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TYPES OF RETAILERS

CHAPTER 02

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General Trends in Retailing• New types of retailers• Globalization• Growth in services

retailing• Growth in

omnishopping by traditional retailers

• Increase use of technology to reduce cost; Increase value delivered

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NAICS Codes for Retailers

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• Retailers Use Different Retail Mixes-merchandise: variety (breadth) / assortment (depth)-services-store design, visual merchandising-location-pricing

Types of Retailers

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Merchandise Offering

Variety (breadth of merchandise): wide vs. narrow- The number of merchandise categories

Assortment (depth of merchandise): deep vs. shallow-the number of items in a category (SKUs)

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Services Offered• Retailers differ in

the services they offer customers– Wheelworks offers

assistance in selecting the appropriate bicycle as well as bicycle repairs.

– Wal-Mart, however, doesn’t provide any additional services.

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Prices and the cost of offering breath and depth of merchandise and services

• Stocking a deep and broad assortment (like Wheelworks) is costly for retailers.

Many SKUs

Inventory Investment Cost

Because the retailer must have backup stock for each SKU in addition to holding the inventory

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Illustration of Variety and Assortment

Lady Foot Locker Sports AuthorityActive SKUs: 44 N/A

Classics SKUs: 44 N/A

Converse SKUs: 25 N/A

Elite Running SKUs: 22 N/A

Fitness N/A SKUs: 1

Running SKUs: 44 SKUs: 39

Trail Running N/A SKUs: 7

Training SKUs: 22 SKUs: 2

Walking SKUs: 11 SKUs: 12

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Food Retailers• Channel preference for food shopping

channel where grocery purchasers do most of their food shopping– Supermarkets– Supercenters– Warehouse Clubs– Convenience

Stores

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Trends in Supermarket Retailing• Competition

• Supercenters• Warehouse Clubs• Convenience Stores• Extreme Price Retailers• Convenience Stores• Drug Stores

•Changing Consumption Patterns

Time Pressure Eating Out More Meal Solutions

Distribution

Costs

Prices

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Characteristics of Food Retailers

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Characteristics of General Merchandise Retailers

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Characteristics of General Merchandise Retailers

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Issues in Department Store Retailing

• Competition– Discount stores on price– Specialty stores on service, depth of

assortment

• Lower cost by reducing service– Centralized cash wraps

• More sales – Customers wait for sale

• Focus on apparel and soft home• Develop private labels and exclusive

brands

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Three Tiers of Department Stores

• First Tier: Upscale, high fashion chains with exclusive designer merchandise and excellent customer service– Nordstrom, Neiman Marcus, Saks

• Second Tier: Retailers sell more modestly priced merchandise with less customer service– Macy’s

• Third Tier: Value oriented caters to more price conscious customer– JCPenney, Sears, Kohl’s

Rob Melnychuk/Getty Images

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Specialty Store Retailers

McGraw-Hill Companies, Inc./Andrew Resek, Photographer

What challenges do specialty store retailers face?