THE VALUE OF RETAILING

Retailing

Retailing includes all activities involved in

Selling and providing goods and

services to ultimate consumers for personal,

or household use.

Classificationof

Retail Establishments

Classificationof

Retail Establishments

Ownership-placeOwnership-place

Level of Service-promotionLevel of Service-promotion

Product Assortment-productProduct Assortment-product

PricePrice

Retailers manipulate their 4 P’s to get the best position in the marketplace– in other words, to create a competitive advantage

CLASSIFYING RETAIL OUTLETS

IndependentRetailers-one store

ownership

IndependentRetailers-one store

ownership

Chain Stores-many stores but only one

owner

Chain Stores-many stores but only one

owner

Franchises-many owners of many

stores

Franchises-many owners of many

stores

CLASSIFICATION BY OWNERSHIP

Product and Trade Name Franchising

Product and Trade Name Franchising

BusinessFormat

Franchising

BusinessFormat

Franchising

Dealer agrees to sell certain products provided by a

manufacturer, but can use any sales tactics he chooses.

Ex-Michelin Tires, Avon

Dealer agrees to sell certain products provided by a

manufacturer, but can use any sales tactics he chooses.

Ex-Michelin Tires, Avon

Dealer must sell the franchiser’s product in the exact way the

franchiser prescribes.Ex – McDonalds, Wendy's

Dealer must sell the franchiser’s product in the exact way the

franchiser prescribes.Ex – McDonalds, Wendy's

BASIC FORMS OF FRANCHISING

Full ServiceFull Service Self Service Self Service

Discount storesDiscount stores

Exclusive storesExclusive storesFactory outlets

Warehouse clubsFactory outlets

Warehouse clubs

CLASSIFICATION BY LEVEL OF SERVICE

The mix of products offered to the consumer by the

retailer; also called the product assortment

Deep & narrow-like Starbucks

Or

Shallow & broad like Walmart

CLASSIFICATION BY PRODUCT OFFERING

CLASSIFICATION BY PRODUCT OFFERING

Depth of Product Line

• Specialty Outlets

• Category Killers

Breadth of Product Line

• General Merchandise Stores

• Scrambled Merchandising

Why do this?

Breadth versus depth of merchandise lines

Department StoresDepartment Stores

Specialty StoresSpecialty Stores

SupermarketsSupermarkets

DrugstoresDrugstores

Convenience StoresConvenience Stores

Discount StoresDiscount Stores

RestaurantsRestaurants

MAJOR TYPES OF RETAILERS BY PRODUCT OFFERING

Major Formsof

NonstoreRetailing

Major Formsof

NonstoreRetailing

Automatic VendingAutomatic Vending

Direct MarketingDirect Marketing

Electronic RetailingElectronic Retailing

NON-STORE RETAILING

TelemarketingTelemarketing

Catalogs & Mail OrderCatalogs & Mail Order

Direct MailDirect Mail

Direct Marketing needs

no personal interaction

Direct Marketing needs

no personal interaction

DIRECT MARKETING

Choosing the Retailing Mix

Choosing the Retailing Mix

ProductProduct

PricePrice

PromotionPromotion

PlacePlace

PersonnelPersonnel

PresentationPresentation

CHOOSING THE RETAIL MIX

TargetMarket

ProductProduct

PricePrice

PromotionPromotion

PlacePlace

PersonnelPersonnel

PresentationPresentation

CHOOSING THE RETAIL MIX

Employee Type & DensityEmployee Type & Density

Merchandise Type & DensityMerchandise Type & Density

Fixture Type & DensityFixture Type & Density

SoundSound

OdorsOdors

Visual FactorsVisual Factors

Factors in

CreatingStore’s

Atmosphere

Factors in

CreatingStore’s

Atmosphere

PRESENTATION (COMMUNICATION) OF THE RETAIL STORE

How manyHow many

How knowledgeableHow knowledgeable

How helpful / invasiveHow helpful / invasive

Fit the image of the productFit the image of the product

Good personal sellersGood personal sellers

Factors in

Personnel decisions

Factors in

Personnel decisions

PERSONNEL OF THE RETAIL STORE

RETAILING STRATEGY-PRICING

Use Everyday Low Pricing

Benchmark or Signpost Items – items used by consumers as an index of overall price level of the store I.e. – “How much do they sell T shirts for?”

Allow for Shrinkage and discounting OR

How much mark-up?

RETAILING STRATEGY - LOCATION

Central Business District

Regional Shopping Centers

Strip Location

Multichannel Retailers

• Anchor Stores

Freestanding Store

Freestanding Store

Shopping Center Tenant

Shopping Center Tenant

Mall TenantMall Tenant

• Parasites

• Destination stores

• Power centers

FIGURE 14-5 The retail life cycle

Scrambled Merchandising

Scrambled merchandising involves offering several unrelated product lines in a single store.

Scrambled merchandising involves offering several unrelated product lines in a single store.

Retailing Mix

The retailing mix includes the activities related to managing the store and the merchandise in the store, which includes retail pricing, store location, retail communication, and merchandise.

The retailing mix includes the activities related to managing the store and the merchandise in the store, which includes retail pricing, store location, retail communication, and merchandise.

Shrinkage

Shrinkage is the breakage and theft of merchandise by customers and employees.

Shrinkage is the breakage and theft of merchandise by customers and employees.

Multichannel Retailers

Multichannel retailers utilize and integrate a combination of traditional store formats and nonstore formats such as catalogs, television, and online retailing.

Multichannel retailers utilize and integrate a combination of traditional store formats and nonstore formats such as catalogs, television, and online retailing.

Retail Life Cycle

The retail life cycle is the process of growth and decline that retail outlets, like products, experience, which consists of the early growth, accelerated development, maturity, and decline stages.

The retail life cycle is the process of growth and decline that retail outlets, like products, experience, which consists of the early growth, accelerated development, maturity, and decline stages.

Parasites

Parasite stores do not create their own traffic. They make money based ontheir proximity to things that will draw foot traffic. (bigger stores, train stations, airports, office buildings, etc.)

Parasite stores do not create their own traffic. They make money based ontheir proximity to things that will draw foot traffic. (bigger stores, train stations, airports, office buildings, etc.)

Destination Stores

Stores that generate customers from larger trading areas than their neighbors or competitors.

i.e.-Dunkin’ Donuts: “It’s worth the trip!”

Stores that generate customers from larger trading areas than their neighbors or competitors.

i.e.-Dunkin’ Donuts: “It’s worth the trip!”

Power Centers

Huge shopping strips with multiple anchors and often a supermarketHuge shopping strips with multiple anchors and often a supermarket

Anchor Stores

A large store, such as a department store or supermarket, that is prominently located in a shopping mall to attract customers who are then expected to patronize the other shops in the mall.

A large store, such as a department store or supermarket, that is prominently located in a shopping mall to attract customers who are then expected to patronize the other shops in the mall.