Retailing

1
Chapter 18

• Retailing

2
Retailing

• Includes all activities involved in selling,
  renting, and providing goods and services to
  ultimate consumers

3
Classifying Retail Outlets

• Form of ownership
• Level of Service
• Merchandise Line

4
Form of Ownership

• Independent Retailer--owned by individual
• -advantage owner can be his/her own boss
• -may offer more personal service to consumers
• Corporate Chain--multiple outlets, common
  ownership
• -centralized decision making, purchasing
• -consumers benefit from similar merchandise,
  mgt. policies
• Contractual System--independently owned stores
  band
• together to act like a chain
• Franchise--parent companies provide name,
  know-how,
• and set of guidelines in exchange for fee and
  royalties

5
Level of Service

• Self Service--customer performs most functions
  (gas stations)
• Limited Service--outlets provide some service
  (typical retailer)
• Full Service--provide many services (dept.
  stores)

6
Merchandise Line

• Depth of Product Line--number of items in
  product line
• Category Killers--specialty discount outlets
  that dominate
• market in a category (e.g., Toys R Us, Home
  Depot)
• Breadth of Product Line--number of different
  product lines
• General Merchandise Stores--broad product line,
  limited depth
• Scrambled Merchandising--unrelated product
  lines
• Hypermarkets / Supercenters--food and other
  goods

New phenomenon Intertype competition
7
The Largest Retailers
Category
Retailers
Sales (, in billions)
Department stores
Sears J C Penney
41.322 30.678
Apparel
Limited TJX
9.347 7.949
Consumer Electronics
Circuit City Best Buy
8.871 8.358
Drug and Discount
Wal-Mart Kmart
139.208 33.674
Home Improvement
Home Depot Lowes
30.219 12.245
Home Shopping
Service Merchandise Fingerhut
3.327 1.912
Specialty Retailers
Costco Toys R Us
24.270 11.200
8
Retail Positioning Strategies
Types of Retailers
Keys to Success
High Value-added/ broad line
(Bloomingdales)
Creative merchandising image excitement,
leader High price/high margin Store Ambiance
Low Value-added/ broad line (K-Mart)
Economies of scalevolume Image good guys,
conveniences Low price/low margin Low or self
service Efficiency of operations
High Value-added/ narrow line (Tiffany)
Unique or high quality products
Imageexclusive specialty High price/high
margin Personal service/advice Expensive
presentation
Low Value-added/ narrow line (Just for
Feet)
Specialty mass merchandising Image value
conscious, consistent Low price, loss leaders
Little or self service Cookie-cutter stores
9
The Retailing Mix

• Retail Pricing
• decide markup / markdown
• timing of discounts
• off-price retailing (e.g., warehouse clubs,
  factory outlets)
• Store Location
• central business district
• regional shopping centers
• community shopping centers
• strip locations / power centers
• freestanding stores
• Image and Atmosphere

10
Image and Atmosphere

• Store personality
• Store layout
• Traffic flow (grid vs. free-flow)
• Merchandise density
• Fixtures and Furniture
• Music
• Color and lighting
• Store personnel

11
The Retail Life Cycle
12
Nonstore Retailing

• Direct marketing
• Customers are exposed to products through
  print or electronic media
• Direct mail / Catalogs
• Eliminates the cost of a store and clerks
• Segmentation and targeting efficiencies
• In-home shopping
• Includes television-assisted retailing and
  computer-assisted retailing.

• Direct selling
• Involves direct sales of goods and services to
  consumers through personal interactions and
  demonstrations in their home or offices.
• e.g., door-to-door, parties, multilevel networks
• Telemarketing
• Uses the telephone to interact with and sell
  directly to consumers.

• Automatic vending
• Serves customers when and where stores cannot.

13
Telemarketing Rules from the FTC
Telemarketers must

• state they are making a sales call, and the
  nature of the product being offered
• disclose that no purchase is necessary to win
  prize promotions
• tell consumer the cost of the products and any
  restrictions on getting the goods or prizes
  before asking for money
• obtain a verifiable authorization before
  attempting to collect for a purchase
• call after 800 a.m. and before 900 p.m. and
• discontinue calls to consumers who have said they
  dont want to be called.