Objectives

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Objectives

• To understand
• The nature of retailing.
• What a retailer is.
• Types of retailers.
• Retail marketing strategies.
• Forms of non-store selling.
• Retailing on the Internet.
• Trends in retailing.

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Retailing

• Involves the sale, and all activities directly
  related to the sale, of products and services to
  end consumers for their personal, non-business
  use
• Retail sales do not only happen in a physical
  retail outlet
• Retailer- a firm that engages primarily in
  retailing
• Have little or no investment in production
  equipment, can purchase merchandise on credit,
  have potential to lease store space

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Dimensions of the Retail Market

• 250,000 retail stores in Canada
• Varies with economic conditions
• Most are small
• Annual sales of lt 100k
• High degree of concentration
• Merging of stores and decline in of dept. stores

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Retail Trends

• On-site entertainment
• Increase sales
• Promote trial and repeat purchases
• Build brand and store loyalty
• Create a fun and exciting shopping experience

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• Service and convenience
• Recognizing customers time pressures by offering
  drive-throughs, delivery, extended hours
• Offering more services under one roof
• Dominion- offers photo finishing, eyewear, liquor
  store, medical offices, drive-through pharmacy
• Specialty and big box stores
• Retailers opening stand-alone stores with
  expanded product offerings

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• Managing customers
• Customer relationship management (CRM)
• Databases
• Multi-channel retailing
• Increasing use of web sales
• Allowing other retailers to sell products

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Small Retailers Keys to Success

• Contractual vertical marketing system (VMS)
• Individual retailers join together to form
  co-operatives, voluntary chains or franchise
  systems
• Offers buying power, specialized management, etc.
• Accessibility and convenience
• Personal service
• Easier to form relationships with customers

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Big vs. Small Retailers

• BIG
• Division of labor
• Specialization of mgmt
• Buying power
• More access to producers/
• manufacturers
• Higher advertising budget

• SMALL
• Flexibility of operations
• Personal service
• Able to experiment

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Store Positioning StrategyRetailing as Theatre

• Store location building the theatre
• Types of store locations
• Business districts
• Shopping centers
• Free-standing retailers
• Non-traditional store locations
• Site selection
• Area evaluation
• Long term population patterns
• Location of competitors
• Demographic makeup of an area
• Fit with firms growth strategy
• Site evaluation

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Store Positioning Strategy

• Store image
• Atmospherics use of color, lighting, scents,
  furnishings, sounds, etc. to create a desired
  setting
• Store design setting the stage
• Store layout and traffic flow
• Fixture type and merchandise density
• Music
• Color and lighting
• Store personnel the actors
• Pricing policy the cost of a ticket to the show

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Physical Facilities of Retailers

• Shopping centres are predominant
• Grouping of retail stores in a multi-unit
  structure
• Classification
• Convenience centre
• Neighbourhood centre
• Community centre
• Regional centre

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Forms of Retailing

• Independent stores
• Retailers with a single stores and no association
  with a VMS
• Possess characteristics of small retailers
• Perceived as having higher price point
• Develop strong relationships

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Forms of Retailing

• Corporate chain stores
• Organization of 2 centrally owned and managed
  stores that generally handle the same types of
  products
• Different from VMS because
• Centrally-managed
• Little autonomy
• Fall mainly in general merchandise, variety
  store, family clothing, shoes

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Forms of Retailing

• Contractual Vertical Marketing System
• Retail co-operatives and voluntary chains
• Provide management and administrative systems
  (accounting, layout, promotion, training)
• Increase competitiveness
• Found in grocery and hardware

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• 2. Franchise systems
• Product and trade name franchising
• i.e. Car dealerships and gas stations
• Business format franchising
• i.e. KFC, Tim Hortons

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Retail Marketing Strategies

• The mix emphasizes product assortment, price,
  location, promotion, and customer service.
• Three key elements
• Breadth and depth
• Price level
• Number of customer services

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Major Types of Retailers

• Department Stores
• Offer a wide variety of hard and soft
  merchandise, and services
• Dont compete on the basis of price
• Face intense competition and high operating costs
• Discount Houses
• Emphasize price
• Are large-scale retailers
• Offer a wide range of products but less depth
• Offer low prices and fewer services

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Limited-Line Retailers

• Offer narrow but deep assortment and varying
  levels of customer service.
• Specialty stores carry a narrow and deep product
  line, usually specializing in a single category
• Off-price retailers offer a deep assortment in a
  narrow line, low prices, and a few services.
• Include factory outlets.
• Category-killer stores offer a narrow but very
  deep assortment and low prices.
• Dominate the category.

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Other Forms of Retailing

• Supermarkets moderately broad, moderately deep
  assortment, few customer services and place
  emphasis on price.
• Superstore
• Convenience stores concentrate on convenience
  goods, have higher prices with fewer customer
  services.
• Warehouse clubs offer a wide breadth of
  products but little depth.

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Non-Store Retailing

• Has grown considerably with advancing technology
  and changing consumer shopping preferences.
• Direct Selling personal contact between buyer
  and seller occurs away from a retail store.
• Telemarketing uses salespeople on the phone to
  sell products and services.
• Direct Marketing uses catalogues, direct mail,
  television shopping, and the Internet.
• Automatic Vending products sold through
  machines with no personal contact.

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Online Retailing

• Occurs when a firm offers products and services
  for sale for purchase by individuals using their
  computers
• B2C online retailing is much smaller than B2B,
  but is growing.

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Where the Online Profits Lie

• Top sellers travel, computer stuff, financial
  services, collectibles
• High-growth categories autos, health beauty,
  toys, books, music, video/DVD, games, streaming
  media
• Potential to do well
• Straight rebuys
• Commodities
• Low-touch products
• Products with high retail margins
• Products that can be customized
• Products that are expensive to inventory
• Products that invite comparison shopping
• Items that are difficult to find

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Making It or Breaking It Online

• Success factors
• Branding
• Building customer loyalty
• Scalability
• Barriers to success
• No instant gratification for customers
• Need for touch--feel information for many
  products
• Security concerns
• Cannibalization of store sales
• Price competition

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Retailing Management

• Positioning of retailers is a challenge in a
  competitive market
• Based on product assortment, price and customer
  services
• Manage through seasonal and fashion cycles
• Key to success is the planning of sound
  strategies which include
• The selection of target markets
• Product line selection
• Customer relationship management strategies
• Retail positioning

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Retail Positioning

• The retailers strategies and actions are
  designed to favourably distinguish the retailer
  from competitors in the minds of the target
  customer.

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Retail Positioning Strategies

• Price and Service
• High price ? High service
• Low price ? Low service
• Assortment, Price and Service
• Product differentiation
• Special service and personality augmentation

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Fashion-Adoption Processes

• Trickle-down
• Trickle-across
• Trickle-up

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Managing the Customer

• In any industry, it is very important to retain
  your customer
• Customer Retention Strategy
• Get to know the customer in as much detail as
  possible
• Reward those customers who are loyal