Chapter 15: Retailing

Prepared & Designed by Laura Rush, B-books, Ltd.

Copyright Cengage Learning 2013 All Rights Reserved

Learning Outcomes
LO1 Discuss the importance of retailing in the U.S. economy Explain the dimensions by which retailers can be classified

LO2
LO3 LO4

Describe the major types of retail operations

Discuss nonstore retailing techniques

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Learning Outcomes
LO5 Define franchising and describe its two basic forms List the major tasks involved in developing a retail marketing strategy Describe new developments in retailing

LO6
LO7

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The Role of Retailing

Discuss the importance of retailing in the U.S. economy.

LO1

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The Role of Retailing

All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non-business use.

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The Role of Retailing

Over 1.5 million U.S. retailers employ more than 15 million people Retailers account for 10.8 percent of U.S. employment Retailing accounts for 12 percent of U.S. businesses Retail sales account for nearly 2/3 of U.S. GDP Industry is dominated by a few giant organizations, such as Wal-Mart 90% of retailers operate only one store
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Review Learning Outcome

The Importance of Retailing
Retailing as a % of U.S. employment

Retailing as a % of U.S. businesses

Retailing as a % of GDP

10.8%

12%
66%

LO1

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Classifying Retailers

Explain the dimensions by which retailers can be classified.

LO2

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Classification of Retail Operations

Ownership

Level of Service

Product Assortment

Price

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Classification of Ownership
Independent Retailers
Owned by a single person or partnership and not part of a larger retail institution Owned and operated as a group by a single organization

Chain Stores

Franchises

The right to operate a business or sell a product

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Level of Service

Self Service
Factory outlets Discount stores Warehouse clubs

Full Service
Exclusive stores

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Types of Stores and Their Characteristics

Service Level Mod Hi-High High Low Low Low-Mod Mod-Low Mod-Low Assortment Broad Narrow Broad Gross Margin Mod High High Low Mod High Low Mod Low

Type of Retailer Department Store Specialty Store Supermarket Convenience Store Drugstore Full-line Discounter Specialty Discounter Warehouse Clubs Off-price Retailer Restaurant

Price Mod-High Mod-High Moderate

Med-Narrow Mod High Medium Med-Broad Med-Broad Moderate Mod Low

Mod Lo-low Mod Low

Low-very low Low

Low
Low Low-High

Broad

Med-Narrow Low Narrow Low-High

Low Low-High

Price
Gross Margin The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted.

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Major Types of Retail Operations

Describe the major types of retail operations.

LO3

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Major Types of Retail Operations

Department Stores

Specialty Stores
Supermarkets

Drugstores
Convenience Stores

Discount Stores
Online

Restaurants

http://www.walgreens.com

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Categories of Discount Stores

Full-Line Discounters

Specialty Discount Stores Warehouse Clubs

Off-Price Discount Retailers

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Discount Stores
Mass Merchandising- Retailing strategy using moderate to low prices on large quantities of merchandise and lower service to stimulate high turnover of products.

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Discount Stores
Supercenter - Retail store combining groceries and general merchandise goods with a wide range of services. Extreme-value Retailing- Smaller stores emphasizing daily necessities at rock-bottom prices.

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Specialty Discount Stores

Category Killers- Specialty discount stores that heavily dominate their narrow merchandise segment.

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Review Learning Outcome

Types of Retail Operations
Department Stores Specialty Stores
Supermarket

Drugstores

Convenienc e Stores

Discount Stores

Restaurants

supercenter Full-line extremevalue Scrambled Merchandising Specialty category killer

Warehouse

Off-price

LO3

factory outlet 20

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Nonstore Retailing

Discuss nonstore retailing Techniques.

LO4

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Nonstore Retailing
Automatic Vending

Direct Retailing

Direct Marketing

M-commerce

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Direct Retailing
Door-to-Door

Office-to-Office

Home Sales Parties

http://www.avon.com Online

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Types of Direct Marketing

Direct Mail

Catalogs & Mail Order

Telemarketing

M-Commerce

Shop-at-home networks Handheld devices

24

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Review Learning Outcome

Nonstore Retailing Techniques
Nonstore Retailing
Vending Direct retailing direct mail catalogs telemarketing Handheld device shop at home
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Direct marketing

M-Commerce

LO4

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Franchising

Define franchising and describe its two basic forms.

LO5

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Basic Forms of Franchising

Product and Trade Name Franchising

Business Format Franchising

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Franchising
Product and Trade Name Franchisingdealer agrees to sell in products provided by a manufacturer or wholesaler. Business Format Franchising- An ongoing business relationship between a franchiser and a franchise.

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Largest U.S. Franchisors

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Source: 2010 Franchise 500 Rankings, http://www.entrepreneur.com/franchises/rankings/franchise500 -115608/2010,-1.html, accessed August 2010.

Review Learning Outcome

Define Franchising and Describe its Two Basic Forms

LO5

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Retail Marketing Strategy

List the major tasks involved in developing a retail marketing strategy.

LO6

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Retail Marketing Strategy

Define & Select a Target Market

Develop the Six Ps

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Defining a Target Market

Demographics
STEP 1: Define the Target Market

Geographics Psychographics

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Choosing the Retailing Mix

Product Place Personnel Presentation

STEP 2: Choose the Retailing Mix

Price Promotion

Online http://www.publix.com
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The Retailing Mix

Product Personnel Place

Target Market

Presentation

Promotion

Price

Choosing the Retailing Mix

The mix of products offered to the consumer by the retailer; also called the product assortment or merchandise mix.

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Retail Promotion Strategy

Advertising Public Relations

Publicity
Sales Promotion

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The Proper Location

Choosing a Community
Economic growth potential Competition Geography

Choosing a Site
Freestanding Store Shopping Center Mall

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Important Factors for Site Choice

Neighborhood socioeconomics

Traffic flows
Land costs Zoning regulations

Public transportation
Sites visibility, parking, entrances and exits, accessibility, and safety Fit with other stores
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Shopping Center and Mall Locations

Advantages
Design attracts shoppers Activities and anchor stores draw customers Ample parking Can target different demographic groups

Disadvantages
Expensive leases

Failure of common promotion efforts

Lease restrictions Hours of operation Anchor store domination Direct competitors

Sharing of common area expenses

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Retail Prices

Low Price
Good Value Single Price Point EDLP

High Price
Quality Image

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Presentation of the Retail Store

Atmosphere - The overall impression conveyed by a stores physical layout, dcor, and surroundings.

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Presentation of the Retail Store

Employee type and density Merchandise type and density Fixture type and density

Sound
Odors

Visual factors
Online http://www.apple.com
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Personnel and Customer Service

Trading Up Two Common Selling Techniques Suggestion Selling

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Customer Service for On-Line Retailers

Easy-to-use Web site

Product availability

Simple returns

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Review Learning Outcome

Developing a Retail Marketing Strategy

LO6

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New Developments in Retailing

Describe new developments in retailing.

LO7

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New Developments in Retailing

Interactivity - Consumers are involved in the retail experience.

Pop-up Shops - Temporary retail establishments that provide flexible locations without a long-term commitment.

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Review Learning Outcome

Describe new development in retailing

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Chapter 15 Company Clip

Sephora carries quality skincare products, but it is due to its excellent retailing techniques that the store has been such a success.
http://www.cengage.com/marketing/book_content/ 9781111821647_lamb/videos/ch15.html

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Part 4 Video: White Rock

White Rock has had to modify its distribution strategy over the years to adapt to its changing position and to the increased competition from major bottlers.
http://www.cengage.com/marketing/book_content/ 1439039429_lamb/part_videos/part04.html

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