Presentation on theme: "THE VALUE OF RETAILING Retailing"— Presentation transcript:
1 THE VALUE OF RETAILINGRetailingRetailing includes all activities involved inSelling and providing goods andservices to ultimate consumers for personal,or household use.
2 CLASSIFYING RETAIL OUTLETS Classification of RetailEstablishmentsOwnership-placeLevel of Service-promotionProduct Assortment-productPriceNotes:A retail establishment can be classified according to its ownership, level of service, product assortment, and price.Retailers use the latter three variables to position themselves in the competitive marketplace. These variables can be combined in several ways to create distinctly different retail operations.Retailers manipulate their 4 P’s to get the best position in the marketplace– in other words, to create a competitive advantage
3 CLASSIFICATION BY OWNERSHIP IndependentRetailers-one store ownershipChain Stores-many stores but only one ownerFranchises-many owners of many storesNotes:Independent retailers are retailers owned by a single person or partnership. Around the world, most retailers are independent.Chain stores are owned and operated as a group by a single organization.Franchises are owned and operated by individuals, but are licensed by a larger supporting organization.
4 BASIC FORMS OF FRANCHISING Product and Trade Name FranchisingBusinessFormatFranchisingDealer agrees to sell certain products provided by a manufacturer, but can use any sales tactics he chooses.Ex-Michelin Tires, AvonDealer must sell the franchiser’s product in the exact way the franchiser prescribes.Ex – McDonalds, Wendy's
5 CLASSIFICATION BY LEVEL OF SERVICE Self ServiceFull ServiceDiscount storesFactory outletsWarehouse clubsNotes:The level of service that retailers provide can be classified along a continuum, from full-service to self-service.Exclusive stores
6 CLASSIFICATION BY PRODUCT OFFERING The mix of products offered to the consumer by the retailer; also called the product assortmentDeep & narrow-like StarbucksOrShallow & broad like Walmart
7 CLASSIFICATION BY PRODUCT OFFERING Depth of Product LineSpecialty OutletsCategory KillersBreadth of Product LineGeneral Merchandise StoresScrambled MerchandisingWhy do this?
9 MAJOR TYPES OF RETAILERS BY PRODUCT OFFERING Department StoresSpecialty StoresSupermarketsDrugstoresConvenience StoresDiscount StoresRestaurantsOn Line: Walgreen’sDo you think drugstore Web sites add value for the consumer? What services on Walgreens’ site would you be most likely to use? Would Internet selling be a factor in your choice of a pharmacy?Notes:With the experimentation with alternative formats of retail stores, classification has become more difficult.Department stores: carries a wide variety of shopping and specialty goods. Purchases are made within each department.Specialty stores: merchandise is tailored to specific target markets. Price is a secondary consideration to consumers.Supermarkets: U.S. consumers spend about a tenth of income in supermarkets. Trends: the growth of prepared foods and time-saving products, and the need for convenience.Drugstores: stock pharmacy-related products and services.Convenience stores: defined as a miniature supermarket, carrying only a limited line of convenience goods.Discount stores: a retailer that competes on the basis of low prices, high turnover, and high volume.Restaurants: straddle the line between retailing establishments and service establishments.
10 NON-STORE RETAILING Major Forms of Nonstore Retailing Automatic VendingDirect MarketingNotes:Nonstore retailing is shopping without visiting a store. The major forms are shown here.Electronic Retailing
11 Direct Marketing needs TelemarketingCatalogs & Mail OrderDirect MailDirect Marketing needsno personalinteractionOn LineAvonWhat advantages to you think the Avon site has over a visit from an Avon representative? Can you get the same amount of product information from each? Does Avon offer any products that you would prefer to order from a representative?
12 CHOOSING THE RETAIL MIX Choosing the Retailing MixProductPricePromotionPlacePersonnelPresentationNotes:The retailing mix consists of six P’s: the four P’s of the marketing mix (product, price, promotion, and place), plus presentation and personnel.
13 CHOOSING THE RETAIL MIX Target MarketProductPricePromotionPlacePersonnelPresentationNotes:Exhibit 11.4 shows the retailing mix.
14 PRESENTATION (COMMUNICATION) OF THE RETAIL STORE Employee Type & DensityMerchandise Type & DensityFixture Type & DensitySoundOdorsVisual FactorsFactorsinCreatingStore’sAtmosphereNotes:The presentation of a retail store helps determine the store’s image and positioning in consumers’ minds. For example, positioning as an upscale store would use a lavish or sophisticated presentation.The main element of presentation is atmosphere, with the most influential factors shown on this slide.Employee type and density: an employee’s general characteristics such as friendly and knowledgeable, and the number of employees in the selling space.Merchandise type and density: the type of merchandise carried and how it is displayed.Fixture type and density: elegant, trendy, uncluttered. Technology may be added as a fixture.Sound: music at a restaurant or store.Odors: smells of pastries in bakeries, fragrances as a key design element.Visual factors: colors can create a mood or focus attention.4. Retailers are now adding an element of entertainment to their store atmosphere.
15 PERSONNEL OF THE RETAIL STORE Fit the image of the product FactorsinPersonneldecisionsHow manyHow knowledgeableHow helpful / invasiveFit the image of the productGood personal sellers
16 RETAILING STRATEGY-PRICING How much mark-up?Allow for Shrinkage and discountingORUse Everyday Low PricingBenchmark or Signpost Items –items used by consumers as an indexof overall price level of the storeI.e. – “How much do they sell T shirts for?”
17 RETAILING STRATEGY - LOCATION Central Business DistrictParasitesFreestanding StoreShopping Center TenantMall TenantRegional Shopping CentersAnchor StoresStrip LocationDestination storesPower centersMultichannel Retailers
19 Scrambled Merchandising Scrambled merchandising involves offering several unrelated product lines in a single store.
20 Retailing MixThe 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.
21 ShrinkageShrinkage is the breakage and theft of merchandise by customers and employees.
22 Multichannel Retailers Multichannel retailers utilize and integrate a combination of traditional store formats and nonstore formats such as catalogs, television, and online retailing.
23 Retail Life CycleThe 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.
24 ParasitesParasite 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.)
25 Destination StoresStores that generate customers from larger trading areas than their neighbors or competitors.i.e.-Dunkin’ Donuts: “It’s worth the trip!”
26 Power CentersHuge shopping strips with multiple anchors and often a supermarket
27 Anchor StoresA 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.