1. McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.

2. LO1 Identify retailers in terms of the utilities they provide. Explain the alternative ways to classify retail outlets. LO2 LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 17, YOU SHOULD BE ABLE TO: Describe the many methods of nonstore retailing. LO3 17-2

3. LO4 Classify retailers in terms of the retail positioning matrix, and specify retailing mix actions. Explain changes in retailing with the wheel of retailing and the retail life cycle concepts. LO5 LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 17, YOU SHOULD BE ABLE TO: 17-3

4. THE VALUE OF RETAILING LO1  Retailing Retailing  Consumer Utilities Offered by Retailing Place Possession  The Global Economic Impact of Retailing Form Time 17-4

5. Slide 17-6 THE VALUE OF RETAILING Retailing –All activities involved in selling, renting, and providing goods and services to ultimate consumers for personal, family, or household useAll activities involved in selling, renting, and providing goods and services to ultimate consumers for personal, family, or household use –Approximately 1.5 Million in U.S.Approximately 1.5 Million in U.S.

6. Slide 17-6 THE VALUE OF RETAILING Retailing Consumer Utilities Offered by Retailing –Allows consumers and producers to meet and creates customer value in the form of utilities provided Consumer Utilities Offered by Retailing –Time –Place –Possession –Form

7. FIGURE 17-1 FIGURE 17-1 Which retailer best provides which utilities? 17-7

8. FIGURE 17-2 FIGURE 17-2 The relative size of different types of retailers 17-8

9. Slide 17-6 THE VALUE OF RETAILING Retailing The Global Economic Value of Retailing –Represented by number of people employed and total amount of money exchanged in retail sales The Global Impact of Retailing –Wal-Mart, Home Depot, and Target –Daiei – Japan –Printemps – France –Marks & Spencer - Britain

10. RETAILERS ARE REINVENTING THEIR STORES TO MATCH THE WAY YOU WANT TO SHOP! 17-10

11. Slide 17-11 Concept Check 1. When Polo makes shirts cut to a customer’s exact preferences, what utility is provided? A: form utility

12. Slide 17-12 Concept Check 2. Two measures of the impact of retailing in the global economy are ________ and _________________. total sales number of employees

13. Slide 17-13 CLASSIFYING RETAIL OUTLETS Form of Ownership – who ownsForm of Ownership – who owns –Individuals, Corporate Chains, Contractual SystemsIndividuals, Corporate Chains, Contractual Systems Level of Service – degree of service providedLevel of Service – degree of service provided –Self-, limited-, and full-serviceSelf-, limited-, and full-service Merchandise Line – how many different types of products store carries and in what assortmentMerchandise Line – how many different types of products store carries and in what assortment

14. CLASSIFYING RETAIL OUTLETS FORM OF OWNERSHIP LO2  Independent Retailer  Form of Ownership Form of Ownership  Corporate Chain Wholesaler-Sponsored Voluntary Chains  Contractual Systems Retailer-Sponsored Cooperatives 17-14

15. CLASSIFYING RETAIL OUTLETS FORM OF OWNERSHIP LO2 Franchising  Contractual Systems, cont.  Business-Format Franchises  Product-Distribution Franchises 17-15

16. FIGURE 17-3 FIGURE 17-3 The top five franchises in the United States 17-16

17.  Self-Service CLASSIFYING RETAIL OUTLETS LEVEL OF SERVICE LO2  Limited Service  Full-Service 17-17

18. Slide 17-18  Depth of Product Line – carries large assortment Depth of Product Line – carries large assortment  Limited-line – considerable assortment Limited-line – considerable assortment  Single-line – tremendous depth in one primary line Single-line – tremendous depth in one primary line Specialty Outlets Category Killers – specialty discount outlets CLASSIFYING RETAIL OUTLETS TYPE OF MERCHANDISE LINE

19. Slide 17-20  Breadth of Product Line Breadth of Product Line General Merchandise Stores – broad product line with limited depth Scrambled Merchandising – several unrelated product lines in a single store CLASSIFYING RETAIL OUTLETS TYPE OF MERCHANDISE LINE

20. Slide 17-20  Breadth of Product Line Breadth of Product Line Hypermarket – large store (>200K sq ft) Hypermarket – large store (>200K sq ft) Form of scrambled merchandising Popular in Europe Variety, quality, low price for food, groceries, and general merchandise Supercenter – approx 70K sq ft with full-size grocery Intertype Competition Intertype Competition CLASSIFYING RETAIL OUTLETS TYPE OF MERCHANDISE LINE

21. FIGURE 17-4 FIGURE 17-4 Stores vary in terms of the breadth and depth of their merchandise lines 17-21

22. FIGURE 17-5 FIGURE 17-5 Hypermarkets are popular in Europe while supercenters are popular in the U.S. 17-22

23. FIGURE 17-6 FIGURE 17-6 Many types of retailers do not have stores 17-23

24. NONSTORE RETAILING LO3  Automatic Vending  Direct Mail and Catalogs 17-24

25. NONSTORE RETAILING LO3  Television Home Shopping  Online Retailing 17-25

26. GOING ONLINE Get Ready for Smack Shopping! 17-26

27. NONSTORE RETAILING LO3  Telemarketing Telemarketing  Direct Selling Do-Not-Call Registry 17-27

28. Slide 17-27 Coke Vending Machine What are the strengths and weaknesses of this form of nonstore retailing?

29. Slide 17-28 Specialty Catalogs What are the strengths and weaknesses of this form of nonstore retailing? SearsL.L. Bean Lilly’s Kids

30. Slide 17-29 QVC Television Home Shopping What are the strengths and weaknesses of this form of nonstore retailing?

31. Slide 17-30 Online Retailing What are the strengths and weaknesses of this form of nonstore retailing?

32. FIGURE 17-7 FIGURE 17-7 Elements of a retailing strategy 17-32

33. Slide 17-36 RETAILING STRATEGY Positioning a Retail Store  Retail Positioning Matrix Retail Positioning Matrix Breadth of Product Line Range of products sold through each outlet Value Added Elements such as location, product reliability, or prestige

34. FIGURE 17-8 FIGURE 17-8 The four positioning strategies for retailers 17-34

35. RETAILING STRATEGY RETAILING MIX LO4  Retailing Mix Retailing Mix Original Markup Maintained Markup  Retail Pricing  Markdown Gross Margin 17-35

36. Slide 17-41 RETAILING STRATEGY Retailing Mix – managing the store and merchandise in the storeRetailing Mix – managing the store and merchandise in the store  Retail Pricing Markup – how much to add Markdown  Original Markup – retailer cost and initial selling price  Maintained Markup – retailer cost and final selling price  Gross Margin Markup on Selling Price Markup on Cost

37. RETAILING STRATEGY RETAILING MIX LO4  Everyday Low Pricing (EDLP)  Everyday Fair Pricing  Benchmark or Signpost Items 17-37

38. RETAILING STRATEGY RETAILING MIX LO4  Off-Price Retailing Off-Price Retailing Warehouse Club Outlet Store Single/One-Price Policy Store 17-38

39. RETAILING STRATEGY RETAILING MIX LO4  Store Location – where and how many Regional Shopping Centers Central Business District  Two or Three Anchor Stores Strip Location Community Shopping Center One primary store Power Center Super Market Anchor 17-39

40. USING MARKETING DASHBOARDS Why Apple Stores May Be the Best in the United States! Sales per Square Foot ($) and Same Store Growth (%) 17-40

41. THE CHANGING NATURE OF RETAILING THE WHEEL OF RETAILING AND RETAIL LIFE CYCLE LO5  Wheel of Retailing Wheel of Retailing  Retail Life Cycle Retail Life Cycle 17-41

42. FIGURE 17-9 FIGURE 17-9 The wheel of retailing: How outlets change over time 17-42

43. FIGURE 17-10 FIGURE 17-10 The retail life cycle describes the stage of growth and decline for retail outlets 17-43

44. Slide 17-55 FUTURE CHANGES IN RETAILING  Multichannel Retailing – utilize and integrate traditional store and nonstore formats e.g., catalogs, television, and online retailing  Changing Shopping Behavior –Shoppers becoming precision shoppers –Demanding convenient hours and locations, outstanding service, and reasonable prices  Managing the Customer Experience

45. MARKETING MATTERS The Multichannel Marketing Multiplier 17-45

46. Retailing Retailing consists of all activities involved in selling, renting, and providing goods and services to ultimate consumers for personal, family, or household use. 17-46

47. Form of Ownership Form of ownership distinguishes retail outlets based on whether individuals, corporate chains, or contractual systems own the outlet. 17-47

48. Level of Service Level of service is the degree of service provided to the customer from three types of retailers: self-, limited-, and full-service. 17-48

49. Merchandise Line A merchandise line describes how many different types of products a store carries and in what assortment. 17-49

50. Depth of Product Line Depth of product line means that the store carries a large assortment of each item. 17-48

51. Breadth of Product Line Breadth of product line describes the variety of different items a store carries. 17-51

52. Scrambled Merchandising Scrambled merchandising consists of offering several unrelated product lines in a single store. 17-52

53. Hypermarket A hypermarket is a form of scrambled merchandising, which consists of a large store (more than 200,000 square feet) that offers consumers everything in a single outlet, eliminating the need to shop at more than one location. 17-53

54. Intertype Competition Intertype competition consists of competition between very dissimilar types of retail outlets. 17-54

55. Telemarketing Telemarketing consists of using the telephone to interact with and sell directly to consumers. 17-55

56. Retail Positioning Matrix The retail positioning matrix is a matrix that positions retail outlets on two dimensions: breadth of product line and value added. 17-56

57. Retailing Mix The retailing mix consists of the activities related to managing the store and the merchandise in the store, which includes retail pricing, store location, retail communication, and merchandise. 17-57

58. Off-Price Retailing Off-price retailing consists of selling brand-name merchandise at lower than regular prices. 17-58

59. Central Business District A central business district is the oldest retail setting, usually located in the community’s downtown area. 17-59

60. Regional Shopping Centers Regional shopping centers consist of 50 to 150 stores that typically attract customers who live or work within a 5- to 10-mile range, often containing two or three anchor stores. 17-60

61. Community Shopping Center A community shopping center consists of a retail location that typically has one primary store (usually a department store branch) and often 20 to 40 smaller outlets, serving a population of consumers who are within a 10- to 20-minute drive. 17-61

62. Strip Location A strip location consists of a cluster of neighborhood stores to serve people who are within a 5- to 10-minute drive. 17-62

63. Power Center A power center is a huge shopping strip with multiple anchor (or national) stores. 17-63

64. Category Management Category management is an approach to managing the assortment of merchandise in which a manager is assigned the responsibility for selecting all products that consumers in a market segment might view as substitutes for each other, with the objective of maximizing sales and profits in the category. 17-64

65. Wheel of Retailing The wheel of retailing is a concept that describes how new forms of retail outlets enter the market. 17-65

66. Retail Life Cycle The retail life cycle is the process of growth and decline that retail outlets, like products, experience. It consists of the early growth, accelerated development, maturity, and decline stages. 17-66

67. Multichannel Retailers Multichannel retailers are retailers that utilize and integrate a combination of traditional store formats and nonstore formats such as catalogs, television, and online retailing. 17-67