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Copyright © 2007 McGraw-Hill Ryerson Limited 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. Copyright © 2007 McGraw-Hill Ryerson Limited

Copyright © 2007 McGraw-Hill Ryerson Limited 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. Not all sales by retailers are retail sales. Not all retailing is done by retailers. Copyright © 2007 McGraw-Hill Ryerson Limited

Dimensions of the Retail Market 250,000 retail stores in Canada. Most are small. High degree of concentration. Copyright © 2007 McGraw-Hill Ryerson Limited

Small Retailers’ Keys to Success Contractual vertical marketing system. Accessibility and convenience. Personal service. Copyright © 2007 McGraw-Hill Ryerson Limited

Physical Facilities of Retailers Most retailers operate from retail stores, although more now engage in non-store selling. Key aspects of retail stores’ physical facilities: Location Design Layout Copyright © 2007 McGraw-Hill Ryerson Limited

Physical Facilities of Retailers Shopping Centres are predominant. Having to become increasingly competitive to continue. Classification: Convenience centre Neighbourhood centre Community centre Regional centre Copyright © 2007 McGraw-Hill Ryerson Limited

Copyright © 2007 McGraw-Hill Ryerson Limited Forms of Retailing Three factors differentiate a chain from an independent and a vertical marketing system. Two or more units Central ownership Standardization of operating policies and centralized strategic decision-making Copyright © 2007 McGraw-Hill Ryerson Limited

Other Forms of Retailing Contractual Vertical Marketing System Retail co-operatives and voluntary chains Franchise systems Product and trade name franchising Business format franchising Copyright © 2007 McGraw-Hill Ryerson Limited

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 Copyright © 2007 McGraw-Hill Ryerson Limited

Major Types of Retailers Department Stores: Offer a wide variety of merchandise and services. Don’t compete on the basis of price. Face intense competition and high operating costs. Discount Houses: Are large-scale retailers. Offer a wide range of products but less depth. Offer low prices and fewer services. Copyright © 2007 McGraw-Hill Ryerson Limited

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. Copyright © 2007 McGraw-Hill Ryerson Limited

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. Copyright © 2007 McGraw-Hill Ryerson Limited

Copyright © 2007 McGraw-Hill Ryerson Limited Nonstore 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. Copyright © 2007 McGraw-Hill Ryerson Limited

Copyright © 2007 McGraw-Hill Ryerson Limited Online Retailing More and more companies are selling directly to consumers over the Internet. B2C online retailing is much smaller than B2B, but is growing. Copyright © 2007 McGraw-Hill Ryerson Limited

Copyright © 2007 McGraw-Hill Ryerson Limited Retailing Management Positioning of retailers is a challenge in a competitive market. In many retail operations, managing through seasonal and fashion cycles is necessary. Retailers have access to considerable volumes of information through technology. Result will be improved productivity. Retailers will place greater emphasis on convenience, customer service, and customer retention. Copyright © 2007 McGraw-Hill Ryerson Limited

Copyright © 2007 McGraw-Hill Ryerson Limited Retailing Management 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. Copyright © 2007 McGraw-Hill Ryerson Limited

Copyright © 2007 McGraw-Hill Ryerson Limited Retail Positioning The retailers’ strategies and actions are designed to favourably distinguish the retailer from competitors in the minds of the target customer. Copyright © 2007 McGraw-Hill Ryerson Limited

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 Copyright © 2007 McGraw-Hill Ryerson Limited

Managing Retail Assortments Many retailers are subject to seasonal or fashion cycles and thus must manage the product assortment critically. To help retailers, consider the Fashion Adoption Processes. Copyright © 2007 McGraw-Hill Ryerson Limited

Fashion-Adoption Processes Copyright © 2007 McGraw-Hill Ryerson Limited

Copyright © 2007 McGraw-Hill Ryerson Limited 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 Copyright © 2007 McGraw-Hill Ryerson Limited