THE VALUE OF RETAILING Retailing Retailing includes all activities involved in Selling and providing goods and services to ultimate consumers for personal, or household use.

CLASSIFYING RETAIL OUTLETS Classification of Retail Establishments Ownership-place Level of Service-promotion Product Assortment-product Price Notes: 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

CLASSIFICATION BY OWNERSHIP Independent Retailers-one store ownership Chain Stores-many stores but only one owner Franchises-many owners of many stores Notes: 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.

BASIC FORMS OF FRANCHISING Product and Trade Name Franchising Business Format Franchising Dealer agrees to sell certain products provided by a manufacturer, but can use any sales tactics he chooses. Ex-Michelin Tires, Avon Dealer must sell the franchiser’s product in the exact way the franchiser prescribes. Ex – McDonalds, Wendy's

CLASSIFICATION BY LEVEL OF SERVICE Self Service Full Service Discount stores Factory outlets Warehouse clubs Notes: The level of service that retailers provide can be classified along a continuum, from full-service to self-service. Exclusive stores

CLASSIFICATION BY PRODUCT OFFERING The mix of products offered to the consumer by the retailer; also called the product assortment Deep & narrow-like Starbucks Or Shallow & broad like Walmart

CLASSIFICATION BY PRODUCT OFFERING Depth of Product Line Specialty Outlets Category Killers Breadth of Product Line General Merchandise Stores Scrambled Merchandising Why do this?

Breadth versus depth of merchandise lines

MAJOR TYPES OF RETAILERS BY PRODUCT OFFERING Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores Restaurants On Line: Walgreen’s Do 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.

NON-STORE RETAILING Major Forms of Nonstore Retailing Automatic Vending Direct Marketing Notes: Nonstore retailing is shopping without visiting a store. The major forms are shown here. Electronic Retailing

Direct Marketing needs Telemarketing Catalogs & Mail Order Direct Mail Direct Marketing needs no personal interaction On Line Avon What 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?

CHOOSING THE RETAIL MIX Choosing the Retailing Mix Product Price Promotion Place Personnel Presentation Notes: 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.

CHOOSING THE RETAIL MIX Target Market Product Price Promotion Place Personnel Presentation Notes: Exhibit 11.4 shows the retailing mix.

PRESENTATION (COMMUNICATION) OF THE RETAIL STORE Employee Type & Density Merchandise Type & Density Fixture Type & Density Sound Odors Visual Factors Factors in Creating Store’s Atmosphere Notes: 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.

PERSONNEL OF THE RETAIL STORE Fit the image of the product Factors in Personnel decisions How many How knowledgeable How helpful / invasive Fit the image of the product Good personal sellers

RETAILING STRATEGY-PRICING How much mark-up? Allow for Shrinkage and discounting OR Use Everyday Low Pricing Benchmark or Signpost Items – items used by consumers as an index of overall price level of the store I.e. – “How much do they sell T shirts for?”

RETAILING STRATEGY - LOCATION Central Business District Parasites Freestanding Store Shopping Center Tenant Mall Tenant Regional Shopping Centers Anchor Stores Strip Location Destination stores Power centers Multichannel Retailers

FIGURE 14-5 The retail life cycle

Scrambled Merchandising Scrambled merchandising involves offering several unrelated product lines in a single store.

Retailing Mix The 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.

Shrinkage Shrinkage is the breakage and theft of merchandise by customers and employees.

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

Retail Life Cycle The 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.

Parasites Parasite stores do not create their own traffic. They make money based on their proximity to things that will draw foot traffic. (bigger stores, train stations, airports, office buildings, etc.)

Destination Stores Stores that generate customers from larger trading areas than their neighbors or competitors. i.e.-Dunkin’ Donuts: “It’s worth the trip!”

Power Centers Huge shopping strips with multiple anchors and often a supermarket

Anchor Stores A 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.