©2002 South-Western Chapter 13 Version 6e1 chapter Retailing 13 Prepared by Deborah Baker Texas Christian University

©2002 South-Western Chapter 13 Version 6e2 chapter Learning Objectives 13 1.Discuss the importance of retailing in the U.S. economy. 2. Explain the dimensions by which retailers can be classified. 3. Describe the major types of retail operations.

©2002 South-Western Chapter 13 Version 6e3 chapter Learning Objectives (continued) Discuss nonstore retailing techniques. 5. Define franchising and describe its two basic forms. 6. List the major tasks involved in developing a retail marketing strategy.

©2002 South-Western Chapter 13 Version 6e4 chapter Learning Objectives (continued) Discuss the challenges of expanding retailing operations into global markets. 8.Describe future trends in retailing.

©2002 South-Western Chapter 13 Version 6e5 Learning Objective 1 1 Discuss the importance of retailing in the U.S. economy.

©2002 South-Western Chapter 13 Version 6e6 Retailing 1 1 All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non-business use.

©2002 South-Western Chapter 13 Version 6e7 The Role of Retailing  Retailing is one of the largest employers  Retailers ring up almost a third of the U.S. GDP  Industry is dominated by a few giant organizations, such as Wal-Mart 1 1

©2002 South-Western Chapter 13 Version 6e8 Learning Objective 2 2 Explain the dimensions by which retailers can be classified. which retailers can be classified.

©2002 South-Western Chapter 13 Version 6e9 Classification of Retail Operations Classification of Retail Establishments Establishments Ownership Level of Service Product Assortment Price 2 2

©2002 South-Western Chapter 13 Version 6e10 Ownership Independent Retailers Independent Retailers Chain Stores Franchises ClassificationofOwnershipClassificationofOwnership 2 2

©2002 South-Western Chapter 13 Version 6e11 Level of Service 2 2 Full Service Self Service Discount stores Exclusive stores Factory outlets Warehouse clubs Factory outlets Warehouse clubs

©2002 South-Western Chapter 13 Version 6e12 Classification Summary 2 2 Type of Retailer Department Store Specialty Store Supermarket Convenience Store Drugstore Full-line Discounter Specialty Discounter Warehouse Clubs Off-price Retailer Restaurant ServiceLevelServiceLevel Mod Hi-High High Low Low-Mod Mod-Low Low Low-High Assort-mentAssort-mentPricePrice Gross Margin Broad Narrow Broad Med-Narrow Medium Med-Broad Broad Med-Narrow Mod-High Moderate Mod High Moderate Mod Low Mod Lo-low Low-lower Low Low-High Mod High High Low Mod High Low Mod Low Low Low-High

©2002 South-Western Chapter 13 Version 6e13 Gross Margin The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted. 2 2

©2002 South-Western Chapter 13 Version 6e14 Learning Objective Describe the major types of retail operations. 3 3

©2002 South-Western Chapter 13 Version 6e15 Major Types of Retail Operations Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores Restaurants 3 3

©2002 South-Western Chapter 13 Version 6e16 Scrambled Merchandising 3 3 The tendency to offer a wide variety of nontraditional goods and services under one roof.

©2002 South-Western Chapter 13 Version 6e17 Categories of Discount Stores Full-Line Discounters Discount Specialty Stores Warehouse Clubs Off-Price Discount Retailers 3 3

©2002 South-Western Chapter 13 Version 6e18 Mass Merchandising Retailing strategy using moderate to low prices on large quantities of merchandise and lower service to stimulate high turnover of products. 3 3

©2002 South-Western Chapter 13 Version 6e19 Hypermarket and Supercenter 3 3 Hypermarket A large retail store combining a supermarket and a full-line discount store. Supercenter Retail store combining groceries and general merchandise goods with a wide range of services.

©2002 South-Western Chapter 13 Version 6e20 Learning Objective Discuss nonstore retailing techniques. 4 4

©2002 South-Western Chapter 13 Version 6e21 Nonstore Retailing Major Forms of Nonstore Retailing Major Forms of Nonstore Retailing Automatic Vending Direct Retailing Direct Marketing Electronic Retailing 4 4

©2002 South-Western Chapter 13 Version 6e22 Direct Retailing 4 4 Door-to-Door Office-to-Office Home Sales Parties Home Sales Parties Direct Retailers sell products: Direct Retailers sell products:

©2002 South-Western Chapter 13 Version 6e23 Direct Marketing 4 4 Telemarketing Catalogs & Mail Order Direct Mail Typesof Direct Marketing Typesof Electronic Retailing

©2002 South-Western Chapter 13 Version 6e24 Electronic Retailing On-Line Retailing Shop-at-Home Networks Types of ElectronicRetailing ElectronicRetailing 4 4

©2002 South-Western Chapter 13 Version 6e25 Learning Objective Define franchising and describe its two basic forms. 5 5

©2002 South-Western Chapter 13 Version 6e26 Basic Forms of Franchising Business Format Franchising Product and Trade Name Franchising Product and Trade Name Franchising Basic Forms of Franchising Franchising 5 5

©2002 South-Western Chapter 13 Version 6e27 Basic Forms of Franchising Product and Trade Name Franchising Dealer agrees to sell certain products provided by a manufacturer or wholesaler. Business Format Franchising Business Format Franchising An ongoing business relationship between a franchiser and a franchisee. An ongoing business relationship between a franchiser and a franchisee. 5 5

©2002 South-Western Chapter 13 Version 6e28 Learning Objective 6 6 List the major tasks involved in developing a retail marketing strategy.

©2002 South-Western Chapter 13 Version 6e29 Retail Marketing Strategy Develop the “Six P’s” Define & Select a Target Market Key Tasks in Strategic Retailing Key Tasks in Strategic Retailing 6 6

©2002 South-Western Chapter 13 Version 6e30 Defining a Target Market STEP 1: Segment the Market STEP 1: Segment the Market Demographics Geographics Psychographics 6 6

©2002 South-Western Chapter 13 Version 6e31 Choosing the Retailing Mix STEP 2: Choose the Retailing Mix STEP 2: Choose the Retailing Mix Product Price Promotion Place Personnel Presentation 6 6

©2002 South-Western Chapter 13 Version 6e32 The Retailing Mix Target Market Product Price Promotion Place Personnel Presentation 6 6

©2002 South-Western Chapter 13 Version 6e33 Product Offering The mix of products offered to the consumer by the retailer; also called the product assortment or merchandise mix. 6 6

©2002 South-Western Chapter 13 Version 6e34 Retail Promotion Strategy 6 6RetailPromotionStrategyRetailPromotionStrategy Advertising Public Relations Publicity Sales Promotion

©2002 South-Western Chapter 13 Version 6e35 The Proper Location 6 6  Large, long-term commitment of resources  Location will affect future growth  Local environment may change over time

©2002 South-Western Chapter 13 Version 6e36 Location 6 6 Freestanding Store Freestanding Store Shopping Center Shopping Center Mall LocationDecisionsLocationDecisions

©2002 South-Western Chapter 13 Version 6e37 Shopping Center and Mall Locations Advantages  Design attracts shoppers  Anchor stores draw customers  Ample parking  Unified imageDisadvantages  Expensive leases  Failure of common promotion efforts  Lease restrictions  Anchor store domination  Direct competitors 6 6

©2002 South-Western Chapter 13 Version 6e38 Price Quality Image Quality Image High Price Low Price Good Value 6 6

©2002 South-Western Chapter 13 Version 6e39 Presentation of the Retail Store Employee Type & Density Merchandise Type & Density Fixture Type & Density Sound Odors Visual Factors FactorsinCreation of a Store’s AtmosphereFactorsinCreation Atmosphere 6 6

©2002 South-Western Chapter 13 Version 6e40 Personnel and Customer Service Suggestive Selling Trading Up Two Common Selling Techniques Two Common Selling Techniques 6 6

©2002 South-Western Chapter 13 Version 6e41 Learning Objective Discuss the challenges of expanding retailing operations into global markets. 7 7

©2002 South-Western Chapter 13 Version 6e42 Global Retailing Spread of communication and mass media Lowering of trade barriers and tariffs Growth potential in underserved markets Reasons for Global Expansion 7 7

©2002 South-Western Chapter 13 Version 6e43 Global Retailing Market Size & Economics Infrastructure & Distribution Competition Operations Financial & Tax Reporting Merchandise Acceptability Partnering Capability Factors Used to Analyze Global Retail Markets Factors Used to Analyze Global Retail Markets 7 7

©2002 South-Western Chapter 13 Version 6e44 Global Retailing Prerequisites for Going Global Secure Domestic Position Secure Domestic Position Long-Term Perspective ConsistentGlobal and Corporate Strategies ConsistentGlobal and Corporate Strategies 7 7

©2002 South-Western Chapter 13 Version 6e45 Learning Objective Describe future trends in retailing. 8 8

©2002 South-Western Chapter 13 Version 6e46 Trends in Retailing Entertainment Convenience and Efficiency Customer Management 8 8

©2002 South-Western Chapter 13 Version 6e47 Customer Management 8 8 Customer Relationship Marketing Loyalty Programs Loyalty Programs Clienteling CustomerManagementStrategiesCustomerManagementStrategies