Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 15 Retailing © EschCollection/Photonica/Getty Images

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 2 Retailing All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non-business use. Retailing LO 1

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 3 The Role of Retailing   U.S. retailers employ nearly 25 million people   Retailers account for 11.6 percent of U.S. employment   Retailing accounts for 13 percent of U.S. businesses   Retailers ring up almost $4 trillion in sales — nearly 40 percent of the U.S. GDP   Industry is dominated by a few giant organizations, such as Wal-Mart LO 1

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 4 Classification of Retail Operations Ownership Level of Service Product Assortment Price LO 2

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 5 Independent Retailers Independent Retailers Chain Stores Franchises Owned by a single person or partnership and not part of a larger retail institution Owned and operated as a group by a single organization The right to operate a business or to sell a product The right to operate a business or to sell a product LO 2 Classification of Ownership

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 6 Level of Service LO 2 Full Service Self Service

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 7 Product Assortment Classification based on BREADTH and DEPTH of product lines. LO 2

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 8 Price The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted. Gross Margin Gross Margin LO 2

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 9 LO 2 Types of Stores and Their Characteristics Assort-mentPrice Gross Margin Broad Narrow Broad Med-Narrow Medium Med-Broad Med-Broad Broad Med-Narrow Narrow Mod-High Mod-High Moderate Mod High Moderate Mod Low Mod Lo-low Low-very low Low Low-High Mod High High Low Low Mod Low Low Low Low-High Type of Retailer Specialty Store Supermarket Convenience Store Drugstore Full-line Discounter Specialty Discounter Warehouse Clubs Off-price Retailer Restaurant ServiceLevel Mod Hi-High High Low Low Low-Mod Mod-Low Mod-Low Low Low Low-High Department Store

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 10 Nonstore Retailing Automatic Vending Direct Retailing Direct Marketing Electronic Retailing LO 4

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 11 Top E-Tailers by Sales Volume America's Top Ten Retail Businesses RankCompanyWeb Sales Volume (in billions) 1Amazon.com Inc.$24.5 2Staples Inc.$9.8 3Dell Inc.$4.5 4Apple Inc.$4.2 5Office Depot Inc.$4.1 6Walmart.com$3.5 7OfficeMax Inc.$2.7 8Sears Holdings Corp.$2.7 9CDW Corp.$2.4 10Best Buy Co.$2.4 LO 4 Beyond the Book

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 12 The Basic Forms of Franchising Product and Trade Name Franchising Dealer agrees to sell in products provided by a manufacturer or wholesaler. Business Format Franchising Business Format Franchising An ongoing business relationship between a franchiser and a franchisee. LO 5

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 13 Top 10 Franchisors LO 5 1.Subway 2.McDonald’s 3.7-Eleven Inc. 4.Hampton Inn/Hampton Inn & Suites 5.Supercuts 6.H & R Block 7.Dunkin’ Donuts 8.Jani-King 9.Servpro 10. ampm

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 14 Retail Marketing Strategy Develop a Retailing Mix Define & Select a Target Market LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 15 Defining a Target Market STEP 1: Segment the Market STEP 1: Segment the Market Demographics Geographics Psychographics LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 16 Choosing the Retailing Mix STEP 2: Choose the Retailing Mix STEP 2: Choose the Retailing Mix Product Promotion Personnel Place Price Presentation LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 17 LO 6 Exhibit 15.3 The Retailing Mix

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 18 Choosing the Retailing Mix Product Offering Product Offering The mix of products offered to the consumer by the retailer; also called the product assortment or merchandise mix. LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 19 Retail Promotion Strategy Public Relations Publicity Sales Promotion LO 6 Advertising

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 20 The Proper Location Economic growth potential Competition Geography Choosing a Community LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 21 The Proper Location Socioeconomic characteristics Traffic flows Land costs Choosing a Specific Site Zoning Regulations Public Transportation Choosing the Type of Site Freestanding Store Shopping Center Mall LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 22 Mall Stores Try to Shrink Traditional mall retailers like Gap and AnnTaylor are trying to restructure the size of their mall stores. Sales per square foot have sunk in recent years. By shrinking the store size, retailers hope to provide a more intimate shopping experience while maximizing store efficiency. Source: Elizabeth Holmes, "Sizing Up Property, Mall Stores Try to Shrink," March 19, 2010, B1. Beyond the Book

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 23 Retail Prices Quality Image High Price Low Price Good Value Single Price Point LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 24 Presentation of the Retail Store Atmosphere The overall impression conveyed by a store’s physical layout, décor, and surroundings LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 25 Presentation of the Retail Store LO 6 Employee type and density Fixture type and density Sound Odors Visual factors Merchandise type and density

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 26 Personnel and Customer Service Suggestion Selling Trading Up Two Common Selling Techniques LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 27 Customer Service for On-Line Retailers Easy-to-use Web site Product availability Simple returns LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 28 New Developments in Retailing Interactivity Consumers are involved in the retail experience. Consumers are involved in the retail experience. M-commerce Purchasing goods through mobile devices. LO 7

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 29 Assignment Best Buy Case In groups of 5-7, discuss the answers to the questions in the case.