Retailing Management 8e© The McGraw-Hill Companies, All rights reserved CHAPTER 2CHAPTER 1 CHAPTER 2 McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Types of Retailers CHAPTER 02

CHAPTER 2CHAPTER 1 CHAPTER Retailer Characteristics Variety (breadth) Variety Assortment (depth) Assortment Services Offered Prices and the cost of offering breath and depth of merchandise and services

CHAPTER 2CHAPTER 1 CHAPTER Merchandise Offering Variety (breadth of merchandise): wide vs. narrow - The number of merchandise categories Assortment (depth of merchandise): deep vs. shallow -the number of items in a category (SKUs)SKUs

CHAPTER 2CHAPTER 1 CHAPTER Retailers differ in the services they offer customers EMS offers assistance in selecting the appropriate kayak and repairing them VS play.com and play.com Wal-Mart: doesn’t provide any services Services Offered

CHAPTER 2CHAPTER 1 CHAPTER Types of Merchandise Retailers Food RetailersGeneral Merchandise Retailers Department Stores Specialty Stores Discount Stores Category Specialists Off-Price Retailers Warehouse Clubs Value Retailers Mom and Pop Stores Convenience Stores Supermarkets Supercenters

CHAPTER 2CHAPTER 1 CHAPTER Food Retailers Channel preference for food shopping channel where grocery purchasers do most of their food shopping Supermarkets Supercenters Warehouse Clubs Convenience Stores

CHAPTER 2CHAPTER 1 CHAPTER Conventional supermarkets 30,000 brands Offer several brands and sizes Designed to maximize efficiency and reduce costs Offer merchandise at 40-60% lower prices than conventional supermarkets Supermarkets

CHAPTER 2CHAPTER 1 CHAPTER Trends in Supermarket Retailing Competition from Discount Stores Changing Consumption Patterns Efficient Distribution Lower CostsLower Prices Time PressureEating Out MoreMeal Solutions

CHAPTER 2CHAPTER 1 CHAPTER Emphasize Fresh Perishables Wegmans Target health conscious and ethnic consumers Offer more private label brands Provide a better in-store experience Conventional Supermarket Survival Pack Chef-crafted meals on the go at EatZi’s

CHAPTER 2CHAPTER 1 CHAPTER Supercenters and Warehouse Clubs Supercenters (Hypermarkets)Hypermarkets The fastest growing retail category Large stores (185,000 square feet) that combine a supermarket with a full-line discount storefull-line discount store One-stop shopping experience Warehouse Clubs Offer a limited and irregular assortment of food and general merchandise with little service at low prices Use low-locations, inexpensive store design, little customer service Low inventory holding costs by carrying a limited assortment of fast selling items

CHAPTER 2CHAPTER 1 CHAPTER Convenience Store Tailors assortments to local market Makes more convenient to shop Offers fresh, healthy food Fast, casual restaurants Financial services available Opening smaller stores closer to consumers (like airports)

CHAPTER 2CHAPTER 1 CHAPTER Issues in Department Store Retailing Competition Discount Stores on Price Specialty Stores on Service, Depth of Assortment Lower Cost by Reducing Services Centralized Cash Wraps More Sales Customers Wait for Sale Focus on Apparel and Soft Home Develop Private Labels and Exclusive Brands

CHAPTER 2CHAPTER 1 CHAPTER First Tier: Upscale, high fashion chains with exclusive designer merchandise and excellent customer service Nordstrom, Neiman Marcus, Saks Second Tier: Retailers sell more modestly priced merchandise with less customer service Macy’s Third Tier: Value oriented caters to more price conscious customer JCPenney, Sears, Kohl’s Three Tiers of Department Stores Rob Melnychuk/Getty Images

CHAPTER 2CHAPTER 1 CHAPTER Mall-Based Apparel Retailers Decline in Mall Shopping and Apparel Sales Lack of New Fashions Less Interest in Fashion Increased Price Consciousness Lifestyle Formats Abercrombie and Fitch Victoria’s Secrets Manufacturers opening their own stores Issues in Specialty Store Retailing McGraw-Hill Companies, Inc./Andrew Resek, Photographer

CHAPTER 2CHAPTER 1 CHAPTER Consolidation Walgreens, CVS, Rite-Aid Competition Supermarkets, Discount Stores and Mail-in orders Evolution to a New Format Stand Alone Sites with Drive Thru Windows Offering more frequent purchase food items Improved systems provide personalized service Issues in Drug Store Retailing

CHAPTER 2CHAPTER 1 CHAPTER Off-Price Retailers Close-out retailers Offer an inconsistent assortment of brand name merchandise at low prices TJX Companies (which operates T.J.Maxx, Marshalls, Winners, HomeGoods, TKMaxx, AJWright, and HomeSense), Ross Stores, Burlington Coat Factory, Big Lots. and

CHAPTER 2CHAPTER 1 CHAPTER Services Retailing Intangibility Problems in Evaluating Service Quality Performance of Service Provider Simultaneous Production and Delivery Importance of Service Provider Perishability No Inventory, Must Fill Capacity Inconsistency of the Offering Importance of HR Management

CHAPTER 2CHAPTER 1 CHAPTER Examples of Service Retailers Type of ServiceService Retail Firms AirlinesAmerican, Delta, British Airways, Singapore Airways Automobile maint/repairJiffy Lube, Midas, AAMCO Automobile rentalHertz, Avis, Budget, Alamo BanksCitibank, NCNB, Bank of America Child care centersKindercare, Gymboree Credit cardsAmerican Express, VISA, Mastercard EducationUniversity of Florida, Babson College Entertainment parksDisney, Universal Studios, Six Flags Express package deliveryFederal Express, UPS, US Postal Service Financial servicesMerrill Lynch, Dean Witter FitnessJazzercise, Bally’s, Gold’s Gym Health CareHumana, HCA Home maintenanceChemlawn, MiniMaid, Roto-Rooter

CHAPTER 2CHAPTER 1 CHAPTER Merchandise/Service Continuum

CHAPTER 2CHAPTER 1 CHAPTER Independent, Single Store Establishments Wholesale-sponsored voluntary group Wholesale-sponsored voluntary group Corporate Retail Chains Franchises Types of Retail Ownership (c) Brand X Pictures/PunchStock

CHAPTER 2CHAPTER 1 CHAPTER Retailers Using Franchise Business Model

CHAPTER 2CHAPTER 1 CHAPTER Franchisor Advantages/Disadvantages Advantages Rapid expansion, highly motivated franchisees do a good job, additional profits by selling franchisees products and services. Disadvantages Company-owned units may be more profitable, less control then independent retailers over advertising, pricing, personnel practices, etc.

CHAPTER 2CHAPTER 1 CHAPTER Franchisee Advantages/Disadvantages Advantages Established/proven product/service, business and technical assistance, and reduction in risk. Disadvantages Loss of control since only semi-independent, franchisee outlets may compete with corporate-owned outlets, and high royalties, fees, costs on equipment, supplies, merchandise, rental/lease rates and mandatory participation in promotional and support services.