Retailing Bricks and Clicks Chapter Sixteen

16-2 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Chapter Objectives  Define retailing; understand how retailing evolves and some ethical issues in retailing  Understand how we classify retailers  Describe the more common forms of nonstore retailing including B2C e-commerce  Understand the importance of store image to a retail positioning strategy and explain how a retailer can create a desirable image in the marketplace

16-3 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Real People, Real Choices: Decision Time at Eskimo Joe’s  Which strategy should Stan pursue? Option 1: Convert the beer bar into a full-service restaurant Option 1: Convert the beer bar into a full-service restaurant Option 2: Continue operating as a beer bar and try to offset lost beer sales with an increase in apparel sales Option 2: Continue operating as a beer bar and try to offset lost beer sales with an increase in apparel sales Option 3: Close Eskimo Joe’s and refocus resources on building the growing apparel business Option 3: Close Eskimo Joe’s and refocus resources on building the growing apparel business

16-4 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Retailing: Special Delivery  Retailing: The final stop in the distribution channel in which organizations sell goods and services to consumers for their personal use

16-5 © 2012 Pearson Education, Inc. publishing as Prentice-Hall.  Retailing is big business: 2009 U.S. sales totaled $4.5 trillion 2009 U.S. sales totaled $4.5 trillion More than one of every ten U.S. workers is employed in retailing More than one of every ten U.S. workers is employed in retailing  Retailers: Belong to a channel of distribution Belong to a channel of distribution Provide time, place, and ownership utility to customers Provide time, place, and ownership utility to customers Retailing is different around the globe Retailing is different around the globe Retailing: A Mixed (Shopping) Bag

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 16.1 The Wheel of Retailing 16-6

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 16.2 The Retail Life Cycle 16-7 Netgrocer

16-8 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. The Evolution Continues: What’s “In Store” for the Future?  Factors motivating retail innovation: The changing economy The changing economy Demographics Demographics Technology Technology Globalization Globalization Consumer Confidence Index National Retail Federation

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. Popup Stores 16-9

16-10 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. The Evolution Continues: What’s “In Store” for the Future?  Factors motivating retail innovation: The changing economy The changing economy Demographics Demographics Technology Technology Globalization Globalization

16-11 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Ethical Problems in Retailing  Shrinkage problems may stem from customers or employees Shoplifting Shoplifting Employee theft Employee theft Retail borrowing Retail borrowing  Ethical treatment of customers Not discouraging certain types of customers from shopping Not discouraging certain types of customers from shopping Not selling harmful products to at risk groups Not selling harmful products to at risk groups

16-12 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. From Mom-and-Pop to Super Walmart: Classifying Retail Stores  The classification of retail stores provides a method by which retailers can benchmark performance  Several classification methods exist: Classifying by what they sell (the merchandise mix) Classifying by what they sell (the merchandise mix) Classifying by level of service Classifying by level of service Classifying by merchandise selection Classifying by merchandise selection

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 16.3 Classification of Book Retailers by Merchandise Selection 16-13

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. Table 16.1 Major Types of Retailers 16-14

16-15 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Convenience Stores

16-16 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Category Killers

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. Table 16.1 Major Types of Retailers, Cont

16-18 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Department Stores This ad for a British department store emphasizes quality service and merchandise variety.

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 16.4 Types of Nonstore Retailing 16-19

16-20 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Automatic Vending  Automatic vending Usually best suited to low-cost convenience goods Usually best suited to low-cost convenience goods Offers many benefits to consumers and marketers Offers many benefits to consumers and marketers Japanese vending machines

It’s Debatable Class Discussion Question Modern vending machines are capable of selling a broad range of products. Visit Vending.Com to learn how even live fishing bait can be sold via vending machines. Vending.Com What are the advantages and disadvantages of selling bait via a vending machine? Would you try it if you were a retailer? How about as a customer? Where do you stand? © 2012 Pearson Education, Inc. publishing as Prentice-Hall.

Table 16.2 Benefits and Limitations of E-Commerce 16-22

16-23 © 2012 Pearson Education, Inc. publishing as Prentice-Hall.  Virtual channels are unlikely to replace traditional ones  Stores must continue to evolve to lure shoppers away from computers In destination retailing, consumers will visit stores for the total entertainment experience In destination retailing, consumers will visit stores for the total entertainment experience B2C’s Effect on Retailing’s Future Visit Mall of AmericaMall of America

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. Retail as Theatre The line between retailing and entertainment is blurring. Stores must position themselves to both attract consumers and stand apart from the competition.

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 16.5 Elements of a Store Image Design Portfolio

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 16.6 Grid Layout 16-26

16-27 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Developing a Store Positioning Strategy: Retailing as Theater  Store personnel Should complement a store’s image Should complement a store’s image Dress, attitude, and knowledge are important Dress, attitude, and knowledge are important  Pricing policy Price points are price ranges of a store’s merchandise Price points are price ranges of a store’s merchandise Price points play a role in establishing its image Price points play a role in establishing its image

16-28 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Developing a Store Positioning Strategy: Retailing as Theater  Build the theatre: store location Types of store locations Types of store locations  Business districts  Shopping centers  Freestanding retailers  Nontraditional store locations Site selection is critical Site selection is critical  “Location, location, location”

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 16.7 Business Districts 16-29

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 16.7 Shopping Centers 16-30

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 16.7 Freestanding Stores 16-31

© 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 16.7 Nontraditional Store Locations 16-32

16-33 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Developing a Store Positioning Strategy: Retailing as Theater  Site selection: choose where to build Trade area A geographic zone that accounts for the majority of a store’s sales and customers Trade area A geographic zone that accounts for the majority of a store’s sales and customers Factors considered in site selection Factors considered in site selection  Site evaluation  Age profile  Community life cycle  Competition

16-34 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Real People, Real Choices: Decision Made at Eskimo Joe’s  Stan chose option 1 Why do you think Stan chose to convert the beer bar and reopen Eskimo Joe’s as a trendy restaurant? Why do you think Stan chose to convert the beer bar and reopen Eskimo Joe’s as a trendy restaurant?

16-35 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America