1. Types of Retailers Chapter 2 McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Bag Borrow or Steal

3. Types of Retailers Retailers Use Different Retail Mixes
-merchandise: variety (breadth) / assortment (depth)
-services
-store design, visual merchandising
-location
-pricing
Infinite Variations
Some combination of retail mixes satisfy the needs of significant segments and persist over time.

4. 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)

5. Variety and Assortment of Kayaks in Different Retail Outlets

6. Characteristics of Food Retailers

7. Trends in Supermarket Retailing
Competition from Discount Stores
Changing Consumption Patterns
Efficient
Distribution
Lower Costs
Lower Prices
Time Pressure
Eating Out More
Meal Solutions

8. Save-A-Lot
Save-A-Lot’s limited assortment format means that stores carry the most frequently purchased grocery items in the most popular size and variety
The company carries high quality exclusive brands – many produced by the same manufacturers of leading name brands – and an assortment of nationally branded items.
This allows Save-A-Lot to offer savings of up to 40% compared to conventional grocery stores – without asking shoppers to sacrifice quality.

9. Characteristics of General Merchandise Retailers

10. Three Tiers of Department Stores
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

11. 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

12. Issues in Discount Store Retailing
Only Big Left
Wal-Mart, Target
Wal-Mart’s Dominance
Differentiate Strategy
Wal-Mart = Low Price and Good value
Target = More Fashionable Apparel
Competition from Category Specialists
Toys-R-Us, Circuit City, Sports Authority

13. Issues in Specialty Store Retailing
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
Hot Topics
McGraw-Hill Companies, Inc./Andrew Resek, Photographer

14. Issues in Drug Store Retailing
Consolidation – Walgreens, CVS, Rite-Aid
Competition from 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 in the pharmacy

15. Category Specialists Deep and Narrow Assortments Destination Stores
Category killers
Low Price and Service
Wholesaling to Business Customers and Retailing to Consumers
Incredible Growth
Bass Pro Shops

16. Category Specialists: Home Improvement Centers
Home Depot and Lowes act as both:
Retailer and Wholesaler
Consumer Business

17. Issues in Extreme Value Retailing
Focuses on Lower Income Consumers
Names mostly imply good value not $1 price points
Low Cost Location
Limited Services
One of the Fastest Growing Retail Segments
Dollar Tree
Family Dollar
Dollar General
99 Cents Only Store

18. Off-Price Retailers Close-out retailers
Offer an inconsistent assortment of brand name merchandise at low prices
TJX companies (T.J. Maxx, Marshalls. HomeGoods)
Ross Stores, Burlington Coat factory, Big Lots, Tuesday Morning

19. Types of Non-store Retailers

20. What are Amazon and eBay?
– Merchandise to consumers. Provides website development and fulfillment services to other retailers
eBay – Acts as a mall or other shopping center providing a “place” for buyers and sellers to meet
Don Farrall/Getty Images

21. Issues in Catalog Retailing
Low Start Up Cost
Evolution of Multi-Channel Offering
Hard to compete with large well established firms
Increasing Mail Costs
Clutter from other Catalogs
General merchandise catalogs like JC Penney
Specialty Catalogs like Victoria Secret

22. Issues in Direct Selling
Completely bypasses retailers and wholesalers
Manufacturers set up their own channels to sell their products directly to consumers
Party plan system: merchandise is demonstrated in a party atmosphere
Multi-level network: Master distributors sell to distributors who sell merchandise
Pyramid schemes: Firm sells to other distributors and little if any merchandise goes to end users

23. Issues in Television Home Shopping
Consumers watch cable stations, infomercials or direct response ads
Few consumers watch regularly
Most purchases made by small proportion of viewers
Customers can’t examine merchandise
Customers must wait for merchandise to come on
Sells predominately jewelry, apparel, cosmetics, kitchenware, and exercise equipment

24. Issues in Vending Machine Retailing
Automatic Merchandising
About $25 billion worth of convenience goods are sold to Americans through 4.7 million vending machines
Sales growth has been declining due to higher prices and healthier eating habits
New technology may help sales growth
Trend of placing machines in captive consumer locations

25. Merchandise/Service Continuum

26. Services vs. Merchandise Retailers
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

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

28. Franchisor Advantages/Disadvantages
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.

29. Franchisee Advantages/Disadvantages
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.