1. RETAILING

2. What is Retailing?
Retailing includes all activities involved in selling, renting, and providing good and services to ultimate consumers for personal, family, or household use.

3. Utilities Retailing Offers to Consumers
Utilities are benefits or value received by users of a product

4. Utilities Retailing Offers to Consumers
Time Utility – Having the good/service for the customer when they want/need it
Place Utility – Having the good/service available to the customer where they want/need it
Form Utility – Production or alteration of a good/service for the customer
Possession Utility – Make a product/service easy for customer purchase

5. Classifying Retail Outlets
Form of Ownership
Level of Service
Merchandise Line

6. Classifying Retail Outlets Form of Ownership
Who owns the retail outlet?
Independent Retailer
Most common form of retail ownership
An individual owns the business
“Be your own boss”
Personal service
Anastasia’s Attic, Bud’s Tire

7. Classifying Retail Outlets Form of Ownership
Who owns the retail outlet?
Corporate Chain
Multiple outlets under the same ownership
Purchasing and decision making is centralized
Great negotiation power
Consumer can expect pretty much the same items in every outlet

8. Classifying Retail Outlets Form of Ownership
Who owns the retail outlet?
Contractual Systems
Independently owned stores that band together to act like a chain
Retailer sponsored cooperatives are when small, independent, retailers form an organization that operates from a wholesale facility cooperatively
Buying power
Perceived as a chain
Pricing and promotions can be coordinated together

9. Classifying Retail Outlets Form of Ownership
Who owns the retail outlet?
Contractual Systems
Independently owned stores that band together to act like a chain
Wholesaler sponsored voluntary chains are when a wholesaler develops a contractual relationship with small, independent retailers to standardize and coordinate buying practices, merchandise programs, and inventory management efforts
Volume discounts

10. Classifying Retail Outlets Form of Ownership
Who owns the retail outlet?
Contractual Systems
Franchises
An individual or firm (franchisee) contracts with a parent company (the franchisor) to set up a business or retail outlet
Advantages
Franchisor helps find location, set up facility, train employees, and helps with advertising
Franchisee pays a “franchisee fee” and yearly royalties

11. Classifying Retail Outlets Form of Ownership
Who owns the retail outlet?
Contractual Systems
Franchises
Good for franchisees because well-known business, can get business advice
Franchisors loose control but gets name out in more places

12. Classifying Retail Outlets Level of Service
How much service is provided by the retail outlet?
Self-Service – Little to no services provided by outlet
Limited Service – Some service provided by outlet
Full Service – A lot of services provided by outlet
Bridal and Formal Shoppe

13. Classifying Retail Outlets Type of Merchandise Line
How many different types of product an outlet carries and in what assortment.
Depth of Product Line – The store carries a large assortment of each item
Limited-line stores have a lot of depth in a related line of products
Single-line stores have a lot of depth in one primary line

14. Classifying Retail Outlets Type of Merchandise Line
How many different types of product an outlet carries and in what assortment.
Breadth of Product Line – The variety of different items a store carries
Department Stores
Scrambled merchandising is having several unrelated product lines in a single store
Supercenters

15. Nonstore Retailing Automatic Vending Direct Mail and Catalogs
Products usually cost more than they do in stores
Soft drinks, candy
Direct Mail and Catalogs
No store locations and store employees, less expense
Easier to segment markets than traditional outlets
Specialty catalogs for certain customers

16. Nonstore Retailing Television Home Shopping Telemarketing
Products shown on tv and you call and purchase or purchase online
Telemarketing
Calling customers on phone to sell products
Good way to target customers
Do Not Call lists

17. Nonstore Retailing Online Retailing Available 24/7 Private
Easy to compare prices
Problem for retailers: 2/3 of customers place product in shopping cart and leave, 70% never come back
booksamillion.com offers a place to compare prices with amazon.com, barnesandnoble.com, and borders.com

18. Nonstore Retailing Online Retailing
Interactive parts of websites give advantage over competition

19. Nonstore Retailing Direct Selling
“Door-to-door retailing” – direct sales of goods and services to consumers through personal interaction and demonstrations in their home or office

20. Nonstore Retailing Direct Selling U.S. direct selling has declined
Retail chains have similar items for cheaper prices
Less stay-at-home moms/wives
Outside U.S. sales are increasing
Distribution channels may not be as strong, so “door-to-door” is more important
People do not know brands, so one-on-one is important

21. Retailing Strategy Retail Positioning Matrix
Breadth of Product Line (range of products sold)
Value Added (Includes location, product reliability, prestige)

22. Retailing Strategy

23. Retailing Strategy Retailing Positioning Matrix
1 – High value added, broad product line
Store design is important
Products have high profit margin, high quality
High levels of service

24. Retailing Strategy Retailing Positioning Matrix
2 – Low value added, broad product line
Low price, high sales volume
Low service
Price oriented
3 – High value added, narrow product line
Product status is important
High levels of service

25. Retailing Strategy Retailing Positioning Matrix
4 – Low value added, narrow product line
Targeted at value-conscious customers
All the stores are “cookie cutter”
Basically same store design and merchandise
Achieve economies of scale by centralized advertising, merchandising, buying, and distribution

26. Retailing Strategy Retailing Positioning Matrix
Can have stores in different places on the matrix, done with different store names

27. Retailing Strategy – Retail Mix
The activity related to managing the store and the merchandise in the store
Price
Store Location
Retail Communication
Merchandise

28. Retailing Strategy – Retail Mix
Retail Price
Markup – How much is added to the product cost to get the selling price that the customer pays
Original markup = Initial selling price – Retail cost
Maintained markup = Final selling price – Retail cost

29. Retailing Strategy – Retail Mix
Retail Price
Markdown – Discounting a product
Some stores use markdowns as part of everyday strategy
Dangerous because some people perceive quality based on price
Shrinkage

30. Retailing Strategy – Retail Mix
Retail Price
Off-pricing retailing is selling brand name merchandise at lower than regular prices
Off-price retailers buy excess inventory below wholesale prices
Discount stores buy at wholesale price and add little mark-up

31. Retailing Strategy – Retail Mix
Retail Price – Off-price Retailers
Outlet Store
20%-30% less than MSRP
Use to get rid of excess inventory
Single-Price Retailers
Relatively small stores
“Value”

32. Retailing Strategy – Retail Mix
Retail Price – Off-price Retailers
Warehouse Club
Large stores
Very plain, no decoration
Charge annual membership fee
Not a lot of services provided

33. Retailing Strategy – Retail Mix
Store Location – Where? How Many?
Central Business District
Downtown
Original retail outlets
Bad parking
Older area

34. Retailing Strategy – Retail Mix
Store Location
Regional Shopping Centers
Usually stores
Serves a large trading area
Usually between 300,000 – 850,000 sq. ft.
Has 1 or 2 full-line department stores
Well-known, “anchors”

35. Retailing Strategy – Retail Mix
Store Location
Community Shopping Center
Usually a discount store or jr. department store as main tenant
Usually between 100,000 – 450,000 sq. ft.
Maybe 20 – 40 stores
Strip Location
Clusters of stores
Unplanned variety of stores

36. Retailing Strategy – Retail Mix
Store Location
Power Center
Large shopping strip
Multiple anchors
Convenient location
Combination of malls, strip locations, and others

37. Retailing Strategy – Retail Mix
Retail Communication
How is store image portrayed?
Prices
Layout
Merchandise
Design

38. Retailing Strategy – Retail Mix
Merchandise
Want the right breadth and depth of products for your target market
Category management
A manager is assigned the responsibility for selecting all products that customers in a market segment view as substitutes for each other

39. Future of Retailing Multichannel Retailing
Using a combination of traditional store and nonstore formats
Simple, convenient
Options!!

40. Future of Retailing Shopping Behavior
Consumers want convenience and service