1. Chapter 2
Types of Retailers

2. The World of Retailing Increasing Industry Concentration
Growing Diversity of Formats
Globalization

3. General Trends in Retailing
New Types of Retailers
Increased Concentration
Globalization
Growth In Services Retailer
Growth in Use of Multi-Channel Retailing by Traditional Retailers
Increase Use of Technology to Reduce Cost, Increase Value Delivered

4. Types of Retailers Food Retailers Mom and Pop Stores
Convenience Stores
Supermarkets
Supercenters
General Merchandise Retailers
Department Stores
Specialty Stores
Discount Stores
Category Specialists
Off-Price Retailers
Warehouse Clubs

5. Globalization of Wal-Mart

6. Conventional Supermarket Survival Pack
Emphasize Fresh Perishables
Target health conscious and ethnic consumers
Provide a better in-store experience
Offer more private label brands

7. Food Retailers Supermarkets Big Box Retailers Convenience Stores
-Cars, highways and TV to build brands
-Knowledgeable customers – self service
-Perishable vs. packaged goods
Big Box Retailers
-Warehouse Clubs
-Supercenters
-Hypermarkets
Convenience Stores

8. Convenience Stores Fight Competition
Tailors associates to local market
Stores are more convenient to shop
Offers fresh food
Fast, casual restaurants
Financial services available
Opening smaller stores closer to consumers – like airports

9. Issues in Food Retailing
Competition from Discount Stores
Changing Consumption Patterns
Efficient
Distribution
Lower Costs
Lower Prices
Time Pressure
Eating Out More
Meal Solutions

10. Types of General Merchandise Retailers
Department Stores
Specialty Stores
Category Specialists
Home Improvement Centers
Discount Stores
Drugstores
Off-Price retailers
Extreme Value Retailers

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. What To Do With an Eroding Market
To deal with an eroding market Department stores are:
attempting to increase the amount of exclusive merchandise
they sell
undertaking marketing campaigns to develop strong images
for their stores and brands
building better relationships with
their key customers
Royalty-Free/CORBIS

13. Issues in Extreme Value Retailing
Focuses on Lower Income Consumers
Names mostly imply good value Low Cost Location
Limited Services
One of the Fastest Growing Retail Segments
Stockbyte/Punchstock Images

14. Non-store Retail Formats
Electronic Retailing
Catalog and Direct Mail
Direct Selling
Television Home Shopping
Vending Machines
Royalty-Free/CORBIS
Ryan McVay/Getty Images

15. Electronic Retailing
History of frenzied investments and false predictions of retail dominance
Primarily used by traditional retailers to compliment store and catalog offerings
Exclusive e-tailers target small and dispersed niche markets
Randy Allbritton/Getty Images

16. What are Amazon and eBay?
Amazon.com – 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

17. Issues in Direct Selling
Providing information and demonstrations is costly
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

18. Issues in Television Home Shopping
Consumers watch cable tv, 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 mostly jewelry, apparel, cosmetics, kitchenware, exercise equipment
Royalty-Free/CORBIS

19. Issues in Vending Machine Retailing
Sales growth has been declining due to higher prices and healthier eating habits
New technology may help sales growth
Vending machines are beginning to accept credit
Trend of placing machines in captive consumer locations
Ryan McVay/Getty Images

20. Types of Nonstore Retailers

21. 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

22. Types of Retail Ownership
Independent, Single Store Establishments
Wholesaler Owned Cooperatives
Corporate Chains
Franchises
(c) Brand X Pictures/PunchStock

23. Reasons for Franchising Growth
Technological advances
Profitable utilization of capital resources
Attainment of the “American Dream”
Demographic expansion
Product/service consistency

24. Types of Franchise Systems
Territorial
Operating
Mobile
Distributorship
Co-ownership
Co-management
Leasing/Licensing
Manufacturing
Service

25. Reasons for Franchising Failure
Inept management
Fraudulent activities
Market saturation

26. Franchisor Positions in the Marketing Channel
Manufacturer - retailer
Manufacturer - wholesaler
Wholesaler - retailer
Service sponsor - retailer

27. Franchisor Benefits Continuous market Market information Money
Sales of products
Rental and lease fees
License fees
Management fees
Royalty fees

28. Franchisee Benefits Initial Services
Market survey and site selection, facility design and layout, lease negotiation advice, financing advice, operating manuals, management training programs, and employee training.
Continuous Services
Field supervision, merchandising and promotional materials, management and employee retraining, quality inspection, national advertising, centralized purchasing, market data and guidance, auditing and record keeping, management reports, and group insurance plans.

29. 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.

30. Franchising Trends for the New Millenium
Sustained growth
Enduring plus un-imagined applications
International expansion
Increasing tensions
Greater emphasis on financial returns

31. Which Types of Retailers Will Be the First to Pursue Global Markets?
Discount Stores
Category Specialists
Department Stores
Supermarkets
Services Retailers

32. Why Is the Retail Industry Becoming More Concentrated?
Traditionally retailers have been local businesses.
Why are bigger firms emerging?
Why are least concentrated sectors food retailers and services retailers?