15 Retailing Dr. Close

Role of Retailing Retailing: sale of products to final customers (personal or family use) Employs 15 million people in the U.S. Accounts for $4 trillion to the U.S. economy –Customer contact – vital customer data here –Wheel of retailing: Enter as low margin, low price (e.g., Izod) Evolve higher price and service (supermarkets; electronics) Can you think of any other products or services that evolved from shabby to sheek?

Retail Strategy Retailing is top heavy: top 5% have 53% of sales Wal-Mart has 5% of all retail sales Retailing is risky: ¾ fail within a year! Non-financial risks: give up your evenings and weekends (especially during holidays) – Lands End: Successful Aspects?

Franchising as a Retail Strategy Granting business rights to franchisee, who pays for the right to use the brand name, product, or methods Examples of retail franchisers:

Retail Marketing Mix Target Market (Old Navy, Gap, Banana Republic) Merchandise Mix (breadth or depth) Promotion (local, in-store works) Location, location, location Atmosphere (temperature, music, color) Price and payment options

Price and Retail Payment

How important are payment options?

Classification of Retail by 1.Ownership (indy, franchise chain) 2.Service level (Nordstrom vs. Wal-mart) 3.Assortment (CVS vs. Smiths) 4.Price (Tiffany vs. jewelry kiosk)

Specialty Stores A type of retailer Conventional: know examples of… –Traditional: general store: anything sold in volume (why gone?) –Focus develops: Single line: one type (hardware, sporting goods, and what else??)

Specialty Stores, cont. Category killers/specialists (modern form of single line) –Specialized mass; all in line (Toys R Us; Circuit City; Home Depot) –kill type of merchandise

Department Stores Limited line: part of type; slow movers –Specialty shop: hi end, hi service, expanded assortment –Department store: each department has a limited line; decline since 50s; shopping products –High costs and competition

Discount Stores Scrambled merchandise: anything sells in volume (supermarkets, Rx) Mass merchandising concept: –Low price and turnover to spur sales volume through bigger markets

Discount Stores, cont. Discount full-line mass merchandisers (Reg. Wal-Mart & K-Mart) –What? Large, self service stores focusing on Soft goods (housewares, fabrics, apparel) & Staples (smooth demand, health and beauty) Low price, low service, high turnover

Discount Stores, cont. Off-price retailers (Marshalls, Ross, TJ Maxx) Supercenters (Super Wal-Mart, Super Target, Big K) –All routine needs at low price –Mass merchandise + groceries

Supermarkets –Large, self-service retailer with grocery specialty –Self-scanning trend: what is your take? –Competition: fierce, 1% profit on many items

Warehouse Clubs Warehouse club / wholesale club (Sams, Costco) –No frills, members only (why?) –Bulk purchases: price competition, homogeneous shopping goods

Convenience Stores Convenience products Often with gas stations –Convenience stores: fill-in your regular shopping Competition (fast food also) 24/7 is more important We pay for the convenience

Non-Store Retailing Vending: hi costs; hi prices (flat sales) Vending is a $40 billion U.S. market Cashless vending=wave of future Direct Marketing (Mail, Catalog, Telemarketing) E-tailing (TV shopping, online) M-commerce: buy from mobile devices (e.g., cell phones)

eTailing and DTC eTail= electronic retail DTC= Direct to consumer Shrinking use of wholesalers? (bypassing wholesalers more and more) eBay: hybrid etailer/online auction site Even sells services online (examples of services on ebay?)

eTail More innovative e-tail sites Mondera Nike ID Zappos

E-cart abandonment When you put an item in your online cart, and do not complete the purchase during that Internet session. A common practice Why do we do this?

E-cart abandonment Top reasons for e-cart abandonment:Top reasons for e-cart abandonment: Research/organization useResearch/organization use Privacy/security issuesPrivacy/security issues Frustration of the length of the checkout processFrustration of the length of the checkout process Total cost (including shipping, handling, and/or tax if applicable)Total cost (including shipping, handling, and/or tax if applicable) Desire to wait for a sale price (online or offline)Desire to wait for a sale price (online or offline) E-shopping for mere entertainment (versus a true intention to buy)E-shopping for mere entertainment (versus a true intention to buy)

Summary Role of retailing Retail strategy Retail Marketing Mix Types of retailers Non-store retail E-tail Any questions??