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1-2 McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 14 Retailing

1-3 ► Understand the economic importance of retailing and its role in the marketing channel. ► Cite evidence of the globalization of retailing. ► Discuss some of the advances in retailing technology. ► Explain the reasons behind the growth of non-store retailing After studying this chapter you should be able to:

1-4 ► Describe key factors in the retail marketing environment, and understand how they relate to retail strategy. ► Cite important ethical and legal issues facing retailers. After studying this chapter you should be able to:

1-5 The Role of Retailing ► Retailing:  An important part of many marketing channels, includes all the activities involved in selling products and services to the ultimate, or final, consumer. ► Retail Sales:  Sales to final consumers; wholesale sales are those to other businesses that in turn resell the product or service, or use it in running their own businesses.

1-6 Economic Importance Sales Profits Company ($ millions) ($ millions) Employees 1.Wal-Mart219,8126,6711,383,000 2.Home Depot 53,5533, ,300 3.Kroger 50,0981, ,000 4.Sears Roebuck 41, ,000 5.Target 39,8881, ,550 6.Albertson’s 37, ,000 7.Kmart 36,910 (95) 240,525 8.Safeway 34,3011, ,000 9.JC Penny 32, , Walgreen 24, ,000 In the U.S., 3 million retailers generate $2.5 trillion in revenues annually!

1-7 Retailers’ Uniqueness in the Channel Provide Product Assortment Emphasize Store Atmospherics Sell Smaller Quantities of Product More Frequently

1-8 Types of Retailers ► Independent Retailers:  Own and operate only one retail outlet. ► Chains:  A retail chain owns and operates multiple retail outlets.

1-9 Types of Retailers ► Franchising:  Retail franchising is a form of chain ownership in which a franchisee pays the franchisor (parent company) fees or royalties and agrees to run the franchise by prescribed norms, in exchange for use of the franchisor’s name. ► McDonald’s ► Jiffy Lube ► Holiday Inn There are 3,000 franchise companies in the U.S. that operate 558,000 separate establishments!

1-10 Top 10 International Retail Franchises 1. McDonald’s 2. Great Wraps 3. Subway 4. Kentucky Fried Chicken 5. Kumon Math and Reading Centers 6. Meineke Discount Muffler Shops 7. TCBY Treats 8. Thrifty Car Rental 9. Blimpie Subs & Salads 10. Mail Boxes Etc.

1-11 Types of Retailers ► Leased Departments:  Leased departments are sections in a retail store that the owner rents to a second party. ► Cooperatives ► Retail Cooperatives:  Independent retailers banding together to counter chain store competition.

1-12 Trends in Retailing Global Retailing Technological Advances Stronger Customer Service

1-13 Nonstore Retailing ► Direct Retailing ► Direct Marketing ► E-Retailing ► Direct Selling ► Vending Machine Sales Stores account for 90% of retail sales, but nonstore retailing is growing faster than store-based retailing!

1-14 Developing Retailing Strategy

1-15 Uncontrollable Factors ► Consumers ► Competition ► Economic Conditions ► Seasonality

1-16 Controllable Factors ► Location  Central Business District (CBD)  Strip Centers  Shopping Malls  Freestanding Sites ► Goods and Services ► Pricing ► Marketing Communications

1-17 Types of Strategy Mix ► Specialty Stores ► Department Stores ► Convenience Stores ► Margin and Turnover Strategy Mixes ► Gross Margin ► Inventory Turnover ► Specialty Stores ► Department Stores ► Convenience Stores ► Margin and Turnover Strategy Mixes ► Gross Margin ► Inventory Turnover

1-18 Ethical and Legal Issues in Retailing ► Consumer Fraud ► Supplier Labor Practices ► Retail Theft ► Slotting Allowances ► Use of Customer Information ► Ecological Considerations ► Consumer Fraud ► Supplier Labor Practices ► Retail Theft ► Slotting Allowances ► Use of Customer Information ► Ecological Considerations