1 Chapter 15: Retailing Prepared by Amit Shah, Frostburg State University Designed by Eric Brengle, B-books, Ltd. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Learning Outcomes 2 Discuss the importance of retailing in the U.S. economy Explain the dimensions by which retailers can be classified Describe the major types of retail operations LO 1 LO 2 LO 3 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Learning Outcomes 3 Discuss nonstore retailing techniques Define franchising and describe its two basic forms List the major tasks involved in developing a retail marketing strategy Describe new developments in retailing LO 5 LO 6 LO 7 LO 4 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

The Role of Retailing 4 Discuss the importance of retailing in the U.S. economy. LO 1 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

The Role of Retailing 5 All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non-business use. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

The Role of Retailing 6  Over 1.6 million U.S. retailers employ more than 24 million people  Retailers account for 11.6 percent of U.S. employment  Retailing accounts for 13 percent of U.S. businesses  Retailers ring up almost $4 trillion in sales--nearly 40 percent of the U.S. GDP  Industry is dominated by a few giant organizations, such as Wal-Mart Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Review Learning Outcome The Importance of Retailing 7 LO % 13% 40% Retailing as a % of U.S. employment Retailing as a % of U.S. businesses Retailing as a % of GDP Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Classifying Retailers 8 Explain the dimensions by which retailers can be classified. LO 2 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Classification of Retail Operations 9 Ownership Level of Service Product Assortment Price Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Classification of Ownership 10 Independent Retailers Independent Retailers Chain Stores Franchises Owned by a single person or partnership and not part of a larger retail institution Owned and operated as a group by a single organization The right to operate a business or sell a product Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Level of Service 11 Full Service Self Service Discount storesExclusive storesFactory outlets Warehouse clubs Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Types of Stores and Their Characteristics 12 Assort-mentPrice Gross Margin Broad Narrow Broad Med-Narrow Medium Med-Broad Broad Med-Narrow Narrow Mod-High Moderate Mod High Moderate Mod Low Mod Lo-low Low-very low Low Low-High Mod High High Low Mod High Low Mod Low Low Low-High Type of Retailer Specialty Store Supermarket Convenience Store Drugstore Full-line Discounter Specialty Discounter Warehouse Clubs Off-price Retailer Restaurant ServiceLevel Mod Hi-High High Low Low-Mod Mod-Low Low Low-High Department Store Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Price 13 Gross Margin - The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Major Types of Retail Operations 14 Describe the major types of retail operations. LO 3 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Major Types of Retail Operations 15 Online Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores Restaurants Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Categories of Discount Stores 16 Full-Line Discounters Specialty Discount Stores Warehouse Clubs Off-Price Discount Retailers Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Discount Stores 17 Mass Merchandising- Retailing strategy using moderate to low prices on large quantities of merchandise and lower service to stimulate high turnover of products. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Discount Stores 18 Supercenter - Retail store combining groceries and general merchandise goods with a wide range of services. Extreme-value Retailing- Smaller stores emphasizing daily necessities at rock-bottom prices. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Specialty Discount Stores 19 Category Killers- Specialty discount stores that heavily dominate their narrow merchandise segment. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Review Learning Outcome Types of Retail Operations 20 LO 3 Department Stores Specialty Stores Supermarket Drugstores Convenience Stores Discount Stores Restaurants Scrambled Merchandising Full-line Specialty Warehouse Off-price supercenter extreme- value category killer factory outlet Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Nonstore Retailing 21 Discuss nonstore retailing Techniques. LO 4 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Non-store Retailing 22 Automatic Vending Direct Retailing Direct Marketing Electronic Retailing Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Direct Retailing 23 Online Door-to-Door Office-to-Office Home Sales Parties Home Sales Parties Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Types of Direct Marketing 24 Telemarketing Catalogs & Mail Order Direct Mail Electronic Retailing Shop-at-home networks On-line retailing Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Review Learning Outcome Nonstore Retailing Techniques 25 LO 4 Vending Direct retailing Direct marketing Electronic retailing direct mail catalogs telemarketing online shop at home Nonstore Retailing Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Franchising 26 Define franchising and describe its two basic forms. LO 5 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Basic Forms of Franchising 27 Business Format Franchising Product and Trade Name Franchising Product and Trade Name Franchising Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Franchising 28 Product and Trade Name Franchising- dealer agrees to sell in products provided by a manufacturer or wholesaler. Business Format Franchising- An ongoing business relationship between a franchiser and a franchise. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Largest U.S. Franchisors Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Review Learning Outcome Define Franchising and Describe its Two Basic Forms 30 LO 5 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Retail Marketing Strategy 31 List the major tasks involved in developing a retail marketing strategy. LO 6 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Retail Marketing Strategy 32 Develop the “Six Ps” Define & Select a Target Market Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Defining a Target Market 33 STEP 1: Define the Target Market STEP 1: Define the Target Market Demographics Geographics Psychographics Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Choosing the Retailing Mix 34 STEP 2: Choose the Retailing Mix STEP 2: Choose the Retailing Mix Product Price Promotion Place Personnel Presentation Online Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Target Market Product Price Place Promotion Personnel Presentation The Retailing Mix Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Choosing the Retailing Mix 36 The mix of products offered to the consumer by the retailer; also called the product assortment or merchandise mix. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Retail Promotion Strategy 37 Advertising Public Relations Publicity Sales Promotion Copyright 2010 by Cengage Learning Inc. All Rights Reserved

The Proper Location 38 Economic growth potential Competition Geography Choosing a CommunityChoosing a Site Freestanding Store Shopping Center Mall Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Important Factors for Site Choice 39  Neighborhood socioeconomics  Traffic flows  Land costs  Zoning regulations  Public transportation  Site’s visibility, parking, entrances and exits, accessibility, and safety  Fit with other stores Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Shopping Center and Mall Locations Design attracts shoppers Activities and anchor stores draw customers Ample parking Can target different demographic groups Sharing of common area expenses 40  Expensive leases  Failure of common promotion efforts  Lease restrictions  Hours of operation  Anchor store domination  Direct competitors AdvantagesDisadvantages Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Retail Prices 41 Quality Image High Price Low Price Good Value Single Price Point EDLP Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Presentation of the Retail Store 42 Atmosphere - The overall impression conveyed by a store’s physical layout, décor, and surroundings. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Presentation of the Retail Store 43 Employee type and density Merchandise type and density Fixture type and density Sound Odors Visual factors Online Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Personnel and Customer Service 44 Increase market share among existing customers Suggestion Selling Trading Up Two Common Selling Techniques Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Customer Service for On-Line Retailers 45 Easy-to-use Web site Product availability Simple returns Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Review Learning Outcome Developing a Retail Marketing Strategy 46 LO 6 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

New Developments in Retailing 47 Describe new developments in retailing. LO 7 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

New Developments in Retailing 48 Interactivity - Consumers are involved in the retail experience. M-Commerce - Purchasing goods through mobile devices. Pop-up Shops - Temporary retail establishments that provide flexible locations without a long-term commitment. Copyright 2010 by Cengage Learning Inc. All Rights Reserved