Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 15 Retailing © EschCollection/Photonica/Getty Images

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 2 Discuss the importance of retailing in the U.S. economy The Role of Retailing LO 1

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 3 Retailing All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non-business use. Retailing LO 1

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 4 The Role of Retailing   U.S. retailers employ nearly 25 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 LO 1

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 5 Explain the dimensions by which retailers can be classified Classification of Retail Operations LO 2

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 6 Classification of Retail Operations Ownership Level of Service Product Assortment Price LO 2

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 7 LO 2 Exhibit 15.1 Types of Stores and Their Characteristics

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 8 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 to sell a product The right to operate a business or to sell a product LO 2 Classification of Ownership

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 9 Level of Service LO 2 Full Service Self Service

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 10 Product Assortment Classification based on BREADTH and DEPTH of product lines. LO 2

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 11 Price The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted. Gross Margin Gross Margin LO 2

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 12 Describe the major types of retail operations Major Types of Retail Operations LO 3

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 13 Major Types of Retail Operations Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores Restaurants LO 3

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 14 Types of Retail Operations Department Store A store housing several departments under one roof. Each department is headed by a buyer, or department head who selects merchandise. A store housing several departments under one roof. Each department is headed by a buyer, or department head who selects merchandise. Specialty Store A retail store specializing in a given type of merchandise. LO 3

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 15 Types of Retail Operations Supermarket Large, departmentalized, self- service retailer. Specializes in food. Some use scrambled merchandising. Drugstore A retail store that stocks pharmacy-related products and services as its main draw. Convenience Store A miniature supermarket, carrying only a limited line of high-turnover convenience goods. LO 3

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 16 Categories of Discount Stores LO 3 Full-Line Discounters Specialty Discount Stores Warehouse Clubs Off-Price Retailers

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 17 Discount Stores Full-line discount store A retailer that offers consumers very limited service and carries a broad assortment of well-known, nationally branded “hard goods”. LO 3

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 18 Discount Stores Mass Merchandising A retailing strategy using moderate to low prices on large quantities of merchandise and lower levels of service to stimulate high turnover of products. Supercenter Retail store that combines groceries and general merchandise goods with a wide range of services. LO 3

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 19 Discount Stores LO 3 a retail store that offers a nearly complete selection of single-line merchandise and uses self-service, discount prices, high volume, and high turnover. A Specialty Discount Store is… a specialty discount store that heavily dominate their merchandise segment. A Category Killer is…

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 20 Discount Stores LO 3 Warehouse membership clubs Limited-service merchant wholesalers that sell a limited selection of brand name appliances, household items, and groceries on a cash-and- carry basis to members. Off-price retailer A retailer that sells at prices 25 percent or more below traditional department store prices because it pays cash for its store and usually doesn’t ask for return privileges.

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 21 Restaurants Straddle the line between retail and service establishments Sell tangible products (food, drink) but also services (food prep, food service) Many could be considered specialty retailers LO 3

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 22 Discuss nonstore retailing techniques Nonstore Retailing LO 4

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 23 Nonstore Retailing Automatic Vending Direct Retailing Direct Marketing Electronic Retailing LO 4

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 24 Automatic Vending the use of machines to offer goods for sale. Automatic Vending is… Vending is the most pervasive retail business in the United States, with 11.5 MILLION vending machines selling billions or dollars worth of goods annually. LO 4

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 25 Direct Retailing Door-to-Door Office-to-Office Home Sales Parties LO 4

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 26 Types of Direct Marketing Catalogs and Mail Order Direct Mail Telemarketing Electronic Retailing LO 4

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 27 Top E-Tailers by Sales Volume America's Top Ten Retail Businesses RankCompanyWeb Sales Volume (in billions) 1Amazon.com Inc.$24.5 2Staples Inc.$9.8 3Dell Inc.$4.5 4Apple Inc.$4.2 5Office Depot Inc.$4.1 6Walmart.com$3.5 7OfficeMax Inc.$2.7 8Sears Holdings Corp.$2.7 9CDW Corp.$2.4 10Best Buy Co.$2.4 LO 4 Beyond the Book

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 28 Define franchising and describe its two basic forms Franchising LO 5

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 29 The Basic Forms of Franchising Product and Trade Name Franchising Dealer agrees to sell in products provided by a manufacturer or wholesaler. Business Format Franchising Business Format Franchising An ongoing business relationship between a franchiser and a franchisee. LO 5

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 30 Top 10 Franchisors LO 5 1.Subway 2.McDonald’s 3.7-Eleven Inc. 4.Hampton Inn/Hampton Inn & Suites 5.Supercuts 6.H & R Block 7.Dunkin’ Donuts 8.Jani-King 9.Servpro 10. ampm

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 31 List the major tasks involved in developing a retail marketing strategy Retail Marketing Strategy LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 32 Retail Marketing Strategy Develop a Retailing Mix Define & Select a Target Market LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 33 Defining a Target Market STEP 1: Segment the Market STEP 1: Segment the Market Demographics Geographics Psychographics LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 34 Choosing the Retailing Mix STEP 2: Choose the Retailing Mix STEP 2: Choose the Retailing Mix Product Promotion Personnel Place Price Presentation LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 35 LO 6 Exhibit 15.3 The Retailing Mix

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 36 Choosing the Retailing Mix Product Offering Product Offering The mix of products offered to the consumer by the retailer; also called the product assortment or merchandise mix. LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 37 Retail Promotion Strategy Public Relations Publicity Sales Promotion LO 6 Advertising

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 38 The Proper Location Economic growth potential Competition Geography Choosing a Community LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 39 The Proper Location Socioeconomic characteristics Traffic flows Land costs Choosing a Specific Site Zoning Regulations Public Transportation Choosing the Type of Site Freestanding Store Shopping Center Mall LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 40 Retail Prices Quality Image High Price Low Price Good Value Single Price Point LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 41 Presentation of the Retail Store Atmosphere The overall impression conveyed by a store’s physical layout, décor, and surroundings LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 42 Presentation of the Retail Store LO 6 Employee type and density Fixture type and density Sound Odors Visual factors Merchandise type and density

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 43 Personnel and Customer Service Suggestion Selling Trading Up Two Common Selling Techniques LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 44 Customer Service for On-Line Retailers Easy-to-use Web site Product availability Simple returns LO 6

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 45 Describe new developments in retailing New Developments in Retailing LO 7

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 46 New Developments in Retailing Interactivity Consumers are involved in the retail experience. Consumers are involved in the retail experience. M-commerce Purchasing goods through mobile devices. LO 7