1. CHAPTER 16 Retailing: Bricks and Clicks
M A R K E T I N G
Real People, Real Choices
Fourth Edition
CHAPTER 16 Retailing: Bricks and Clicks

2. Retailing
The process by which products are sold to consumers for personal use
1 in 5 US workers are in retailing
Over 1.2 million retail firms
Only 8% have annual sales of over 2.5 million

3. The Wheel of Retailing
New types of retailers find it easiest to enter the market by offering goods at lower prices than competitors; after they gain a foothold, they gradually trade up, improving facilities and increasing the quality and assortment of merchandise, and offering special amenities; upscaling increases costs causing prices to rise; higher prices open the door for a new entrant charging lower prices

4. Retail Life Cycle
Retailers are also products because they provide benefits and must offer a competitive advantage to survive
Introduction: new retailer takes a unique approach to doing business
Growth: retailer catches on with shoppers, sales and profits rise, others start to copy it so retailer expands offerings
Maturity: many have copied it and an entire industry has formed, profits decline
Decline: retail format becomes obsolete

5. What’s in Store for the Future
Demographics
Working consumers
Drive up windows
Expanding store hours
Shopping consultants
Mail / internet / phone orders
Catering to younger age segments (with greater purchasing power)
E.g. Pacific Sunwear, Hot Topic
Ethnic diversity
Increasing Spanish & Asian populations

6. What’s in Store for the future
Technology
Instant data capture and integration with ordering systems e.g. JC Penney
Skipping checkout lines
Virtual displays (e.g. furniture in your living room; clothes on your body, etc.)

7. Classifying Retailers by what they sell
Grocery stores, departmental stores, fast food restaurants, gas stations, etc.
Some lines still blurred
scrambled merchandising – strategy of carrying a combination of food and nonfood items

8. Classifying Retailers by Service
Trade-off between service levels and prices
Self-service retailers e.g. Sam’s Club
Full-service retailers e.g. Neiman Marcus, Saks.
Limited-service retailers e.g. Walmart, Target, Old Navy, Kohl’s, etc.

9. Classifying by Merchandise Selection
Merchandise breadth is the number of different product lines available
Narrow assortment (e.g. convenience store)
Broad assortments (e.g. warehouse club)
Merchandise depth is the variety of choices available for each specific product
Shallow assortment (e.g. factory outlet for Polo)
Deep assortments (e.g. departmental store)

10. Store Types Convenience stores (e.g. 7-Eleven) Supermarkets
Pay higher prices for close to home shopping
Supermarkets
Grocery stores like Food Lion, etc.
Specialty stores
Narrow and deep inventories (e.g. cigars & tobacco stores in malls)
Department stores
E.g. Macys, Dillards, etc.
Discount stores
General merchandise discount stores (e.g. Walmart, Kmart)
Off-price retailers (e.g. TJ Maxx)
Warehouse clubs (e.g. Costco)
Factory outlet stores
Hypermarkets – four to five times larger than a supermarket - Carrefours

11. Nonstore Retailing
Any method a firm uses to complete an exchange that does not require a customer visit to a store
Direct selling
Automatic vending

12. Direct Selling
Direct selling occurs when a salesperson presents a product to one individual or a small group, takes orders, and delivers the merchandise
Door-to-Door Sales
Parties and Networks
party plan systems (e.g. Tupperware parties)
multilevel pyramid schemes (e.g. Amway)

13. Automatic Vending
Appealing for selling convenience goods because of small space required, and minimal personnel to maintain and operate
New innovations:
Ore-Ida French fries
Software
Levi’s jeans

14. E-Commerce and the Customer
Benefits
Shop 24/7
Less travel
More choices
More information
Price competition
Fast delivery
Limitations
Lack of security
Fraud
Can’t touch items
Hard to distinguish color/ texture online
Expensive to return

15. E-Commerce and the Marketer
Benefits
The world is your marketplace
Decreases costs
Tracking of consumer behavior
Limitations
Lack of security
Must maintain site
Price competition
Conflicts with conventional retailers

16. Developing a Store Positioning Strategy
Store image
how should the target market perceive the store – exciting (REI stores), old-fashioned (Wilkins, furniture), edgy and hip (Hot Topic), elegant and refined (Saks), etc.
Atmospherics
the use of color, lighting, scents, furnishings, sounds, and other design elements to create a desired setting

17. Store Design: Setting the Stage
Store layout and traffic flow (e.g. grid layout in a grocery store)
Fixture type and merchandise density (e.g. wooden racks vs. metal racks); clutter, sitting areas, etc.
The sound of music (e.g. Nordstrom)
Color and lighting (warm colors stimulate appetite, pink preferred by women’s cosmetics)
The Actors: Store Personnel; uniformed ushers, etc.

18. Building the Store: Store Location
Types of locations
Business District (downtown)
Shopping centers (Malls)
Lifestyle centers (e.g. Manchester Village)
Freestanding retailer (Walmart, IKEA)
Non-traditional locations: carts, kiosks, etc.