1. Retailing: Bricks and Clicks

2. Chapter Objectives
Define retailing
how retailing evolves
Retail classifications
Nonstore retailing

3. B2C e-commerce store image Chapter Objectives
its benefits, limitations, and future promise
store image
positioning strategy
creating a desirable image in the marketplace

4. Retailing: Special Delivery
the process by which goods and services are sold to consumers for their personal use
CABELA’S

5. Retailing: Special Delivery
The retailer adds/subtracts value from the offering
with its image,
inventory,
service quality,
location, and
pricing policy.
CABELA’S

6. Retailing: A Mixed (Shopping) Bag
Retailing is big business:
one of every five U.S. workers
is employed in retailing.
BARNES and NOBLE

7. Retailing: A Mixed (Shopping) Bag
Retailers
= final channel of distribution,
providing utilities to customers
time,
place, and
ownership.
BARNES and NOBLE

8. The Evolution of Retailing
The wheel-of-retailing hypothesis
New types of retailers
enter the market
by offering lower-priced goods.
They gradually improve
facilities, quality and
assortment of merchandise, and amenities
and increase prices.

9. The Evolution of Retailing (cont’d)
The retail life cycle
Retailers are born, grow and mature, and eventually die or become obsolete.
Introduction stage
Growth stage
Maturity stage
Decline stage

10. The Evolution Continues: What’s “In Store” for the Future?
Demographics:
retailers must find new ways to sell to diverse groups.
convenience for working consumers
Catering to specific age segments
Recognizing ethnic diversity

11. The Evolution Continues: What’s “In Store” for the Future? (cont’d)
Technology
Internet and e-tailing
Electronic point-of-sale (POS) systems
Cart-top computer
to scan purchases as customers move through store
RFID tags
Intellifit System

12. The Evolution Continues: What’s “In Store” for the Future? (cont’d)
Globalization
Need to adjust to different conditions
around the world
Innovative retailing concepts
developing overseas
influencing U.S. retailing

13. Classifying Retail Stores
what they sell:
merchandise mix
level of service
Self-service
Full-service
Limited service
NEIMAN MARCUS

14. Classifying Retail Stores (cont’d)
Classifying by merchandise selection
Merchandise assortment:
selection of products a retailer sells
Merchandise breadth:
number of different product lines
Merchandise depth:
choices available in each product line

15. Figure 16.1: Classification of Retailers by mdse. Selection

16. Classifying Retail Stores (cont’d)
Retail Format
Convenience stores
Supermarkets
Specialty stores
Discount stores
Warehouse clubs
Factory outlet stores
Department stores
Hypermarkets
KOHL’S

17. Non-store Retailing Any method a firm uses to complete an exchange
that does not require
a customer to visit a store
LL BEAN

18. Nonstore Retailing (cont’d)
Direct selling
Door-to-door sales
Party plan system
Multilevel network:
a master distributor recruits other people to become distributors
Illegal pyramid schemes:
people pay money to advance in company, profiting from others who might join
Automatic vending
AMWAY

19. B2C E-commerce (B2C) e-commerce: online exchange
between companies & individual consumers

20. B2C E-commerce Benefits of B2C e-commerce
DOGTOYS.COM
Benefits of B2C e-commerce
Facilitates global marketplace exchanges
Increases consumer convenience
fulfills experiential needs.
For specialized businesses.
price information available.
reduce business costs.

21. B2C E-commerce (cont’d)
Limitations of B2C e-commerce
Customers must wait
to receive products.
poorly designed Sites.
Security concerns.
Internet fraud
Can’t touch-and-feel”.

22. B2C E-commerce (cont’d)
More Limitations
Firms need “bricks-and-mortar” presence
to maintain base of loyal customers.
Developing countries with cash economies
can’t easily pay for Internet purchases.
PEAPOD.COM

23. B2C E-commerce (cont’d)
One More Limitation
Online inventory
may cannibalize
major retailer store sales.
(Victoria Secret catalog??)
PEAPOD.COM

24. B2C’s Effect on the Future of Retailing
Virtual channels
unlikely to replace traditional ones.
Stores must evolve
to lure shoppers away from computers.

25. B2C’s Effect on the Future of Retailing
In destination retail,
consumers will visit stores
for total entertainment experience.
MOA & amusement park
West Edmonton Mall
Nike Store (Chicago)

26. Retailing as Theater Store image: the way a retailer is perceived
in the marketplace
relative to the competition

27. Retailing as Theater Store image: Atmospherics: the use of:
color, lighting,
scents, furnishings,
sounds, other design elements
to create a desired setting

28. Figure 16.2: Mapping a Store’s Personality

29. Store Image (cont’d) Store design: setting the stage Store layout:
arrangement of merchandise in store
determines traffic flow
(grid layout vs. free-flow layout)
Fixture type
merchandise density
sound of music
Color & lighting
to set a mood

30. Store Image (cont’d) Store personnel: Pricing policy
should complement a store’s image
Pricing policy
Price points/ranges
of store’s merchandise
helps establish image

31. Retailing as Theater (cont’d)
Store location
Types of store locations
Business districts
Shopping centers
Freestanding retailers
Nontraditional store locations

32. Retailing as Theater (cont’d)
Store location (Site selection)
Store’s trade area:
geographic zone that accounts for the majority of its sales and customers
Primary – Secondary - Tertiary
Saturated trade area
Understored trade area
Overstored trade area

33. TOP RETAILERS www.stores.org Top 100 retailers (U.S)
Top 200 global retailers
Retailer of the year
NRF conference
New York City - January

34. Non-traditional retailing
Tourism retailing
Souvenir shops
Museums, events, resorts
Shopping trips
MOA, Dallas, New York City
Secondary retailing
Garage sales
Thrift shops
Consignment retailers

35. The end
Go shopping

36. Real People, Real Choices
Eskimo Joe’s (Stan Clark)
A new Oklahoma law raised the legal drinking age from 18 to 21.
How to ensure that Eskimo Joe’s would survive the new law?
Option 1: convert the beer bar into a full-service restaurant.
Option 2: continue operating as a beer
bar and offset declining beer sales
with an increase in apparel sales.
Option 3: close Eskimo Joe’s bar
and refocus on building the growing
apparel business.

37. Real People, Real Choices
Eskimo Joe’s (Stan Clark)
Stan chose option 1: convert the beer bar to a full- service restaurant focused on selling great food.
The success was immediate, and Stan credits the result with paying close attention to the quality of food and service.
ESKIMOJOES.COM

38. Discussion
The wheel-of-retailing theory suggests the retailer’s normal path is to enter the marketplace with lower-priced goods and then increase quality, services, and prices.
--Why do you think this happens?
--Is it the right path for all retailers?
--Why or why not?

39. Discussion
Wal-Mart has become a dominant retailer in the U.S. marketplace, accounting for over 30 percent of the total sales of some products.
--Is this good for consumers?
--For the retail industry?

40. Discussion
Department stores may be declining in popularity in the United States but remain the primary place to shop in other countries such as Japan.
--Why do you think this is so?
--Can department stores in the U.S. turn this trend around?
MACY’S

41. Group Activity
You and two friends decide to open a combination coffee shop and bookstore near your college. To attract college students and other customers, you’ll need to carefully design the store image.
--Develop a detailed plan that
specifies how your group
will use atmospherics
to create the store image.

42. Discussion
Experts predict a rosy future for B2C e-commerce, with exponential increases in Internet sales of some product categories within a few years.
--What effect do you think the growth of e-retailing will have on traditional retailing?
--In what ways will this be good for consumers, and in what ways will it not be so good?

43. Discussion
Pyramid scheme promoters recruit at frenzied meetings that make potential members fearful of passing up a great opportunity if they don’t join.
--Why do people continue to be lured into these schemes?
--What do you think should be done to stop these unethical promoters?

44. Discussion
Macy’s and other stores use vending machines to sell electronics such as iPods.
List other opportunities for vending machine sales.
What are the negative and positive elements of vending sales?

45. Group Activity
Your team are business consultants for a chain of 37 traditional department stores in 12 Midwestern U.S. cities.
The stores’ revenues have declined as specialty stores and hypermarkets have begun to squeeze them out. The chain has asked your group for suggestions to increase its business
--Outline your recommendations and present them to the class.

46. Group Activity
Your client is a local caterer planning to open a new retail outlet selling take-out gourmet dinners.
Your group of marketing consultants is examining locations: the central business district, a shopping center, a freestanding entity, or a nontraditional location.
--Outline the advantages and disadvantages of each type of location.

47. Marketing Plan Exercise
Think about a new retail venture, a specialty store that sells timepieces such as men’s and ladies’ watches and clocks.
--What retailing strategies do you recommend for the first two years of the business—what merchandise, what store image, and what location(s)?
--What long-term retailing strategies do you recommend?

48. Marketing in Action Case: You Make the Call
What is the decision facing IKEA?
What factors are important in understanding this decision situation?
What are the alternatives?
What decision(s) do you recommend?
What are some ways to implement your recommendation?