1. Types of Retailers
CHAPTER 2

2. The World of Retailing Introduction to the World of Retailing
Types of Retailers
Multichannel Retailing
Customer Buying Behavior

3. Questions What trends shape today’s retailers?
What are the different types of retailers?
How do retailers differ in terms of how they meet the needs of their customers?
How do service retailers differ from merchandise retailers?
What are the types of ownership for retail firms?

4. General Trends in Retailing
New Types of Retailers
Increased Concentration
Globalization
Growth In Services Retailer
Demise of Pure Electronic Retailers (Webvan, eToys, etc)
Growth in Use of Multi-Channel Retailing by Traditional Retailers
Increase Use of Technology to Reduce Cost; Increase Value Delivered

5. Types of Retailers Retailers Use Different Retail Mixes
-merchandise: variety (breadth) / assortment (depth)
-services
-store design, visual merchandising
-location
-pricing
Infinite Variations
Some combination of retail mixes satisfy the needs of significant segments and persist over time.

6. Bag Borrow or Steal

7. Retailer Characteristics
Variety (breadth)
Assortment (depth)
Services Offered
Prices and the cost of offering breath and depth of merchandise and services

8. Merchandise Offering Variety (breadth of merchandise): wide vs. narrow
- The number of merchandise categories
Assortment (depth of merchandise): deep vs. shallow
-the number of items in a category (SKUs)

9. Services Offered Retailers differ in the services they offer customers
EMS offers assistance in selecting the appropriate kayak and repairing them VS
Outdoorplay.com and
Wal-Mart: doesn’t provide any services

10. Inventory Investment Cost
Prices and the cost of offering breath and depth of merchandise and services
Stocking a deep and broad assortment (like EMS) is costly for retailers.
Many SKUs
Because the retailer must have backup stock for each SKU in addition to holding the inventory
Inventory Investment Cost

11. Types of Merchandise Retailers
Food Retailers
General Merchandise Retailers
Mom and Pop Stores Convenience Stores Supermarkets Supercenters
Department Stores Specialty Stores Discount Stores Category Specialists Off-Price Retailers Warehouse Clubs Value Retailers

12. Sales and growth rate for retail sectors

13. Food Retailers
Channel preference for food shopping channel where grocery purchasers do most of their food shopping
Supermarkets
Supercenters
Warehouse Clubs
Convenience Stores

14. Characteristics of Food Retailers

15. Supermarkets Conventional supermarkets
30,000 SKU
Limited assortment supermarkets (extreme value food retailers)
2000 SKU
Offer one or two brands and sizes
Designed to maximize efficiency and reduce costs
Offer merchandise at 40-60% lower prices than conventional supermarkets

16. ALDI: German’s Wal-Mart
ALDI provides quality merchandise at low prices by reducing its assortment in order to control store operating expenses

17. Trends in Supermarket Retailing
Competition from Discount Stores
Changing Consumption Patterns
Efficient
Distribution
Lower Costs
Lower Prices
Time Pressure
Eating Out More
Meal Solutions

18. Conventional Supermarket Survival Pack
Emphasize Fresh Perishables
Wegmans
Target health conscious and ethnic consumers
Provide a better in-store experience
Offer more private label brands
Chef-crafted meals on the go at EatZi’s

19. Supercenters and Warehouse Clubs
The fastest growing retail category
Large stores (150,000 – 220,000 square feet) that combine a supermarket with a full-line discount store
One-stop shopping experience
Offer a limited and irregular assortment of food and general merchandise with little service at low prices
Use low-locations, inexpensive store design, little customer service
Low inventory holding costs by carrying a limited assortment of fast selling items

20. Convenience Store Tailors assortments to local market
Makes more convenient to shop
Offers fresh, healthy food
Fast, casual restaurants
Financial services available
Opening smaller stores closer to consumers (like airports)

21. General Merchandise Retailers
Department Stores
Specialty Stores
Category Specialists
Home Improvement Centers
Discount Stores
Drugstores
Off-Price retailers
Extreme Value Retailers

22. Characteristics of General Merchandise Retailers

23. Issues in Department Store Retailing
Competition
Discount Stores on Price
Specialty Stores on Service, Depth of Assortment
Lower Cost by Reducing Services
Centralized Cash Wraps
More Sales
Customers Wait for Sale
Focus on Apparel and Soft Home
Develop Private Labels and Exclusive Brands

24. Three Tiers of Department Stores
First Tier: Upscale, high fashion chains with exclusive designer merchandise and excellent customer service
Nordstrom, Neiman Marcus, Saks
Second Tier: Retailers sell more modestly priced merchandise with less customer service
Macy’s
Third Tier: Value oriented caters to more price conscious customer
JCPenney, Sears, Kohl’s
Rob Melnychuk/Getty Images

25. Department Stores: What To Do With an Eroding Market
Department stores are:
attempting to increase the amount of exclusive merchandise they sell
undertaking marketing campaigns to develop strong images for their stores and brands
building better relationships with their key customers
Royalty-Free/CORBIS

26. Issues in Discount Store Retailing
Only Big Left
Wal-Mart, Target
Wal-Mart’s Dominance
Differentiate Strategy
Wal-Mart = Low Price and Good value
Target = More Fashionable Apparel
Competition from Category Specialists
Toys-R-Us, Best Buy, Sports Authority
McGraw-Hill Companies, Inc.
Gary He, photographer

27. Issues in Specialty Store Retailing
Mall-Based Apparel Retailers
Decline in Mall Shopping and Apparel Sales
Lack of New Fashions
Less Interest in Fashion
Increased Price Consciousness
Lifestyle Formats
Abercrombie and Fitch
McGraw-Hill Companies, Inc./Andrew Resek, Photographer

28. Specialty Store Retailers
McGraw-Hill Companies, Inc./Andrew Resek, Photographer

29. Issues in Drug Store Retailing
Consolidation
Walgreens, CVS, Rite-Aid
Competition
Supermarkets, Discount Stores and Mail-in orders
Evolution to a New Format
Stand Alone Sites with Drive Thru Windows
offering more frequent purchase food items
Improved systems provide personalized service

30. Category Specialists Deep and Narrow Assortments Destination Stores
Category killers
Low Price and Service
Wholesaling to Business Customers and Retailing to Consumers
Incredible Growth
Bass Pro Shops

31. Sephora, France’s leading perfume/ cosmetic chain LVMH’s division
Category Specialists
Sephora, France’s leading perfume/ cosmetic chain LVMH’s division

32. Category Specialists: Home Improvement Centers
Home Depot and Lowes act as both:
Retailer and Wholesaler
Consumer Business

33. Home Improvement Centers
Displayed in a warehouse atmosphere
Customer Service: How to select and how to use merchandise
Competition focuses on price, effort to differentiate and services provided
Ryan McVay/Getty Images

34. Issues in Extreme Value Retailing
Focuses on Lower Income Consumers
Names mostly imply good value not $1 price points
Low Cost Location
Limited Services
One of the Fastest Growing Retail Segments
Dollar Tree
Family Dollar
Dollar General
99 Cents Only Store

35. Off-Price Retailers Close-out retailers
Offer an inconsistent assortment of brand name merchandise at low prices
TJX companies (T.J. Maxx, Marshalls)
Ross Stores, Burlington Coat factory, Big Lots, Tuesday Morning

36. Services Retailing Intangibility
Problems in Evaluating Service Quality
Performance of Service Provider
Simultaneous Production and Delivery
Importance of Service Provider
Perishability
No Inventory, Must Fill Capacity
Inconsistency of the Offering
Importance of HR Management

37. Examples of Service Retailers
Type of Service Service Retail Firms
Airlines American, Delta, British Airways, Singapore Airways
Automobile maint/repair Jiffy Lube, Midas, AAMCO
Automobile rental Hertz, Avis, Budget, Alamo
Banks Citibank, NCNB, Bank of America
Child care centers Kindercare, Gymboree
Credit cards American Express, VISA, Mastercard
Education University of Florida, Babson College
Entertainment parks Disney, Universal Studios, Six Flags
Express package delivery Federal Express, UPS, US Postal Service
Financial services Merrill Lynch, Dean Witter
Fitness Jazzercise, Bally’s, Gold’s Gym
Health Care Humana, HCA
Home maintenance Chemlawn, MiniMaid, Roto-Rooter

38. Merchandise/Service Continuum

39. Types of Retail Ownership
Independent, Single Store Establishments
Wholesale-sponsored voluntary group
Corporate Retail Chains
Franchises
(c) Brand X Pictures/PunchStock

40. Retailers Using Franchise Business Model

41. Franchising 30 – 40% of US Retail Sales
Franchisee Pays Fixed Fee Plus % of Sales
Franchisee Implements Program
Why is this Ownership Format Efficient?
The McGraw-Hill Companies, Inc./Jill Braaten, photographer