2. Retailing Is it a Love-Hate Relationship?

3. Retailing consists of the sale and all activities related to the sale of goods and services to the ultimate consumer for personal, non-business use and has enhanced the quality of our daily lives.

4. Retailing form of middlemen that serve as purchasing agents for their customers and as sales specialists for their suppliers

5. Retailers vs. Wholesalers Retailer –completes transactions to the final consumer –more than 50% of revenue must come from final customer sales Wholesaler –sells products for resale

6. Fortune 500 Leading Retailers Walmart (1) CVS (12) Kroger (24) Home Depot (33) Amazon (35) Target (36) Walgreens (37) Lowe’s (52)

7. Retailer Characteristics Sell Smaller Quantities, More Frequently Provide Assortment of Goods Provide a Pleasant Shopping Environment and Emphasize Atmospherics and Layout

8. Retail Classification According to Ownership Corporate Chains –two or more centrally owned and managed stores –Three Factors Differentiate a Chain from a contractual VMS or an independent number of units central ownership lack of autonomy of units

9. Independent Stores –single retailer not affiliated with any type of contractual VMS –most retailers are independent and quite small Contractual VMS –independently owned firms that join together under a contract voluntary chains retailer coops Franchising –Avis, McDonald’s, Subway, Holiday Inn Classification by Ownership

10. Classification According to Marketing Strategies Three Factors Used to Classify –depth and breadth of product assortment –price level –amount of customer service

11. Retailer Classifications by Strategy Department Stores –Selective Distribution Discount Stores – Supercenters (Walmart) and Full Line Discount Stores (Walmart) Specialty Stores Supermarkets –Scrambled merchandising

12. Types of Retail Operations Drugstores –Pharmacy related goods main draw Drugstores –Pharmacy related goods main draw Convenience Stores –Intensive Distribution Warehouse Clubs Off-price Retailer Restaurants

13. NonStore Retailing Direct Selling – declining; why? Telemarketing – “no call” lists Automatic Vending Direct Retailing (Marketing) –Catalogs – book form of presentation Send out 10-20 catalogs for every order received Target time constrained working women –tv shopping –online ordering

14. Vending Machines Traditionally coin operated, now accept credit cards and bills Requires minimal space, but investment in equipment Best suited to non-perishable, low priced products such as candy, drinks, cigarettes Cigarette vending declining because of lack of control over minor shoppers Technology increasing willingness to buy higher priced items i.e., airport locations feature Best Buy vending machines

15. Retailing Mix PLACE –Physical Facilities Location - #1 –Shopping Centers classified by predominant retailer convenience neighborhood community Regional –DESTINATION STORES

16. Retail Management (cont’d) Positioning via Product and Price –product assortment – depth, breadth –Price – skimming, penetration –Promotion – national advertising, social media –Service Levels –Examples: Two Variables –high price/high service –low price/low service Three Variables –retailer offers different brands –service and personality augmentation

17. Retailing Mix PRESENTATION –Design – interior materials, fixtures –merchandise type and density –Layout –Odors –Sound –Visual Factors –COLOR warm (home-like and comfortable) vs. cool (elegance)

18. Retail Management (cont’d) Pricing –Markups amount retailer adds to product’s cost to determine selling p % of cost or % of selling price –Example Markup % on Selling Price = Amount Added to cost/ Selling Price ($6-$4)/$6 = 33.3% This is a relatively low markup!

19. Markdowns amount by which the retailer reduces the original selling price Markdown % = Dollar Amount of Markdown/Sale or New Price Example –($50-$39)/$39 = 11/39 = 28.2%

20. Trends in Retailing Changing demographics and industry structure Expanding computer technology Emphasis on convenience and service Scrambled Merchandising Increasing polarity in retail trade Experimentation Growth in NonStore Retailing

21. Issues of Interest/Trends Consumer Fraud –Walmart and the modification of return policies Shoplifting –layout issues –favored items accessories, cosmetics, jewelry, music –Slotting Allowances impact customer choice and new product introductions

22. Wheel of Retailing Developed by McNair to help explain evolutionary changes Basically states: –retailers enter the market with low cost, low price approach and consumers respond favorably –In time, start to trade up to attract a broader market, achieve higher margins and gain more status –Sooner or later, becomes vulnerable to new competitors that are low cost/low price

23. Retail Life Cycle Introduction –Aggressive entrepreneur –Unique approach to business Growth –Catches on with shoppers Maturity –Intense competition –Profits decline Department stores Decline –Innovation hurts Full service gas stations