Transcript 13. Retailing

Key Concepts

Over 1 million U.S. retailers employ more than 15
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
Retailing as a %
of U.S. employment
11.6%
Retailing as a %
of U.S. businesses
Retailing as a %
of GDP
13%
40%
Independent
Retailers
Owned by a single person or
partnership and not part of a larger
retail institution
Chain Stores
Owned and operated as a group by a
single organization
Franchises
The right to operate a business
or sell a product
Self Service
Factory outlets
Warehouse clubs
Full Service
Discount stores
Exclusive stores
Service
Level
Type of Retailer
Assortment
Price
Gross
Margin
Department Store
Mod Hi-High
Broad
Mod-High
Mod High
Specialty Store
High
Narrow
Mod-High
High
Supermarket
Low
Broad
Moderate
Low
Convenience Store
Low
Med-Narrow
Mod High
Mod High
Drugstore
Low-Mod
Medium
Moderate
Low
Full-line Discounter
Mod-Low
Med-Broad
Mod Low
Mod Low
Specialty Discounter
Mod-Low
Med-Broad
Mod Lo-low
Mod Low
Warehouse Clubs
2
Low
Broad
Low-very low
Low
Off-price Retailer
Low
Med-Narrow
Low
Low
Restaurant
Low-High
Narrow
Low-High
Low-High
LO
Gross
Margin
The amount of money the
retailer makes as a
percentage of sales after
the cost of goods sold is
subtracted.
Department Stores
Specialty Stores
Supermarkets
Drugstores
Convenience Stores
Discount Stores
Restaurants
Full-Line
Discounters
Specialty Discount
Stores
Warehouse
Clubs
Off-Price
Discount Retailers
Mass
Merchandising
Retailing strategy using
moderate to low prices on
large quantities of
merchandise and lower
service to stimulate high
turnover of products.
Supercenter
Retail store combining groceries
and general merchandise
goods with a wide range of
services.
Retailer that offers consumers
very limited service and carries
Full-line discounters a broad assortment of wellknown, nationally branded
“hard goods”.
Category
Killers
Specialty discount stores
that heavily dominate their
narrow merchandise
segment.
Automatic Vending
Direct Retailing
Direct Marketing
Electronic Retailing
Door-to-Door
Avon, Mary Kay
Office-to-Office
Home Sales Parties
Tupperware
Direct Mail
Catalogs & Mail Order
Shop-at-home networks
On-line retailing
Telemarketing
Electronic Retailing
Online 24/7
Product and Trade Name
Franchising
Business Format
Franchising
LO5
Product and
Trade Name
Franchising
Dealer agrees to sell products
provided by a manufacturer or
wholesaler.
Business
Format
Franchising
An ongoing business
relationship between a
franchiser and a franchisee.
McDonald’s
Southland
Subway
Burger King
KFC
Pizza Hut
RadioShack
Taco Bell
Dairy Queen
Hooter’s
Jason’s Deli
Marble Slab
Quiznos Sub
Define & Select
a Target Market
Develop the
“Six Ps”
Demographics
STEP 1:
Segment the Market
Geographics
Psychographics
STEP 2:
Choose the
Retailing Mix
Product
Place
Price
Personnel
Promotion
Presentation
Product
Personnel
Place
Target
Market
Presentation
Promotion
Price
Product
Offering
LO6
The mix of products offered to the
consumer by the retailer; also
called the product assortment or
merchandise mix.
Advertising
Public Relations
Publicity
Sales Promotion
Choosing a Community
Economic growth
potential
Choosing a Site
Freestanding Store
Shopping Center
Competition
Mall
Geography
 Neighborhood
socioeconomics
 Traffic flows
 Land costs
 Zoning regulations
 Public transportation
 Site’s visibility, parking,
entrances and exits,
accessibility, and safety
 Fit with other stores
Advantages





Design attracts
shoppers
Activities and anchor
stores draw customers
Ample parking
Unified image
Sharing of common
area expenses
Disadvantages

Expensive leases

Failure of common promotion
efforts

Lease restrictions

Hours of operation

Anchor store
domination

Direct competitors

Consumer time limits
Low Price
Good Value
Single Price Point
EDLP
High Price
Quality
Image
Atmosphere
LO6
The overall impression
conveyed by a store’s physical
layout, décor, and surroundings
Employee type and density
Merchandise type and density
Fixture type and density
Sound
Odors
Visual factors
Trading Up
Two Common
Retail Selling
Techniques
Suggestion Selling
Easy-to-use Web site
Product availability
Simple returns
New Developments in Retailing
Interactivity
Consumers are
involved in the
retail experience.
M-commerce
Purchasing goods
through mobile
devices.