Chapter 15 Retailing Introduction An intermediary involved in

Chapter 15 Retailing

Introduction An intermediary involved in Retailer Wholesaler selling goods and services to ultimate consumers (examples? ) An intermediary that takes title to the goods it handles and redistributes them to retailers, other distributors, and sometimes end consumers • Employs 24 million people in the U. S. • Accounts for $4. 5 trillion to the U. S. economy

STRATEGIC IMPLICATIONS: RETAIL MARKETING STRATEGY A retailer develops a marketing strategy based on the firm’s goals and strategic plans Two fundamental steps: Picking a target market: size and profit potential. POSITION. 2. Developing a retailing mix to satisfy the chosen target market 1. 4 Ps + Personnel & Presentation used to create a retail image

The Retailing Mix Product Personnel Place Target Market Presentation Promotion Price

Choosing the Merchandising Mix The mix of products offered to the consumer by the retailer; also called the product assortment or merchandise mix.

Merchandising (Product) Strategy Category management: Retailing strategy which views each product category as an individual profit center. Slotting Allowances: lump-sum payments by manufacturers for stocking new products. Scrambled Merchandising: Combining dissimilar product lines to boost sales volume. Growth of Store brands – Battle for shelf

Presentation of the Retail Store Atmosphere The overall impression conveyed by a store’s physical layout, décor, and surroundings. Five Senses.

Personnel and Customer Service Two Common Selling Techniques Trading Up Suggestion Selling

Price The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted. Price and payment options : how important? http: //www. youtube. com/watch? v=k. Mimyg. VTgb. U

HOW THE VIEWS OF THESE STORES' REGULAR SHOPPERS COMPARE Target Neiman Marcus and Saks Macy's J. C. Penney Optimistic about the economy in next 6 months 33% 35% 36% 33% Shopping closer to home 38% 26% 36% 44% Shopping for sales more often 42% 22% 39% 45% Spending less on clothing 39% 28% 35% 42%

Age 18 -34 Age 35 -64 Age 65 and older Education high school Education college Household size two or fewer Income less than $40, 000 Income $40, 000$99, 000 Income Target Neiman Marcus Macy's J. C. Penney 104 110 69 99 112 70 92 110 82 89 105 97 82 71 78 92 115 113 105 88 91 91 95 63 55 56 75 121 96 116 120 155 240 186 122

Classification of Retail by Ownership (independent, franchise chain) 2. Service level (Nordstrom vs. Wal-mart) 3. Assortment (CVS vs. Smith’s) 4. Price (Tiffany vs. jewelry kiosk) 1.

Types of Retailers

Department Stores Service Level High Assortment Broad Price High Gross Margin High

Specialty Stores Type of Retailer Specialty Store Service Level High Assortment Narrow Price High Gross Margin High

Specialty Discount Stores OR Category Killers Specialty Discount Stores Type of Retailer Service Level Specialty Discount Store Low Assortment Narrow Price Low Deep Assortment Gross Margin Low

Discount Stores Discount Low Service Broad Assortment Low price Shallow Assortment Low margin

Off-Price Retailer Off-price Retailer Low service Narrow Line Low prices Prices Low margins

Supercenters Supermarket Low service Broad Moderate prices Low margins

Supermarkets �Large, self-service retailer with grocery specialty �Self-scanning trend: what is your take? �Competition: fierce, 1% profit on many items

Warehouse Clubs Warehouse club / wholesale club (Sam’s, Costco) No frills, members only (why? ) Bulk purchases: price competition, homogeneous shopping goods

Convenience Stores Convenience products Often with gas stations Convenience stores: fill-in your “regular” shopping Competition (fast food also) 24/7 is more important We pay for the convenience

Non-Store Retailing Vending: hi costs; hi prices (flat sales) Vending is a $40 billion U. S. market Cashless vending=wave of future Direct Marketing (Mail, Catalog, Telemarketing) E-tailing (TV shopping, online) M-commerce: buy from mobile devices (e. g. , cell phones)

Wheel of Retailing Newer, low-price types of retailing arise to challenge older established “bigger” retailers.

Wheel of Retailing Motel 3 Motel + Free Breakfast + HBO + Happy Hour 2 New Entrant Motel + Free Breakfast No Frills Motel 1 a theory to explain the institutional changes 4

e. Tailing and DTC e. Tail= electronic retail DTC= Direct to consumer Shrinking use of wholesalers? (bypassing wholesalers more and more) e. Bay: hybrid etailer/online auction site Even sells services online (examples of services on ebay? )

e. Tail More innovative e-tail sites Printing online www. printresponsibly. com Nike ID Zappos http: //nikeid. nike. com http: //www. zappos. com

Future of re[E]tailing http: //www. youtube. com/watch? v=jti. Ja. X 6 q 1 i 0