Retailing Bricks and Clicks Chapter Objectives Define retailing
Retailing: Bricks and Clicks
Chapter Objectives • • Define retailing and understand how retailing evolves Describe how retailers are classified Describe the more common forms of nonstore retailing Describe B 2 C e-commerce and its benefits, limitations, and future promise • Understand the importance of store image to a retail positioning strategy and explain how a retailer can create a desirable image in the marketplace 2
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? Ø Ø Ø Ø 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. 3
Retailing: Special Delivery • Retailing: the process by which goods and services are sold to consumers for their personal use • The retailer adds/subtracts value from the offering with its image, inventory, service quality, location, and pricing policy. 4
Retailing: A Mixed (Shopping) Bag • Retailing is big business: one of every five U. S. workers is employed in retailing. • Retailers belong to a channel of distribution, providing time, place, and ownership utility to customers. 5
The Evolution of Retailing • The wheel-of-retailing hypothesis Ø New types of retailers enter the market by offering lower-priced goods. Ø They gradually improve facilities, quality and assortment of merchandise, and amenities and increase prices. 6
The Evolution of Retailing (cont’d) • The retail life cycle Ø Retailers are born, grow and mature, and eventually die or become obsolete. Ø Introduction stage Ø Growth stage Ø Maturity stage Ø Decline stage 7
The Evolution Continues: What’s “In Store” for the Future? • Demographics: retailers must find new ways to sell to diverse groups. Ø Offering convenience for working consumers Ø Catering to specific age segments Ø Recognizing ethnic Ø diversity 8
The Evolution Continues: What’s “In Store” for the Future? (cont’d) • Globalization Ø Need to adjust to different conditions around the world Ø Innovative retailing concepts developing overseas and influencing U. S. retailing 9
Classifying Retail Stores • Classifying by what they sell: merchandise mix • Classifying by level of service Ø Self-service Ø Full-service Ø Limited service 10
Classifying Retail Stores (cont’d) • Classifying by merchandise selection Ø Merchandise assortment: selection of products a retailer sells Ø Merchandise breadth: number of different product lines Ø Merchandise depth: choices available in each product line 11
Classifying Retail Stores (cont’d) • Major forms retailers take Ø Convenience stores Ø Supermarkets Ø Specialty stores Ø Discount stores Ø Warehouse clubs Ø Factory outlet stores Ø Department Stores Ø Hypermarkets 12
Nonstore Retailing • Any method a firm uses to complete an exchange that does not require a customer to visit a store • Direct selling: a salesperson presents a product to one individual or a small group, takes orders, and delivers merchandise. 13
Nonstore Retailing (cont’d) • Direct selling (continued) Ø Door-to-door sales Ø Party plan system Ø Multilevel network: a master distributor recruits other people to become distributors Ø Illegal pyramid schemes: people pay money to advance in company, profiting from others who might join • Automatic vending 14
B 2 C E-commerce • Business-to-consumer (B 2 C) e-commerce: online exchange between companies and individual consumers 15
B 2 C E-commerce (cont’d) • Benefits of B 2 C e-commerce Ø Facilitates exchanges in global marketplace. Ø Increases convenience for consumers. Ø Can fulfill experiential needs. Ø Allows specialized businesses to succeed. Ø Makes price information easily available. Ø Allows businesses to reduce costs. 16
B 2 C E-commerce (cont’d) • Limitations of B 2 C e-commerce Ø Customers must wait to receive products. Ø Sites suffer from poor design. Ø Security is a concern to consumers/marketers. Ø Internet fraud is a danger. Ø People need “touch-and-feel” information. 17
B 2 C E-commerce (cont’d) • Limitations of B 2 C e-commerce (continued) Ø Firms need “bricks-and-mortar” presence to maintain base of loyal customers. Ø Developing countries with cash economies can’t easily pay for Internet purchases. Ø Online inventory may cannibalize major retailer store sales. 18
B 2 C’s Effect on the Future of Retailing • Virtual channels are unlikely to replace traditional ones. • Stores must continue to evolve to lure shoppers away from computers. • In destination retail, consumers will visit stores for total entertainment experience. 19
Retailing as Theater • Store image: the way a retailer is perceived in the marketplace relative to the competition Ø Atmospherics: the use of color, lighting, scents, furnishings, sounds, and other design elements to create a desired setting 20
Store Image (cont’d) • Store design: setting the stage Ø Store layout: arrangement of merchandise in the store that determines traffic flow (grid layout vs. free-flow layout) Ø Fixture type and merchandise density Ø The sound of music Ø Color and lighting to set a mood 21
Store Image (cont’d) • Store personnel: should complement a store’s image • Pricing policy Ø Price points/ranges of store’s merchandise play a role in establishing its image 22
Retailing as Theater (cont’d) • Store location Ø Types of store locations • • Business districts Shopping centers Freestanding retailers Nontraditional store locations 23
Retailing as Theater (cont’d) • Store location (continued) Ø Site selection • Store’s trade area: geographic zone that accounts for the majority of its sales and customers • Saturated trade area • Understored trade area • Overstored trade area 24
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. Ø The success was immediate, and Stan credits the result with paying close attention to the quality of food and service. 25
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? 26
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