15 Retailing Dr Close Role of Retailing

15 Retailing Dr. Close

Role of Retailing • Retailing: sale of products to final customers (personal or family use) • Employs 15 million people in the U. S. • Accounts for $4 trillion to the U. S. economy – Customer contact – vital customer data here – Wheel of retailing: • Enter as low margin, low price (e. g. , Izod) • Evolve higher price and service (supermarkets; electronics) • Can you think of any other products or services that evolved from shabby to sheek?

Retail Strategy • • Retailing is top heavy: top 5% have 53% of sales Wal-Mart has 5% of all retail sales Retailing is risky: ¾ fail within a year! Non-financial risks: give up your evenings and weekends (especially during holidays) – http: //www. landsend. com Lands End: Successful Aspects?

Franchising as a Retail Strategy • Granting business rights to franchisee, who pays for the right to use the brand name, product, or methods • Examples of retail franchisers:

Retail Marketing Mix • Target Market (Old Navy, Gap, Banana Republic) • Merchandise Mix (breadth or depth) • Promotion (local, in-store works) • Location, location • Atmosphere (temperature, music, color) • Price and payment options

Price and Retail Payment

How important are payment options?

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

Specialty Stores • A type of retailer • Conventional: know examples of… – Traditional: general store: anything sold in volume (why gone? ) – Focus develops: • Single line: one type (hardware, sporting goods, and what else? ? )

Specialty Stores, cont. • Category killers/specialists (modern form of single line) – Specialized mass; all in line (Toys R Us; Circuit City; Home Depot) – “kill” type of merchandise

Department Stores • Limited line: part of type; slow movers – Specialty shop: hi end, hi service, expanded assortment – Department store: each department has a limited line; decline since 50 s; shopping products – High costs and competition

Discount Stores • Scrambled merchandise: anything sells in volume (supermarkets, Rx) • Mass merchandising concept: – Low price and turnover to spur sales volume through bigger markets

Discount Stores, cont. • Discount full-line mass merchandisers (Reg. Wal-Mart & K-Mart) – What? Large, self service stores focusing on • Soft goods (housewares, fabrics, apparel) & • Staples (smooth demand, health and beauty) • Low price, low service, high turnover

Discount Stores, cont. • Off-price retailers (Marshalls, Ross, TJ Maxx) • Supercenters (Super Wal-Mart, Super Target, Big K) – All routine needs at low price – Mass merchandise + groceries

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)

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 Mondera http: //www. mondera. com Nike ID http: //nikeid. nike. com Zappos http: //www. zappos. com

E-cart abandonment • When you put an item in your online cart, and do not complete the purchase during that Internet session. • A common practice Why do we do this?

E-cart abandonment • • • Top reasons for e-cart abandonment: Research/organization use Privacy/security issues Frustration of the length of the checkout process Total cost (including shipping, handling, and/or tax if applicable) • Desire to wait for a sale price (online or offline) • E-shopping for mere entertainment (versus a true intention to buy)

Summary • • Role of retailing Retail strategy Retail Marketing Mix Types of retailers Non-store retail E-tail Any questions? ?