Lamb, Hair, McDaniel

2012-2013

CHAPTER 15 Retailing
Karin Smeds/Gorilla Creative Images/Getty Images

Chapter 12

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Retailing
Retailing

All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non-business use.

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The Role of Retailing

U.S. retailers employ nearly 25 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 salesnearly 40 percent of the U.S. GDP Industry is dominated by a few giant organizations, such as Wal-Mart
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Classification of Retail Operations

Ownership

Level of Service

Product Assortment

Price
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Exhibit 15.1
Types of Stores and Their Characteristics
Type of Retailer Service Level Mod Hi-High High Low Low Low-Mod Mod-Low Mod-Low Low Low Low-High Assortment Broad Narrow Broad Med-Narrow Medium Med-Broad Med-Broad Broad Med-Narrow Narrow Gross Margin Mod High High Low Mod High Low Mod Low Mod Low Low Low Low-High

Price
Mod-High Mod-High Moderate Mod High Moderate Mod Low Mod Lo-low
Low-very low

Department Store
Specialty Store Supermarket Convenience Store Drugstore Full-line Discounter Specialty Discounter Warehouse Clubs Off-price Retailer Restaurant

Low Low-High

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Classification of Ownership
Independent Retailers Chain Stores
Owned by a single person or partnership and not part of a larger retail institution Owned and operated as a group by a single organization

Franchises

The right to operate a business or to sell a product

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Level of Service

Full Service

Self Service

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Product Assortment
Classification based on BREADTH and DEPTH of product lines.

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Price
Gross Margin

The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted.

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Major Types of Retail Operations

Department Stores

Specialty Stores
Supermarkets

Drugstores Convenience Stores

Discount Stores Restaurants
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Types of Retail Operations

A store housing several departments under one roof. Each department is headed by a buyer, or department head who selects merchandise.

Department Store

Specialty Store

A retail store specializing in a given type of merchandise.

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Types of Retail Operations

Supermarket
Large, departmentalized, selfservice retailer. Specializes in food. Some use scrambled merchandising.

Drugstore

A retail store that stocks pharmacy-related products and services as its main draw.
A miniature supermarket, carrying only a limited line of high-turnover convenience goods.
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Convenience Store

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Categories of Discount Stores

Full-Line Discounters Specialty Discount Stores

Warehouse Clubs
Off-Price Retailers
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Discount Stores
Full-line discount store

A retailer that offers consumers very limited service and carries a broad assortment of well-known, nationally branded hard goods.

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Discount Stores
Mass Merchandising

A retailing strategy using moderate to low prices on large quantities of merchandise and lower levels of service to stimulate high turnover of products.
Retail store that combines groceries and general merchandise goods with a wide range of services.

Supercenter

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Discount Stores A Specialty Discount Store is

a retail store that offers a nearly complete selection of single-line merchandise and uses self-service, discount prices, high volume, and high turnover.

A Category Killer is
a specialty discount store that heavily dominate their merchandise segment.
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Discount Stores
Warehouse membership clubs
Limited-service merchant wholesalers that sell a limited selection of brand name appliances, household items, and groceries on a cash-andcarry basis to members. A retailer that sells at prices 25 percent or more below traditional department store prices because it pays cash for its store and usually doesnt ask for return privileges.
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Off-price retailer

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Restaurants
Straddle the line between retail and service establishments Sell tangible products (food, drink) but also services (food prep, food service) Many could be considered specialty retailers

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Nonstore Retailing
Automatic Vending Direct Retailing Direct Marketing

Electronic Retailing

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Automatic Vending is
the use of machines to offer goods for sale.

Vending is the most pervasive retail business in the United States, with 11.5 MILLION vending machines selling billions or dollars worth of goods annually.

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Direct Retailing
Door-to-Door

Office-to-Office

Home Sales Parties

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Types of Direct Marketing

Telemarketing
Direct Mail Catalogs and Mail Order

Electronic Retailing
Shop-at-Home Networks
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Top E-Tailers by Sales Volume

America's Top Ten Retail Businesses Rank
1 2 3 4 5 6 7

Company
Amazon.com Inc. Staples Inc. Apple Inc. Dell Inc. Office Depot Inc. Walmart.com Sears

Web Sales Volume

(in billions)

$34.2 $10.2 $5.2 $4.8 $4.1 $4.0 $3.1

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9 10
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Liberty Media (owns QVC)

Office Max CDW

$3.0
$2.8 $2.7

The Basic Forms of Franchising

Product and Trade Name Franchising Dealer agrees to sell in products provided by a manufacturer or wholesaler.

Business Format Franchising

An ongoing business relationship between a franchiser and a franchisee.

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Top 10 Franchisors
1. Subway 2. McDonalds 3. 7-Eleven Inc. 4. Hampton Inn/Hampton Inn & Suites 5. Supercuts 6. H & R Block 7. Dunkin Donuts 8. Jani-King 9. Servpro 10. ampm
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Retail Marketing Strategy

Define & Select a Target Market

Develop a Retailing Mix

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Defining a Target Market

Demographics
STEP 1: Segment the Market

Geographics Psychographics

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Choosing the Retailing Mix

Product STEP 2: Choose the Retailing Mix Promotion Place Price

Personnel

Presentation

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Exhibit 15.3
The Retailing Mix

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Choosing the Retailing Mix

Product Offering

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

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Retail Promotion Strategy

Advertising Public Relations Publicity Sales Promotion

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The Proper Location

Choosing a Community
Economic growth potential Competition Geography

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The Proper Location

Choosing a Specific Site Socioeconomic characteristics Traffic flows Land costs Zoning Regulations Shopping Center Choosing the Type of Site

Freestanding Store

Mall
Public Transportation
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Retail Prices
Low Price
Good Value Single Price Point

High Price
Quality Image

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Presentation of the Retail Store

Atmosphere

The overall impression conveyed by a stores physical layout, dcor, and surroundings
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Presentation of the Retail Store

Employee type and density Merchandise type and density Fixture type and density Sound Odors Visual factors
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Personnel and Customer Service

Trading Up Two Common Selling Techniques Suggestion Selling

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Customer Service for On-Line Retailers

Easy-to-use Web site

Product availability

Simple returns

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New Developments in Retailing

Consumers are involved in the retail experience. Purchasing goods through mobile devices.

Interactivity

M-commerce

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