• Final stop on the distribution path
• The process by which products are sold to consumers for personal use
• Retailers add value with image, inventory, service quality, location, and pricing policies

Retail sales ($billion), by type of business

• New types of retailers find it easiest to enter the market by offering goods at lower prices than competitors; after they gain a foothold, they gradually trade up, improving facilities and increasing the quality and assortment of merchandise, and offering special amenities; up scaling increases costs causing prices to rise; higher prices open the door for a new entrant charging lower prices

The wheel of retailing

• Retailers are also products because they provide benefits and must offer a competitive advantage to survive
– Introduction: new retailer takes a unique approach to doing business
– Growth: retailer catches on with shoppers, sales and profits rise, others start to copy it so retailer expands offerings
– Maturity: many have copied it and an entire industry has formed, profits decline
– Decline: retail format becomes obsolete

The retail life cycle

Factors Affecting the Future of Retailing
• Demographics
Convenience for working women
Catering to specific age segments
Recognizing ethnic diversity
• Technology
• Globalization

• All retailers are classified by the NAICS codes
• Some lines still blurred
– scrambled merchandising - strategy of carrying a combination of food and nonfood items

Classifying Retailers by Service
• Self-service retailers
• Full-service retailers
• Limited-service retailers

Classifying Retailers by Merchandise Selection
• Merchandise breadth is the number of different product lines available
– Narrow versus Broad assortments
• Merchandise depth is the variety of choices available for each specific product
– Shallow versus Deep assortments

Breadth versus depth of merchandise lines

• Convenience stores
• Supermarkets
• Specialty stores
• Department stores
• Hypermarket stores
• Discount stores
– General merchandise discount stores
– Off-price retailers
– Warehouse clubs
– Factory outlet store

Supercenters are a popular store format.

• Any method a firm uses to complete an exchange that does not require a customer visit to a store
– Direct selling
– Automatic vending

Forms of nonstore retailing

• Direct selling occurs when a salesperson presents a product to one individual or a small group, takes orders, and delivers the merchandise
– Door-to-Door Sales
– Parties and Networks
• party plan systems
• multilevel pyramid schemes

• Appealing for selling convenience goods because of small space required, and minimal personnel to maintain and operate
– French fries
– Software
– Levi’s jeans

• Online exchange between companies and individual consumers

• Benefits
– Shop 24/7
– Less travel
– More choices
– More information
– Price competition
– Fast delivery
• Limitations
– Lack of security
– Fraud
– Can’t touch items
– Hard to distinguish color/ texture online
– Expensive to return

• Benefits
– The world is your marketplace
– Decreases costs
– Very specialized businesses possible
– Real-time pricing
– Tracking of consumer behavior
• Limitations
– Lack of security
– Must maintain site
– Price competition
– Conflicts with conventional retailers
– Legal issues not resolved

Developing a Store Positioning Strategy
• Store image
– how the target market perceives the store
– its market position relative to the competition
• Atmospherics
– the use of color, lighting, scents, furnishings, sounds, and other design elements to create a desired setting

• Store layout and traffic flow
• Fixture type and merchandise density
• The sound of music
• Color and lighting
• The Actors: Store Personnel
• Pricing policy

Building the Theater: Store Location
• Types of Locations
• Site Selection
– Location planners evaluate trade area and conduct site evaluation
• traffic flow, number of parking spaces available, ease of delivery access, visibility from street, local zoning laws, population characteristics, community life cycle, mobility, degree of competition