CHAPTER 02
TYPES OF
RETAILERS
2-1
General Trends in Retailing
• New types of retailers
• Globalization
• Growth in services
retailing
• Growth in
omnishopping by
traditional retailers
• Increase use of
technology to reduce
cost; Increase value
delivered
2-2
NAICS Codes for Retailers
2-3
Types of Retailers
• Retailers Use Different Retail Mixes
-merchandise: variety (breadth) /
assortment (depth)
-services
-store design, visual merchandising
-location
-pricing
2-4
Merchandise Offering
Variety (breadth of merchandise): wide vs. narrow
- The number of merchandise categories
Assortment (depth of merchandise): deep vs. shallow
-the number of items in a category (SKUs)
2-6
Services Offered
• Retailers differ in
the services they
offer customers
– Wheelworks offers
assistance in
selecting the
appropriate bicycle
as well as bicycle
repairs.
– Wal-Mart, however,
doesn’t provide any
additional services.
2-7
Prices and the cost of offering breath and depth of
merchandise and services
• Stocking a deep and broad assortment (like
Wheelworks) is costly for retailers.
Many SKUs
Because the retailer must have backup stock for each SKU
in addition to holding the inventory
Inventory Investment Cost
2-8
Illustration of Variety and Assortment
Lady Foot Locker
Sports Authority
Active
SKUs: 44
N/A
Classics
SKUs: 44
N/A
Converse
SKUs: 25
N/A
Elite Running
SKUs: 22
N/A
Fitness
N/A
SKUs: 1
Running
SKUs: 44
SKUs: 39
N/A
SKUs: 7
Training
SKUs: 22
SKUs: 2
Walking
SKUs: 11
SKUs: 12
Trail Running
2-9
Food Retailers
• Channel preference for food shopping
channel where grocery purchasers do most of
their food shopping
– Supermarkets
– Supercenters
– Warehouse Clubs
– Convenience
Stores
2-10
Trends in Supermarket Retailing
• Competition
•
•
•
•
•
•
Supercenters
Warehouse Clubs
Convenience Stores
Extreme Price Retailers
Convenience Stores
Drug Stores
Distribution
Costs
Prices
•Changing Consumption Patterns
Time Pressure
Eating Out More
Meal Solutions
2-14
Characteristics of Food Retailers
2-15
Characteristics of
General Merchandise Retailers
2-21
Characteristics of
General Merchandise Retailers
2-22
Issues in Department Store Retailing
• Competition
– Discount stores on price
– Specialty stores on service, depth of
assortment
• Lower cost by reducing service
– Centralized cash wraps
• More sales
– Customers wait for sale
• Focus on apparel and soft home
• Develop private labels and exclusive
brands
2-24
Three Tiers of Department Stores
• First Tier: Upscale, high fashion
chains with exclusive designer
merchandise and excellent
customer service
– Nordstrom, Neiman Marcus, Saks
• Second Tier: Retailers sell more
modestly priced merchandise
with less customer service
– Macy’s
• Third Tier: Value oriented caters
to more price conscious
customer
– JCPenney, Sears, Kohl’s
Rob Melnychuk/Getty Images
2-25
Specialty Store Retailers
McGraw-Hill Companies, Inc./Andrew Resek, Photographer
What challenges do specialty
store retailers face?
2-28