Retail Marketing
Lecturer: S. van Renssen
Literature
• Introduction to
Retailing,
Lusch, Dunne,
Carver
ISBN 978-0-538-75507-8
Overview
1.1
Introduction to Retail Marketing
Ch. 1, 2
1.2
Retail Customers and
Competition in retail
Ch. 3, 4
1.3
Managing the supply chain, Legal Ch. 5, 6
and ethical behavior
1.4
Ch. 7
1.5
Market selection and location
analysis
Managing retailers finances
1.6
Creating the proposition
Ch. 10, 11, 12
1.7
People and organisation
Ch. 14
Ch. 8, 9, 10
Learning Objectives
• Explain what retailing is.
• Describe trends in retailing
• Describe the five methods used to categorize
retailers.
• Explain different methods for the study of
retailing
4
What is Retailing?
• Retailing
Consists of the final activity
and steps needed to place a
product in the hands of the
consumer or to provide
services to the consumer.
5
Modern retailing
• Retailer: Category Management
• Manufacturer: Trade Marketing
Distribution Diagram
Your brand
Wholesaler
Retailer
Retailmarketing
Consumer
Consumer
marketing
Trade marketing
Competing brand
Phases in the cooperation between
manufacturer and retailer
Manufacturer
Retailer
Consumer
marketing (pull)
Push marketing
Trade marketing
Retail marketing
Professional
cooperation
Trends in retailing
•
•
•
•
•
Growth of E-tailing
Price competition
Internationalisation
Demographic shift
Store size increasing
Categorizing Retailers
• By industry or branch of activity (type of
business)
• Number of Outlets
• Store Format (margin versus turnover)
• Location
• Size
10
Classification by industry or branch of activity
• The United Nations system (ISIC, rev.4). Classification is by
industry or branch of activity (one digit), with further subdivision
into classes (two digits) and sub-classes (three digits).
11
ISIC Code
471
Formal description
Non-specialized retail trade in stores
Common description
4711
Retail sale in non-specialized stores with food,
beverages or tobacco predominating
Supermarkets
4719
Other retail sale in non-specialized stores
Department stores
4721
Retail sale of food, beverages and tobacco in
specialized stores
Retail sale of food in specialized stores
4722
Retail sale of beverages in specialized stores
4723
Retail sale of tobacco products in specialized
stores
Retail sale of automotive fuel in specialized stores
472
473
4730
474
This class includes
- meat and meat products incl poultry
- fish and seafood
- fruit and vegetables
- bakery products
- confectionery and nuts stores
- bottled water and soft drink stores
- coffee stores
- spice stores
- other miscellaneous specialty food stores
- beer, wine, and liquor stores
- health food supplement stores
- vitamin stores
- tobacco stores
retail sale of beverages
- alcoholic beverages
- non-alcoholic beverages
retail sale of tobacco and tobacco products
Retail sale of automotive fuel in specialized stores
Retail sale of information and communications
equipment in specialized stores
Computers, peripheral units, software and
telecommunications equipment in specialized stores
Classification by Number of Outlets
•
•
•
•
Single independent store (mum-and-dad store)
Small chains (2-9 outlets)
Medium sized chains (10 – 50 outlets)
Large chains (50+ outlets)
Retailers with several outlets are stronger because they
can spread fixed costs
Classification by Store Format
•
•
•
•
•
•
•
•
•
•
•
Discount stores
Convenience stores
Specialist stores
Style shops
Branded goods shops
Service shops
Locally specific shops
Non-store retailers
Supermarkets
Hypermarkets
Department stores
Margins Versus Turnover
• Gross Margin
Is net sales minus the cost of goods sold.
• Gross Margin Percentage
Is the gross margin divided by net sales or
what percent of each sales € is gross
margin.
15
Margins Versus Turnover
• Operating Expenses
Are the expenses the retailer incurs in
running the business other than the cost of
the merchandise.
• Inventory Turnover
Refers to the number of times per year, on
average, that a retailer sells its inventory.
16
Margin
Margin versus Turnover
High margin,
low tunover
(most
common)
High
performance
retailers
No survival
Discount
store
Turnover
Classification by Location
• Free Standing Sites
• City or Town Locations
– Inner City
– Main Street
• Shopping Centers
– Strip Shopping Centers
– Shopping Malls
• Other Location Opportunities
18
Classification by Size
• m2 Sales Area
• Number of employees (f.t.e.)
• Sales volume
• Larger retailer have lower operating costs per
sales € than smaller firms
19
Assignment 1.
• Go to www.careersinretailing.com
• Pick any of the listed retailers.
• As a manager for your selected retailer,
compare your retailer’s web site to that of
several other retailers.
• What changes would you make to your web
site? You want to use your web site to make
individuals interested in working for your retail
enterprise.
20
A career in retailing
•
•
•
•
•
•
•
•
•
•
•
•
21
Hard Work
Analytical Skills
Creativity
Decisiveness
Flexibility
Initiative
Leadership
Organization
Risk Taking
Stress Tolerance
Perseverance
Enthusiasm
The Study and Practice of
Retailing
(P. 32)
Analytical Method
Manager is finder and
investigator of facts.
Creative Method
Manager is conceptual
and very imaginative.
Two-Pronged Method
Manager who employs both
approaches.
22
Strategic Planning in Retail
Mission statement
Statement of goals and objectives
Financial objectives
Productivity objectives
Societal objectives
Personal objectives
Strategies
SWOT analysis
Elements of a Mission
Statement
• How the retailer uses or intends to use its
resources
• How it expects to relate to the ever-changing
environment
• The kinds of values it intends to provide in order
to serve the needs and wants of the consumer
24
Components of Strategic
Planning
• Goals and Objectives are the performance
results intended to be brought about
through the execution of a strategy.
• Market performance objectives
• Financial performance objectives
25
Market Performance Objectives
• Sales Volume
• Market Share (sales)
• Market share (sales volume)
26
Financial Performance Objectives
•
•
•
•
•
27
Net Profit Margin
Asset Turnover
Return on Assets
Financial Leverage
Return on Net Worth
Strategic Profit Model
Net Profit
Margin
Net Profit*

Total Sales
x
Asset
Turnover
=
Return on
Assets
Net Profit*

Total Assets
Total Sales

Total Assets
*Net profit after taxes
28
x
Financial
Leverage
Total Assets

Net Worth
=
Return on
Net Worth
Net Profit*

Net Worth
Retail Objectives
Sales
Volume
Market Share
Profitability
Financial
Performance
Objectives
Market
Performance
Objectives
Productivity
Retail
Mission
SelfGratification
Personal
Objectives
Employment
Societal
Objectives
Taxes
Consumer
Choice
Power and
Authority
Status and
Respect
29
Equity
Benefactor
Strategy
• Strategy
Is a carefully designed plan for achieving
the retailer’s goals and objectives.
30
Retail Strategies
• Get shoppers into your store.
• Convert these consumers into customers
by having them purchase merchandise.
• Do this at the lowest operating cost
possible that is consistent with the
level of service that your customers expect.
31
Environmental analysis
• SWOT Analysis
Is the identification and analysis of a
retailer’s strengths and weaknesses and
the opportunities and threats the firm
faces.
32
Strategy
• Retail mix
Is the combination of merchandise,
assortment, price, promotion, customer
service, and store layout that best serves the
segments targeted by the retailer.
• Brand mix
Is the combination of brands (manufacturer
brands, retailer brands) of the retailer.
33
Retail Strategic Planning and
Operations Management Model
Competitive Environment:
Behavior of Consumers, Competition and Channel Members
Strategic Planning
SWOT
Mission
Goals and
Objectives
Strengths
Weaknesses
Opportunities
Threats
Social and Legal Environment:
Socioeconomic Environment, State of Technology, Legal System, Ethical Behavior
34
Retail Strategic Planning and
Operations Management Model
Competitive Environment:
Behavior of Consumers, Competition and Channel Members
Retail Marketing Strategy
Target Market(s)
Location(s)
Retail Mix
Brand mix
Merchandise
Pricing
Advertising & Promotion
Customer Service &
Selling
Store Layout & Design
35
Operations
Management
Buying & Handling
Merchandise Pricing
Advertising &
Promotion
Customer Services
& Selling Facilities
High-Profit
Performance
Retailing
Social and Legal Environment:
Socioeconomic Environment, State of Technology, Legal System, Ethical
Behavior