COMPETENCY:
OBJECTIVE:
3.00
3.03
Explain the business and economics of the fashion industry.
Identify the types of fashion retailers.
A.
Identify the main types of retailers.
1.
General merchandisers
a.
Carry many types of goods in several price ranges in order to satisfy a wide variety of customers
b.
May be rural general stores or huge mass merchandisers
c.
Example: Sears
2.
Specialized merchandisers
a.
Offer narrower lines of related merchandise
b.
Have a more distinct group of customers
c.
Market certain categories of goods to particular age groups, sizes, and consumer tastes and preferences
d.
Examples: Victoria’s Secret, Footlocker, Lane Bryant
B.
Describe department store retailing.
1.
General characteristics
a.
Large-scale mass merchandisers
b.
Usually carry a wide range of sizes
c.
Carry household goods
d.
“Departmentalized” by category/sizes of goods being sold. Each department may have separate salespeople and payment
areas.
e.
Generally known for high quality, fashion, and customer service
f.
Usually offer credit and return or exchange privileges
g.
Offers numerous customer services such as gift wrap, layaway, and restaurant(s)
h.
Sell to many income levels, but generally target middle to upper income customers
i.
High operating expenses due to number of employees and customer services
j.
Advertise heavily
k.
Large buying and sales volumes
l.
Examples: Macy’s, Bloomingdale’s, Dillard’s, Hecht’s
2.
Types of department stores
a.
Branch stores: Small retail stores owned and operated by a parent store; may be located in suburbs or other urban areas;
receive merchandise and operation instructions from the original store. (See example under flagship stores.)
b.
Flagship stores: “Parent” or main stores originally located in a central business district.
(1) Responsible for merchandising and promotion for entire operation which saves on operating expenses
(2) Can make merchandise available to branch stores on short notice
(3) Some flagship stores have closed and moved administrative offices to other locations.
(4) Example: Macy’s, located on 34th Street in New York City, is the flagship store and home office for all other Macy’s
branch stores located throughout the country.
c.
Junior department stores: Small department stores with limited assortments of apparel, housewares, gifts, and household
textiles.
(1) Moderately priced merchandise
(2) Locally owned
(3) Low sales volume makes it difficult for these stores to compete.
(4) Examples: Gray’s Department Store, Nags Head, North Carolina; The Evans Company, Murfreesboro, North Carolina
(Teachers will need to give examples from their local areas.)
d.
Chain stores: A group of stores owned, managed, merchandised, and controlled by a central office.
(1) All stores carry similar goods at similar prices.
(2) Private label merchandise. Examples: Kenmore at Sears, Hunt Club at JCPenney
(3) Decisions made at central headquarters
(4) Because of the large buying power, merchandise can be produced to the chain’s specifications.
(5) May serve as anchor stores. Anchor stores are the attractions that draw customers to shopping centers and malls.
(6) Examples: JCPenney, Sears, Belk, Kohl’s (These stores would likely have a “flagship” store by the same name.)
C.
Describe discount store retailing.
1.
Discount stores: Mass merchandisers that sell at lower-than-average prices.
2.
General characteristics
a.
Located in large, no-frills facilities in high traffic areas
b.
Offer minimal customer services
c.
All merchandise is paid for at checkout counters located near store exits.
d.
High sales volume
e.
Fashion followers
f.
Many discount retailers are making an effort to offer more current fashions.
g.
Most discounters are chains.
h.
Extended operating hours
i.
Many products are imported from low-wage countries.
j.
Buy in large quantities
k.
Appeal to customers with modest clothing budgets
l.
Examples: Kmart, Wal-Mart, Target
3.
Types of discount stores
a.
Off-price discounters: Retailers that sell brand name or designer merchandise at lower-than-normal prices.
(1) High fashion goods at moderate prices
(2) Changing and unstable collection of merchandise
(3) Buy merchandise at below-wholesale prices
(4) Labels may be cut out to protect merchandise sold in upscale shops.
(5) Do not place advance orders
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b.
(6) Make low-cost special purchases during the season when other stores are planning for the next season
(7) Stock consists of production overruns, end-of-season goods, closeouts, and irregulars.
(8) Examples: Marshalls, TJ Maxx, Ross Stores, Loehmann’s
Factory outlets: Discount stores that are manufacturer owned and operated.
(1) Sell only merchandise produced by the company
(2) Products sold include overruns, canceled orders, and discontinued items.
(3) May be located in factory outlet malls. Examples: Concord Mills and Tanger Outlets
(4) Examples: Bass, Maidenform, Manhattan Shirts
D.
Describe specialty store retailing.
1.
Specialty stores: Retailers that sell limited classifications of merchandise.
2.
General characteristics
a.
Low sales volume
b.
High prices
c.
Offer unusual merchandise, more personalized service, convenience, and ambience
d.
Known for a certain level of design or quality of merchandise
e.
Examples: Tiffany’s, David’s Bridal, Wilson’s Leather Goods
3.
Types of specialty stores
a.
Franchise stores: Retail establishments in which a firm or an individual buys the right to use a famous or
established name or trademark in a specified trading area.
(1) Often located in exclusive shopping areas of major cities or boutique areas within large department stores
(2) The designer or manufacturer does not have direct ownership of the franchise and does not help run the
business, only supplies goods to the retailer.
(3) Examples: Benetton, Esprit, Liz Claiborne, Ralph Lauren’s Polo Shops
b.
Boutiques: Small, stand-alone shops or areas within larger stores that sell unusual, limited quantity apparel,
accessories, or decorative items.
(1) High level of customer service
(2) Fashion-forward merchandise
(3) Target special-interest customers
(4) Unique images
(5) New, artistic, and handmade items
(6) Examples: Giorgio Armani, Valentino
E.
Describe nonstore retailing.
1.
Nonstore retailing: Selling without a conventional store facility. Nonstore retailing developed for the convenience of the consumer.
2.
Types of nonstore retailers
a.
Mail-order retailing: Selling merchandise through catalogs distributed to customers.
(1) Customers select items by looking at pictures and reading product descriptions.
(2) An alternative for customers who prefer to shop from the comfort of their home or cannot go out to shop
(3) Orders are placed by mail, toll-free calls, computer, or fax.
(4) Merchandise is usually paid for by credit card and shipped directly to the consumer.
(5) Extended order-taking hours
(6) May offer a full line of items or specialize in a single line of merchandise
(7) Many retail department stores and chains also offer catalog shopping.
(8) Many mail-order houses also have retail stores.
(9) Customers usually pay high shipping and handling fees.
(10) Examples: Spiegel, Chadwick’s of Boston, L.L. Bean, J. Crew, Lands’ End
b.
Telecommunication retailing: Selling merchandise using communication devices; includes television retailing and computer
(Internet) retailing.
(1) Television retailing
(a) Television channels are used to show and describe merchandise.
(b) Many celebrities sell signature lines of merchandise. Examples: Victoria Principal, Bob Mackie
(c)
Consumers can control what they view.
(d) Orders are placed by telephone or online through the company website.
(e) Used to introduce and test the market for new products
(f)
Reaches a national audience
(g) Examples: Home Shopping Network, QVC
(2) Computer (Internet) retailing
(a) Electronic retailing or “e-tailing”
(b) Combines computer and telephone technologies with marketing and merchandising
(c)
Shoppers view merchandise on computer monitors and order through a modem connection.
(d) Allows customers to view “electronic catalogs”
(e) Allows for comparison shopping
(f)
Examples: fashionmall.com, outletmall.com, shoppinglist.com, payless.com, jcpenney.com
c.
In-home selling
(1) Selling outside of a retail store
(2) Used to sell cosmetics, jewelry, clothing lines, and other merchandise through selling parties or door-to-door sales
(3) Merchandise is often high quality and unusual in design.
(4) Prices may be high.
(5) Examples: Mary Kay, Avon, BeautiControl
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