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Chapter
14
Retailing
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McGraw-Hill/Irwin
Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
After studying this chapter
you should be able to:
► Understand
the economic importance of
retailing and its role in the marketing
channel.
► Cite
evidence of the globalization of retailing.
► Discuss
some of the advances in retailing
technology.
► Explain
the reasons behind the growth of
non-store retailing
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After studying this chapter
you should be able to:
► Describe
key factors in the retail
marketing environment, and understand
how they relate to retail strategy.
► Cite
important ethical and legal issues
facing retailers.
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The Role of Retailing
►
Retailing:
 An important part of many marketing
channels, includes all the activities involved in
selling products and services to the ultimate,
or final, consumer.
►
Retail Sales:
 Sales to final consumers; wholesale sales are
those to other businesses that in turn resell
the product or service, or use it in running
their own businesses.
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Economic Importance
Company
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
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Sales
($ millions)
Wal-Mart
219,812
Home Depot
53,553
Kroger
50,098
Sears Roebuck
41,078
Target
39,888
Albertson’s
37,931
Kmart
36,910
Safeway
34,301
JC Penny
32,004
In
the
U.S.,
3
million
Walgreen
24,623
Profits
($ millions)
Employees
6,671
1,383,000
3,044
256,300
1,043
288,000
735
310,000
1,368
223,550
501
220,000
(95)
240,525
1,254
193,000
98
270,000
retailers
generate
886
106,000
$2.5 trillion in revenues annually!
Retailers’ Uniqueness
in the Channel
Sell Smaller
Quantities of Product
More Frequently
Emphasize
Store
Atmospherics
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Provide
Product
Assortment
Types of Retailers
► Independent
Retailers:
 Own and operate
only one retail
outlet.
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► Chains:
 A retail chain owns
and operates
multiple retail
outlets.
Types of Retailers
► Franchising:
 Retail franchising is a form of chain
ownership in which a franchisee pays the
franchisor (parent company) fees or royalties
and agrees to run the franchise by
prescribed norms, in exchange for use of the
franchisor’s name.
►McDonald’s
There are 3,000 franchise companies
►Jiffyin
Lube
the U.S. that operate 558,000
►Holidayseparate
Inn
establishments!
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Top 10 International
Retail Franchises
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
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McDonald’s
Great Wraps
Subway
Kentucky Fried Chicken
Kumon Math and Reading Centers
Meineke Discount Muffler Shops
TCBY Treats
Thrifty Car Rental
Blimpie Subs & Salads
Mail Boxes Etc.
Types of Retailers
► Leased
Departments:
 Leased departments are sections in a retail
store that the owner rents to a second
party.
► Cooperatives
► Retail
Cooperatives:
 Independent retailers banding together to
counter chain store competition.
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Trends in Retailing
Global
Retailing
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Technological
Advances
Stronger
Customer
Service
Nonstore Retailing
► Direct
Retailing
► Direct Marketing
► E-Retailing
► Direct Selling Stores account for
90% of retail sales, but
► Vending Machine Sales
nonstore retailing is
growing faster than
store-based
retailing!
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Developing Retailing Strategy
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Uncontrollable Factors
► Consumers
► Competition
► Economic
Conditions
► Seasonality
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Controllable Factors
►
Location




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Central Business District (CBD)
Strip Centers
Shopping Malls
Freestanding Sites
►
Goods and Services
►
Pricing
►
Marketing Communications
Types of Strategy Mix
► Specialty
Stores
► Department Stores
► Convenience Stores
► Margin and Turnover Strategy
Mixes
► Gross Margin
► Inventory Turnover
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Ethical and Legal Issues
in Retailing
► Consumer
Fraud
► Supplier Labor Practices
► Retail Theft
► Slotting Allowances
► Use of Customer
Information
► Ecological Considerations
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