15
Retailing
Dr. Close
Role of Retailing
• Retailing: sale of products to final customers
(personal or family use)
• Employs 15 million people in the U.S.
• Accounts for $4 trillion to the U.S. economy
– Customer contact – vital customer data here
– Wheel of retailing:
• Enter as low margin, low price (e.g., Izod)
• Evolve higher price and service (supermarkets;
electronics)
• Can you think of any other products or services
that evolved from shabby to sheek?
Retail Strategy
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Retailing is top heavy: top 5% have 53% of sales
Wal-Mart has 5% of all retail sales
Retailing is risky: ¾ fail within a year!
Non-financial risks: give up your evenings and weekends
(especially during holidays)
– http://www.landsend.com
Lands End:
Successful Aspects?
Franchising as a Retail Strategy
• Granting business rights to franchisee, who
pays for the right to use the brand name,
product, or methods
• Examples of retail franchisers:
Retail Marketing Mix
• Target Market (Old Navy, Gap, Banana
Republic)
• Merchandise Mix (breadth or depth)
• Promotion (local, in-store works)
• Location, location, location
• Atmosphere (temperature, music, color)
• Price and payment options
Price and Retail Payment
How important are payment
options?
Classification of Retail by
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Ownership (indy, franchise chain)
Service level (Nordstrom vs. Wal-mart)
Assortment (CVS vs. Smith’s)
Price (Tiffany vs. jewelry kiosk)
Specialty Stores
• A type of retailer
• Conventional: know examples of…
– Traditional: general store: anything sold in volume
(why gone?)
– Focus develops:
• Single line: one type (hardware, sporting goods,
and what else??)
Specialty Stores, cont.
• Category killers/specialists (modern form of
single line)
– Specialized mass; all in line (Toys R Us;
Circuit City; Home Depot)
– “kill” type of merchandise
Department Stores
• Limited line: part of type; slow movers
– Specialty shop: hi end, hi service, expanded
assortment
– Department store: each department has a limited
line; decline since 50s; shopping products
– High costs and competition
Discount Stores
• Scrambled merchandise: anything sells in volume
(supermarkets, Rx)
• Mass merchandising concept:
– Low price and turnover to
spur sales volume through bigger markets
Discount Stores, cont.
• Discount full-line mass merchandisers
(Reg. Wal-Mart & K-Mart)
– What? Large, self service stores focusing on
• Soft goods (housewares, fabrics, apparel) &
• Staples (smooth demand, health and beauty)
• Low price, low service, high turnover
Discount Stores, cont.
• Off-price retailers (Marshalls, Ross, TJ Maxx)
• Supercenters (Super Wal-Mart, Super Target, Big K)
– All routine needs at low price
– Mass merchandise + groceries
Supermarkets
– Large, self-service retailer with grocery
specialty
– Self-scanning trend: what is your take?
– Competition: fierce, 1% profit on many items
Warehouse Clubs
• Warehouse club / wholesale club (Sam’s,
Costco)
– No frills, members only (why?)
– Bulk purchases: price competition,
homogeneous shopping goods
Convenience Stores
• Convenience products
• Often with gas stations
– Convenience stores: fill-in your “regular” shopping
• Competition (fast food also)
• 24/7 is more important
• We pay for the convenience
Non-Store Retailing
• Vending: hi costs; hi prices (flat sales)
• Vending is a $40 billion U.S. market
• Cashless vending=wave of future
• Direct Marketing (Mail, Catalog, Telemarketing)
• E-tailing (TV shopping, online)
• M-commerce: buy from mobile devices
(e.g., cell phones)
eTailing and DTC
• eTail= electronic retail
• DTC= Direct to consumer
• Shrinking use of wholesalers? (bypassing
wholesalers more and more)
• eBay: hybrid etailer/online auction site
• Even sells services online
(examples of services
on ebay?)
eTail
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More innovative e-tail sites
Mondera http://www.mondera.com
Nike ID http://nikeid.nike.com
Zappos http://www.zappos.com
E-cart abandonment
• When you put an item in your online cart,
and do not complete the purchase during
that Internet session.
• A common practice
Why do we do this?
E-cart abandonment
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Top reasons for e-cart abandonment:
Research/organization use
Privacy/security issues
Frustration of the length of the checkout process
Total cost (including shipping, handling, and/or
tax if applicable)
• Desire to wait for a sale price (online or offline)
• E-shopping for mere entertainment (versus a
true intention to buy)
Summary
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Role of retailing
Retail strategy
Retail Marketing Mix
Types of retailers
Non-store retail
E-tail
Any questions??