Retailing: Bricks and
Clicks

Chapter Objectives
• Define retailing
• how retailing evolves
• Retail classifications
• Nonstore retailing
2

Chapter Objectives
 its benefits, limitations, and future promise
 positioning strategy
 creating a desirable image in the marketplace
3

Retailing: Special Delivery
• Retailing :
• the process by which goods and services are sold to consumers for their personal use
CABELA’S
4

Retailing: Special Delivery
• The retailer adds/subtracts
value from the offering
• with its image,
• inventory,
• service quality,
• location, and
• pricing policy
.
CABELA’S
5

Retailing: A Mixed (Shopping) Bag
 one of every five U.S. workers
 is employed in retailing.
BARNES and NOBLE
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Retailing: A Mixed (Shopping) Bag
 = final channel of distribution,
 time,
 place, and
 ownership.
BARNES and NOBLE
7

The Evolution of Retailing
• The wheel-of-retailing hypothesis
 New types of retailers
• enter the market
• by offering lower-priced goods.
 They gradually improve
• facilities, quality and
• assortment of merchandise, and amenities
 and increase prices .
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The Evolution of Retailing (cont’d)
• The retail life cycle
 Retailers are born, grow and mature , and eventually
 die or become obsolete .
Introduction stage
 Growth stage
 Maturity stage
 Decline stage
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The Evolution Continues:
What’s “In Store” for the Future?
• Demographics
:
• retailers must find new ways to sell to diverse groups.
convenience for working consumers
Catering to specific age segments
Recognizing ethnic diversity
10

The Evolution Continues: What’s “In
Store” for the Future? (cont’d)
• Technology
 Internet and e-tailing
 Electronic point-of-sale (POS) systems
 Cart-top computer
• to scan purchases as customers move through store
 RFID tags
 Intellifit System
11

The Evolution Continues: What’s “In
Store” for the Future? (cont’d)
• Globalization
 Need to adjust to different conditions
• around the world
 Innovative retailing concepts
• developing overseas
• influencing U.S. retailing
12

Classifying
Retail Stores
 merchandise mix
Self-service
Full-service
Limited service
NEIMAN MARCUS
13

Classifying Retail Stores (cont’d)
• Classifying by merchandise selection
 Merchandise assortment
:
• selection of products a retailer sells
 Merchandise breadth
:
• number of different product lines
 Merchandise depth
:
• choices available in each product line
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Figure 16.1: Classification of Retailers by mdse. Selection
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Classifying Retail Stores (cont’d)
• Retail
Format
Convenience stores
Supermarkets
Specialty stores
Discount stores
Warehouse clubs
Factory outlet stores
Department stores
Hypermarkets
KOHL’S
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Non-store
Retailing
• Any method a firm uses
• to complete an exchange
• that does not require
• a customer to visit a store
LL BEAN
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Nonstore Retailing (cont’d)
• Direct selling
 Door-to-door sales
 Party plan system
 Multilevel network:
• a master distributor recruits other people to become distributors
 Illegal pyramid schemes:
• people pay money to advance in company, profiting from others who might join
• Automatic vending
AMWAY
18

B2C E-commerce
• (B2C) e-commerce:
• online exchange
• between companies & individual consumers
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B2C E-commerce
DOGTOYS.COM
• Benefits of B2C e-commerce
 Facilitates global marketplace exchanges
 Increases consumer convenience
 fulfills experiential needs.
 For specialized businesses.
 price information available.
 reduce business costs .
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B2C Ecommerce (cont’d)
• Limitations of B2C e-commerce
 Customers must wait
• to receive products.
 poorly designed Sites.
 Security concerns.
 Internet fraud
 Can’t touch-and-feel ”.
21

B2C Ecommerce (cont’d)
• More Limitations
• Firms need “bricks-and-mortar” presence
 to maintain base of loyal customers.
• Developing countries with cash economies
 can’t easily pay for Internet purchases.
PEAPOD.COM
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B2C Ecommerce (cont’d)
• One More Limitation
• Online inventory
• may cannibalize
• major retailer store sales.
 (Victoria Secret catalog??)
PEAPOD.COM
23

B2C’s Effect on the Future of Retailing
• Virtual channels
 unlikely to replace traditional ones.
• Stores must evolve
 to lure shoppers away from computers.
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B2C’s Effect on the Future of Retailing
• In destination retail,
• consumers will visit stores
• for total entertainment experience
.
• MOA & amusement park
• West Edmonton Mall
• Nike Store (Chicago)
25

Retailing as
Theater
• Store image:
• the way a retailer
• is perceived
• in the marketplace
• relative to the competition
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Retailing as
Theater
• Store image:
• Atmospherics
: the use of:
• color,
• scents, lighting, furnishings,
• sounds,
• other design elements to create a desired setting
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Figure 16.2: Mapping a Store’s Personality
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Store Image (cont’d)
• Store design: setting the stage
 Store layout:
• arrangement of merchandise in store
– determines traffic flow
– (grid layout vs. free-flow layout)
 Fixture type
 merchandise density
 sound of music
 Color & lighting
• to set a mood
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Store Image (cont’d)
• Store personnel:
 should complement a store’s image
• Pricing policy
 Price points/ranges
 of store’s merchandise
 helps establish image
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Retailing as Theater (cont’d)
 Types of store locations
• Business districts
• Shopping centers
• Freestanding retailers
• Nontraditional store locations
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Retailing as Theater (cont’d)
• Store’s trade area :
– geographic zone that accounts for the majority of its sales and customers
– Primary – Secondary - Tertiary
• Saturated trade area
• Understored trade area
• Overstored trade area
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TOP RETAILERS
• www.stores.org
• Top 100 retailers (U.S)
• Top 200 global retailers
• Retailer of the year
• NRF conference
 New York City - January
33

Non-traditional retailing
• Tourism retailing
 Souvenir shops
• Museums, events, resorts
 Shopping trips
• MOA, Dallas, New York City
• Secondary retailing
 Garage sales
 Thrift shops
 Consignment retailers
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The end
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Real People, Real Choices
• Eskimo Joe’s (Stan Clark)
• A new Oklahoma law raised the legal drinking age from 18 to 21.
• How to ensure that Eskimo Joe’s would survive the new law?
 Option 1: convert the beer bar into a full-service restaurant.
 Option 2: continue operating as a beer
 bar and offset declining beer sales
 with an increase in apparel sales.
 Option 3: close Eskimo Joe’s bar
 and refocus on building the growing
 apparel business.
36

Real People, Real Choices
• Eskimo Joe’s (Stan Clark)
• Stan chose option 1: convert the beer bar to a full- service restaurant focused on selling great food.
The success was immediate, and Stan credits the result with paying close attention to the quality of food and service.
ESKIMOJOES.COM
37

Discussion
• The wheel-of-retailing theory suggests the retailer’s normal path is to enter the marketplace with lower-priced goods and then increase quality, services, and prices.
 --Why do you think this happens?
 --Is it the right path for all retailers?
 --Why or why not?
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Discussion
• Wal-Mart has become a dominant retailer in the
U.S. marketplace, accounting for over 30 percent of the total sales of some products.
 --Is this good for consumers?
 --For the retail industry?
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Discussion
• Department stores may be declining in popularity in the
United States but remain the primary place to shop in other countries such as
Japan.
--Why do you think this is so?
--Can department stores in the U.S. turn this trend around?
MACY’S
40

Group Activity
• You and two friends decide to open a combination coffee shop and bookstore near your college. To attract college students and other customers, you’ll need to carefully design the store image.
 --Develop a detailed plan that
 specifies how your group
 will use atmospherics
 to create the store image.
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Discussion
• Experts predict a rosy future for B2C ecommerce, with exponential increases in
Internet sales of some product categories within a few years.
 --What effect do you think the growth of e-retailing will have on traditional retailing?
 --In what ways will this be good for consumers, and in what ways will it not be so good?
42

Discussion
• Pyramid scheme promoters recruit at frenzied meetings that make potential members fearful of passing up a great opportunity if they don’t join.
--Why do people continue to be lured into these schemes?
--What do you think should be done to stop these unethical promoters?
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Discussion
• Macy’s and other stores use vending machines to sell electronics such as iPods.
List other opportunities for vending machine sales.
What are the negative and positive elements of vending sales?
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Group Activity
• Your team are business consultants for a chain of 37 traditional department stores in 12
Midwestern U.S. cities.
• The stores’ revenues have declined as specialty stores and hypermarkets have begun to squeeze them out. The chain has asked your group for suggestions to increase its business
--Outline your recommendations and present them to the class.
45

Group Activity
• Your client is a local caterer planning to open a new retail outlet selling take-out gourmet dinners.
• Your group of marketing consultants is examining locations: the central business district, a shopping center, a freestanding entity, or a nontraditional location.
 --Outline the advantages and disadvantages of each type of location.
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Marketing Plan Exercise
• Think about a new retail venture, a specialty store that sells timepieces such as men’s and ladies’ watches and clocks.
 --What retailing strategies do you recommend for the first two years of the business —what merchandise, what store image, and what location(s)?
 --What long-term retailing strategies do you recommend?
47

Marketing in Action Case:
You Make the Call
• What is the decision facing IKEA?
• What factors are important in understanding this decision situation?
• What are the alternatives?
• What decision(s) do you recommend?
• What are some ways to implement your recommendation?
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