CHAPTER 2
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Types of
Retailers
CHAPTER 2
Retailing Management 8e
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The World of Retailing
CHAPTER 2
1
Introduction to the World of Retailing
Types of Retailers
Multichannel Retailing
Customer Buying Behavior
Retailing Management 8e
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Questions
CHAPTER 2
1
• What trends shape today’s retailers?
• What are the different types of retailers?
• How do retailers differ in terms of how they meet the
needs of their customers?
• How do service retailers differ from merchandise
retailers?
• What are the types of ownership for retail firms?
Retailing Management 8e
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General Trends in Retailing
CHAPTER 2
1
• New Types of Retailers
• Increased Concentration
• Globalization
• Growth In Services Retailer
• Demise of Pure Electronic Retailers (Webvan, eToys, etc)
• Growth in Use of Multi-Channel Retailing by Traditional
Retailers
• Increase Use of Technology to Reduce Cost; Increase
Value Delivered
Retailing Management 8e
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Types of Retailers
CHAPTER 2
1
• Retailers Use Different Retail Mixes
-merchandise: variety (breadth) /
assortment (depth)
-services
-store design, visual merchandising
-location
-pricing
• Infinite Variations
• Some combination of retail mixes
satisfy the needs of significant
segments and persist over time.
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Bag Borrow or Steal
Retailing Management 8e
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Retailer Characteristics
CHAPTER 2
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• Variety (breadth)
• Assortment (depth)
• Services Offered
• Prices and the cost of offering breath and depth of
merchandise and services
Retailing Management 8e
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Merchandise Offering
CHAPTER 2
1
Variety (breadth of merchandise): wide vs. narrow
- The number of merchandise categories
Assortment (depth of merchandise): deep vs. shallow
-the number of items in a category (SKUs)
Retailing Management 8e
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Services Offered
CHAPTER 2
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• Retailers differ in the
services they offer
customers
• EMS offers assistance in
selecting the
appropriate kayak and
repairing them
VS
• Outdoorplay.com and
• Wal-Mart: doesn’t
provide any services
Retailing Management 8e
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Prices and the cost of offering breath
and depth of merchandise and services
CHAPTER 2
1
• Stocking a deep and broad assortment (like EMS) is
costly for retailers.
Many SKUs
Because the retailer must have backup stock for each SKU
in addition to holding the inventory
Inventory Investment Cost
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Types of Merchandise Retailers
Food Retailers
General Merchandise Retailers
Mom and Pop Stores
Convenience Stores
Supermarkets
Supercenters
Retailing Management 8e
CHAPTER 2
1
Department Stores
Specialty Stores
Discount Stores
Category Specialists
Off-Price Retailers
Warehouse Clubs
Value Retailers
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Sales and growth rate for retail sectors
Retailing Management 8e
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Food Retailers
CHAPTER 2
1
• Channel preference for food shopping channel where
grocery purchasers do most of their food shopping
• Supermarkets
• Supercenters
• Warehouse Clubs
• Convenience Stores
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Characteristics of Food Retailers
Retailing Management 8e
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Supermarkets
CHAPTER 2
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• Conventional supermarkets
• 30,000 SKU
• Limited assortment
supermarkets (extreme value
food retailers)
• 2000 SKU
• Offer one or two brands and sizes
• Designed to maximize efficiency and
reduce costs
• Offer merchandise at 40-60% lower
prices than conventional
supermarkets
Retailing Management 8e
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ALDI: German’s Wal-Mart
CHAPTER 2
1
ALDI provides quality merchandise at low prices by reducing its
assortment in order to control store operating expenses
Retailing Management 8e
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Trends in Supermarket Retailing
CHAPTER 2
1
• Competition from Discount Stores
Efficient
Distribution
Lower Costs
Lower Prices
• Changing Consumption Patterns
Time Pressure
Retailing Management 8e
Eating Out More
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Meal Solutions
2 - 17
Conventional
Supermarket Survival Pack
CHAPTER 2
1
• Emphasize Fresh Perishables
• Wegmans
Chef-crafted meals on the go at EatZi’s
Retailing Management 8e
• Target health conscious and
ethnic consumers
• Provide a better in-store
experience
• Offer more private label brands
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Supercenters and Warehouse Clubs
CHAPTER 2
1
Supercenters
Warehouse Clubs
• The fastest growing retail
category
• Large stores (150,000 – 220,000
square feet) that combine a
supermarket with a full-line
discount store
• One-stop shopping experience
• Offer a limited and irregular
assortment of food and general
merchandise with little service at
low prices
• Use low-locations, inexpensive
store design, little customer
service
• Low inventory holding costs by
carrying a limited assortment of
fast selling items
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Convenience Store
CHAPTER 2
1
• Tailors assortments to local market
• Makes more convenient to shop
• Offers fresh, healthy food
• Fast, casual restaurants
• Financial services available
• Opening smaller stores closer to consumers (like
airports)
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General Merchandise Retailers
CHAPTER 2
1
• Department Stores
• Specialty Stores
• Category Specialists
• Home Improvement Centers
• Discount Stores
• Drugstores
• Off-Price retailers
• Extreme Value Retailers
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Characteristics of
General Merchandise Retailers
Retailing Management 8e
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Issues in Department Store Retailing
CHAPTER 2
1
• Competition
• Discount Stores on Price
• Specialty Stores on Service,
Depth of Assortment
• Lower Cost by Reducing Services
• Centralized Cash Wraps
• More Sales
• Customers Wait for Sale
• Focus on Apparel and Soft
Home
• Develop Private Labels and
Exclusive Brands
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Three Tiers of Department Stores
CHAPTER 2
1
• First Tier: Upscale, high fashion
chains with exclusive designer
merchandise and excellent
customer service
• Nordstrom, Neiman Marcus, Saks
• Second Tier: Retailers sell more
modestly priced merchandise with
less customer service
• Macy’s
• Third Tier: Value oriented caters
to more price conscious customer
• JCPenney, Sears, Kohl’s
Retailing Management 8e
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Department Stores:
What To Do With an Eroding Market
CHAPTER 2
1
• Department stores are:
• attempting to increase the
amount of exclusive
merchandise they sell
• undertaking marketing
campaigns to develop
strong images for their
stores and brands
• building better
relationships with their key
customers
Retailing Management 8e
Royalty-Free/CORBIS
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Issues in Discount Store Retailing
CHAPTER 2
1
• Only Big Left
• Wal-Mart, Target
• Wal-Mart’s Dominance
• Differentiate Strategy
• Wal-Mart = Low Price and
Good value
• Target = More Fashionable
Apparel
• Competition from
Category Specialists
• Toys-R-Us, Best Buy, Sports
Authority
Retailing Management 8e
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Issues in Specialty Store Retailing
CHAPTER 2
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• Mall-Based Apparel Retailers
• Decline in Mall Shopping and
Apparel Sales
• Lack of New Fashions
• Less Interest in Fashion
• Increased Price Consciousness
• Lifestyle Formats
• Abercrombie and Fitch
McGraw-Hill Companies, Inc./Andrew Resek, Photographer
Retailing Management 8e
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Specialty Store Retailers
CHAPTER 2
1
McGraw-Hill Companies, Inc./Andrew Resek, Photographer
Retailing Management 8e
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Issues in Drug Store Retailing
CHAPTER 2
1
• Consolidation
• Walgreens, CVS, Rite-Aid
• Competition
• Supermarkets, Discount Stores and
Mail-in orders
• Evolution to a New Format
• Stand Alone Sites with Drive Thru
Windows
• offering more frequent purchase
food items
• Improved systems provide
personalized service
Retailing Management 8e
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Category Specialists
• Deep and Narrow
Assortments
• Destination Stores
• Category killers
• Low Price and Service
• Wholesaling to Business
Customers and Retailing
to Consumers
• Incredible Growth
Retailing Management 8e
CHAPTER 2
1
Bass Pro Shops
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Category Specialists
CHAPTER 2
1
Sephora, France’s leading perfume/
cosmetic chain LVMH’s division
Retailing Management 8e
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Category Specialists:
Home Improvement Centers
CHAPTER 2
1
Home Depot and Lowes act as both:
Retailer
and
Consumer
Retailing Management 8e
Wholesaler
Business
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Home Improvement Centers
CHAPTER 2
1
• Displayed in a warehouse
atmosphere
• Customer Service: How to
select and how to use
merchandise
• Competition focuses on
price, effort to differentiate
and services provided
Ryan McVay/Getty Images
Retailing Management 8e
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Issues in Extreme Value Retailing
CHAPTER 2
1
• Focuses on Lower Income Consumers
• Names mostly imply good value not $1 price points
• Low Cost Location
• Limited Services
• One of the Fastest Growing Retail Segments
• Dollar Tree
• Family Dollar
• Dollar General
• 99 Cents Only Store
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Off-Price Retailers
CHAPTER 2
1
• Close-out retailers
• Offer an inconsistent assortment of brand name
merchandise at low prices
• TJX companies (T.J. Maxx, Marshalls)
• Ross Stores, Burlington Coat factory, Big Lots, Tuesday
Morning
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Services Retailing
CHAPTER 2
1
• Intangibility
• Problems in Evaluating Service Quality
• Performance of Service Provider
• Simultaneous Production and Delivery
• Importance of Service Provider
• Perishability
• No Inventory, Must Fill Capacity
• Inconsistency of the Offering
• Importance of HR Management
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Examples of Service Retailers
CHAPTER 2
1
Type of Service
Service Retail Firms
Airlines
American, Delta, British Airways, Singapore Airways
Automobile maint/repair
Jiffy Lube, Midas, AAMCO
Automobile rental
Hertz, Avis, Budget, Alamo
Banks
Citibank, NCNB, Bank of America
Child care centers
Kindercare, Gymboree
Credit cards
American Express, VISA, Mastercard
Education
University of Florida, Babson College
Entertainment parks
Disney, Universal Studios, Six Flags
Express package delivery
Federal Express, UPS, US Postal Service
Financial services
Merrill Lynch, Dean Witter
Fitness
Jazzercise, Bally’s, Gold’s Gym
Health Care
Humana, HCA
Home maintenance
Chemlawn, MiniMaid, Roto-Rooter
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Merchandise/Service Continuum
Retailing Management 8e
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Types of Retail Ownership
CHAPTER 2
1
• Independent, Single
Store Establishments
• Wholesale-sponsored
voluntary group
• Corporate Retail
Chains
• Franchises
(c) Brand X Pictures/PunchStock
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Retailers Using
Franchise Business Model
Retailing Management 8e
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CHAPTER 2
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Franchising
CHAPTER 2
1
• 30 – 40% of US Retail Sales
• Franchisee Pays Fixed Fee
Plus % of Sales
• Franchisee Implements
Program
• Why is this Ownership Format
Efficient?
The McGraw-Hill Companies, Inc./Jill Braaten, photographer
Retailing Management 8e
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