RETAILING AN OUTLOOK

THE WORLD OF RETAILING

Introduction to Retailing

Types of Retailers

Multi-Channel Retailing

Customer Buying Behavior

WHAT IS RETAILING?

Includes all
the activities Involved
in Selling Goods or
Services Directly to
Final Consumers
RETAILING IS SELLING
HISTORY
 Need for food, water, and bodily comforts.
 Human aggressiveness.

 Trade was an outgrowth of friendly gift giving.

 People who had more goods than they could consume

traded the excess away.
CLASSIFICATION OF
RETAILING
Amount
Amount of
of Service
Service
Self-Service,
Self-Service, Limited-Service
Limited-Service and
and
Full-Service
Full-Service Retailer
Retailer
Product
Product Line
Line
Length
Length and
and Breadth
Breadth of
of the
the Product
Product
Assortment
Assortment

Relative
Relative Prices
Prices
Pricing
Pricing Structure
Structure that
that isis Used
Used
by
by the
the Retailer
Retailer
Retail Organizations
Independent, Corporate, or
Contractual
Ownership Organization
CLASSIFICATION OF RETAILING:
AMOUNT OF SERVICE

Self-Service Limited-Service
Retailer Retailers
Provide Few or No Provide Only a Limited
Services to Number of Services
Shoppers to Shoppers
i.e. Mini Market Full-Service i.e. Watson
Retailers
Retailers that Provide a
Full Range of Services
to Shoppers
i.e. Tesco
CLASSIFICATION OF RETAILING:
PRODUCT LINE
Store Description
Narrow Product Line, Deep Assortment i.e.
Specialty Stores GS Gills or Athlete’s Outlet
Wide Variety of Product Lines i.e. Clothing,
Department Stores Home Furnishings,(Jasco)

Limited Line of High-Turnover Convenience

Convenience Stores Goods i.e. 7-Eleven

Standard Merchandise at Lower Prices

Discount Stores i.e. Macro
Changing Collection of Higher-Quality Goods at a
Off-Price Retailers Reduced Price i.e. Factory Outlet (FOS)
Limited Selection of Brand-Name Grocery
Warehouse Clubs Items, Appliances, Etc. i.e. Reject Shop
CLASSIFICATION OF RETAILING:
RELATIVE PRICES
Higher
Higher Prices
Prices and
and Offer
Offer Higher-Quality
Higher-Quality Goods
Goods
and
and Customer
Customer Service
Service

Regular
Regular Prices
Prices and
and Offer
Offer Normal-Quality
Normal-Quality Goods
Goods
and
and Customer
Customer Service
Service

Low
Low Prices
Prices and
and Offer
Offer Lower-Quality
Lower-Quality Goods
Goods
and
and Customer
Customer Service
Service

Discount
Discount “Off-Priced”
“Off-Priced” Catalog
Catalog
Stores
Stores Retailers
Retailers Showrooms
Showrooms
DEPARTMENT STORES (1)

Service Assort- Gross

Price
Level ment Margin

High Broad High High

SPECIALTY STORES (2)

Specialty
Specialty Stores
Stores

Type of Retailer Service Assort- Gross

Price
Level ment Margin

Specialty Store High Narrow High High

SPECIALTY DISCOUNT STORES
(3) OR CATEGORY KILLERS

Specialty
Specialty Discount
Discount
Stores
Stores

Type of Retailer Service Assort- Gross

Price
Level ment Margin

Specialty Discount Store Low Narrow Low Low

Deep
Assortment
 DISCOUNT STORES (4)

Broad
Discount Low Service Low price Low margin
Assortment

Shallow
Assortment
 OFF-PRICE RETAILER (5)

Off-price Retailer Low service prices Low margins

Narrow Line LowPrices
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

MULTI CHANNEL RETAILING
 MULTI CHANNELS
 Designer shops
 Off pricers ( Factory outlets)
 Shop in shop
 Departmental store
 Discount stores
 Spin offs
 E –Retailing
 Catalogue Retailing
 Direct mail
 TV
 Tele retailing
 OVER SEAS EXPANSION (WHY?)
 More profits
 Crowded domestic market
 Overseas market gives capacity advantage.
 OVER SEAS EXPANSION
 Wholly owned subsidiaries.
 Franchise arrangements
 Licensed
 Joint venture
OFF SITE RETAILING
 NATURE OF RETAIL INDUSTRY IS
CHANGING

To Today’s Retailer

Mom and Pop Store

AIMS
This topic seeks to:
 compare traditional and electronic retailing;
 identify the benefits of electronic retailing (e-retailing);
 examine the key successes and factors;
 introduce models & features of e-retailing;

23
TRADITIONAL RETAILING
Selling to a final customer through a physical
outlet or through direct communication e.g.:

 Malls – collection of individual stores, individually managed.

Mall management provides physical location where a retailer
can create an outlet;
 Generalised stores – have a unified management but carry
different product lines;
 Specialised stores – sell a specific product line;

24
TRADITIONAL RETAILING (CNTD)
 Franchise stores – a single marketing and brand, but
individual store may be run by a different management,
with a fee paid back to franchisee.
 Direct mailing – catalogue is sent to customer, who then
send a mail order.

Other forms:

 telemarketing;
 door-to-door sales;
 vending machines;

25
have moved away from physical outlet to virtual retailing.
RETAILING TO E-RETAILING

E-retailing results from mapping traditional

retailing to the new medium of the internet:

 Specialised stores -> specialised e-stores;

 Generalised stores -> generalised e-stores;
 Malls -> E-malls;
 Franchise stores -> ?

26
NEW CLASSES OF E-RETAILING

E-brokers - bring together customers and suppliers.

 do not sell directly;

 match customers’ requests to e-retailers;
 search is based on attributes supplied by the consumer e.g.
cheapest price;
 important now (name-your-price) & in the future.

27
NEW CLASSES OF E-RETAILING (CNTD)

Direct selling by manufacturer:

 permits mass customisation;

 reduced costs;
 new specialised products.

28
BENEFITS OF E-RETAILING

To the customer:

 convenience;
 better information;
 competitive pricing;
 customisation;
 shopping anywhere, anytime.

29
BENEFITS OF E-RETAILING (CNTD)

To the e-retailer:

 global reach;
 better customer service;
 low capital cost;
 mass customisation;
 targeted marketing;
 more value added services;
 new forms of specialised stores and niche marketing. 30
FEATURES OF E-RETAILING
Important features of an e-shop:
 On-line catalogue for goods, linked to the order process ;
 Provision of a search engine for products;
 Shopping cart, for good selection and automatic price
update;
 Personalisation of store layouts, promotions and marketing;
 An online contact person;
 Order status checking facility;
 Use of forums and customer communities.
31
E-RETAILING MODELS

 Specialised e-store;
 Generalised e-store;
 E-mall;
 Direct Selling by the manufacturer;
 E-broker;
 E-services.

32
E-RETAILING SITES

Examples include: :Exercise

 Amazon.com; Match examples
 Walmart; to categories
 Yahoo!Store; of models
 dell.com; summarised in
the previous
 ba.com;
.slide
 Priceline.com

33
 ELECTRONIC COMMERCE

Categories of Electronic Commerce

• Business-to-customer (B2C): Retailing

of products and services directly to
individual customers

• Business-to-business (B2B): Sales of

goods and services among businesses

• Consumer-to-consumer (C2C):
Individuals use Web for private sales or
exchange
 ELECTRONIC COMMERCE

Benefits of Disintermediation to the Consumer

Cost/

Sweater

Manufacturer Distributor Retailer Customer $48.50

$40.34
Manufacturer Retailer Customer

Manufacturer $20.45
Customer

Figure 4-2
THE END
 Essentials of Management Information Systems
Chapter 4 Electronic Commerce & Electronic Business

ELECTRONIC COMMERCE

Electronic Commerce Payment Systems

SYSTEM DESCRIPTION

CREDIT CARDS SECURE SITE PRESERVES INFORMATION

ELECTRONIC CASH DIGITAL CURRENCY USED FOR MICROPAYMENTS

PERSON-TO-PERSON SEND MONEY TO SITES UNABLE TO USE CREDIT CARDS

DIGITAL WALLET SOFTWARE STORES CREDIT CARD INFORMATION

ELECTRONIC CHECK CHECK WITH ENCRIPTED DIGITAL SIGNATURE

SMART CARD MICROCHIP STORES ELECTRONIC CASH

ELECTRONIC BILL PAYMENT ELECTRONIC FUNDS TRANSFER

DECISION VARIABLES FOR RETAILERS

Customer Service

Store Design Merchandise

and Display Assortment
Retail
Strategy
Pricing Location

Communication
Mix
 CHAPTER 12

Retailing and Wholesaling

RETAILER MARKETING DECISIONS

Retailer
Retailer
Retailer
Retailer Marketing
Marketing Mix
Mix
Strategy
Strategy
Product
Product and
and service
service
Target
Target Market
Market assortment
assortment

Retail
Retail Store
Store Prices
Prices
Positioning
Positioning
Promotion
Promotion

Place
Place (location)
(location)
PRODUCT ASSORTMENT AND SERVICES
DECISIONS

Product Assortment
• Width and Depth of Assortment
• Quality of Products
• Product Differentiation Strategies

Services Mix
Key Tool of Nonprice Competition
for Setting One Store Apart From
Another
Store’s Atmosphere
• Physical Layout
• “Feel” That Suits the Target Market
and Moves Customers to Buy
RETAILER’S PRICE, PROMOTION, AND
PLACE DECISIONS

Price
Decisions Promotion
Target Market, Decisions
Product & Using
Service Advertising, Place
Assortment, Personal Selling,
Sales Promotion, Decisions
Competition Shopping
Public Relations,
& Direct Centers, Central
Marketing to Business
Reach Customers Districts, or
Power Centers,
or Online
Shopping
THE FUTURE OF RETAILING

New
New Retail
Retail Forms
Forms and
and Shortening
Shortening Retail
Retail Lifecycle
Lifecycle

Growth
Growth of
of Nonstore
Nonstore Retailing
Retailing

Increasing
Increasing Intertype
Intertype Competition
Competition

Rise
Rise of
of Megaretailer
Megaretailer

Growing
Growing Importance
Importance of
of Retail
Retail Technology
Technology

Global
Global Expansion
Expansion of
of Major
Major Retailers
Retailers

Retail
Retail Stores
Stores as
as “Communities”
“Communities” or
or “Hangouts”
“Hangouts”
THE WHEEL OF RETAILING
High Margin
High Price
High Status

11
33
22
22 33 Low Margin
Low Price
Low Status
11
11 11=
=Discount
Discount
22=
=Superstore
Superstore
22 33 44 33=
=Warehouse
WarehouseClub
Club
44=
=Combination
CombinationStore
Store
WHAT IS WHOLESALING?
 All the activities involved in selling goods and
services to those buying for resale or business use.
 Wholesaler - those firms engaged primarily in
wholesaling activity.
 Wholesalers buy mostly from producers and sell
mostly to:
 Retailers,
 Industrial
consumers, and
 Other wholesalers.
WHY ARE WHOLESALERS USED?
Wholesalers are Often Better at Performing One or More
of the Following Channel Functions:
Management
Management Selling
Selling and
and
Services
Services && Advice
Advice Promoting
Promoting
Market
Market Buying
Buying and
and
Information
Information Assortment
Assortment Building
Building
Wholesaler
Functions Bulk
Risk
Risk Bearing
Bearing Bulk Breaking
Breaking

Financing
Financing Warehousing
Warehousing

Transportation
Transportation
 TYPES OF WHOLESALERS
Merchant Wholesaler
Independently Owned
Business that Takes Title to the
Merchandise it Handles.

Manufacturers’ Sales
Branches and Offices
Wholesaling by Sellers or Brokers/ Agents
Buyers Themselves They Don’t Take Title to
Rather Than Through the Goods, and They
Independent Perform Only a Few
Wholesalers. Functions.
WHOLESALER MARKETING DECISIONS

Wholesaler
Wholesaler
Wholesaler
Wholesaler Marketing
Marketing Mix
Mix
Strategy
Strategy
Product
Product and
and service
service
Target
Target Market
Market assortment
assortment
Service
Service Prices
Prices
Positioning
Positioning
Promotion
Promotion

Place
Place (location)
(location)
TRENDS IN WHOLESALING

Consolidation
Consolidation within
within the
the Industry
Industry isis Reducing
Reducing #
# of
of Wholesalers
Wholesalers

Distinction
Distinction Between
Between Large
Large Retailers
Retailers and
and Wholesalers
Wholesalers Blurs
Blurs

Wholesalers
Wholesalers Will
Will Continue
Continue to
to Increase
Increase the
the Services
Services Provided
Provided

Wholesalers
Wholesalers Are
Are Beginning
Beginning to
to Go
Go Global
Global
REST STOP:
REVIEW OF CONCEPT CONNECTIONS
1. Explain the roles of retailers and wholesalers in the
distribution channel.
2. Describe the major types of retailers and give examples of
each.
3. Identify the major types of wholesalers and give examples of
each.
4. Explain the marketing decisions facing retailers and
wholesalers.
SEE YOU NEXT…..IN CHAPTER 13
INTRODUCTION
 An intermediary involved in selling
goods and services to ultimate
Retailer consumers (examples?)

An intermediary that takes title

Wholesaler to the goods it handles and
redistributes them to retailers,
other distributors, and
sometimes end consumers
•Employs 15 million people in the U.S.
•Accounts for $4.5 trillion to the U.S.
STRATEGIC IMPLICATIONS: RETAIL
MARKETING STRATEGY
 A retailer develops a marketing strategy
based on the firm’s goals and strategic plans
 Two fundamental steps:
1. Picking a target market: size and profit
potential. POSITION.
2. Developing a retailing mix to satisfy the
chosen target market
1. 4Ps + Personnel & Presentation used to create a
retail image
THE RETAILING MIX
Product
Product
Personnel
Personnel Place
Place

Target
Market

Presentation
Presentation Promotion
Promotion

Price
Price
CHOOSING THE MERCHANDISING MIX

The mix of products offered to the

consumer by the retailer; also called
the product assortment or
merchandise mix.
 MERCHANDISING (PRODUCT)
STRATEGY

 Category management: Retailing strategy which views each

product category as an individual profit center.

 Slotting Allowances: lump-sum payments by manufacturers

for stocking new products.

 Scrambled Merchandising: Combining dissimilar product

lines to boost sales volume.

 Growth of Store brands – Battle for shelf space

PRESENTATION OF THE RETAIL
STORE - ATMOSPHERE

The overall impression

conveyed by a store’s physical
layout, décor, and
surroundings.
Five Senses.
PERSONNEL AND CUSTOMER SERVICE

Trading
Trading Up
Up
Two Common
Selling
Techniques
Suggestion
Suggestion Selling
Selling
PRICE
The amount of money the retailer
makes as a percentage of sales after
the cost of goods sold is subtracted.

Price
Priceand
andpayment
payment options
options::how
how important?
important?
http://www.youtube.com/watch?v=kMimygVTgbU
http://www.youtube.com/watch?v=kMimygVTgbU
CLASSIFICATION OF RETAIL BY
1. Ownership (independent, franchise chain)
2. Service level (Nordstrom vs. Wal-mart)
3. Assortment (CVS vs. Smith’s)
4. Price (Tiffany vs. jewelry kiosk)
WHEEL OF RETAILING
 Newer, low-price types of retailing arise
to challenge older established “bigger”
retailers.
WHEEL OF RETAILING
Motel 3 Motel
+ Free Breakfast
+ HBO
+ Free Breakfast 4
+ HBO
+ Happy Hour

2
New Entrant
Motel
+ Free Breakfast

No Frills 1
Motel

a theory to explain the institutional changes

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
 More innovative e-tail sites
 Printing online www.printresponsibly.com

 Nike ID http://nikeid.nike.com

 Zappos http://www.zappos.com
FUTURE OF RE[E]TAILING
 http://www.youtube.com/watch?v=jtiJaX6q1i0
RETAIL MARKETING MIX AND PLANNING

Charles Blankson, Ph.D.

THE NATURE OF RETAIL MARKETING
 The key aspects of retail marketing is an attitude of
mind.
 In making retail marketing decisions, retailers must
consider the needs of the customers.
 Retail marketing decisions are driven by what the
shoppers need and want.
2
THE NATURE OF RETAIL MARKETING
…
 Retail marketing is therefore a philosophy and is all
about satisfying the customers
 What the customers regard as value and what they buy is
decisive.
 What the customers buy determines the nature of the
retailer’s business.
3
THE NATURE OF RETAIL MARKETING
 The essence of retail marketing is developing
merchandise and services that satisfy specific
needs of customers, and supplying them at prices
that will yield profits.

 Retailers
must take the customers’ needs into
consideration in retail operation.
4
THE NATURE OF RETAIL MARKETING
 Retail marketing is stimulating, quick-paced, and
influential.

 Itencompasses a wide range of activities

including:
 Environmental analysis
 Market research
 Consumer analysis
 Product planning etc.

5
THE CONCEPT OF RETAIL
MARKETING
 The retail marketing concept is the acceptance by the
retailer that it is the “customer” and not “demand” that lie at
the core of the retail organisation.
 The retail marketing concept is a philosophy, not a system
of retailing or retail structure.
 It is founded on the belief that profitable retailing and
satisfactory returns on investment can only be achieved by
identifying, anticipating and satisfying customer needs and
desires.
 It is an attitude of mind that places the customer at the very
centre of retailing activities.
71
IMPORTANCE OF MARKETING IN
RETAILING
 Marketing is a vital tool for every retailer, as it identifies current,
unfulfilled needs and wants, which it defines and quantifies.
 Marketing determines which target groups the retailer should serve.
 Marketing could be seen as delivering an acceptable standard of living.
 Marketing can ensure complete satisfaction and sustained customer
loyalty.
 Marketing depends on the efficient co-ordination of consumer
prediction, product development, packaging design and influencing
demand through appropriate communication medium.
 From these, a suitable mix is achieved.
72
RETAIL MARKETING
OBJECTIVES
 The retail marketing objective is a performance
parameter which has been explicitly stated.
 It can be stated in quantifiable terms and time terms so
that results can be measured against it.
Three types of retail objectives include:
1. Basic objective – those which defines retailer’s long-
term purposes.
2. Goals – those which the retailer must achieve to be
successful
3. Targets – short-term goals that require immediate
achievement.
73
RETAIL MARKETING MIX
 Retail marketing mix is the term used to describe the
various elements and methods required to formulate and
execute retail marketing strategy.
 Retail managers must determine the optimum mix of
retailing activities and co-ordinate the elements of the
mix.
 The aim of such coordination is for each store to have a
distinct retail image in consumers’ mind.
 The mix may vary greatly according to the type of
market the retailer is in, and the type of product/services.
74.
RETAIL MARKETING MIX
While many elements may make up a firm’s retail marketing
mix, the essential elements may include:
 Store location,
 merchandise assortments

 Store ambience,

 customer service,

 price,

 Communication with customers

10
MIX …
 Personal selling
 Store image
 Store design
 Sales incentives
 People
 Process
 Physical evidence
11
THE MIX PLANNING
The retail marketing mix is the vehicle through which a
retailer’s marketing strategy is implemented and, in
planning the mix, retailers should be guided by three
basic principles:
1. The mix must be consistent with the expectation of
target customers;
2. Elements must be consistent with each other to create
synergy; and
3. The mix must be responsive to competitive strategy.
77.
COMPOSITION OF KEY
ELEMENTS
 Place
 Product
 Price
 Promotion
 People
 Process
 Physical Environment

13
KEY ELEMENT
Place (store location)
 Target market

 Channel structure

 Channel management

 Retailer image

 Retail logistics

 Retail distribution

14
KEY ELEMENT
Product (merchandise)
 Product development

 Product management

 Product features and benefits

 Branding

 Packaging

 After-sales services

15
KEY ELEMENT
Price
 Costs

 Profitability

 Value for money

 Competitiveness

 Incentives

 Quality

 Status

16
KEY ELEMENT
Promotion
 Developing promotional mixes

 Advertising management

 Sales promotion

 Sales management

 Public relations

 Direct marketing

17
KEY ELEMENT
People element
 Staff capability
 Efficiency
 Availability
 Effectiveness
 Customer interaction
 Internal marketing
18
KEY ELEMENT
Process element
 Order processing

 Database management

 Service delivery

 Queuing system

 Standardisation

19
RETAIL MARKETING PLANNING
 Retail marketing plan consists of:
 Setting objectives

 Systematic way of identifying a range of options.

 Formulation of plans for achieving goals

 Logical sequence of retailing activities.

85
IMPORTANCE OF RETAIL MARKETING
PLANNING
 Hostile and complex retail marketing environment
 External and internal retail organisation factors interact
 Maximising revenue
 Maximising profit
 Maximising return on investment
 Minimising costs
 Each element has conflicting needs
 All these variables interact
 All these variables result in optimum compromise.

86.
MANAGERIAL USE
 To help identify sources of competitive
advantage.
 To force an organised retail approach
 To develop specific areas of retail activities.
 To ensure consistent relationships between
retail organisation and its proximate
environment.
 To inform customers, suppliers and
competitors.
87.
APPROACHES TO PLANNING
Top down approach
 Retail management sets goals and plans for all levels of
management.
Bottom up approach
 Various units prepare own goals and plans sent up for
approval.
88.
TYPES OF PLANNING
 Annual plan – short term and tactical.

 Long range – three to five years relating to

strategic retail management.

 Strategic plans – five to ten years long term plans

relating to the adaptation of the retailing approach.
89
SHORT-TERM RETAIL PLANNING
Short-term
Tactical planning relating to:
 Current retail marketing position
 Strategy for the year
 Objectives for the year
 Action , budgets and controls.
 Coordinating retail activities within departments.

25
LONG-TERM PLAN
Long-term
Medium range planning relating to:
 Major factors and forces affecting the retailer.

 Long-term objectives.

 Resources required.

 Reviewed and updated regularly.

 Deals with current business

26
STRATEGIC RETAIL PLANNING
 This is the process of developing and maintaining
a strategic fit between the retail organisation’s
capabilities and its changing marketing
opportunities.

 Itrelies on developing a clear corporate mission,

supporting objectives, creating a sound business
portfolio, and coordinating functional strategies.
92.
CORPORATE LEVEL PLANNING

 Retail management should plan which business the

retailer should stay in and which new areas to
pursue.
 Design the retail organisation to withstand shocks.

 Adapt the organisation to take advantage of market

opportunities.
 Define the corporate mission.

93.
MISSION STATEMENT
 A strategic plan should begin with a mission
statement.
 A mission statement is a statement of the retail
organization’s purpose, what it wants to achieve in
the large environment.
 It guides people in the retail organization so that
they can work independently and yet collectively
towards overall organizational goals.
94.
EXAM TYPE QUESTION
 It is the effective blending of all the elements of retail
marketing mix activities within the retail organization
that determines the success of retail marketing
management. Discuss this statement and explain with
retail examples how the elements of retail marketing mix
could be blended to ensure the success of retail
operation.

 Mastering the process of trying to optimise the retail

marketing mix still defies and frustrates most retail
managers. Explain why personal guesswork and
intuitions are used by retail managers most of the time.
30
TYPES OF RETAILERS
 Retailers are classified based on:
 Amount of service they offer
 Breadth & depth of product lines
 Relative prices charged
 How they are organized
AMOUNT OF SERVICE
 Self-Service Retailers:
 Serve customers who are willing to perform their own “locate-
compare-select” process to save money.
 Limited-Service Retailers:
 Provide more sales assistance because they carry more shopping
goods about which customers need information.
 Full-Service Retailers:
 Usually carry more specialty goods for which customers like to be
“waited on.”
PRODUCT LINE CLASSIFICATION
 Specialty stores
 Department stores
 Supermarket
 Convenience stores
 Superstores
 Category killers
 RELATIVE PRICES CLASSIFICATION
 Discount stores
 Off-price retailers
 Factory outlet
 Independent off-price retailers
 Warehouse club
ORGANIZATIONAL
CLASSIFICATION
 Chain Stores
 Voluntary chain
 Retailer cooperative
 Franchise
 Merchandising conglomerates