Chapter 13 Retailing and e-distribution

1. Presentation prepared by Robin Roberts, Griffith University and Mike Spark, Swinburne University of Technology

2. Chapter 13Retailing and e-distribution

3. Chapter Objectives • Understand the purpose and function of retailers in the marketing channel • Identify major types of retailers • Explore strategic issues in retailing • Recognise the various forms of non-store retailing • Understand the characteristics of e-distribution • Examine the major types of franchising and the benefits and weaknesses of franchising

4. Retailing versus e-tailing in the florist industry Dial-Up Broadband Roses Only

5. Retailing Retailing includes all transactions in which buyers are the ultimate consumers, who intend to consume the product through personal, family or household use. Retailers • are organisations • add value • and create utility

6. Major types of retail stores • Many types of retail stores exist • Classified by breadth of products • Two general categories include: • General-merchandise retailers • Specialty retailers

7. General-merchandise retailers Department Stores • large retail organisations • wide product mixes Discount Stores • self-service, general-merchandise stores • brand name and private brand products • low prices Supermarkets • large, self-service stores • food and non food product ranges

8. General-merchandise retailers (cont’d) Superstores • giant retail outlets • food and nonfood products • most routine consumer products Hypermarkets • combines supermarket and discount Warehouse Clubs • large-scale, members-only • combining cash-and-carry wholesaling with discount retailing

9. General-merchandise retailers (cont’d) Warehouse Showrooms • large on-premise inventories • minimal services Catalog Showrooms • form of warehouse showroom • products are stored out of buyers’ reach Convenience Stores • Small stores in convenient locations • long opening hours • frequently purchased items

10. Specialty retailers Specialty retailers emphasise narrow and deep assortments There are 3 main types: • Traditional Specialty Retailers • Category Killers • Off-price retailers

11. Specialty retailers (cont’d) Traditional Specialty Retailers • narrow product mix • deep product lines • higher costs and higher margins • more product selection • product expertise • high levels of personal service

12. Specialty retailers (cont’d) Category Killers • concentrate on a major product categories • compete on low prices and availability Off-Price Retailers • buy seconds, overruns, returns and off-season merchandise • charge less than department stores for comparable merchandise • offer fewer customer services

13. Strategic issues in retailing Consumer purchases may result from social and psychological influences Consumers shop for various reasons, retailers must do more…. Factors affecting location • Intended target market trading area • Types of products being sold • Suitability of site for customer access • Customer characteristics • Location of competitive retail operations

14. Strategic issues in retailing (cont’d) Types of Locations • Central business district (CBD) • Free-standing structures • Neighbourhood • Community • Regional Emerging types • Factory outlet centres • Miniwarehouse centres • Non-anchored centres

15. What factors should Aldi consider when selecting locations for its new stores? Dial-Up Broadband Today Tonight footage courtesy of Seven Network

16. Types of traditional shopping centres • Neighborhood Shopping Centres • several small convenience and • specialty stores • Community Shopping Centres • one or more department stores • some specialty and convenience stores • Regional Shopping Centres • home to large department stores • widest product mix • deepest product lines

17. Types of emerging or non-traditional shopping centres • Factory Outlet Centres • feature discount and factory outlets • carrying traditional brand names • Miniwarehouse Centres • loosely planned centres that lease to retailers running stores out of warehouse bays • Non-anchored Centres • do not have traditional ‘anchors’ • combine off-price and category killer stores in a ‘power centre’ format

18. Strategic issues in retailing (cont’d) Retail positioning • Identifying an unserved or underserved market segment • a strategy that distinguishes the retailer from others in the minds of consumers in that segment Store image • Atmospherics • Interior layout • Exterior storefront and entrance design

19. Strategic issues in retailing (cont’d) Scrambled merchandising • addition of unrelated products and product lines to an existing product mix • particularly fast-moving items that can be sold in volume Intent of scrambled merchandising: • one-stop shopping focus • Generate customer traffic • Realise higher profit margins • Increase impulse purchases

20. Strategic issues in retailing (cont’d) The wheel of retailing A hypothesis holding that new retailers usually enter the market as low-status, low-margin, low-price operators but eventually evolve into high-cost, high price merchants

21. The Wheel of Retailing

22. Non-store retailing Non-store retailing is the selling of products outside of the confines of a retail facility Three factors spurring growth: • Consumers • poorly informed sales force • Impact of older generation

23. Direct marketing Direct marketing— use of telecommunications and non-personal media to introduce products • Catalogue marketing • Direct-response marketing • Telemarketing • Television home shopping • Online retailing

24. Direct marketing Catalogue Marketing A type of marketing in which an organisation provides a catalogue from which customers can place orders by mail, telephone and the internet

25. Direct marketing (cont’d) • Direct-response marketingA type of marketing that occurs when a retailer advertises a product and makes it available through mail or telephone orders • TelemarketingThe performance of marketing-related activities by telephone

26. Direct marketing (cont’d) • Television home shoppingCan buy them by calling a toll-free number and paying with a credit card • Online retailingMakes products available to buyers through computer connections

27. Direct selling • Direct sellingThrough face-to-face sales presentations at home or in the workplace • Benefits • Convenience of time and place of presentation • Personal attention to customer • Limitations • High costs make it the most expensive form of selling • Negative consumer view of direct selling

28. Automatic vending • Automatic vendingUse of machines to dispense a product and used for small, routinely-purchased products • Benefits • continuous and efficient service • Limitations • high costs of equipment • possible frequent servicing and repairs • impersonal means of selling

29. e-distribution The role of e-distribution is to make the products available at the right time, at the right place, in the right quantities • IT advances are allowing close synchronisation and cooperation between external suppliers and the firm and • internally between the manufacturing and customer contact operations

30. B2B e-distribution B2B e-distribution has benefited from organisational resources available to build technologically advanced networks among manufacturers and supply chain members. Extranets • secure Web-based networks that connect companies with their customers and suppliers • B2B e-marketing infrastructures make the whole channel process more efficient

31. e-tailing • The Internet is becoming a major retail venue. • Security remains an issue which stops customers from using the online purchasing facilities. • As encryption technology improves, the trust and confidence of customers will make this an escalating opportunity for satisfying customer needs, particularly for information-based products and trading.

32. Franchising A form of licensing in which a franchiser in exchange for a financial commitment, grants a franchisee the right to market its product in accordance with the franchiser’s standards.

33. Franchising Retail franchises fall into three major categories: • Manufacturer authorises number of retail stores • Trucks, cars, shoes, paint, petrol • Producer licences to sell a given product to retailers • Soft drink industry • Franchiser supplies brands names, techniques or services • McDonalds, Gloria Jeans, Greens