CHAPTER 16 Retailing: Bricks and Clicks

1. M A R K E T I N G Real People, Real Choices Fourth Edition CHAPTER 16Retailing: Bricks and Clicks

2. Chapter Objectives • Define retailing and understand how retailing evolves • Describe how retailers are classified • Describe the more common forms of nonstore retailing • Describe the B2C e-commerce, its benefits, limitations, and future promise • Understand the importance of store image to a retail positioning strategy and explain how a retailer can create an image in the marketplace

3. Retailing • Final stop on the distribution path • The process by which products are sold to consumers for personal use • Retailers add value with image, inventory, service quality, location, and pricing policies

4. The Wheel of Retailing • New types of retailers find it easiest to enter the market by offering goods at lower prices than competitors; after they gain a foothold, they gradually trade up, improving facilities and increasing the quality and assortment of merchandise, and offering special amenities; upscaling increases costs causing prices to rise; higher prices open the door for a new entrant charging lower prices

5. Retail Life Cycle • Retailers are also products because they provide benefits and must offer a competitive advantage to survive • Introduction: new retailer takes a unique approach to doing business • Growth: retailer catches on with shoppers, sales and profits rise, others start to copy it so retailer expands offerings • Maturity: many have copied it and an entire industry has formed, profits decline • Decline: retail format becomes obsolete

6. What’s in Store for the Future • Demographics • Technology • Globalization

7. Major Demographic Factors • Convenience for consumers • Catering to specific age segments • Recognizing ethnic diversity

8. Classifying Retailers • All retailers are classified by the NAICS codes • Some lines still blurred • scrambled merchandising – strategy of carrying a combination of food and nonfood items

9. Classifying Retailers by Service • Self-service retailers • Full-service retailers • Limited-service retailers

10. Classifying by Merchandise Selection • Merchandise breadth is the number of different product lines available • Narrow versus broad assortments • Merchandise depth is the variety of choices available for each specific product • Shallow versus deep assortments

11. Convenience stores Supermarkets Specialty stores Department stores Hypermarket stores Discount stores General merchandise discount stores Off-price retailers Warehouse clubs Factory outlet stores Store Types

12. Nonstore Retailing • Any method a firm uses to complete an exchange that does not require a customer visit to a store • Direct selling • Automatic vending

13. Direct Selling • Direct selling occurs when a salesperson presents a product to one individual or a small group, takes orders, and delivers the merchandise • Door-to-Door Sales • Parties and Networks • party plan systems • multilevel pyramid schemes

14. Automatic Vending • Appealing for selling convenience goods because of small space required, and minimal personnel to maintain and operate • French fries • Software • Levi’s jeans

15. Benefits Shop 24/7 Less travel More choices More information Price competition Fast delivery Limitations Lack of security Fraud Can’t touch items Hard to distinguish color/ texture online Expensive to return E-Commerce and the Customer

16. Benefits The world is your marketplace Decreases costs Very specialized businesses possible Real-time pricing Tracking of consumer behavior Limitations Lack of security Must maintain site Price competition Conflicts with conventional retailers Legal issues not resolved E-Commerce and the Marketer

17. Developing a Store Positioning Strategy • Store image • how the target market perceives the store • its market position relative to the competition • Atmospherics • the use of color, lighting, scents, furnishings, sounds, and other design elements to create a desired setting

18. Store Design: Setting the Stage • Store layout and traffic flow • Fixture type and merchandise density • The sound of music • Color and lighting • The Actors: Store Personnel • Pricing policy

19. Building the Theater: Store Location • Types of locations • Site selection • Location planners evaluate trade area and conduct site evaluation • traffic flow, number of parking spaces available, ease of delivery access, visibility from street, local zoning laws, population characteristics, community life cycle, mobility, degree of competition

20. Site Selection • Reflect growth strategy • Convenient to customers in trade area • Population characteristics • Degree of competition • Target market location

21. Issues for Discussion • Why do retailers usually enter with low-priced goods and then increase over time? Is this the right path for all retailers? • Is Wal-Mart’s power in the marketplace good for consumers? For retailing? Why do some communities prevent Wal-Mart from opening? • Do you feel that atmospherics affect your purchase behavior? • What effect will the growth of e-retailing have on traditional retailing?