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15 Retailing

15 Retailing. Dr. Close. Role of Retailing. Retailing: sale of products to final customers (personal or family use) Employs 15 million people in the U.S. Accounts for $4 trillion to the U.S. economy Customer contact – vital customer data here Wheel of retailing:

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15 Retailing

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  1. 15Retailing Dr. Close

  2. Role of Retailing • Retailing: sale of products to final customers (personal or family use) • Employs 15 million people in the U.S. • Accounts for $4 trillion to the U.S. economy • Customer contact – vital customer data here • Wheel of retailing: • Enter as low margin, low price (e.g., Izod) • Evolve higher price and service (supermarkets; electronics) • Can you think of any other products or services that evolved from shabby to sheek?

  3. Retail Strategy • Retailing is top heavy: top 5% have 53% of sales • Wal-Mart has 5% of all retail sales • Retailing is risky: ¾ fail within a year! • Non-financial risks: give up your evenings and weekends (especially during holidays) • http://www.landsend.com Lands End: Successful Aspects?

  4. Granting business rights to franchisee, who pays for the right to use the brand name, product, or methods Examples of retail franchisers: Franchising as a Retail Strategy

  5. Retail Marketing Mix • Target Market (Old Navy, Gap, Banana Republic) • Merchandise Mix (breadth or depth) • Promotion (local, in-store works) • Location, location, location • Atmosphere (temperature, music, color) • Price and payment options

  6. Price and Retail Payment

  7. How important are payment options?

  8. Ownership (indy, franchise chain) Service level (Nordstrom vs. Wal-mart) Assortment (CVS vs. Smith’s) Price (Tiffany vs. jewelry kiosk) Classification of Retail by

  9. Specialty Stores • A type of retailer • Conventional: know examples of… • Traditional: general store: anything sold in volume (why gone?) • Focus develops: • Single line: one type (hardware, sporting goods, and what else??)

  10. Specialty Stores, cont. • Category killers/specialists (modern form of single line) • Specialized mass; all in line (Toys R Us; Circuit City; Home Depot) • “kill” type of merchandise

  11. Department Stores • Limited line: part of type; slow movers • Specialty shop: hi end, hi service, expanded assortment • Department store: each department has a limited line; decline since 50s; shopping products • High costs and competition

  12. Discount Stores • Scrambled merchandise: anything sells in volume (supermarkets, Rx) • Mass merchandising concept: • Low price and turnover to spur sales volume through bigger markets

  13. Discount Stores, cont. • Discount full-line mass merchandisers (Reg. Wal-Mart & K-Mart) • What? Large, self service stores focusing on • Soft goods (housewares, fabrics, apparel) & • Staples (smooth demand, health and beauty) • Low price, low service, high turnover

  14. Discount Stores, cont. • Off-price retailers (Marshalls, Ross, TJ Maxx) • Supercenters (Super Wal-Mart, Super Target, Big K) • All routine needs at low price • Mass merchandise + groceries

  15. Supermarkets • Large, self-service retailer with grocery specialty • Self-scanning trend: what is your take? • Competition: fierce, 1% profit on many items

  16. Warehouse Clubs • Warehouse club / wholesale club (Sam’s, Costco) • No frills, members only (why?) • Bulk purchases: price competition, homogeneous shopping goods

  17. 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

  18. Non-Store Retailing • Vending: hi costs; hi prices (flat sales) • Vending is a $40 billion U.S. market • Cashless vending=wave of future • Direct Marketing (Mail, Catalog, Telemarketing) • E-tailing (TV shopping, online) • M-commerce: buy from mobile devices (e.g., cell phones)

  19. 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?)

  20. eTail • More innovative e-tail sites • Mondera http://www.mondera.com • Nike ID http://nikeid.nike.com • Zappos http://www.zappos.com

  21. E-cart abandonment • When you put an item in your online cart, and do not complete the purchase during that Internet session. • A common practice Why do we do this?

  22. E-cart abandonment • Top reasons for e-cart abandonment: • Research/organization use • Privacy/security issues • Frustration of the length of the checkout process • Total cost (including shipping, handling, and/or tax if applicable) • Desire to wait for a sale price (online or offline) • E-shopping for mere entertainment (versus a true intention to buy)

  23. Summary • Role of retailing • Retail strategy • Retail Marketing Mix • Types of retailers • Non-store retail • E-tail • Any questions??

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