CHAPTER 16 Retailing: Bricks and Clicks

1
CHAPTER 16Retailing Bricks and Clicks
M A R K E T I N G
Real People, Real Choices Fourth Edition
2
Retailing

• The process by which products are sold to
  consumers for personal use
• 1 in 5 US workers are in retailing
• Over 1.2 million retail firms
• Only 8 have annual sales of over 2.5 million

3
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

4
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

5
Whats in Store for the Future

• Demographics
• Working consumers
• Drive up windows
• Expanding store hours
• Shopping consultants
• Mail / internet / phone orders
• Catering to younger age segments (with greater
  purchasing power)
• E.g. Pacific Sunwear, Hot Topic
• Ethnic diversity
• Increasing Spanish Asian populations

6
Whats in Store for the future

• Technology
• Instant data capture and integration with
  ordering systems e.g. JC Penney
• Skipping checkout lines
• Virtual displays (e.g. furniture in your living
  room clothes on your body, etc.)

7
Classifying Retailers by what they sell

• Grocery stores, departmental stores, fast food
  restaurants, gas stations, etc.
• Some lines still blurred
• scrambled merchandising strategy of carrying a
  combination of food and nonfood items

8
Classifying Retailers by Service

• Trade-off between service levels and prices
• Self-service retailers e.g. Sams Club
• Full-service retailers e.g. Neiman Marcus, Saks.
• Limited-service retailers e.g. Walmart, Target,
  Old Navy, Kohls, etc.

9
Classifying by Merchandise Selection

• Merchandise breadth is the number of different
  product lines available
• Narrow assortment (e.g. convenience store)
• Broad assortments (e.g. warehouse club)
• Merchandise depth is the variety of choices
  available for each specific product
• Shallow assortment (e.g. factory outlet for Polo)
• Deep assortments (e.g. departmental store)

10
Store Types

• Convenience stores (e.g. 7-Eleven)
• Pay higher prices for close to home shopping
• Supermarkets
• Grocery stores like Food Lion, etc.
• Specialty stores
• Narrow and deep inventories (e.g. cigars
  tobacco stores in malls)
• Department stores
• E.g. Macys, Dillards, etc.

• Discount stores
• General merchandise discount stores (e.g.
  Walmart, Kmart)
• Off-price retailers (e.g. TJ Maxx)
• Warehouse clubs (e.g. Costco)
• Factory outlet stores
• Hypermarkets four to five times larger than a
  supermarket - Carrefours

11
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

12
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 (e.g. Tupperware parties)
• multilevel pyramid schemes (e.g. Amway)

13
Automatic Vending

• Appealing for selling convenience goods because
  of small space required, and minimal personnel to
  maintain and operate
• New innovations
• Ore-Ida French fries
• Software
• Levis jeans

14
E-Commerce and the Customer

• Benefits
• Shop 24/7
• Less travel
• More choices
• More information
• Price competition
• Fast delivery

• Limitations
• Lack of security
• Fraud
• Cant touch items
• Hard to distinguish color/ texture online
• Expensive to return

15
E-Commerce and the Marketer

• Benefits
• The world is your marketplace
• Decreases costs
• Tracking of consumer behavior

• Limitations
• Lack of security
• Must maintain site
• Price competition
• Conflicts with conventional retailers

16
Developing a Store Positioning Strategy

• Store image
• how should the target market perceive the store
  exciting (REI stores), old-fashioned (Wilkins,
  furniture), edgy and hip (Hot Topic), elegant and
  refined (Saks), etc.
• Atmospherics
• the use of color, lighting, scents, furnishings,
  sounds, and other design elements to create a
  desired setting

17
Store Design Setting the Stage

• Store layout and traffic flow (e.g. grid layout
  in a grocery store)
• Fixture type and merchandise density (e.g. wooden
  racks vs. metal racks) clutter, sitting areas,
  etc.
• The sound of music (e.g. Nordstrom)
• Color and lighting (warm colors stimulate
  appetite, pink preferred by womens cosmetics)
• The Actors Store Personnel uniformed ushers,
  etc.

18
Building the Store Store Location

• Types of locations
• Business District (downtown)
• Shopping centers (Malls)
• Lifestyle centers (e.g. Manchester Village)
• Freestanding retailer (Walmart, IKEA)
• Non-traditional locations carts, kiosks, etc.