Retail Marketing

1
Retail Marketing

• Lecturer S. van Renssen

2
Literature

• Introduction to Retailing,
• Lusch, Dunne, Carver
• ISBN 978-0-538-75507-8

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Overview
1.1 Introduction to Retail Marketing Ch. 1, 2
1.2 Retail Customers and Competition in retail Ch. 3, 4
1.3 Managing the supply chain, Legal and ethical behavior Ch. 5, 6
1.4 Market selection and location analysis Ch. 7
1.5 Managing retailers finances Ch. 8, 9, 10
1.6 Creating the proposition Ch. 10, 11, 12
1.7 People and organisation Ch. 14
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Learning Objectives

• Explain what retailing is.
• Describe trends in retailing
• Describe the five methods used to categorize
  retailers.
• Explain different methods for the study of
  retailing

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What is Retailing?

• Retailing
• Consists of the final activity and steps
  needed to place a product in the hands of the
  consumer or to provide services to the consumer.

6
Modern retailing

• Retailer Category Management
• Manufacturer Trade Marketing

7
Distribution Diagram
Your brand
Competing brand
Wholesaler
Trade marketing
Consumer marketing
Retailer
Retailmarketing
Consumer
8
Phases in the cooperation between manufacturer
and retailer
9
Trends in retailing

• Growth of E-tailing
• Price competition
• Internationalisation
• Demographic shift
• Store size increasing

10
Categorizing Retailers

• By industry or branch of activity (type of
  business)
• Number of Outlets
• Store Format (margin versus turnover)
• Location
• Size

11
Classification by industry or branch of activity

• The United Nations system (ISIC, rev.4).
  Classification is by industry or branch of
  activity (one digit), with further subdivision
  into classes (two digits) and sub-classes (three
  digits).

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ISIC Code ISIC Code Formal description Common description
471   Non-specialized retail trade in stores  
  4711 Retail sale in non-specialized stores with food, beverages or tobacco predominating Supermarkets
  4719 Other retail sale in non-specialized stores Department stores
472   Retail sale of food, beverages and tobacco in specialized stores  
  4721 Retail sale of food in specialized stores This class includes - meat and meat products incl poultry - fish and seafood - fruit and vegetables - bakery products - confectionery and nuts stores - bottled water and soft drink stores - coffee stores - spice stores - other miscellaneous specialty food stores - beer, wine, and liquor stores - health food supplement stores - vitamin stores - tobacco stores
  4722 Retail sale of beverages in specialized stores retail sale of beverages - alcoholic beverages - non-alcoholic beverages
  4723 Retail sale of tobacco products in specialized stores retail sale of tobacco and tobacco products
473   Retail sale of automotive fuel in specialized stores  
  4730   Retail sale of automotive fuel in specialized stores
474   Retail sale of information and communications equipment in specialized stores  
      Computers, peripheral units, software and telecommunications equipment in specialized stores
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Classification by Number of Outlets

• Single independent store (mum-and-dad store)
• Small chains (2-9 outlets)
• Medium sized chains (10 50 outlets)
• Large chains (50 outlets)

Retailers with several outlets are stronger
because they can spread fixed costs
14
Classification by Store Format

• Discount stores
• Convenience stores
• Specialist stores
• Style shops
• Branded goods shops
• Service shops
• Locally specific shops
• Non-store retailers
• Supermarkets
• Hypermarkets
• Department stores

15
Margins Versus Turnover

• Gross Margin
• Is net sales minus the cost of goods sold.
• Gross Margin Percentage
• Is the gross margin divided by net sales or what
  percent of each sales is gross margin.

16
Margins Versus Turnover

• Operating Expenses
• Are the expenses the retailer incurs in running
  the business other than the cost of the
  merchandise.
• Inventory Turnover
• Refers to the number of times per year, on
  average, that a retailer sells its inventory.

17
Margin versus Turnover
Margin
Turnover
18
Classification by Location

• Free Standing Sites
• City or Town Locations
• Inner City
• Main Street
• Shopping Centers
• Strip Shopping Centers
• Shopping Malls
• Other Location Opportunities

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Classification by Size

• m2 Sales Area
• Number of employees (f.t.e.)
• Sales volume
• Larger retailer have lower operating costs per
  sales than smaller firms

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Assignment 1.

• Go to www.careersinretailing.com
• Pick any of the listed retailers.
• As a manager for your selected retailer, compare
  your retailers web site to that of several other
  retailers.
• What changes would you make to your web site? You
  want to use your web site to make individuals
  interested in working for your retail enterprise.
  

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A career in retailing

• Hard Work
• Analytical Skills
• Creativity
• Decisiveness
• Flexibility
• Initiative
• Leadership
• Organization
• Risk Taking
• Stress Tolerance
• Perseverance
• Enthusiasm

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The Study and Practice of Retailing
(P. 32)
Analytical Method Manager is finder
and investigator of facts.
Creative Method Manager is conceptual and very
imaginative.
Two-Pronged Method Manager who employs
both approaches.
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Strategic Planning in Retail
Mission statement Statement of goals and
objectives Financial objectives Productivity
objectives Societal objectives Personal
objectives Strategies SWOT analysis
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Elements of a Mission Statement

• How the retailer uses or intends to use its
  resources
• How it expects to relate to the ever-changing
  environment
• The kinds of values it intends to provide in
  order to serve the needs and wants of the consumer

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Components of Strategic Planning

• Goals and Objectives are the performance results
  intended to be brought about through the
  execution of a strategy.
• Market performance objectives
• Financial performance objectives

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Market Performance Objectives

• Sales Volume
• Market Share (sales)
• Market share (sales volume)

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Financial Performance Objectives

• Net Profit Margin
• Asset Turnover
• Return on Assets
• Financial Leverage
• Return on Net Worth

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Strategic Profit Model
Net Profit Margin
Net Profit ? Total Sales
Return on Assets
Financial Leverage
Return on Net Worth
x

x

Net Profit ? Total Assets
Total Assets ? Net Worth
Net Profit ? Net Worth
Asset Turnover
Total Sales ? Total Assets
Net profit after taxes
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Retail Objectives
Sales Volume
Profitability
Market Share
Financial Performance Objectives
Productivity
Market Performance Objectives
Retail Mission
Employment
Personal Objectives
Societal Objectives
Self- Gratification
Taxes
Power and Authority
Consumer Choice
Equity
Status and Respect
Benefactor
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Strategy

• Strategy
• Is a carefully designed plan for achieving the
  retailers goals and objectives.

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Retail Strategies

• Get shoppers into your store.
• Convert these consumers into customers
• by having them purchase merchandise.
• Do this at the lowest operating cost
• possible that is consistent with the
• level of service that your customers expect.

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Environmental analysis

• SWOT Analysis
• Is the identification and analysis of a
  retailers strengths and weaknesses and the
  opportunities and threats the firm faces.

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Strategy

• Retail mix
• Is the combination of merchandise, assortment,
  price, promotion, customer service, and store
  layout that best serves the segments targeted by
  the retailer.
• Brand mix
• Is the combination of brands (manufacturer
  brands, retailer brands) of the retailer.

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Retail Strategic Planning and Operations
Management Model
Competitive Environment Behavior of Consumers,
Competition and Channel Members
Strategic Planning
SWOT Strengths Weaknesses Opportunities Threats
Goals and Objectives
Mission
Social and Legal Environment Socioeconomic
Environment, State of Technology, Legal System,
Ethical Behavior
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Retail Strategic Planning and Operations
Management Model
Competitive Environment Behavior of Consumers,
Competition and Channel Members
Retail Marketing Strategy Target Market(s)
Location(s) Retail Mix Brand
mix Merchandise Pricing Advertising Promotion
Customer Service Selling
Store Layout Design
Operations Management Buying Handling
Merchandise Pricing Advertising Promotion
Customer Services Selling Facilities
High-Profit Performance Retailing
Social and Legal Environment Socioeconomic
Environment, State of Technology, Legal System,
Ethical Behavior