CHAPTER ONE

Retailing encompasses the business activities involved in selling goods and services to consumers for their personal, family, or household use. It includes every sale to the final consumer.

Consists of the final activities and steps needed to place merchandise made elsewhere into the hands of the consumers or to provide services to consumers

Rank

Company

Main Emphasis

TESCO, GIANT, Full-line discount stores, supercenters, membership clubs JUSCO.MY MYDIN CELEBRITY FIRNESS WATSON, GURDIAN IKEA PARKSON, METROJAYA, ISETAN THE STORE, BILLIONS Membership clubs Drugstores Home centers Department stores, specialty stores

2 3 4 5

Supermarkets

Sell

the variety of product for consumer to purchase. Divide large quantities into consumer-sized lots. Credit facilities Service after sales Provide information.

Physical

facilities close to consumers residences Distribution the product on behalf manufacturer and wholesaler Risk taking Storage facilities Involve in final process

 Fulfill Job

the needs of customers and enhance the living cost opportunities the unemployment rate

Decrease Building Expand

relationship between manufacturer and consumer to the global market (e-commerce) the income of small retailer and

Enhance

SMEs.

RETAIL INSTITUTION

Food-Oriented Convenience store Conventional supermarket Food-based superstore Combination store Box (limited-line) store Warehouse store

General Merchandise Specialty store Traditional department Full-line discount store Variety store Off-price chain Factory outlet Membership club Flea market

Food oriented retailers

well located neighborhood open long hours and carries a moderate number of items small facilities average to above average prices average atmosphere and customers service ease of shopping at convenience stores and impersonal nature of many large supermarkets appealing to their customers example like 7 eleven.

Location: Neighborhood

Prices: Average to Above average Atmosphere and Services: Average

Merchandise: Medium width and low depth of assortment; average quality

Promotion: Moderate

 A supermarket is a self-service food store with grocery, meat, and produce departments A conventional supermarket is a departmentalized food store with a wide range of food and related products; sales of general merchandise are limited. The leading chains are Kroger, Safeway, Albertsons, and Ahold USA. Many independent supermarkets are affiliated with cooperative or voluntary organizations, such as IGA and Supervalu. Example Cold Storage

Location: Neighborhood

Prices: Competitive

Merchandise: Extensive width and depth of assortment; average quality; manufacturer, private, and generic brands

Atmosphere and Services: Average Promotion: Heavy use of newspapers, flyers, and coupons

A food-based superstore is larger and more diversified than a conventional supermarket but usually smaller and less diversified than a combination store. These stores are efficient, offer a degree of one-stop shopping, stimulate impulse purchases, and feature high-profit general merchandise.

Location: Community shopping center or isolated site

Prices: Competitive

Merchandise: Full assortment plus health and beauty aids and general merchandise

Atmosphere and Services: Average

Promotion: Heavy use of newspapers, flyers

A combination store unites supermarket and general merchandise in one facility This leads to operating efficiencies and cost savings. Consumers like one-stop shopping and will travel a longer distance to get there. Impulse sales are high. Many general merchandise items have better margins than food items. Wal-Mart, Kmart, and Target operate supercenters.

Location: Community shopping center or isolated site

Prices: Competitive

Merchandise: Full assortment plus health and beauty aids and general merchandise

Atmosphere and Services: Average

Promotion: Heavy use of newspapers, flyers

 A box (limited-line) store is a food-based discounter that focuses on a small selection of items, moderate hours of operation, few services, and limited manufacturer brands. They carry fewer than 2,000 items, few refrigerated perishables, and limited assortments. Prices are on shelves or overhead signs, items are displayed in cut cases, customers bag items, and private-label brands are stressed. Prices are 20 to 30 percent below supermarkets.

Location: Neighborhood

Prices: Very low

Merchandise: Low width and depth of assortment; few perishables; few national brands

Atmosphere and Services: Low

Promotion: Little or none

A warehouse store is a food-based discounter offering a moderate number of food items in a nofrills setting. These stores appeal to one-stop food shoppers, concentrate on special purchases of popular brands, use cut-case displays, offer little service, post prices on shelves, and locate in secondary sites. Many consumers do not like shopping in warehouse settings. Also, the lack of brand continuity may limit growth.

Location: Secondary site, often in industrial area

Prices: Very low

Merchandise: Moderate width and low depth of assortment; emphasis on manufacturer brands bought at discount

Atmosphere and Services: Low

Promotion: Little or none

General merchandise retailers

specialty store concentrates on selling one goods or service line. Specialty stores carry a narrow but deep assortment in their chosen category and tailor the strategy to a given market segment. This allows for a better product selection and sales expertise than competitors. Consumers shop at specialty stores because of knowledgeable sales personnel, the variety of choices, customer service policies, intimate store size and atmosphere, the lack of crowds, and the absence of unrelated merchandise. The stores can vary in retail strategy; there are upscale stores for affluent customers and those with a discount orientation for price-conscious consumers.

Leading specialty chains include Best Buy and Circuit City (consumer electronics), Toys R Us (toys), The Limited and Gap (apparel), and Barnes & Noble and Borders (books). A specialty store can be vulnerable to seasonality or a decline in popularity for its product category because its offering is so concentrated.

Location: Business district or shopping center

Prices: Competitive to Above average Atmosphere and Services: Average to excellent

Merchandise: Very narrow width and extensive depth of assortment; average to good quality

Promotion: Heavy use of displays Extensive sales force

A department store is a large retail unit with an extensive assortment (width and depth) of goods and services that is organized into separate departments for purposes of buying, promotion, customer service, and control. To be classified as a department store, a retailer must sell a wide range of products (such as apparel, furniture, and appliances and home furnishings) and selected other items (such as paint, hardware, toiletries, cosmetics, etc.)with no one merchandise line predominating.

 At

a traditional department store, merchandise quality ranges from average to quite good, pricing is moderate to above average, and customer service ranges from medium to high levels. Traditional department stores were the first to advertise prices, enact a one-price policy, develop computerized checkouts, offer money-back guarantees, add branch stores, decentralize management, and move into suburban shopping centers. In recent years, industry wide sales growth of traditional department stores has lagged behind that of full-line discount stores.

 These

are some reasons for the difficulties: i. They no longer have brand exclusivity. ii. Many firms have been too passive with privatelabel goods. iii. There are more price conscious customers than ever. iv. The popularity of shopping malls has aided specialty stores, as malls provide one-stop shopping. v. Specialty stores have better assortments in the lines they carry.

vi.Customer

service has deteriorated. vii.Some stores are too big and have too much unproductive selling space. viii.Many department stores have a weak focus on customer market segments and a fuzzy image. ix.Such chains as Sears have repeatedly changed strategic orientation, which is confusing to customers. x. Some companies are not innovative enough.

To

overcome these difficulties, traditional department stores need

to clarify their niche; emphasize customer service; present more exciting, better-organized store interiors; better utilize space; open outlets in smaller, underdeveloped towns; and centralize more buying and promotion functions, do better research, and reach customers more efficiently.

Location: Business district, shopping center or isolated store

Prices: Average to Above average Atmosphere and Services: Good to excellent Promotion: Heavy ad and catalog use; direct mail; personal selling

Merchandise: Extensive width and depth of assortment; average to good quality

A full-line discount store is a type of department store with these features: a broad merchandise assortment for less than conventional prices; greater emphasis on such items as auto accessories, gardening equipment, and housewares; centralized checkout service and customer service; a self-service emphasis; private-brand nondurable goods and manufacturerbrand durable goods; less fashion-sensitive merchandise; and inexpensive facilities and low operating costs.

The success of full-line discount stores is due to a clear customer focus, popular brands, competitive prices, improved image, and more customer services. A number of these stores are located in small towns where competition is less intense. The greatest challenges are competition from other retailers, too rapid expansion, and saturation of prime locations.

Location: Business district, shopping center or isolated store

Prices: Competitive

Merchandise: Extensive width and depth of assortment; average to good quality

Atmosphere/Services: Slightly below average to average

Promotion: Heavy on newspapers; price-oriented; selling

A variety store handles an assortment of inexpensive and popularly priced goods and services, such as apparel and accessories, costume jewelry, notions and small wares, candy, toys, and other items in the price range. There are open displays, few salespeople, incomplete merchandise lines, and no delivery.

Location: Business district, shopping center or isolated store

Prices: Average

Merchandise: Good width and some depth of assortment; below-average to average quality

Atmosphere/Services: Below average

Promotion: Use of newspapers

An off-price chain features brand name (sometimes designer) apparel and accessories, footwear (primarily womens and family), linens, fabrics, cosmetics, and/or housewares and sells them at everyday low prices in an efficient, limited-service environment.

Location: Business district, shopping center or isolated store

Prices: Low

Merchandise: Moderate width and poor depth of assortment; average to good quality; low continuity

Atmosphere/Services: Below average

Promotion: Use of newspapers; brands not advertised; limited selling

 A factory outlet is a manufacturer-owned store selling closeouts, discontinued merchandise, irregulars, canceled orders, and, sometimes, in-season, first-quality merchandise. Manufacturers interest in factory outlets has increased for four basic reasons: They can control where their discounted merchandise is sold. They are able to achieve supplemental profits. They can decide upon store visibility, set promotion policies, remove labels, and assure the proper disposal of merchandise. They may need revenue from outlet stores to sustain their growth.

Location: Out of the way site or discount mall

Prices: Very Low

Merchandise: Moderate width and poor depth of assortment; low continuity

Atmosphere/Services: Very low

Promotion: Little

A membership (warehouse) club appeals to price-conscious consumers, who must be members to shop there. Some members are small business owners and employees who pay a membership fee to buy merchandise at wholesale prices. They account for 60 percent of total club sales.

Location: Isolated store or secondary site

Prices: Very Low

Merchandise: Moderate width and poor depth of assortment; low continuity

Atmosphere/Services: Very low

Promotion: Little; some direct mail

A flea market has many retail vendors selling a range of products at discount prices at sites not normally associated with retailing (such as racetracks, stadiums, arenas, and former supermarket and department store locations). They may be indoor or outdoor.

Location: Isolated store

Prices: Very Low

Merchandise: Extensive width and poor depth of assortment; low continuity; variable quality

Atmosphere/Services: Very low

Promotion: Limited

RETAIL INSTITUTION

It exceeds $375 billion annually 80% comes from direct marketing Web-based retailing is fastest growing area

 Customer

is first exposed to a good or service through a nonpersonal medium and then orders by mail, phone, fax, or computer Annual U.S. sales exceed $300 billion Other leading countries include
* Japan * Germany * Great Britain

*France *Italy

 Reduced costs Lower prices

Large geographic coverage Convenient to customers Ability to pinpoint customer segments Ability to eliminate sales tax for some Ability to supplement regular business

without additional outlets

 Products

purchase Costs may be underestimated Response rates to catalogs under 10% Clutter exists Long lead time required Industry reputation sometimes negative

cannot be examined prior to

DIRECT

SELLING Direct selling includes both personal contact with consumers in their homes (and other nonstore locations) and phone solicitations initiated by a retailer. The direct selling strategy mix emphasizes convenient shopping and a personal touch.

 Direct

selling revenues in the United States have risen relatively slowly. These are reasons why: a. More women now work. b. There is reduced interest in direct selling. c. Market coverage is limited by the size of the sales force. d. Sales productivity is low. e. Sales force turnover is high. f. Prices must be average to above average so that a firm is able to compensate sales personnel. g. There are various legal restrictions. h. There is a poor image associated with the term door-to-door.

vending machine is a cash- or cardoperated retailing format that dispenses goods and services. It eliminates the use of sales personnel and allows 24-hour sales. Machines can be placed wherever they are most convenient for consumers. To improve productivity and customer relations, vending machine operators are applying several innovations.

 Collection,
* * * * *

storage, and usage of relevant customer information

name address background shopping interests purchase behavior

Observation

of 80-20 rule

Project a retail presence Enhance image Generate sales Reach geographically-dispersed customers Provide information to customers Promote new products Demonstrate new product benefits

Provide customer service (e.g., email) Be more personal with consumers Conduct a retail business efficiently Obtain customer feedback Promote special offers Describe employment opportunities Present information to potential investors, franchisees, and the media

1. Brochure Web Site 2. Commerce Web Site 3. Integrated Web Site 4. The Webified Store 5. Site Integrated with Manufacturer Systems

Using

Web information entertainme nt interactive communicat ions

the

Shopping

Online selection prices convenience fun

Trust Fear Lack of security Lack of personal communication

 Develop

or exploit a well-known, trustworthy retailer name Tailor the product assortment for Web shoppers Enable the shopper to click as little as possible Provide a solid search engine Use customer information

Nontraditional retailing also includes formats that do not fit into the store and non store-based categories:
Video kiosks Airport retailing

The

video kiosk is a freestanding, interactive, electronic computer terminal that displays products and related information on a video screen; it often has a touch screen for consumers to make selections. Video kiosks can be placed almost anywhere, require few employees, and are an entertaining and easy way to shop.

These are some of the distinctive features of airport retailing: There is a large group of prospective shoppers. Air travelers are a temporary captive audience at the airport. Sales per square foot of retail space are much higher than at regional malls. Rent is about 20 to 30 percent higher per square foot.

 Airport

stores are smaller, carry fewer items, and have higher prices than traditional stores. Replenishing merchandise and stocking shelves may be difficult at airport stores because they are physically removed from delivery areas and space is limited. The sales of gift items and forgotten travel items are excellent. Passengers are at airports at all times of day so longer store hours are possible. International travelers are often interested in duty-free shopping. There is much tighter security at airports than before, which has had a dampening effect on some shopping.

Product Pricing Place Promotion Personalities

Target

market is that segment of the market that the retailer decides to pursue through its marketing efforts.

Three

criteria : Measurable market segment demographic Accessibility or the degree to which the retailer can target its promotional or distribution efforts to a particular market segment. Substantial or large enough to be profitable for the retailer.