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15Retailing
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:
• 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?
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: Lands End:
Successful Aspects?Successful Aspects?
Franchising as a Retail Strategy
• Granting business rights to franchisee, who pays for the right to use the brand name, product, or methods
• Examples of retail franchisers:
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
Price and Retail Payment
How important are payment options?
Classification of Retail by
1. Ownership (indy, franchise chain)
2. Service level (Nordstrom vs. Wal-mart)
3. Assortment (CVS vs. Smith’s)
4. Price (Tiffany vs. jewelry kiosk)
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??)
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
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
Discount Stores
• Scrambled merchandise: anything sells in volume (supermarkets, Rx)
• Mass merchandising concept:– Low price and turnover to
spur sales volume through bigger markets
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
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
Supermarkets
– Large, self-service retailer with grocery specialty
– Self-scanning trend: what is your take?Self-scanning trend: what is your take?– Competition: fierce, 1% profit on many items
Warehouse Clubs
• Warehouse club / wholesale club (Sam’s, Costco)– No frills, members only (why?)– Bulk purchases: price competition,
homogeneous shopping goods
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
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)
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 serviceson ebay?)
eTail
• More innovative e-tail sites
• Mondera http://www.mondera.com
• Nike ID http://nikeid.nike.com
• Zappos http://www.zappos.com
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?Why do we do this?
E-cart abandonment
• Top reasons for e-cart abandonment:Top reasons for e-cart abandonment:• Research/organization useResearch/organization use• Privacy/security issuesPrivacy/security issues• Frustration of the length of the checkout processFrustration of the length of the checkout process• Total cost (including shipping, handling, and/or Total cost (including shipping, handling, and/or
tax if applicable)tax if applicable)• Desire to wait for a sale price (online or offline)Desire to wait for a sale price (online or offline)• E-shopping for mere entertainment (versus a E-shopping for mere entertainment (versus a
true intention to buy)true intention to buy)
Summary
• Role of retailing
• Retail strategy
• Retail Marketing Mix
• Types of retailers
• Non-store retail
• E-tail
• Any questions??