Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 15 Retailing © EschCollection/Photonica/Getty Images

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1

Lamb, Hair, McDaniel

CHAPTER 15

Retailing

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Retailing

All the activities directly

related to the sale of goods

and services to the ultimate

consumer for personal,

non-business use.

RetailingRetailing

LO1


The Role of Retailing

U.S. retailers employ nearly 25 million people

Retailers account for 11.6 percent of U.S. employment

Retailing accounts for 13 percent of U.S. businesses

Retailers ring up almost $4 trillion in sales—nearly 40 percent of the U.S. GDP

Industry is dominated by a few giant organizations, such as Wal-Mart

LO1


Classification of Retail Operations

OwnershipOwnership

Level of ServiceLevel of Service

Product AssortmentProduct Assortment

PricePrice

LO2


IndependentRetailers

IndependentRetailers

Chain StoresChain Stores

FranchisesFranchises

Owned by a single person or partnership and not part of a larger retail institution

Owned by a single person or partnership and not part of a larger retail institution

Owned and operated as a group by a single organizationOwned and operated as a group by a single organization

The right to operate a business or to sell a productThe right to operate a business or to sell a product

LO2

Classification of Ownership


Level of Service

LO2

Full Full ServiceService

Self Self ServiceService


Product Assortment

Classification based on BREADTH and DEPTH of product lines.

LO2


Price

The amount of money

the retailer makes as a

percentage of sales after

the cost of goods sold is

subtracted.

GrossMargin

GrossMargin

LO2


LOLO22

Types of Stores and Their Characteristics

Assort-Assort-mentment PricePrice GrossGross

MarginMargin

BroadBroad

NarrowNarrow

BroadBroad

Med-NarrowMed-Narrow

MediumMedium

Med-BroadMed-Broad

Med-BroadMed-Broad

BroadBroad

Med-NarrowMed-Narrow

NarrowNarrow

Mod-HighMod-High

Mod-HighMod-High

ModerateModerate

Mod HighMod High

ModerateModerate

Mod LowMod Low

Mod Lo-lowMod Lo-low

Low-very lowLow-very low

LowLow

Low-HighLow-High

Mod HighMod High

HighHigh

LowLow

Mod HighMod High

LowLow

Mod LowMod Low

Mod LowMod Low

LowLow

LowLow

Low-HighLow-High

Type of RetailerType of Retailer

Specialty StoreSpecialty Store

SupermarketSupermarket

Convenience StoreConvenience Store

DrugstoreDrugstore

Full-line DiscounterFull-line Discounter

Specialty DiscounterSpecialty Discounter

Warehouse ClubsWarehouse Clubs

Off-price RetailerOff-price Retailer

RestaurantRestaurant

Service Service LevelLevel

Mod Hi-HighMod Hi-High

HighHigh

LowLow

LowLow

Low-ModLow-Mod

Mod-LowMod-Low

Mod-LowMod-Low

LowLow

LowLow

Low-HighLow-High

Department StoreDepartment Store


Nonstore Retailing

Automatic VendingAutomatic Vending

Direct RetailingDirect Retailing

Direct MarketingDirect Marketing

Electronic RetailingElectronic Retailing

LO4


Top E-Tailers by Sales Volume

America's Top Ten Retail Businesses

Rank Company Web Sales Volume (in billions)

1 Amazon.com Inc. $24.5

2 Staples Inc. $9.8

3 Dell Inc. $4.5

4 Apple Inc. $4.2

5 Office Depot Inc. $4.1

6 Walmart.com $3.5

7 OfficeMax Inc. $2.7

8 Sears Holdings Corp. $2.7

9 CDW Corp. $2.4

10 Best Buy Co. $2.4

LO4B

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The Basic Forms of Franchising

Product and Trade Name Franchising

Product and Trade Name Franchising

Dealer agrees to sell in products provided by a manufacturer or wholesaler.

Dealer agrees to sell in products provided by a manufacturer or wholesaler.

BusinessFormat

Franchising

BusinessFormat

Franchising

An ongoing business relationship between a franchiser and a franchisee.

An ongoing business relationship between a franchiser and a franchisee.

LO5


Top 10 Franchisors

LO5

1.1. SubwaySubway2.2. McDonald’sMcDonald’s3.3. 7-Eleven Inc.7-Eleven Inc.4.4. Hampton Inn/Hampton Inn Hampton Inn/Hampton Inn

& Suites& Suites5.5. SupercutsSupercuts6.6. H & R BlockH & R Block7.7. Dunkin’ DonutsDunkin’ Donuts8.8. Jani-KingJani-King9.9. ServproServpro10.10. ampmampm


Retail Marketing Strategy

Develop a Retailing Mix

Define & Select a Target Market

LO6


Defining a Target Market

STEP 1:Segment the Market

STEP 1:Segment the Market

DemographicsDemographics

GeographicsGeographics

PsychographicsPsychographics

LO6


Choosing the Retailing Mix

STEP 2:Choose the Retailing Mix

STEP 2:Choose the Retailing Mix

ProductProduct

PromotionPromotion

PersonnelPersonnel

PlacePlace

PricePrice

PresentationPresentation

LO6


LO6

Exhibit 15.3Exhibit 15.3The Retailing MixThe Retailing Mix


Choosing the Retailing Mix

ProductOffering

ProductOffering

The mix of products

offered to the consumer

by the retailer; also

called the product

assortment or

merchandise mix.

LO6


Retail Promotion Strategy

Public RelationsPublic Relations

PublicityPublicity

Sales PromotionSales Promotion

LO6

AdvertisingAdvertising


The Proper Location

Economic growth potential

Economic growth potential

CompetitionCompetition

GeographyGeography

Choosing a Community

LO6


The Proper Location

Socioeconomic characteristics

Socioeconomic characteristics

Traffic flowsTraffic flows

Land costsLand costs

Choosing a Specific Site

Zoning RegulationsZoning Regulations

Public TransportationPublic Transportation

Choosing the Type of Site

Freestanding StoreFreestanding Store

Shopping CenterShopping Center

MallMall

LO6


Mall Stores Try to Shrink

• Traditional mall retailers like Gap and AnnTaylor are trying to restructure the size of their mall stores.

• Sales per square foot have sunk in recent years.

• By shrinking the store size, retailers hope to provide a more intimate shopping experience while maximizing store efficiency.

Source: Elizabeth Holmes, "Sizing Up Property, Mall Stores Try to Shrink," March 19, 2010, B1.

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Retail Prices

QualityImage

High PriceHigh Price Low Price Low Price

Good ValueSingle Price Point

LO6


Presentation of the Retail Store

AtmosphereAtmosphere The overall impression

conveyed by a store’s

physical layout, décor,

and surroundings

LO6


Presentation of the Retail Store

LO6

Employee type and densityEmployee type and density

Fixture type and densityFixture type and density

SoundSound

OdorsOdors

Visual factorsVisual factors

Merchandise type and densityMerchandise type and density


Personnel and Customer Service

Suggestion SellingSuggestion Selling

Trading UpTrading Up

Two Common Two Common SellingSelling

TechniquesTechniques

LO6


Customer Service for On-Line Retailers

Easy-to-use Web site Easy-to-use Web site

Product availabilityProduct availability

Simple returnsSimple returns

LO6


New Developments in Retailing

InteractivityInteractivityConsumers areinvolved in the retail experience.

Consumers areinvolved in the retail experience.

M-commerceM-commercePurchasing goods through mobile devices.

Purchasing goods through mobile devices.

LO7


Assignment

• Best Buy Case

• In groups of 5-7, discuss the answers to the questions in the case.

Documents

Chapter 15 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 15 Retailing © EschCollection/Photonica/Getty Images