Retailing

What Is Retailing?

Retailing includes all the Retailing includes all the activities involved in selling activities involved in selling

products or services directly to products or services directly to final consumers for their final consumers for their personal or business use.personal or business use.

Most retailing is done by retailers, but nonstore retailing has recently grown substantially.

Classification of Types of Retailers

Retailers are classified based on:– Level of service they offer.– Breadth and depth of product lines.– Relative prices charged.– How they are organized.

Level of Service Classification

Self-Service Retailers:– Serve customers who are willing to perform their own

“locate-compare-select” process to save money. Limited-Service Retailers:

– Provide more sales assistance because they carry more shopping goods about which customers need information.

Full-Service Retailers:– Usually carry more specialty goods for which

customers like to be “waited on.”

Product Line Classification

Specialty stores Department stores Supermarkets Convenience stores

Superstores– Category killers

– Supercenters

– Hypermarkets

Product Line Classification

Specialty stores– Carry narrow product lines with deep assortments

within those lines. Department stores

– Carry a wide variety of product lines – typically clothing, home furnishings, and household goods. Each product line is operated by a separate department managed by specialist buyers or merchandisers.

Specialty StoresThe Gap’s product lines are limited to clothing and accessories for men, women, kids, and babies. In addition to regular sizes, petite and tall sizes are available in a variety of clothing items.

Supermarkets– Large, low-cost, low-margin, high-volume,

self-service store that carries a wide variety of food, laundry, and household products.

Convenience stores– Small stores located near residential areas that

are open long hours 7 days a week and carry a limited line of high-turnover convenience goods.

Product Line Classification

Larger than regular supermarkets and offer a large assortment of routinely purchased food products, nonfood items, and services.

Category Killers– Giant specialty stores that carry a very deep assortment of

a particular line and are staffed by knowledgeable employees.

Supercenters– Large combination discount and grocery stores.

Hypermarkets– Gigantic supercenters the size of 6 football fields.

Superstores

Relative Prices Classification

Discount stores Off-price retailers

– Independent off-price retailers

– Factory outlets Factory outlet malls Value-retail centers

– Warehouse club

Discount Stores

A retail institution that sells A retail institution that sells standard merchandise at lower standard merchandise at lower

prices by accepting lower prices by accepting lower margins and selling at higher margins and selling at higher

volume.volume.Wal-Mart is such a successful discounter that they now sell

more toys than category killer Toys ‘R Us.

Off-price Retailers– Independent Off-price Retailers:

Either owned and run by entrepreneurs or as a division of a larger retail operation.

– Factory Outlets: Owned and operated by a manufacturer. Normally

carries the manufacturer’s surplus, discontinued, or irregular goods.

– Warehouse Club: Sells a limited selection of brand-name grocery items,

appliances, clothing, and a hodgepodge of other goods at deep discounts to members who pay annual membership fees.

Relative Prices Classification

Factory Outlet Malls

Factory outlet malls and value-retail centers have blossomed in recent years, making them one of the hottest growth areas in retailing.

Retailer Marketing Decisions

Amazon Targets Its Market

Online retailer Amazon uses a sophisticated database to track customer purchases and individually target buyers by suggesting other items that fit past purchase profiles.

Assortment and Service Decisions

Product assortment– Should differentiate the retailer while matching target

shoppers’ expectations.

Services mix– Another opportunity for differentiation.

Store atmosphere– Physical layout can help/hinder shopping.– Experiential retailing helps sell goods.– Unusual, exciting shopping environments are becoming

more common.

Experiential Retailing

Mall of America pioneered the experiential retailing concept and remains the #1 retail tourist attraction in the nation.

Pricing:– Must fit its target market and positioning, product and

service assortment, and competition. Promotion:

– Can use any or all of the promotion tools—advertising, personal selling, sales promotion, public relations, and direct marketing—to reach consumers.

Place:– Retailers can locate in central business districts, various

types of shopping centers, strip malls, or power centers.– Location is the key to success.

Price and Promotion Decisions

Types of Shopping Centers

Regional shopping center or mall

Community shopping center

Neighborhood shopping center (strip mall)

Power center Megamalls Lifestyle centers

The Future of Retailing

1. New Retail Forms and Shortening Retail Life Cycles

2. Growth of Nonstore Retailing

3. Retail Convergence

4. Rise of the Megaretailers

5. Growing Importance of Retail Technology

6. Global Expansion of Major Retailers

7. Retail Stores as “Communities” or “Hangouts”