Retailing: Bricks and Clicks. 2 Chapter Objectives Define retailing how retailing evolves Retail...

Retailing: Bricks and Clicks

2

Chapter Objectives

• Define retailing

• how retailing evolves

• Retail classifications

• Nonstore retailing

3

Chapter Objectives

• B2C e-commerceits benefits, limitations, and future

promise

• store image positioning strategycreating a desirable image in the

marketplace

4

Retailing: Special Delivery

• Retailing:

• the process by which goods and services are sold to consumers for their personal use

CABELA’S

5

Retailing: Special Delivery

• The retailer adds/subtracts value from the offering

• with its image, • inventory, • service quality, • location, and • pricing policy.

CABELA’S

6

Retailing: A Mixed (Shopping) Bag

• Retailing is big business: one of every five U.S. workers is employed in retailing.

BARNES and NOBLE

7

Retailing: A Mixed (Shopping) Bag

• Retailers = final channel of distribution,

• providing utilities to customers time, place, and ownership.

BARNES and NOBLE

8

The Evolution of Retailing

• The wheel-of-retailing hypothesisNew types of retailers

• enter the market • by offering lower-priced goods.

They gradually improve • facilities, quality and • assortment of merchandise, and amenities

and increase prices.

9

The Evolution of Retailing (cont’d)

• The retail life cycleRetailers are born, grow and mature, and eventually

die or become obsolete.

Introduction stage Growth stage Maturity stage Decline stage

10

The Evolution Continues: What’s “In Store” for the Future?

• Demographics: • retailers must find new ways to sell to diverse

groups.

convenience for working consumers

Catering to specific age segments

Recognizing ethnic diversity

11

The Evolution Continues: What’s “In Store” for the Future? (cont’d)

• TechnologyInternet and e-tailingElectronic point-of-sale (POS) systemsCart-top computer

• to scan purchases as customers move through store

RFID tagsIntellifit System

12

The Evolution Continues: What’s “In Store” for the Future? (cont’d)

• GlobalizationNeed to adjust to different conditions

• around the world

Innovative retailing concepts • developing overseas• influencing U.S. retailing

13

Classifying Retail Stores

• what they sell: merchandise mix

• level of serviceSelf-service

Full-service

Limited service

NEIMAN MARCUS

14

Classifying Retail Stores (cont’d)

• Classifying by merchandise selectionMerchandise assortment:

• selection of products a retailer sells

Merchandise breadth: • number of different product lines

Merchandise depth: • choices available in each product line

15

Figure 16.1: Classification of Retailers by mdse. Selection

16

Classifying Retail Stores (cont’d)

• Retail FormatConvenience stores

Supermarkets

Specialty stores

Discount stores

Warehouse clubs

Factory outlet stores

Department stores

Hypermarkets

KOHL’S

17

Non-store Retailing

• Any method a firm uses

• to complete an exchange

• that does not require

• a customer to visit a store

LL BEAN

18

Nonstore Retailing (cont’d)

• Direct sellingDoor-to-door salesParty plan systemMultilevel network:

• a master distributor recruits other people to become distributors

Illegal pyramid schemes: • people pay money to advance in company,

profiting from others who might join

• Automatic vendingAMWAY

19

B2C E-commerce

• (B2C) e-commerce:

• online exchange • between companies & individual consumers

20

B2C E-commerce

• Benefits of B2C e-commerceFacilitates global marketplace exchanges Increases consumer convenience fulfills experiential needs. For specialized businesses.price information available.reduce business costs.

DOGTOYS.COM

21

B2C E-commerce (cont’d)

• Limitations of B2C e-commerceCustomers must wait

• to receive products.

poorly designed Sites. Security concerns.Internet fraud Can’t touch-and-feel”.

22

B2C E-commerce (cont’d)

• More Limitations

• Firms need “bricks-and-mortar” presence to maintain base of loyal customers.

• Developing countries with cash economies can’t easily pay for Internet purchases.

PEAPOD.COM

23

B2C E-commerce (cont’d)

• One More Limitation

• Online inventory

• may cannibalize

• major retailer store sales. (Victoria Secret catalog??)

PEAPOD.COM

24

B2C’s Effect on the Future of Retailing

• Virtual channels unlikely to replace traditional ones.

• Stores must evolve to lure shoppers away from computers.

25

B2C’s Effect on the Future of Retailing

• In destination retail, • consumers will visit stores • for total entertainment

experience.

• MOA & amusement park• West Edmonton Mall• Nike Store (Chicago)

26

Retailing as Theater

• Store image: • the way a retailer • is perceived • in the marketplace • relative to the competition

27

Retailing as Theater

• Store image: • Atmospherics: the use of:• color, lighting, • scents, furnishings, • sounds, other design elements • to create a desired setting

28

Figure 16.2: Mapping a Store’s Personality

29

Store Image (cont’d)

• Store design: setting the stageStore layout:

• arrangement of merchandise in store – determines traffic flow – (grid layout vs. free-flow layout)

Fixture typemerchandise densitysound of musicColor & lighting

• to set a mood

30

Store Image (cont’d)

• Store personnel: should complement a

store’s image

• Pricing policyPrice points/ranges of store’s merchandise helps establish image

31

Retailing as Theater (cont’d)

• Store locationTypes of store locations

• Business districts • Shopping centers• Freestanding retailers• Nontraditional store locations

32

Retailing as Theater (cont’d)

• Store location (Site selection)• Store’s trade area:

–geographic zone that accounts for the majority of its sales and customers

–Primary – Secondary - Tertiary

•Saturated trade area•Understored trade area •Overstored trade area

33

TOP RETAILERS

• www.stores.org

• Top 100 retailers (U.S)

• Top 200 global retailers

• Retailer of the year

• NRF conferenceNew York City - January

34

Non-traditional retailing

• Tourism retailingSouvenir shops

• Museums, events, resorts

Shopping trips• MOA, Dallas, New York City

• Secondary retailingGarage salesThrift shopsConsignment retailers

35

The end

• Go shopping

36

Real People, Real Choices

• Eskimo Joe’s (Stan Clark)• A new Oklahoma law raised the legal drinking

age from 18 to 21.• How to ensure that Eskimo Joe’s would survive

the new law? Option 1: convert the beer bar into a full-service restaurant. Option 2: continue operating as a beer bar and offset declining beer sales with an increase in apparel sales. Option 3: close Eskimo Joe’s bar and refocus on building the growing apparel business.

37

Real People, Real Choices

• Eskimo Joe’s (Stan Clark)• Stan chose option 1: convert

the beer bar to a full- service restaurant focused on selling great food.The success was immediate, and Stan

credits the result with paying close attention to the quality of food and service.

ESKIMOJOES.COM

38

Discussion

• The wheel-of-retailing theory suggests the retailer’s normal path is to enter the marketplace with lower-priced goods and then increase quality, services, and prices. --Why do you think this happens? --Is it the right path for all retailers? --Why or why not?

39

Discussion

• Wal-Mart has become a dominant retailer in the U.S. marketplace, accounting for over 30 percent of the total sales of some products. --Is this good for consumers? --For the retail industry?

40

Discussion

• Department stores may be declining in popularity in the United States but remain the primary place to shop in other countries such as Japan.--Why do you think this is so?

--Can department stores in the U.S. turn this trend around?

MACY’S

41

Group Activity

• You and two friends decide to open a combination coffee shop and bookstore near your college. To attract college students and other customers, you’ll need to carefully design the store image. --Develop a detailed plan that specifies how your group will use atmospherics to create the store image.

42

Discussion

• Experts predict a rosy future for B2C e-commerce, with exponential increases in Internet sales of some product categories within a few years. --What effect do you think the growth of e-retailing will

have on traditional retailing? --In what ways will this be good for consumers, and in

what ways will it not be so good?

43

Discussion

• Pyramid scheme promoters recruit at frenzied meetings that make potential members fearful of passing up a great opportunity if they don’t join.--Why do people continue to be lured into these

schemes?

--What do you think should be done to stop these unethical promoters?

44

Discussion

• Macy’s and other stores use vending machines to sell electronics such as iPods.List other opportunities for vending

machine sales.

What are the negative and positive elements of vending sales?

45

Group Activity

• Your team are business consultants for a chain of 37 traditional department stores in 12 Midwestern U.S. cities.

• The stores’ revenues have declined as specialty stores and hypermarkets have begun to squeeze them out. The chain has asked your group for suggestions to increase its business--Outline your recommendations and present them to the class.

46

Group Activity

• Your client is a local caterer planning to open a new retail outlet selling take-out gourmet dinners.

• Your group of marketing consultants is examining locations: the central business district, a shopping center, a freestanding entity, or a nontraditional location. --Outline the advantages and disadvantages of each

type of location.

47

Marketing Plan Exercise

• Think about a new retail venture, a specialty store that sells timepieces such as men’s and ladies’ watches and clocks. --What retailing strategies do you recommend for the

first two years of the business—what merchandise, what store image, and what location(s)?

--What long-term retailing strategies do you recommend?

48

Marketing in Action Case:You Make the Call

• What is the decision facing IKEA?

• What factors are important in understanding this decision situation?

• What are the alternatives?

• What decision(s) do you recommend?

• What are some ways to implement your recommendation?