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Retailing Topics

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Assume that shopping trips begin from the consumer's home. Retail Agglomeration. Trip Chains ... Retail Site Selection. Agglomeration. How does retail location ... – PowerPoint PPT presentation

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Title: Retailing Topics


1
Retailing MKTG 6211
Retailing Topics
Professor Edward Fox Cox School of Business/SMU
2
Retail Site Selection
  • Openings
  • Expansions
  • Closings

What are the effects of proposed changes in
retail sites on the revenues of new and existing
stores?
3
Retail Site Selection Why Does It Matter?
  • Access to consumers
  • Number
  • Characteristics
  • Growth
  • Locations of other stores
  • Cannibalization own stores
  • Agglomeration
  • Competition
  • Complementarity

According to Wal-Marts Real Estate group, the
difference between good and bad locations exceed
25 million in gross profit
4
Retail Site Selection How Is It Done?
  • Select
  • Geographic market
  • Site within the geographic market
  • If an opening or expansion, the format/size of
    the store to be opened

5
Retail Site Selection Agglomeration
  • Agglomeration captures the countervailing effects
    of complementarity and competition among
    retailers
  • Intra-type - Stores of the same type locating
    near one another
  • Facilitates consumer search
  • Examples motor miles and restaurant rows
  • Inter-type - Stores of different types locating
    near one another
  • Facilitates multi-purpose shopping, virtual
    one-stop-shopping, and offers a wider variety of
    goods to choose from
  • Examples shopping centers and shopping malls

Recognizes that consumers may use multiple stores
to meet their needs - shopping strategically!!
6
Retail Site Selection Agglomeration
  • Trip chaining Make unrelated purchases on the
    same trip
  • Price search Search until you find an
    attractive price
  • Cherry picking Visit multiple stores for
    their bargain prices

7
Retail Site Selection Where Do Consumers Work?
  • Another consideration in retail site selection is
    where consumers work
  • Do shopping trips begin from home?
  • From work?

8
Retail Agglomeration Trip Chains
  • Trip chains reflect the routing problem faced by
    shoppers
  • Consumers minimize shopping costs by reducing
    travel, subject to fulfilling diverse
    product/service needs
  • Price search
  • Our research incorporates price uncertainty,
    allowing shoppers to terminate or continue a
    shopping trip (unplanned)
  • Data limitations require that we
  • Consider visits only to selected store formats
  • Assume that shopping trips begin from the
    consumers home

9
Retail Site Selection Agglomeration
  • How does retail location affect multi-store
    shopping?

RETAIL LOCATION
Relative to customers
Relative to other stores
Retail Competition
Destination Effect
Specifically, how are retailer revenues affected
by nearby supermarkets, drug stores, mass
merchandisers and supercenters, dollar stores and
warehouse clubs?
10
Retail Agglomeration Preliminary Model - Data
Description
11
Retail Agglomeration Preliminary Model Results
Travel Times
  • Travel times have the expected negative effect
    for own-store cross-store travel time parameters
    have smaller positive effects
  • We observe symmetric competition among grocery
    stores in terms of location
  • Revenues at EDLP storesFood Lion and Wal-Mart
    Supercenterare least sensitive to distances that
    their customers have to travel

12
Retail Agglomeration Preliminary Model Results -
Agglomeration
  • Wal-Mart Discount stores are most affected by
    locating near other stores
  • Wal-Mart Supercenters are not affected by the
    concentration of other stores nearby
  • Locating near club stores does not affect
    retailers in our sample

13
Multi-Channel Retailing
  • COME IN. CALL IN. LOG ON.

14
Multi-Channel Retailing
  • How big is the Internet -- milestones
  • Mid - 1996 online population of the
    United States was 35 million
  • Mid - 1998 online population became 72.6
    million
  • April 1999 more than 83 million users
    online above age 16
  • 2000 Census 42 of US households have internet
    access
  • 50 of US households
    have computers

Source Levy Weitz and Census Bureau
15
Multi-Channel Retailing
  • How big is the Internet?

16
Multi-Channel Retailing
  • How big is Internet retail?

Estimated Quarterly U.S. Retail E-commerce Sales
as a Percent of Total Quarterly Retail Sales 4th
Quarter 19992nd Quarter 2007 Percent of Total
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                 
17
Multi-Channel Retailing
  • What do shoppers buy on the Internet?

Source PCDataonline Jan 00-Jan 01
18
Multi-Channel Retailing
  • What do shoppers buy on the Internet?
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