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Fairchild Books

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Title: Fairchild Books


1
?2007 Fairchild Publications, Inc.
2
The Five Rs of Retailing
The Right
  • Merchandise
  • Price
  • Place
  • Time
  • Quantity

3
History
  • The first department store is generally agreed
    to be Bon Marché, in Paris in the mid-1800s
  • The urban population of New York, Philadelphia
    and Boston modeled themselves after the most
    sophisticated European cities
  • Originally three types of retailing existed in
    America, matching the rural population

4
Department Stores
  • The Bureau of the Census defines a department
    store as a retail store that employs 25 or more
    people and sells
  • General lines of apparel
  • Home furnishings
  • Household linens and dry goods
  • Stores, published by the National Retail
    Federation, defines department stores to include
  • Multi-department, soft-good store of specialized
    department stores with a fashion orientation and
    full markup policy

5
Department Stores
  • Many no longer carry hardlines
  • Organization of department stores
  • Parent, or flagship stores, and branch stores
  • Buyers purchase for areas
  • Entertainment is a key component of todays
    shopping experience
  • Saturation of shopping space per customer in the
    U.S.
  • 1960 4 sq. ft. of space per person
  • 1990 19 sq. ft. of space per person

6
Specialty Stores
  • Limited lines of merchandise typify them
  • Crate and Barrel, Talbots, Tiffany Co.
  • Private label retailer is a variation of the
    specialty store, carrying only product it makes
    itself
  • Ann Taylor, Brooks Brothers, Gap

7
Organization of Specialty Stores
  • Small specialty stores, the buying and
    merchandising are done by owner, store manager,
    and a small staff
  • Large multi-department specialty stores are
    organized much like department stores
  • Entertainment is a natural activity for specialty
    stores

8
Discount Stores
  • Discounters sell name-brand merchandise at less
    than full retail prices
  • Discounters turn a profit by
  • Keeping overhead low and service minimal
  • Centralizing checkout counters and relying on
    self-service
  • Using volume and size to compensate for low
    markups
  • Aiming to do a minimum annual sales volume of
    500,000

9
Discount Stores
  • Organization of discount stores
  • Buyers are responsible for several departments
    instead of a single category
  • Entertainment is a big part of the experience
  • Greeters are often present
  • Blue light specials are eagerly awaited

10
Forms of Retail Ownership
  • Four common types of ownership (U.S.)
  • Sole Proprietors
  • Account for over 90 of all retailers
  • Small stores, or mom-and-pop stores, are single
    store sole proprietorships
  • Chain Organization
  • A group of centrally owned stores, 4 or more
  • Mass merchandiser known for low prices
  • Department store known for high quality
    merchandise
  • Specialty merchandiser selling exclusive designs
    at high prices can be chains

11
Forms of Retail Ownership
Forms of Retail Ownership
  • Leased departments
  • Sections of retail stores owned and operated by
    outside organizations
  • Specialized knowledge usually portends leased
    departments
  • Furs, fine jewelry, beauty salons, and shoes are
    often leased

12
Forms of Retail Ownership
  • Franchises
  • Exclusive use of name, merchandise, and any
    corporate advertising in an exclusive trading
    area are the franchisees benefits. The
    franchisor gets a royalty fee for providing the
    organization, merchandising and training.
  • Often confused for chains since the franchises
    and directly owned stores look alike. Benetton is
    a successful franchisor.
  • Designer Yves Saint Laurent has long taken
    advantage of franchising to expand the Rive
    Gauche label

13
Other Types of Fashion Retailers
  • Off-price retailers
  • Factory outlet stores
  • Category killers
  • Boutiques/Showcase stores
  • Nonstore retailers
  • TV home shopping
  • Internet shopping sites

14
Off-Price
  • Late rise/early peak fashion cycle merchandise as
    opposed to discounters late peak/early decline
  • Compete directly with department stores
  • Sell brand-name and designer merchandise at lower
    than normal prices, but often late in the season
    and usually in broken sizes and colors

15
Off-Price
  • In 1920, Loehmanns was the first off-price
    store
  • In the 80s, manufacturers turned to off-pricers,
    who paid full price for excess fabric and
    demanded lower cost garments it helped everyone
  • T.J. Maxx and Marshalls led the way for the
    resurgence of off-price stores

16
Factory Outlet Stores
  • Discount operations run by manufacturers, they
    have grown dramatically in recent years
  • Less than 100 outlet centers nationwide in 1988
  • Almost 360 outlet centers across the U.S. today
  • They serve to eliminate overruns and seconds
  • Prior to this, manufacturers and designers turned
    to off-pricers
  • Todays factory outlet malls are destinations

17
Category Killers
  • Carry the ultimate narrow and deep selection,
    allowing for deep purchasing discounts which are
    passed on to the customer in the form of low
    prices
  • 1970s saw the rise of Toys R Us, Bed Bath
    Beyond and others
  • Home Depot and Barnes Noble Booksellers
    continue the trend today
  • Most are free standing destinations, big boxes

18
Boutiques
  • The appeal for individuality is one of the
    driving forces behind the boutique revival
  • Showcase stores on Madison Avenue for designers
    are the latest trend
  • It allows them to show their goods in a
    controlled environment
  • It helps to create the branding necessary to
    compete in todays fashion business

19
Nonstore Retailers
  • Four categories exist
  • Direct selling
  • Typified by the Avon, direct selling sales
    totaled 25 billion in the U.S.
  • Catalogue retailers
  • Lands End, Eddie Bauer, Patagonia,
    Williams-Sonoma and L.L.Bean all run successful
    catalogue businesses
  • Total sales in 2000 was 110 billion in the U.S.
  • Catalogues also function as early predictors of
    sales for the brick and mortar stores

20
Nonstore Retailers
  • TV home shopping
  • In 2001, HSN had a total sales of almost 2
    billion and a customer base of almost 5 million
  • QVC had an estimated 79 million viewers
  • Celebrities of some form often appear to promote
    their goods on air

21
Nonstore Retailers
  • Internet shopping sites
  • E-tailing or electronic retailing
  • What you need is a PC to access shopping anytime
    from anywhere
  • Although the potential is great, it remains
    largely untapped
  • E-tail players that have been the most successful
    so far are the online channels of apparel retail
    and catalog giants, like JCPenny.com,
    Landsend.com, and JCrew.com
  • Catalogue firms like Lands End, Eddie Bauer, and
    L.L.Bean have had success, in part, due to their
    sophisticated fulfillment capacity

22
Mergers
  • Until the 30s, most department stores were
    independently owned
  • Consolidations, bankruptcy, and foreign
    investments have changed the scene dramatically
  • Many retailers closed down
  • Efficiency and expansion are the key strategies
    for the retailing future

23
Wheel of Retailing
  • Retailers must constantly respond to change in
    the environment to succeed and flourish
  • Harvard Business School Professor Emeritus
    Malcolm McNairs Wheel of Retailing theory states

24
Wheel of Retailing
  • Most retailers begin as lower priced distributors
  • To grow they trade up and add amenities, varied
    assortments, customer service, higher quality
    goods, etc.
  • Capital requirements mean higher prices
  • As each retailer moves up, the vacuum is filled
    quickly by the level below
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