Consumers Rule

1
Retailing Bricks and Clicks
2
Chapter Objectives

• Define retailing
• how retailing evolves
• Retail classifications
• Nonstore retailing

3
Chapter Objectives

• B2C e-commerce
• its benefits, limitations, and future promise
• store image
• positioning strategy
• creating 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

5
Retailing Special Delivery

• The retailer adds/subtracts value from the
  offering
• with its image,
• inventory,
• service quality,
• location, and
• pricing policy.

6
Retailing A Mixed (Shopping) Bag

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

7
Retailing A Mixed (Shopping) Bag

• Retailers
• final channel of distribution,
• providing utilities to customers
• time,
• place, and
• ownership.

8
The Evolution of Retailing

• The wheel-of-retailing hypothesis
• New 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 (contd)

• The retail life cycle
• Retailers are born, grow and mature, and
  eventually die or become obsolete.
• Introduction stage
• Growth stage
• Maturity stage
• Decline stage

10
The Evolution Continues Whats 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 Whats In Store for
the Future? (contd)

• Technology
• Internet and e-tailing
• Electronic point-of-sale (POS) systems
• Cart-top computer
• to scan purchases as customers move through store
• RFID tags
• Intellifit System

12
The Evolution Continues Whats In Store for
the Future? (contd)

• Globalization
• Need 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 service
• Self-service
• Full-service
• Limited service

14
Classifying Retail Stores (contd)

• Classifying by merchandise selection
• Merchandise 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 (contd)

• Retail Format
• Convenience stores
• Supermarkets
• Specialty stores
• Discount stores
• Warehouse clubs
• Factory outlet stores
• Department stores
• Hypermarkets

17
Non-store Retailing

• Any method a firm uses
• to complete an exchange
• that does not require
• a customer to visit a store

18
Nonstore Retailing (contd)

• Direct selling
• Door-to-door sales
• Party plan system
• Multilevel 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 vending

19
B2C E-commerce

• (B2C) e-commerce
• online exchange
• between companies individual consumers

20
B2C E-commerce

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

21
B2C E-commerce (contd)

• Limitations of B2C e-commerce
• Customers must wait
• to receive products.
• poorly designed Sites.
• Security concerns.
• Internet fraud
• Cant touch-and-feel.

22
B2C E-commerce (contd)

• More Limitations
• Firms need bricks-and-mortar presence
• to maintain base of loyal customers.
• Developing countries with cash economies
• cant easily pay for Internet purchases.

23
B2C E-commerce (contd)

• One More Limitation
• Online inventory
• may cannibalize
• major retailer store sales.
• (Victoria Secret catalog??)

24
B2Cs Effect on the Future of Retailing

• Virtual channels
• unlikely to replace traditional ones.
• Stores must evolve
• to lure shoppers away from computers.

25
B2Cs 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 Stores Personality
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Store Image (contd)

• Store design setting the stage
• Store layout
• arrangement of merchandise in store
• determines traffic flow
• (grid layout vs. free-flow layout)
• Fixture type
• merchandise density
• sound of music
• Color lighting
• to set a mood

30
Store Image (contd)

• Store personnel
• should complement a stores image
• Pricing policy
• Price points/ranges
• of stores merchandise
• helps establish image

31
Retailing as Theater (contd)

• Store location
• Types of store locations
• Business districts
• Shopping centers
• Freestanding retailers
• Nontraditional store locations

32
Retailing as Theater (contd)

• Store location (Site selection)
• Stores 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 conference
• New York City - January

34
Non-traditional retailing

• Tourism retailing
• Souvenir shops
• Museums, events, resorts
• Shopping trips
• MOA, Dallas, New York City
• Secondary retailing
• Garage sales
• Thrift shops
• Consignment retailers

35
The end

• Go shopping

36
Real People, Real Choices

• Eskimo Joes (Stan Clark)
• A new Oklahoma law raised the legal drinking age
  from 18 to 21.
• How to ensure that Eskimo Joes 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 Joes bar
• and refocus on building the growing
• apparel business.

37
Real People, Real Choices

• Eskimo Joes (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.

38
Discussion

• The wheel-of-retailing theory suggests the
  retailers 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?

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,
  youll 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 dont
  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

• Macys 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 mens and
  ladies watches and clocks.
• --What retailing strategies do you recommend for
  the first two years of the businesswhat
  merchandise, what store image, and what
  location(s)?
• --What long-term retailing strategies do you
  recommend?

48
Marketing in Action CaseYou 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?