types of retailers - dr. nghia trong nguyen · •what are the different types of retailers? ......
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Retailing Management 8e © The McGraw-Hill Companies, All rights reserved.
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Types of
Retailers CHAPTER 2
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The World of Retailing
Introduction to the World of Retailing
Types of Retailers
Multichannel Retailing
Customer Buying Behavior
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Questions
• What trends shape today’s retailers?
• What are the different types of retailers?
• How do retailers differ in terms of how they meet the needs of their customers?
• How do service retailers differ from merchandise retailers?
• What are the types of ownership for retail firms?
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General Trends in Retailing
• New Types of Retailers
• Increased Concentration
• Globalization
• Growth In Services Retailer
• Demise of Pure Electronic Retailers (Webvan, eToys, etc)
• Growth in Use of Multi-Channel Retailing by Traditional Retailers
• Increase Use of Technology to Reduce Cost; Increase Value Delivered
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• Retailers Use Different Retail Mixes
-merchandise: variety (breadth) / assortment (depth)
-services
-store design, visual merchandising
-location
-pricing
• Infinite Variations
• Some combination of retail mixes satisfy the needs of significant segments and persist over time.
Types of Retailers
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Bag Borrow or Steal
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Retailer Characteristics
• Variety (breadth)
• Assortment (depth)
• Services Offered
• Prices and the cost of offering breath and depth of merchandise and services
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Merchandise Offering
Variety (breadth of merchandise): wide vs. narrow
- The number of merchandise categories
Assortment (depth of merchandise): deep vs. shallow
-the number of items in a category (SKUs)
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• Retailers differ in the services they offer customers
• EMS offers assistance in selecting the appropriate kayak and repairing them
VS
• Outdoorplay.com and
• Wal-Mart: doesn’t provide any services
Services Offered
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Prices and the cost of offering breath and depth of merchandise and services
• Stocking a deep and broad assortment (like EMS) is costly for retailers.
Many SKUs
Inventory Investment Cost
Because the retailer must have backup stock for each SKU
in addition to holding the inventory
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Mom and Pop Stores
Convenience Stores
Supermarkets
Supercenters
Department Stores
Specialty Stores
Discount Stores
Category Specialists
Off-Price Retailers
Warehouse Clubs
Value Retailers
Types of Merchandise Retailers
Food Retailers General Merchandise Retailers
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Sales and growth rate for retail sectors
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Food Retailers
• Channel preference for food shopping channel where grocery purchasers do most of their food shopping
• Supermarkets
• Supercenters
• Warehouse Clubs
• Convenience Stores
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Characteristics of Food Retailers
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• Conventional supermarkets • 30,000 SKU
• Limited assortment supermarkets (extreme value food retailers) • 2000 SKU
• Offer one or two brands and sizes
• Designed to maximize efficiency and reduce costs
• Offer merchandise at 40-60% lower prices than conventional supermarkets
Supermarkets
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ALDI: German’s Wal-Mart
ALDI provides quality merchandise at low prices by reducing its
assortment in order to control store operating expenses
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Trends in Supermarket Retailing
• Competition from Discount Stores
• Changing Consumption Patterns
Efficient
Distribution Lower Costs Lower Prices
Time Pressure Eating Out More Meal Solutions
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• Emphasize Fresh Perishables • Wegmans
• Target health conscious and ethnic consumers
• Provide a better in-store experience
• Offer more private label brands
Conventional Supermarket Survival Pack
Chef-crafted meals on the go at EatZi’s
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Supercenters and Warehouse Clubs
Supercenters
• The fastest growing retail category
• Large stores (150,000 – 220,000 square feet) that combine a supermarket with a full-line discount store
• One-stop shopping experience
Warehouse Clubs
• Offer a limited and irregular assortment of food and general merchandise with little service at low prices
• Use low-locations, inexpensive store design, little customer service
• Low inventory holding costs by carrying a limited assortment of fast selling items
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Convenience Store
• Tailors assortments to local market
• Makes more convenient to shop
• Offers fresh, healthy food
• Fast, casual restaurants
• Financial services available
• Opening smaller stores closer to consumers (like airports)
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General Merchandise Retailers
• Department Stores
• Specialty Stores
• Category Specialists
• Home Improvement Centers
• Discount Stores
• Drugstores
• Off-Price retailers
• Extreme Value Retailers
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Characteristics of General Merchandise Retailers
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• Competition
• Discount Stores on Price
• Specialty Stores on Service, Depth of Assortment
• Lower Cost by Reducing Services
• Centralized Cash Wraps
• More Sales
• Customers Wait for Sale
• Focus on Apparel and Soft Home
• Develop Private Labels and Exclusive Brands
Issues in Department Store Retailing
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• First Tier: Upscale, high fashion chains with exclusive designer merchandise and excellent customer service • Nordstrom, Neiman Marcus, Saks
• Second Tier: Retailers sell more modestly priced merchandise with less customer service • Macy’s
• Third Tier: Value oriented caters to more price conscious customer • JCPenney, Sears, Kohl’s
Three Tiers of Department Stores
Rob Melnychuk/Getty Images
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• Department stores are:
• attempting to increase the amount of exclusive merchandise they sell
• undertaking marketing campaigns to develop strong images for their stores and brands
• building better relationships with their key customers
Department Stores: What To Do With an Eroding Market
Royalty-Free/CORBIS
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• Only Big Left • Wal-Mart, Target
• Wal-Mart’s Dominance
• Differentiate Strategy • Wal-Mart = Low Price and
Good value
• Target = More Fashionable Apparel
• Competition from Category Specialists • Toys-R-Us, Best Buy, Sports
Authority
Issues in Discount Store Retailing
McGraw-Hill Companies, Inc.
Gary He, photographer
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• Mall-Based Apparel Retailers
• Decline in Mall Shopping and Apparel Sales • Lack of New Fashions
• Less Interest in Fashion
• Increased Price Consciousness
• Lifestyle Formats
• Abercrombie and Fitch
Issues in Specialty Store Retailing
McGraw-Hill Companies, Inc./Andrew Resek, Photographer
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Specialty Store Retailers
McGraw-Hill Companies, Inc./Andrew Resek, Photographer
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• Consolidation • Walgreens, CVS, Rite-Aid
• Competition • Supermarkets, Discount Stores and
Mail-in orders
• Evolution to a New Format • Stand Alone Sites with Drive Thru
Windows
• offering more frequent purchase food items
• Improved systems provide personalized service
Issues in Drug Store Retailing
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• Deep and Narrow Assortments
• Destination Stores
• Category killers
• Low Price and Service
• Wholesaling to Business Customers and Retailing to Consumers
• Incredible Growth
Category Specialists
Bass Pro Shops
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Category Specialists
Sephora, France’s leading perfume/
cosmetic chain LVMH’s division
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Category Specialists: Home Improvement Centers
Home Depot and Lowes act as both:
Retailer and Wholesaler
Consumer Business
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• Displayed in a warehouse atmosphere
• Customer Service: How to select and how to use merchandise
• Competition focuses on price, effort to differentiate and services provided
Home Improvement Centers
Ryan McVay/Getty Images
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Issues in Extreme Value Retailing
• Focuses on Lower Income Consumers
• Names mostly imply good value not $1 price points
• Low Cost Location
• Limited Services
• One of the Fastest Growing Retail Segments
• Dollar Tree
• Family Dollar
• Dollar General
• 99 Cents Only Store
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Off-Price Retailers
• Close-out retailers
• Offer an inconsistent assortment of brand name merchandise at low prices
• TJX companies (T.J. Maxx, Marshalls)
• Ross Stores, Burlington Coat factory, Big Lots, Tuesday Morning
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Services Retailing
• Intangibility
• Problems in Evaluating Service Quality
• Performance of Service Provider
• Simultaneous Production and Delivery
• Importance of Service Provider
• Perishability
• No Inventory, Must Fill Capacity
• Inconsistency of the Offering
• Importance of HR Management
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Examples of Service Retailers
Type of Service Service Retail Firms
Airlines American, Delta, British Airways, Singapore Airways
Automobile maint/repair Jiffy Lube, Midas, AAMCO
Automobile rental Hertz, Avis, Budget, Alamo
Banks Citibank, NCNB, Bank of America
Child care centers Kindercare, Gymboree
Credit cards American Express, VISA, Mastercard
Education University of Florida, Babson College
Entertainment parks Disney, Universal Studios, Six Flags
Express package delivery Federal Express, UPS, US Postal Service
Financial services Merrill Lynch, Dean Witter
Fitness Jazzercise, Bally’s, Gold’s Gym
Health Care Humana, HCA
Home maintenance Chemlawn, MiniMaid, Roto-Rooter
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Merchandise/Service Continuum
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• Independent, Single Store Establishments
• Wholesale-sponsored voluntary group
• Corporate Retail Chains
• Franchises
Types of Retail Ownership
(c) Brand X Pictures/PunchStock
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Retailers Using Franchise Business Model
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• 30 – 40% of US Retail Sales
• Franchisee Pays Fixed Fee Plus % of Sales
• Franchisee Implements Program
• Why is this Ownership Format Efficient?
Franchising
The McGraw-Hill Companies, Inc./Jill Braaten, photographer