Retailing all the activities directly related to the sale of goods and services to the ultimate consumer for Chapter 15 Retailing The Role of Retailing personal NONBUSINESS use Ways a retail establishment can be classified o Its Ownership Forms of ownership Independent Retailer a retailer owned by a single person or partnership and not operated as part of a larger retail institution Chain Store part this is part of a group of the same stores owned and operated by a single organization o One home office for the entire chain Franchises stores that are owned and operated by individuals but are licensed by a larger supporting organization o Combines the advantages of independent ownership with those of the chain store o Level of Service o Product Assortment Classified along a continuum for full service to self service Classified by the breath and depth of their product lines Specialty stores have the most concentrated product assortment Full line discounters typically carry broad assortments of merchandise Stores often modify their product assortment to accommodate environmental factors such as recessions Factory outlet stores may only carry part of a single line Discount specialty stores ex Home Depot carry a broad assortment in concentrated product lines o Price Department stores and specialty stores charge the full suggested retail price Discounters factory outlets and off price retailers use lower prices Expensive products can push the price positions of mid level retailers to a higher level Cause them to lose their core customers Gross Margin how much a retailer makes as a percentage of sales after the cost of goods sold is subtracted Level of gross margin and price level generally match Markdowns on merchandise and price wars among competitors cause gross Major Types of Retail Operations margin to DECLINE There are distinct types of retail stores Recently retailers are experimenting with alternative formats that make it harder to classify them Types of Retail Stores o Department Stores a store housing several departments under one roof Each department I treated as a separate buying center Purchases are generally made within each department Buyer head of each department Selects merchandise for their specific department Responsible for department promotion and personnel Department store managers sets broad policies for all the buys regarding types of merchandise carried and price ranges o Keeps a uniform store image 1 o Specialty Stores a retail store specializing in a given type of merchandise Allows retailers to refine the segmentation strategies and tailor their merchandise for a specific target market Sales clerks offer more attentive customer service More consumers buy clothing from specialty stores then from any other type of retailer Specialty stores consumers consider price secondary Determinants of popularity Distinctive merchandise Stores physical appearance Caliber of staff Manufactures like introducing new products in small specialty stores BEFORE larger department stores food items o Supermarkets large departmentalized self service retailers that specialize in food and some non Economic conditions have caused many families to start eating at home again Supermarkets have experienced an upwards swing Conventional supermarkets are being replaced by bigger Super Stores which use scrambled merchandising Scrambled Merchandising the tendency to offer a wide variety of nontraditional Trend towards tailoring marketing strategies to appeal to specific consumer segments goods and services under one roof Shift towards loyalty progams o Drugstores a retail store that stocks pharmacy related products and serives as its main draw Also carry extensive selection of OTC medication Cosmetics Health and beauty aids Seasonal merchandise Greeting cards Small toys Convince foods More competition from Mass Merchandisers Super Markets Direct mail prescription services high turnover convenience goods Self service Located near residential areas convenient location Open 24 hours convenient hours Fast service Convenience higher prices Expanded their offering of non food items o Convenience Store can be defined as a miniature super market carrying only a limited line of o Discount Stores a retailer that competes on the basis of low prices high turnover and high volume Full line Discount Stores a retailer that offers customers very limited service and carries a broad assortment of well known nationally branded hard goods Housewares toys auto parts sporting goods etc Also called Mass Merchandisers 2 o Mass Merchandising retail strategy using moderate to low prices on large quantities of merchandise and lower levels of service to stimulate high turnover products Wal Mart is largest example Supercenters combine full line of groceries and general merchandise with a wide o Services such as dry cleaning portrait studios pharmacies hair salons range of services etc o EX Target o Food is a customer magnet for supercenters Specialty Discount Stores a retail store that combines groceries and general merchandise and lower levels of service to stimulate high turn over or products Offer a nearly complete selection of single line merchandise and Self service Discount prices High Volume High Turnover Category Killer a specialty discount store that heavily dominates its narrow merchandise segment o Create retail empires in highly fragmented mom pop markets o Ex Best buy IKEA Office Depot Warehouse membership Club a limited service merchant wholesaler that sells a limited selection of brand name appliances household items and groceries Sold in bulk from warehouse outlets Warehouse members tend to be o Better educated o More affluent o From larger households Gets it goods from o Bankrupt stores o Irregular merchandise o Unsold end of season output Off Price retailer retailer that sells at prices 25 or more BELOW traditional department store prices because it pays cash for its tock and usually does as for any return privledges Factory Outlet an off price retailer that is owned and operated by a manufacturer o Carries only one line of merchandise o Allows Managers to Regulate where their surplus is sols Realize high profit margins o Restaurants Straddle the line between retailing establishments and serice establishments Sell tangible products food and drinks but also offer a valuable service for customers Trend toward eating out Working mothers Dual income families Less time to shop and prepare One of the most
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