Chp 15 Retailing The Role of Retailing Retailing all the activities directly related to the sale of goods and services to the ultimate consumer for personal nonbusiness use has enhances the quality of our daily lives o Affects all of us indirectly and directly o Almost 9 10 retail companies employ fewer than 20 people A retail establishment can be classified according to its ownership level of service product Classification of Retail Operations assortment and price o Ownership Independent retailers owned by a single person or partnership and not operated as part of a larger retail institution Chain Stores owned and operated as a group by a single organization Many administrative tasks are handled by the home office Franchises owned and operated by individuals but are licensed by a larger supporting organization Combines advantage of independent ownership with those of the chain store organization o Level of Service Full to self service Exclusive clothing stores offer high levels of service Retailers like factory outlets offer virtually no services o Product Assortment Breadth and depth of their product line Full line discount retailers usually carry broad assortments of merchandise with limited depth limited variety but many different products o Price Traditional department stores and specialty stores typically charge the full suggested retail price Gross Margin how much the retailer makes as a percentage of sales after the cost of goods sold is subtracted High price stores usually equal high gross margins and vice versa Major Types of Retail Operations Traditionally there have been several distinct types of retail stores with each offering a different product assortment type of service and price level according to its customers Recently retailers are experimenting with alternative formats that make it harder to classify shopping preferences them o Department Stores A department store carries a wide variety of shopping and specialty goods including apparel cosmetics housewares electronics and sometimes furniture Purchases are made in each department Treated as separate buying centers Headed by a buyer who not only selects the merchandise for his or her department but may also be responsible for promotion and for personnel o Specialty Stores store More customer service A retail store specializing in a given type of merchandise Deeper but narrower assortment of specialty merchandise than a department Consumers usually consider price to be a secondary the distinctive merchandise determine popularity o Supermarkets Large departmentalized self service retailer that specializes in food and some nonfood items Conventional supermarkets are being replaced by bigger superstores which offer pharmacies nonfood items and services Scrambled merchandising the tendency to offer a wide variety of nontraditional goods and services under one roof o Drugstores Stock pharmacy related products and services as their main draw but they also carry an extensive selection of OTC medications cosmetics healthy and beauty aids seasonal merchandise and foods Added services such as 24 hour drive through pharmacies and low cost health clinics o Convenience Stores A miniature supermarket carrying only a limited line of high turnover convenience goods Expanded their offerings to video rentals and health and beauty items and added upscale food and sandwich items 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 consumers very limited service and carries a broad assortment of well known nationally branded hard goods Wal Mart is the largest in terms of sales Mass Merchandising A retailing strategy using moderate to low prices on large quantities of merchandise and lower levels of service to stimulate high turnover of products Supercenters A retail store that combines groceries and general merchandise goods with a wide range of services Specialty Discount Stores A retail store that offers a nearly complete selection of single line merchandise and uses self service discount prices high volume and high turnover Category Killers specialty discount stores that heavily dominate their narrow merchandise segment best buy staples ikea Warehouse membership clubs Sell a limited selection of brand name appliances household items and groceries Sold in bulk from a warehouse outlet o Costco BJ s Off Price Retailers A retailer that sells at prices 25 percent or more below traditional department store prices because it pays cash for its stock and usually doesn t ask for return privileges Factory Outlet an off price retailer that is owned and operated by a manufacturer o Consists of closeouts factory seconds and canceled offers surplus Restaurants Straddle the line between retailing establishments and service establishments o Sell tangible goods and also provide a valuable service for consumers o One of the most entrepreneurial of businesses and one of the most competitive o About 50 fail within the first year of operation Non store Retailing Shopping without visiting a store Currently growing faster than in store retailing Automatic vending direct retailing direct marketing electronic retailing Automatic Vending o Machines to offer goods for sale snacks electronics drinks o Consumers willing to pay slightly higher prices for convenience o The selling of products by representatives who work door to door office to office or at home sales parties o Pampered chef and Avon Tupperware and knives Direct Retailing Direct Marketing o Refers to the techniques used to get consumers to make a purchase from their home office or other nonretail setting o Telemarketing direct mail catalogs and mail order Telemarketing Use of telephone to directly sell to customers Outbound calls are sales calls calling pinpointed potential customers Inbound use 800 numbers to take orders generate leads and provide customer service Direct Mail Marketers can precisely target their customers according to demographics geographics and even psychographics Catalogs and Mail Order Interested consumers will flip through catalogs to get ideas before placing orders online Successful catalogs usually are created for high segmented markets Electronic Retailing o Online retailing and the 24 hour shop at home television networks Online retailing A type of shopping available to consumers with personal computers and internet access Exploded in the last several years as consumers
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