RetailingLearning ObjectivesBest BuyRetailers’ Uniqueness in ChannelThe Role of RetailingRetail versus WholesaleEconomic ImportanceTypes of RetailersTypes of Retailers (con’t)Types of New Products (con’t)Trends in RetailingNonstore RetailingCustomer Service in RetailingSlide 14Developing Retail StrategyEvaluating Retail LocationsScrambled MerchandisingSlide 18Ethical and Legal IssuesSummaryC H A P T E RC H A P T E R© 2007 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinRetailingRetailing1414-2© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdLearning ObjectivesLearning ObjectivesLearning ObjectivesLearning ObjectivesAfter studying this chapter, you should be able to: Understand the economic importance of retailing and its role in the marketing channel.Cite evidence of the globalization of retailing.Discuss some of the advances in retailing technology. Explain the reasons behind the growth of nonstore retailing.Describe key factors in the retail marketing environment, and understand how they relate to retail strategy. Cite important ethical and legal issues facing retailers.14-3© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdBest BuyBest BuyBest BuyBest BuyBest Buy, the nation’s largest seller of electronics, is doing what many retail analysts believe all retailers should do: Focus on certain types of customers and ignore the rest. For the chosen customers, Best Buy is creating more value by concentrating on their needs and preferences. For those not chosen, Best Buy would be happy if those customers took their business elsewhere.14-4© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdRetailers’ Uniqueness in ChannelRetailers’ Uniqueness in ChannelRetailers’ Uniqueness in ChannelRetailers’ Uniqueness in ChannelRetailers’Retailers’UniquenessUniquenessSell SmallerSell SmallerQuantities, Quantities, More FrequentlyMore FrequentlyProvideProvideAssortmentsAssortmentsEmphasizeEmphasizeAtmosphericsAtmospherics14-5© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdThe Role of RetailingThe Role of RetailingThe Role of RetailingThe Role of RetailingRetail SalesRetail SalesRetail sales are sales to final consumers; wholesale sales are those to other businesses that in turn resell the product or service, or use it in running their own businesses.RetailingRetailingAn important part of many marketing channels, includes all the activities involved in selling products and services to the ultimate, or final, consumer..14-6© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdRetail versus WholesaleRetail versus WholesaleRetail versus WholesaleRetail versus WholesaleTo be classified as a retailer, a firm’s retail sales must equal or exceed 50 percent of its total revenues. Firms with less than 50 percent retail sales are classified as wholesalers.Wal-Mart was reminded of the distinction when its Sam’s Wholesale Club was forced to change its name to Sam’s Club in states in which its retail sales exceeded the 50 percent benchmark. Ultimately, the word wholesale was dropped from all Sam’s Club store names.14-7© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdEconomic ImportanceEconomic ImportanceEconomic ImportanceEconomic ImportanceRetailing is a major force in the economy. Three million U.S. retailers employ 14 million people and generate an astonishing $2.5 trillion in annual revenues. This translates into a $9,100 retail expenditure for every man, woman, and child in the United States.14-8© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdChainsChainsA retail chain owns and operates multiple retail outlets. By far, chain stores sell more merchandise than any other category of retailers.IndependentIndependentRetailersRetailersIndependent retailers own and operate only one retail outlet – they account for more than three-fourths of all retail establishments.moreTypes of RetailersTypes of RetailersTypes of RetailersTypes of Retailers14-9© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdRetail franchising is a form of chain ownership in which a franchisee pays the franchisor fees or royalties and agrees to run the franchise by prescribed norms, in exchange for use of the franchisor’s name.moreTypes of Retailers Types of Retailers (con’t)(con’t)Types of Retailers Types of Retailers (con’t)(con’t)14-10© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdCooperativesCooperativesResponding to competitive pressures exerted by the buying power of chain stores, independent retailers sometimes band together to form retail cooperatives. Although each store remains independently owned, the retail cooperative generally adopts a commonname and storefront.Types of New Products Types of New Products (con’t)(con’t)Types of New Products Types of New Products (con’t)(con’t)LeasedLeasedDepartmentsDepartmentsLeased departments are sections in a retail store that the owner rents to a second party.14-11© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdTrends in RetailingTrends in RetailingTrends in RetailingTrends in RetailingGlobalGlobalRetailingRetailingCustomerCustomerServiceServiceTechnologicalTechnologicalAdvancesAdvancesTrendsinRetailing14-12© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdNonstore RetailingNonstore RetailingNonstore RetailingNonstore RetailingNonstore retailing: sales outside a physical structure.DirectDirectSellingSellingVending Vending MachineMachineSalesSalesDirect selling: the sale of a consumer product or service, person-to-person, away from a fixed retail location.Vending machines allow customers to purchase and receive merchandise from a machine.DirectDirectRetailingRetailingDirect retailing is the portion of direct marketing in which ultimate consumers, not business customers, do the buying.14-13© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdCustomer Service in RetailingCustomer Service in RetailingCustomer Service in RetailingCustomer Service in RetailingCustomer service refers to the activities that increase the quality and value customers receive when they