Types of Retailers

What is the opportunity?

Environmental Factors:

“Story of Stuff” (on blog)Macro-

Environment

CompetitorsCustomers

Micro-EnvironmentTechnology Social Issues

Ethical/LegalIssues

Political Issues

Environmental Issues

RETAILERETAILERR

Describing Different Types of Retailers

(Retail Mix)

CustomerService

Retail Strategy

Store Design& Display

Location

CommunicationsMix

MerchandiseAssortments

Pricing

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

• New Types of Retailers

Describing Different Types of Retailers

(Retail Mix)

CustomerService

Retail Strategy

Store Design& Display

Location

CommunicationsMix

MerchandiseAssortments

Pricing

Type ofMerchandis

e

Variety and Assortment

A Critical Decision

Variety

Assortment

Services

Pricing

“Blockbuster was not concerned about Netflix because its research showed more than 90% of video

renters decide on the videos they want to watch the same day they rent

them.”

Environmental Factors

Macro-Environment

Competitors

Customers

Micro-EnvironmentTechnology Social Issues

Ethical/LegalIssues

Political &Economic Issues

Environmental Issues

RETAILERETAILERR

Oops...

Now this?

Apple Looking Less Shiny? Look Again.

Text

"When Steve came to us with this idea, it was a no-brainer," says Jim

Gianopolus, CEO of News Corp.'s (NWS) 20th Century Fox. While he

admits there are many other ways to get movies, he thinks Apple can

cut through the clutter. "I think this will be a transformative version of

the rental model," Gianopolus says. Holders of Blockbuster (BBI)

shares appear to concur. The company's shares plunged 17%

amid concern Apple will eat into its film-rental business.

January 16, 2008

Apple’s Strategy:Adding “Transformative”

ServiceVariety

Assortment

Services

Pricing

Characteristics ofFood Retailers

Group Activity

Variety

Assortment

Services

Pricing

•What online services do each of these retailers offer?

•What value do they add?

•What do they imply about the other elements of the marketing mix for this retailer?

•As a class - how do services offered vary within each main group (Food & Gen. Merchandise? Do any seem to be “standard”?

Group ActivityOnline Services

FOOD RETAILERS

• Safeway (Supermarket): http://shop.safeway.com/

• Target (Super Center): http://www.target.com/

• Costco (Warehouse Club): http://www.costco.com/

GENERAL MERCHANDISE RETAILERS

• Sears (Dept. Store): http://www.sears.com

• Abercrombie & Fitch (Specialty Store):http://www.abercrombie.com/

• Home Depot (Category Specialist):http://www.homedepot.com/

Group ActivityOnline Services

• Food Retailers•Primary Shopping Format for Food Sales

Growth Rates by Retail Format

• Fresh perishables

• Health-conscious& ethnic

• In-store experience

• Private brand labels

How supermarketsare competing

• Department Stores

• Specialty Stores

• Category Specialists

• Home Improvement Centers

• Discount Stores

• Drugstores

• Off-Price retailers

• Extreme Value Retailers

Types of General Merchandise Retailers

Royalty-Free/CORBIS

Department stores in an eroding market

•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

Why Sears Must EngineerIts Own Makeover

Text

“With a potential recession on the horizon,

retail experts say it is now clear Chairman

Edward S. Lampert must engineer a radical

makeover of the 121-year-old retailer to

prove it can thrive alongside bigger rivals.

To halt the sales and profit declines, the

company's Sears and Kmart stores must

forge new roles for themselves that will

distinguish them in customers' eyes from

competitors such as Kohl's Corp., J.C.

Penney Co., Target Corp. and Wal-Mart

Stores Inc.

January 16, 2008

Issues in Discount Store Retailing

• Only Big Three Left

Wal-Mart, Kmart, 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, Circuit City, Sports Authority

McGraw-Hill Companies, Inc./Gary He, photographer

•Decline in Mall Shopping and Apparel Sales

•-Lack of New Fashions

•-Less Interest in Fashion

•-Increase Price Consciousness

•Lifestyle Formats – Abercrombie and Fitch and Hot Topics

McGraw-Hill Companies, Inc./Gary He, photographer

Issues in Specialty Store Retailing

• Consolidation – Walgreens, CVS, Rite-Aid

• Competition from 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 in the pharmacy

Issues in Drug Store Retailing

• Deep and Narrow Assortments Destination Stores

• Low Price and Service

• Wholesaling to Business Customers and Retailing to Consumers

• Incredible Growth

Ryan McVay/Getty Images

Category Specialists

Services vs. Merchandise Retailers

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

Article Summary Assignment #1:

Write a two-page paper that addresses these issues

1. Find an article in a business publication about a retailer changing their retail strategy

2. What strategic elements are they changing? Customer Service? Pricing?

3. What factors within their macro-environment are the catalyst for this change?

4. What changes have occurred in their micro-environment?

5. What effect do they hope this will have on their customers behavior and/or perceptions

6. Do you think this will work? Why or why not? What are the risks?

Customer

Service

Retail Strategy

Store Design

& Display

Location

CommunicationsMix

Merchandise

Assortments

Pricing

Macro-Environment

Competitors

Customers

Micro-EnvironmentTechnology Social Issues

Ethical/LegalIssues

Political &Economic Issues

Environmental Issues

RETAILERRETAILER