CHAPTER 8RETAILING

Definition of retailing

All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non-business use.

Retailing

Classification of retail operations

OwnershipOwnership

Level of ServiceLevel of Service

Product AssortmentProduct Assortment

PricePrice

1) Classification of ownership

IndependentRetailers

IndependentRetailers

Chain StoresChain Stores

FranchisesFranchises

Owned by a single person or partnership and not part of a larger retail institution, eg. Florists, shoe stores, hair salons, bakery shop.

Owned by a single person or partnership and not part of a larger retail institution, eg. Florists, shoe stores, hair salons, bakery shop.

Owned and operated as a group by a single organization.

The administrative tasks and purchase of merchandise are handled by the home office for the entire chain, eg. Starbucks, Kamdar, Jakel.

Owned and operated as a group by a single organization.

The administrative tasks and purchase of merchandise are handled by the home office for the entire chain, eg. Starbucks, Kamdar, Jakel.

The right to operate a business or sell a product.

Owned and operated by individuals but are licensed by large supporting organization, eg. KFC, McDonalds, Pizza Hut.

The right to operate a business or sell a product.

Owned and operated by individuals but are licensed by large supporting organization, eg. KFC, McDonalds, Pizza Hut.

Level of serviceLevel of service

The level of service that retailers provide can start from full service to self service.

Some retailers provide high levels of service (eg. Boutique) which provide consultation, alterations, gift wrapping, to delivery.

But some retailers operate their stores with self services, such as petrol kiosks.

The level of service that retailers provide can start from full service to self service.

Some retailers provide high levels of service (eg. Boutique) which provide consultation, alterations, gift wrapping, to delivery.

But some retailers operate their stores with self services, such as petrol kiosks.

2) Level of service

Level of service

Full Service Self Service

Discount stores Exclusive storesFactory outlets Warehouse clubs

Types of stores and their characteristics

Assort-Assort-mentment PricePrice GrossGross

MarginMargin

Broad

Narrow

Broad

Med-Narrow

Medium

Med-Broad

Med-Broad

Broad

Med-Narrow

Narrow

Mod-High

Mod-High

Moderate

Mod High

Moderate

Mod Low

Mod Lo-low

Low-very low

Low

Low-High

Mod High

High

Low

Mod High

Low

Mod Low

Mod Low

Low

Low

Low-High

Type of RetailerType of Retailer

Specialty Store

Supermarket

Convenience Store

Drugstore

Full-line Discounter

Specialty Discounter

Warehouse Clubs

Off-price Retailer

Restaurant

Service Service LevelLevel

Mod Hi-High

High

Low

Low

Low-Mod

Mod-Low

Mod-Low

Low

Low

Low-High

Department Store

3) Product Assortment

Retailers classify their stores through product assortment according to the breadth and depth of their product line.

Eg; Toy R Us – concentrated on product assortment bycarrying single / narrow product lines.

4) Price

GrossMargin

GrossMargin

The amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted.

Retailers position their stores by price, eg. Mydin and factory outlets offer low prices to attract shoppers.

Major types of retail operations

Department StoresDepartment Stores

Specialty StoresSpecialty Stores

SupermarketsSupermarkets

DrugstoresDrugstores

Convenience StoresConvenience Stores

Discount StoresDiscount Stores

RestaurantsRestaurants

Major types of retail operations Department Stores - Consists of several department under one roof and carry wide variety

of shopping and specialty goods. - Purchases are made within each department.

For example: Metrojaya, Parkson Grand and Aeon Jaya Jusco.

Department Stores - Consists of several department under one roof and carry wide variety of shopping and specialty goods.

- Purchases are made within each department. For example: Metrojaya, Parkson Grand and Aeon Jaya Jusco.

Specialty Stores - Merchandise is tailored to specific target markets, such as sporting goods, children clothing, pet supplies. - Price is a secondary consideration to consumers.

- These stores provide a low-risk testing ground for many new products. For example, Al Ikhsan, Toy R Us and Padini.

Specialty Stores - Merchandise is tailored to specific target markets, such as sporting goods, children clothing, pet supplies. - Price is a secondary consideration to consumers.

- These stores provide a low-risk testing ground for many new products. For example, Al Ikhsan, Toy R Us and Padini.

Supermarkets – This type of retailer is a large, departmentalized self service, low cost, low margin, high volume retailer that specializes in fresh food, dried food, and daily non-food households. - Offer large product varieties with focus on product assortments.

- Located near to housing area, eg. Jaya Supermarket & Jaya Jusco Supermarket.

Supermarkets – This type of retailer is a large, departmentalized self service, low cost, low margin, high volume retailer that specializes in fresh food, dried food, and daily non-food households. - Offer large product varieties with focus on product assortments.

- Located near to housing area, eg. Jaya Supermarket & Jaya Jusco Supermarket.

Drugstores – These stores sell medicines, health care products like vitamins and treatment oil and toiletries. Some store have pharmacists who give advice and distribute controlled and prescribed m medicines. - For example, Watson and Guardian Pharmacy..

Drugstores – These stores sell medicines, health care products like vitamins and treatment oil and toiletries. Some store have pharmacists who give advice and distribute controlled and prescribed m medicines. - For example, Watson and Guardian Pharmacy..

Convenience Stores- defined as a miniature supermarket, carrying only a limited line of convenience goods.

- Located near to residential area that are open for long hours seven days a week and fast services.- Price normally higher as compared to supermarkets.- For example: 7-Eleven & Kedai Mesra (Petronas)

Convenience Stores- defined as a miniature supermarket, carrying only a limited line of convenience goods.

- Located near to residential area that are open for long hours seven days a week and fast services.- Price normally higher as compared to supermarkets.- For example: 7-Eleven & Kedai Mesra (Petronas)

Discount Stores- a retailer that competes on the basis of low prices, high turnover, and high volume of merchandise. - There are 4 types of discount stores, full line discount stores or mass merchandise, supercenters, specialty discount stores and off- price retailers.

Discount Stores- a retailer that competes on the basis of low prices, high turnover, and high volume of merchandise. - There are 4 types of discount stores, full line discount stores or mass merchandise, supercenters, specialty discount stores and off- price retailers.

Restaurants - Straddle the line between retailing establishments and service establishments. - Tangible products are food and drinks. Service elements are food preparation and food service. - For example Restaurants Sri Thai.

Restaurants - Straddle the line between retailing establishments and service establishments. - Tangible products are food and drinks. Service elements are food preparation and food service. - For example Restaurants Sri Thai.

Department Stores

Department Stores

Specialty Stores

Specialty Stores SupermarketSupermarket DrugstoresDrugstores Convenience

StoresConvenience

StoresDiscount

StoresDiscount

Stores RestaurantsRestaurants

ScrambledMerchandising

ScrambledMerchandising

Full-line

Specialty

Warehouse

Off-price

supercenter

extreme- value

categorykiller

factoryoutlet

14

LO3

Non Store RetailingNon Store Retailing

Non Store Retailing

Refers to shopping without visiting a store and is currently growing faster than in store shopping because of consumer demand for convenience.

Non-store retailing

Automatic VendingAutomatic Vending

Direct RetailingDirect Retailing

Direct MarketingDirect Marketing

Electronic RetailingElectronic Retailing

Non-store retailing Automatic Vending – is a form of non store retailing that uses automated machine.

- can found everywhere to sell a wide variety of convenience and impulse goods. For example candy, snacks and drinks. - Product assortments are narrow, prices are moderate and there is no service.

Automatic Vending – is a form of non store retailing that uses automated machine. - can found everywhere to sell a wide variety of convenience and impulse goods. For example candy, snacks and drinks. - Product assortments are narrow, prices are moderate and there is no service.

Direct Retailing – is selling through personal contact to homes, offices, or at home sales parties such as techniques used by Avon dealers selling cosmetics among

office workers and Tupperware parties organized by housewives or sales in the office.

Direct Retailing – is selling through personal contact to homes, offices, or at home sales parties such as techniques used by Avon dealers selling cosmetics among

office workers and Tupperware parties organized by housewives or sales in the office.

Direct Marketing – sometimes or called direct marketing, through various advertising media that interact with consumers, generally calling the consumer to make direct response. - For example: direct mail, catalogs and telemarketing.

Direct Marketing – sometimes or called direct marketing, through various advertising media that interact with consumers, generally calling the consumer to make direct response. - For example: direct mail, catalogs and telemarketing.

Electronic Retailing – Online retailing is available to users with computers and access to internet. More convenience and less costly. For example Amazon.com & Ebay.Com.

- Television home shopping allows consumers to watch a shopping channel on which products are display and they can order through telephone.For example Smartshop.

Electronic Retailing – Online retailing is available to users with computers and access to internet. More convenience and less costly. For example Amazon.com & Ebay.Com.

- Television home shopping allows consumers to watch a shopping channel on which products are display and they can order through telephone.For example Smartshop.

Automatic VendingMachine

Direct Retailing

Electronic Retailing

Non-store retailing techniques

Vending

Direct retailing

Direct marketing

Electronic retailing

direct mailcatalogstelemarketing

onlineshop at home

Nonstore RetailingNonstore Retailing

19

A franchise is a continuing relationship in which a franchiser grants to a franchisee the business rights to operate or to sell aproducts.

• The franchisor originates the trade name, product, method of operation, etc.

• The franchisee, in return pays the franchisor for the right to use its name, product or business method.

FranchisingLO5

Basic forms of franchising

Business FormatFranchising

Business FormatFranchising

Product and Trade Name Franchising

Product and Trade Name Franchising

Franchising

Product and Trade Name Franchising

Product and Trade Name Franchising

Dealer agrees to sell in products provided by a manufacturer or wholesaler.Eg. Pepsi bottler in Malaysia is licensedTo bottle and sell Pepsi’s soft drinks in Malaysia.

Dealer agrees to sell in products provided by a manufacturer or wholesaler.Eg. Pepsi bottler in Malaysia is licensedTo bottle and sell Pepsi’s soft drinks in Malaysia.

BusinessFormat

Franchising

BusinessFormat

Franchising

An ongoing business relationship between a franchiser and a franchisee.For example, McDonalds, KFC and Secret Recipe.

An ongoing business relationship between a franchiser and a franchisee.For example, McDonalds, KFC and Secret Recipe.