Chapter 9Retailing

Learning objectives

1 Discuss the importance of retailing to the economy

2 Explain the dimensions by which retailers can be classified

3 Describe the main types of retail operations

4 Discuss non-store retailing techniques

Learning objectives (cont.)

5 Define franchising and describe its two basic forms

6 List the main tasks involved in developing a retail marketing strategy

7 Discuss the challenges of expanding retailing operations into global markets

8 Describe future trends in retailing

Learning objective 1

Define the term marketingDiscuss the importance of retailing to the economy

Retailing

All the activities directly

related to the sale of goods

and services to the ultimate

consumer for personal, non-

business use.

1

The role of retailing

• Retailing is one of the largest employers

• Supermarkets and grocery stores account for 23% of total retail income

• Small business made up 95% of retail business, but only 38% of total retail income

1

Learning objective 2

Describe four marketing management philosophies.

Explain the dimensions by which retailers can be classified

Classification of retail operations

2

• Level of service

• Product assortment

• Price

• Gross margin

Ownership2

Classification of ownership:

• independent retailers• chain stores• franchises.

Level of service

Full service Self service

Discount stores Exclusive storesFactory outlets, warehouse clubs

2

Mod-High

Classification summary

Department store

Specialty store

Supermarket

Convenience store

Chemist

Full-line discounter

Specialty discounter

Off-price retailer

Restaurant

Mod high-High

High

Low

Low

Low-Mod

Mod-Low

Mod-Low

Low

Low-High

Broad

Narrow

Broad

Med-Narrow

Medium

Med-Broad

Med-Broad

Med-Narrow

Med-Narrow

Mod-High

Mod-High

Moderate

Mod-High

Moderate

Mod-Low

Mod low-Low

Low

Low-High

High

Low

Mod-High

Low

Mod-Low

Mod-Low

Low

Low-High

2

Type of retailer Service level Assortment Price Grossmargin

Learning objective 3

Describe four marketing management philosophies.

Describe the main types of retail operations

Gross margin

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

3

Major types of retail operations

3

• Department stores

• Specialty stores

• Supermarkets

• Chemists

• Convenience stores

• Discount stores

• Hypermarket

Categories of discount stores3

• Full-line discounters

• Discount specialty stores

• Hypermarket

• Category killers

Mass merchandising

Retailing strategy using

moderate to low prices on

large quantities of

merchandise and lower

service to stimulate high

turnover of products.

3

Restaurants

Restaurants can also be

classified as specialty

retailers, given the

concentration of their product

offering

3

Learning objective 4

Discuss non-store

retailing techniques

Non-store retailing4

• Automatic vending

• Direct retailing

• Direct marketing

• Electronic retailing

Direct retailing

• door-to-door

• office-to-office

• home sales parties.

Direct retailers sell products through:

4

Direct marketing4

• Direct mail

• Catalogues and mail order

• Telemarketing

• Electronic retailing

Learning objective 5

Define franchising and describe its two basic forms

Basic forms of franchising4

• Product and trade name franchising

• Business format franchising

Basic forms of franchising

Product and trade name franchising

Dealer agrees to sell certain products provided by a manufacturer or

wholesaler.

Business format franchising

An ongoing business relationship between a franchiser and a franchisee.

5

Learning objective 6

List the main tasks involved in developing a retail marketing strategy

Retail marketing strategy6

Key tasks in strategic retailing:

• define and select a target market

• develop the ‘six Ps’

Defining a target market6

Step 1: Segment the market

• Demographics

• Geographics

• Psychographics

Choosing the retailing mix6

Step 2: Choose the retailing mix

• Product• Place• Price• Personnel• Promotion• Presentation

The retailing mix

TargetTargetmarketmarket

Product

Price

Promotion

Place

Personnel

Presentation

6

Product offering

The mix of products

offered to the consumer

by the retailer; also called

the product assortment or

merchandise mix.

6

Retail promotion strategy6

• Advertising

• Public relations

• Publicity

• Sales promotion

The proper location6

• Large, long-term commitment of resources

• Location will affect future growth

• Local environment may change over time

Location6

• Freestanding store

• Shopping centre

Price

Quality image

High priceLow price

Good value

6

Presentation of the retail store6

Factors in creation of a store’s atmosphere:

• employee type and density• merchandise type and

density• fixture type and density• sound• odours• visual factors

Personnel and customer service

6

Two common selling techniques:

• trading up

• suggestive selling.

Learning objective 7

Discuss the challenges of expanding retailing operations into global markets

Global retailing7

Reasons for global expansion

• Spread of communication and mass media

• Growth potential of undeserved markets

• Lowering of trade barriers and tariffs

Global retailing (cont.)

7

Factors used to analyse global retail markets:

• market size and economics• infrastructure and distribution• competition• operations• financial and tax reporting• merchandise acceptability• partnering capability.

Global retailing (cont.)

Prerequisites for going global:

7

• secure domestic position

• long-term perspective

• consistent global and

corporate strategies.

Describe future

trends in retailing

Learning objective 8

Trends in retailing8

• Entertainment• Convenience and

efficiency• Customer

management

Customer management8

Customer management strategies

• Customer relationship marketing

• Loyalty programs

• Developing clientele