General Trends in Retailing
• New Types of Retailers
• Increased Concentration
• Globalization
• Growth In Services Retailer
• Growth in Use of Multi-Channel Retailing by Traditional Retailers
• Increase Use of Technology to Reduce Cost, Increase Value Delivered
Food Retailers
Mom and Pop Stores
Convenience Stores
Supermarkets
Supercenters
General Merchandise RetailersDepartment Stores
Specialty Stores
Discount Stores
Category Specialists
Off-Price Retailers
Warehouse Clubs
Types of Retailers
Conventional Supermarket Survival Pack
Emphasize Fresh Perishables
Target health conscious and ethnic consumers
Provide a better in-store experience
Offer more private label brands
Food Retailers Supermarkets
-Cars, highways and TV to build brands
-Knowledgeable customers – self service
-Perishable vs. packaged goods
Big Box Retailers -Warehouse Clubs
-Supercenters
-Hypermarkets
Convenience Stores
Convenience Stores Fight Competition
• Tailors associates to local market
• Stores are more convenient to shop
• Offers fresh food
• Fast, casual restaurants
• Financial services available
• Opening smaller stores closer to consumers – like airports
Issues in Food Retailing
Competition from Discount Stores
Changing Consumption Patterns
Efficient
Distribution Lower Costs Lower Prices
Time Pressure Eating Out More Meal Solutions
Types of General Merchandise Retailers
• Department Stores
• Specialty Stores
• Category Specialists
• Home Improvement Centers
• Discount Stores
• Drugstores
• Off-Price retailers
• Extreme Value Retailers
Issues in Department Store Retailing
• Competition
-Discount Stores on Price
-Specialty Stores on Service, Depth of Assortment• Lower Cost by Reducing Services (?)
-Centralized Cash Wraps• More Sales (?)
-Customers Wait for Sale• Focus on Apparel and Soft Home• Develop Private Labels and Exclusive Brands
What To Do With an Eroding Market
To deal with an eroding market Department stores are:
•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
Royalty-Free/CORBIS
Issues in Extreme Value Retailing
• Focuses on Lower Income Consumers• Names mostly imply good value Low Cost
Location• Limited Services• One of the Fastest Growing Retail Segments
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Non-store Retail Formats
Electronic Retailing
Catalog and Direct Mail
Direct Selling
Television Home Shopping
Vending Machines
Royalty-Free/CORBISRyan McVay/Getty Images
Electronic Retailing
• History of frenzied investments and false predictions of retail dominance
• Primarily used by traditional retailers to compliment store and catalog offerings
• Exclusive e-tailers target small and dispersed niche markets
Randy Allbritton/Getty Images
What are Amazon and eBay?
• Amazon.com – Merchandise to consumers. Provides website development and fulfillment services to other retailers
• eBay – Acts as a mall or other shopping center providing a “place” for buyers and sellers to meet
Don Farrall/Getty Images
Issues in Direct Selling
• Providing information and demonstrations is costly
• Party plan system: merchandise is demonstrated in a party atmosphere
• Multi-level network: Master distributors sell to distributors who sell merchandise
• Pyramid schemes: Firm sells to other distributors and little if any merchandise goes to end users
Issues in Television Home Shopping
• Consumers watch cable tv, infomercials or direct response ads
• Few consumers watch regularly• Most purchases made by small proportion of
viewers• Customers can’t examine merchandise• Customers must wait for merchandise to come
on• Sells mostly jewelry, apparel, cosmetics,
kitchenware, exercise equipment
Royalty-Free/CORBIS
Issues in Vending Machine Retailing• Sales growth has been
declining due to higher prices and healthier eating habits
• New technology may help sales growth
• Vending machines are beginning to accept credit
• Trend of placing machines in captive consumer locations
Ryan McVay/Getty Images
Services vs. Merchandise Retailers
Intangibility -Problems in Evaluating Service Quality -Performance of Service ProviderSimultaneous Production and Delivery -Importance of Service Provider
Perishability -No Inventory, Must Fill CapacityInconsistency of the Offering -Importance of HR Management
Types of Retail Ownership
• Independent, Single Store Establishments
Wholesaler Owned Cooperatives
• Corporate Chains
• Franchises
(c) Brand X Pictures/PunchStock
Reasons for Franchising Growth
Technological advances
Profitable utilization of capital resources
Attainment of the “American Dream”
Demographic expansion
Product/service consistency
Types of Franchise Systems
Territorial
Operating
Mobile
Distributorship
Co-ownership
Co-management
Leasing/Licensing
Manufacturing
Service
Franchisor Positions in the Marketing Channel
Manufacturer - retailer
Manufacturer - wholesaler
Wholesaler - retailer
Service sponsor - retailer
Franchisor Benefits
Continuous marketContinuous market
Market informationMarket information
MoneyMoney
Sales of productsSales of products
Rental and lease feesRental and lease fees
License fees License fees
Management feesManagement fees
Royalty fees
Franchisee Benefits
Initial Services
Market survey and site selection, facility design and layout, lease negotiation advice, financing advice, operating manuals, management training programs, and employee training.
Continuous Services
Field supervision, merchandising and promotional materials, management and employee retraining, quality inspection, national advertising, centralized purchasing, market data and guidance, auditing and record keeping, management reports, and group insurance plans.
Franchisor Advantages/Disadvantages
Advantages
Rapid expansion, highly motivated franchisees do a good job, additional profits by selling franchisees products and services.
Disadvantages
Company-owned units may be more profitable, less control then independent retailers over advertising, pricing, personnel practices, etc.
Franchising Trends for the New Millenium
Sustained growth
Enduring plus un-imagined applications
International expansion
Increasing tensions
Greater emphasis on financial returns
Which Types of Retailers Will Be the First to Pursue Global Markets?
Discount Stores
Category Specialists
Department Stores
Supermarkets
Services Retailers