Lecture Retailing management (6/e) - Chapter 2: Types of retailers. This chapter describes the different types of retailers and how retailers are using the multichannel approach to attract customers.
Chapter Types of Retailers McGrawHill/Irwin Retailing Management, 6/e Copyright © 2007 by The McGrawHill Companies, Inc. All rights reserved The World of Retailing Increasing Industry Concentration Globalization Growing Diversity of Formats 2 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 2-4 Merchandise Offering • Variety (breadth of merchandise) The number of merchandise categories Jack Star/PhotoLink/Getty Images C Squared Studios/Getty Images Stockbyte/Punchstock Images • Assortment (depth of merchandise) The number of items in a category (SKUs) Royalty-Free/CORBIS Royalty-Free/CORBIS Royalty-Free/CORBIS Royalty-Free/CORBIS 2-5 Variety and Assortment of Bicycles Types of Retailers Food Retailers Mom and Pop Stores Convenience Stores Supermarkets Supercenters General Merchandise Retailers Department Stores Specialty Stores Discount Stores Category Specialists Off-Price Retailers Warehouse Clubs NAICS Codes for Retailers Food Retailers Primary Shopping Format for Food Sales Growth Rates by Retail Format Globalization of Wal-Mart Characteristics of Food Retailers 2-10 Types of Retail Ownership • Independent, Single Store Establishments Wholesaler Owned Cooperatives • Corporate Chains • Franchises (c) Brand X Pictures/PunchStock 2-41 2-42 Retailers Using Franchise Business Model Franchising 30 – 40% of US Retail Sales Franchisee Pays Fixed Fee Plus % of Sales Franchisee Implements Program Why is This Ownership Format Efficient? The McGraw-Hill Companies, Inc./Jill Braaten, photographer 2-43 Reasons for Franchising Growth Technological advances Profitable utilization of capital resources Attainment of the “American Dream” Demographic expansion Product/service consistency 2-44 Types of Franchise Systems Territorial Operating Mobile Distributorship Co-ownership Co-management Leasing/Licensing Manufacturing Service 2-45 Reasons for Franchising Failure Inept management Fraudulent activities Market saturation 2-46 2-47 Franchisor Positions in the Marketing Channel Manufacturer - retailer Manufacturer - wholesaler Wholesaler - retailer Service sponsor - retailer Franchisor Benefits Continuous Continuousmarket market Market Market information information Money Money Royalty fees Sales Salesof ofproducts products Rental Rentaland andlease leasefees fees License Licensefees fees Management Managementfees fees 2-48 Franchisee Benefits 2-49 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 2-50 Franchisor Advantages/Disadvantages Advantages Rapid expansion, highly motivated franchisees 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 2-51 Franchisee Advantages/Disadvantages Advantages Established/proven product/service, business and technical assistance, and reduction in risk Disadvantages Loss of control since only semi-independent, franchisee outlets may compete with corporateowned outlets, and high royalties, fees, costs on equipment, supplies, merchandise, rental/lease rates and mandatory participation in promotional and support services 2-52 Franchising Trends for the New Millenium Sustained growth Enduring plus un-imagined applications International expansion Increasing tensions Greater emphasis on financial returns 2-53 Which Types of Retailers Will Be the First to Pursue Global Markets? Discount Stores Category Specialists Department Stores Supermarkets Services Retailers Increasing Concentration 53% of sales 85% of sales Drug Stores Walgreens, CVS, Rite-Aid and Eckerds Discount Stores Wal-Mart, Target and Kmart 2-54 Why Is the Retail Industry Becoming More Concentrated? Traditionally retailers have been local businesses • Why are bigger firms emerging? • Why are least concentrated sectors food retailers and services retailers? 2-55 ... from Category Specialists Toys-R-Us, Circuit City, Sports Authority McGraw-Hill Companies, Inc./Gary He, photographer Issues in Specialty Store Retailing 2- 22 Mall-Based Apparel Retailers Decline... key customers Royalty-Free/CORBIS Issues in Discount Store Retailing 2- 21 • Only Big Three Left Wal-Mart, Kmart, Target • Wal-Mart’s Dominance • Differentiate Strategy Wal-Mart = Low Price and... Drugstores Off-Price retailers Extreme Value Retailers 2- 17 Characteristics of General Merchandise Retailers 2- 18 Issues in Department Store Retailing • Competition -Discount Stores on Price -Specialty