RETAIL MARKETING

RETAIL MARKETING THE STRUCTURE OF RETAILING Charles Blankson, Ph.D.

Retail Store Classification Retail stores could be classified in the following ways: • By service or product retailing; • By type of merchandise e.g., food, apparel, automotive, drug etc., • Departmental specialty retailing • By margin and turnover, • By location, e.g. city centre, out-of-town, free-standing etc., • By type of ownership e.g., independent, chain, franchise, etc., • By strategic group – multiples., • Store versus non-store retailing; • Electronic or the Internet retailing. 2.

Depth and width of product lines: Specialty outlets Department stores Variety chains Supermarkets Superstores hypermarkets Non-store retailing Mail order Direct mail Teleshopping Electronic shopping Network retailing The Internet retailing 3. Store Types

Customer service levels Personal service Limited service Self-service Price position Discount store Cash & carry Warehouse clubs Category killer 4. Store types continues…

Location High street Out-of-town Convenience store Shopping centre Airport retailing Terminal retailing Mall---Mall of America Ownership Independent Small multiple Co-operative society Franchising Corner shops. 5. Store types continues….

Retail Strategy Differences

Creation of Value Retail Exchange Process • An exchange is an act of obtaining a desired object from somebody by offering something in return. • Retailing as an exchange process is between the retailer and the customer. • The retailer offers the services and/or merchandise that are valued by the customers. • These customers are therefore willing to pay for the services offered. • Thus, the creation of value via exchange process is part of the retailer’s strategy to satisfy customers. • It is this satisfaction and piece of mind that the customer pays for. 7.

Utility/Service offering The value received or perceived by the customer is in relation to: Store Merchandise Services Retail experience Store image Store loyalty These elements will determine the level of customer satisfaction Customer’s Cost elements Monetary Time and travel Retail experience Perceived risks Opportunity cost These elements will form the total customer cost and will determine the overall customer derived value. 8. Derived Value from Retail Exchange

Retail Value Retailers continue to search for new ways to create value for their customers as in the following categories: • By offering the right merchandise • By creating good shopping atmosphere • By decreasing the risk of shopping • By making shopping convenient • By reducing price through cost control. 9.

Retail Marketing Mix

Changes in the Retail Environment Changes in social environment are constantly affecting what consumers want and how retailers provide consumers with their needs. Consumers are changing: • what they buy as income, technology and lifestyles change • who they buy from as retail format change • who they buy from as supermarkets move into fashion retailing • how they are buying as the Internet brings new and better deals and save time. • where they are buying as government policy affects where stores can relocate • when they buy as shops open longer and new convenience formats spread. 11

Retailers’ interests Retailers are interested in the above changes because: • they affect how much people want to buy • of the costs of providing customers with the products and services that they want. Examples: • a change in the birth rate has an effect on consumer spending, particularly for retailers that sell baby wear and baby foods. • Changes in social attitudes to work, home and leisure affects the amount and types of clothing and recreational goods that people buy. 14

Examples continues.. • Political decisions relating to the environment, shopping locations and fair trade affect where and how retailers can trade. • Changes in technology bring new attitudes to buying products and services and to better organisation of the supply chain. In order to analyse the effect of these changes on retailer, four types of changes could be identified: • Unpredictable changes • Seasonal changes • Short-term changes, and • Structural changes. 15

Structural Changes Structural changes are those changes that occur over a much longer period and have more enduring effects. They have a long term effect on the basic ways in which goods and services are provided. These changes include: • Demographic changes • Technological changes • Economic changes • Social changes • Political changes • Legal changes • Cultural changes Note: retailers cannot alter these changes but operate within their boundary. 16

Structural changes…… These structural changes can be used to explain changes in modern retailing and also indicate where future changes may go. They could be used to explain phenomena such as: • the growth of supermarket in grocery retailing from the 1960s to their present domination of grocery trade. • the growth of out-of-town shopping centres • changes in retail formats in other areas of retailing – supermarkets extending into fashion retailing • the growth of large firms in retailing – leading to concentration. • the integration of supply chain activities. 17

Changes in the Level of Retail Activity The four components of change work together to determine the level of demand for different products. Conceptually, the level of demand can be described by the following equation: Level of demand = trend value + fluctuation +seasonal effect + odd event effect. Note: • Trend value is associated with long-term structural demand • Fluctuation is caused by year-to-year changes in the economy • Seasonal effect is caused by the time of year • Odd event effect is caused by changes in weather, strikes etc. 18

Socio-demographic change The population of a country is important to retailers because it defines the primary market for most retailers. Stagnant population has several implications: • Retailers have to rely more on the growth in income than population for new opportunities. • It encourages foreign retailers to venture into Britain as a way of expanding their market. • It exposes British retailers to greater international competitive pressures. 19

Retail Technology Technology consists of the resources and methods that are used to produce products and services. New technology can lead to: • cheaper and better products and/or services • improve the consumer supply chain by reducing distribution costs • improve availability of products to the consumer. Technology has resulted in: • increasing use of self-service • increased standardisation • more even spread of shopping 20

Socio-economic Change Time has become increasingly important for people for a number of reasons. The main issues are: • increase in incomes • change in household structure • increased working hours • more leisure activities available • the need for extra time to consume positioning products • days are crowded with tasks and social obligations that have become more complex.

Seminar • In groups, review the major changes in the US retail industry over the past two years for class room discussion

RETAIL MARKETING