RETAIL MARKETING

1. RETAIL MARKETING

2. Build-A-Bear Workshop • Maxine Clark was passionate about retailing • Started her career as executive trainee at May Department Stores. • She had the ability to spot trends and a series of promotions led to her becoming president of Payless Shoe Stores in 1992. • In 1996 she decided to devote to an innovative idea: “A teddy-bear theme experience retailer that combines the universal appeal of plush animals with an interactive assembly line that allows children to create their own huggies”

3. Retailing • Retailing is about spotting trends • Consumer Trends – Life-style changes • Trading trends – Change in the Trading practices. • And then stimulate sales through Skilled people Ambience Customer Relationship Consumer Benefits… and the list goes on.

4. External Impact on Retail International Dimension: - Life-style / Wall-Mart Success Represents events originating in foreign countries as well as opportunities. Technological Dimension: - Digital Economy Scientific and technological advancements in the industry and society at large. Socio-cultural Dimension: - Small Families / Condominiums Demographic characteristics, Norms, Customs and values of the population within which the company operates.

5. Changing face of Retail …. If the only constant is change - Where are we coming from ? Premise 1: Whatever got you where you are today is no longer sufficient to keep you there. Premise 2: In the complex retail sale a good tactical plan is only as good as the strategy that led upto it. Premise 3: You can succeed in retail sales today only if you know what you are doing and why.

6. The new ways of retailing • Bricks-and-mortar stores leveraging their customer base by making it convenient on-store shopping, or through the internet or through the telephone. REI (Recreation Equipment Incorporated) • Largest outdoor specialty retailer…. $ 600 million annual revenues specializes in high-performance mountain climbing and outdoor gear and clothing. • REI customers may get an idea by looking through a catalog – get more information going through the internet – solicit expert advise through an online representative and then purchase through any of the alternatives. • 52 Stores, 22 States and a huge 65 foot high free-standing climbing rock, mountain-bike trails and “rain rooms” so customers can try their equipment.

7. In the context of Retailing Changes Affect Two Key Areas • Trading Environment • Consumer Environment

8. Changes in the Trading Environment • Concentration in the trade with cross borders • As barriers are reduced, products will expand into other markets • Internationalism will accelerate • National products spill into other country’s markets • Companies will concentrate their purchasing where it is most advantageous • International brands will grow in importance. • The trade will develop international strategies for categories. • Manufacturers will become much closer to their customers.

9. Changes in Consumer Environment • Reduced rate of growth in population • An ageing population due to improvements in health services • More households with fewer people per household • Consumer are more critical • Steady increase in disposable income • Increased people mobility

10. What does it lead to ? Trade Concentration A reduction in the number of outlets and the emergence of large strategic accounts. Internationalism Retailers are now opening operations in many different countries. Major buying groups have emerged on an international basis with complex networks significantly impacting on manufacturer marketing plans. Specialisation Consumer loyalty has been established by new and varied retailing formats targeted at different consumer needs.

11. Retailing is big business • Wal-Mart – one of the world’s largest corporation • Carrefour – French based: Operates hyper markets in 24 countries. • Retailers like A&P, Food Lion, Stop & Shop and 7-Eleven are owned by companies with headquarters in Europe and Japan – Cross border cultures

12. The Role of Retailing • Retailing is one of the largest employers • Retailers ring up almost a third of the U.S. GDP • The largest co. in the world is a retail co. Walmart $259 billion(topped the fortune500 list for last 4yrs) • If Walmart were its own economy it would rank 30th in the world,right behind Saudi Arabia

13. How has this been possible • Sophisticated communication and information systems are used to manage business. • 8200 ‘7-Eleven’ Stores in Japan scan customer’s shopping basket and send data via satellite and the internet to corporate headquarters. • Headquarters at ‘7-Eleven’ aggregate the data by region, product and time and makes that information available to all stores and suppliers by the following morning. • Fast-food / Fresh-food items are ordered three times a day. • Magazines once a day • Processed \ food items three times a week………

14. Amazon.com • Maintains a data warehouse with information about what each customer has bought. • When customers return to www.amazon.com they are immediately recognized and suggestions based on past purchases made. • Emails are sent when books of your interest are published. • Amazon.com showed profits in the fourth quarter of 2001, but there are failures as well. • In 2001 alone 384 e-tailers either filed for bankruptcy or ceased operations.

15. Retail Management • Retailing is a part of life – customers do not realize what goes behind. • Involves sophisticated technologies to reach customers and critical business decisions. • Most of what you learnt during your marketing management class is relevant and related. • Selecting Target markets • Selecting retail locations • What merchandise and services to offer • Distributing merchandise to stores • Deciding how to price promote and present merchandise.

16. What is Retailing All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non-business use. A retailer is a business that sells products and/or services to consumers for personal or family use.

17. Retailing is Big Part of Economy – Employment Projections for 2010 by BLS (Bureau of Labour Statistics, US) Retail (17%) Manufacturing(18%) Government (15%) Services (50%)

18. Retailer’s Position within a Distribution Channel

19. Retailer’s Role in a Distribution Channel • Providing an assortment of products and services • Breaking Bulk • Holding Inventory • Providing services Distribution channels get vertically integrated for providing benefits to the consumer.

20. Retailers add value • Do-it-yourselfer for a door company. • Home Depot will enable Select the door from a large display, Assortment of hardware, paint and tools are presented. • Retailers can add value in different ways.

21. The value of the product or service increase across stages Doll can be bought on credit or put on layaway Doll is featured on floor display Doll is offered in convenient locations in quantities of one Doll is developed in several styles Doll is developed at manufacturer

22. Classificationof Retail Establishments Ownership Level of Service Product Assortment Price Classification of Retail Operations

23. Classification of Ownership Independent Retailers Franchises Chain Stores Ownership

24. Independent Retailer • Owns, operates only one outlet, • Owner / Proprietor / Family members working as assistants. • Neighbourhood “Baniya” / “Paanwalla” / “Comarsons” / “Amarsons” • Advantages – Ease of entry and rapport with customers. • Disadvantages – Economies of scale and “Total Offer”

25. Chain Retailer • Corporate retail chain – Similarity in merchandise, the ambience, advertising, promotions…. • Wills Sport / Louis Phillipe / Arrow / Shoppers Stop / Food World / Music World / Planet M / ….. • Advantage – Bargaining power & therefore cost-effectiveness • Disadvantage – Regional / rural preferences difficult.

26. Franchising • Contractual agreement to conduct business – fee and compensation are determined. • Product Franchising – Archie’s stores. Here the franchiser sells products of the franchiser. • Business Format Franchising – McDonalds. Here standards and code of conduct is agreed upon. • Franchising is essentially a method of expanding the retail business.

27. Self Service Full Service Factory outlets Discount stores Exclusive stores Level of Service

28. Product/Merchandise Assortment Breadth or Width of merchandise - The number of merchandise categories Depth of merchandise -the number of items in a category - Stock Keeping Units (SKUs)

29. Narrow Broad Specialty Stores Drug Store Department Store Product Assortment

30. Low High Factory outlets Discount stores Specialty stores Price DrugStore

31. Type of Retailer Service Level Assort- ment Price Mod Hi-High Broad Mod-High Department Store Specialty Store High Narrow Mod-High Supermarket Low Broad Moderate Convenience Store Low Med-Narrow Mod High Drugstore Low-Mod Medium Moderate Full-line Discounter Mod-Low Med-Broad Mod Low Specialty Discounter Mod-Low Med-Broad Mod Lo-low Warehouse Clubs Low Broad Low-lower Off-price Retailer Low Med-Narrow Low Restaurant Low-High Med-Narrow Low-High Classification Summary

32. Department Stores Specialty Stores Supermarkets Drugstores Convenience Stores Discount Stores Restaurants Major Types of Retail Operations

33. Retail Formats Department Stores (20000 to 40000 Sq Ft) Large scale retail format / Often multi-levelled / Variety of merchandise – specially furnishing and apparel. Shoppers Stop / Westside / Harrods / JC Penny Speciality Stores (Normally under 8000 Sq Ft) Narrow Product Line / Deep Assortment / Toy Kemp in Banglore, Nalli Saree in Chennai Super Markets(8000 to 20000 Sq Ft) Large / Low Cost / Low Margin / High Volume / Self Service – grocery revolution. Convenience Stores(3000 to 8000 Sq Ft) Small / Near Residences / Petrol Pumps

34. Retail Formats Discount Stores (Varying Sizes) Off-price retailers, Seconds showrooms, Factory outlets offering odd sizes and unpopular colours. Hyper Markets (80000 to 220000 Sq Ft) Huge Size, Both food and non-food (Clothes/Jewellery/Hardware/Whitegoods/Cycles/Computers. “Carrefour” , Retail Parks with cafeteria, restaurants, pubs, banks, petrol stations. May be located on the outskirts of the town.

35. Mass Merchandising Retailing strategy using moderate to low prices on large quantities of merchandise and lower service to stimulate high turnover of products.

36. Hypermarket A large retail store combining a supermarket and a full-line discount store. Supercenter Retail store combining groceriesand general merchandise goods with a wide range of services. Hypermarket and Supercenter

37. Product Place or Location Price Personnel Promotion Presentation Choosing the Retailing Mix Choose the Retailing Mix

38. Location Decisions Freestanding Store Mall Shopping Center Location

39. Locations Free-standing • Store located along a major traffic artery. • No competition / Lower Rents / Ample Parking • Gas stations, Convenience Stores, Hotels and Fast-food restaurants on highways. • Discount stores in the west. • In India distance is a big issue due to traffic and petrol costs.

40. Locations Shopping Centre and Mall “A group of retail and other commercial establishments that is planned, developed, owned and managed as a single property” International Council of Shopping Centres ICSC Definition. • It can be a mall – typically enclosed and climate controlled. • It can be a strip – a row of stores with parking provided for in front of the store.

41. Factors in Creation of a Store’s Atmosphere Employee Type & Density Merchandise Type & Density Fixture Type & Density Sound Odors Visual Factors Presentation of the Retail Store

42. Product Personnel TargetMarket Presentation Place Price The Retailing Mix Merchandise Assortment Store Atmospherics Customer Service Promotion Advertising Personal Selling Publicity Sales Promotion Location, Location, Location! Retail List Price Discounts Credit

43. The Strategy Mixes

44. Three Basic Strategic Positions • Low end • Medium • High end

45. Retail Strategy Alternatives

46. Major Forms ofNonstore Retailing Automatic Vending Direct Retailing Direct Marketing Electronic Retailing Nonstore Retailing

47. Direct Retailers sell products: Door-to-Door Home Sales Parties Office-to-Office Direct Retailing

48. Electronic Retailing Types of Electronic Retailing Shop-at-Home Networks On-Line Retailing

49. Franchising • What is it?

50. 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. Basic Forms of Franchising