Retailing
- a consumer market distribution channel
function
- an organization (retailer) buys products from
firms and sells them directly to consumers
- a retailer is a reseller in the marketing channel
over 1,100,000 retailers in the U.S.
Retail Industry
- second largest industry in the U.S.
12 % of U.S. employment
$ 4.2T in annual sales
- 90% of retail stores are single-store businesses
but account for less than half of retail sales
- majority of revenue generated by companies
that run retail chains
- biggest retailer in the world is Walmart
$344B in revenue last year
operates a chain of discount wholesale
stores emphasizing low prices
Retail Sales and the Economy
- important *economic indicator, gives glimpse
into U.S. Gross Domestic Product number
( which indicates how fast economy is
growing or shrinking)
*consumer spending makes up about 70% of
GDP
Retailer Benefits to Customers and Suppliers
Customers - ability to purchase small quantities
of wide assortment of products at
reasonable prices
Suppliers - opportunities to reach target market
with right products at the right time,
build demand, provide customer
feedback
Key Issues for Retailers
Customer Satisfaction - develop strategies that
bring the customers back
Acquire the Right Products - identify what
customer want, negotiate with
suppliers to obtain products on time
Product Cycle - new innovated products
released with high prices to maximize
profits early on ( flat panel HDTV,
updated iPads) - has created highly
competitive situation among retailers
Product Presentation - present products to
customers in a way to generate interest
Traffic Building - use promotional methods to
build interest
a. people visiting the store
b. visits to the website
Layout - store physical layout important in
creating a retail "experience" that will
attract customers
Online "layout" where site navigation
and usability could make difference in
site success
Location - well placed stores, high visibility,
easy access can generate more traffic
and be highly valuable
must project appealing image to attract
customers
must understand the trade-off between
cost and benefits of a location
neighborhood, community, regional
shopping centers
Positioning
identifying unserved or underserved
market segment - serve it with strategy to
distinguish from other retailers in mind
of consumer
Keeping Pace with Technology - technology has
changed all areas of retailing:
- customer knowledge
- product movement
- point of purchase
- web technologies
E-Commerce
- internet allows consumers to shop and
purchase online
- now traditional retailers sell products on
their own website
- currently represents 3% of total retail
industry revenue - growth is steady
- more widespread use expected as more
internet-savvy customers enter the market
Target Markets Served by Retailers
Mass Market
Specialty Market
Exclusive Market
Pricing Strategy
Discount Pricing
Competitive Pricing
Full Price Pricing
( name the target market associated with
the pricing strategies above )
Promotional Focus
Advertising
traditional media
internet for retailers selling online
Direct Mail
catalog retailers
small local companies
Personal Selling
expensive, high end products
Major Types of Retail Stores
Two General Categories
1. General Merchandise Retailers
2. Specialty Retailers
General Merchandise Retailers
offer a variety of product lines stocked in
considerable depth - broad product mix
Department Stores
generally service oriented
organized into separate departments
housewares, cosmetics, apparel,...
Macy's, Sears
Discount Stores
self-service, lower margins than Dept.
stores for higher volume
wide variety of products
Walmart, Target
Convenience Stores
small, self-service, long hours, narrow
assortment of convenience products
Supermarkets
large self-service stores, carry
complete line of food products plus
consumer personal items
lower prices than neighborhood stores
Wegmans
Superstores
very large stores, self-service
carry all the products of supermarkets
plus other routinely purchased
consumer products and services
Warehouse Clubs (Buying Clubs)
large scale mass merchandising
low cost
members only
handle many brand leader products
few services, mainly self-serve
BJ's
Sam's Club
Specialty Retailers
offer substantial assortments in a few
product lines
Radio Shack
Gap Inc.
Home Depot. Lowes
Staples, Office Depot
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The (U.S.) Retail Sales Report
Released by: Census Bureau and Department
of Commerce
Coverage: Previous months sales data
Release Date: 13th of the month
Indicator tracks $ value of physical merchandise
sold within retail trade (uses sampling)
Includes companies of all sizes, from Walmart
to independent small- town businesses.
Retail sales considered a coincident indicator -
activity reflects current state of the economy
Also considered a key pre-inflationary indicator
Has two components:
1. Total sales figure ( and % change from
previous month
2. "Ex-autos" figure due to large ticket
price and known seasonality
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