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RETAILING

RETAILING
all activities involved in selling goods or services directly to final consumers for their personal, nonbusiness use

retailer
a business in which sales come primarily from retailing


MAJOR TYPES OF RETAIL STORES
by amount of service

Full Service
"Customer is King" perspective of department stores in the '20s in the U.S.

Limited Service
e.g., Sears, JCPenny

Self Service
e.g., Service Merchandise

The idea of "self service" was a new concept in the '20s in the U.S.  Everyone likes to remember Henry Ford as some kind of automotive genius - my understanding of history is different from popular notions on that subject.  But nobody remembers him for the influence that he had on retailing with his company stores.  Imagine walking into a store and having to ask a clerk to get something out of the back room or an off-limits shelf for each and every little item you want to consider buying.  Henry Ford thought that this was an inefficient way to do business -- you are paying for unnecessary labor as well as losing sales from prospective customers who can't easily compare the features of products.  So why not just put merchandise on a shelf, let the customer make comparisons on her own, and pay wages only for the people who stand at the door to exchange money for the goods being purchased, checking out customers in assembly line fashion?  Henry Ford deserves some thanks for implementing an idea that we now take for granted.


MAJOR TYPES OF RETAIL STORES
by product line

Recall:

  • product line depth
  • product mix width

Specialty Store
limited and single line stores; narrow product mix width, deep product lines

Department Store
many varied product lines; each line is managed as a separate department

Supermarket
large, low-cost, low margin, high volume, self service store which carries a wide variety of food, laundry, and household products

Convenience Store
small store located near a residential area that is open long hours and carries a limited line of high-turnover convenience goods

Hypermarket, Supercenter
a huge store that combines the operations of supermarket and discount retailing and warehousing; carries a wide assortment of products

Category Killer
an especially large specialty store with a large selection of products in its category with relatively low prices


MAJOR TYPES OF RETAIL STORES
by relative prices

Discount Store
sells at lower prices on lower margin but higher margin

Off-price Retailer
buys at less than regular wholesale prices and sells at less than retail

  • Factory Outlet
    owned and operated by the manufacturer to sell surplus, discontinued, or irregular goods
  • Warehouse Club
    sells a limited selection of items at deep discounts to members who pay annual membership fees

Catalog Showroom
sells a wide selection of high-markup, fast moving brand name goods at discount prices


MAJOR TYPES OF RETAIL STORES
by ownership

Chain Store
a retail outlet that is part of a multiple-outlet organization in which the stores are commonly owned and controlled and sell similar lines of merchandise

Franchise Store
a store owned by a franchisee who has contracted with the parent company to market specific products

Independent Store
a single retail outlet owned by an individual partnership or corporation

leased department
a part of a store that is leased to and operated by an outside party


MAJOR TYPES OF RETAIL STORES
by method of operation

Store Retailing
customer goes to store to purchase a product

Nonstore Retailing
customers purchase products without visiting a store

  • direct marketing
  • direct selling
  • automatic vending


NONSTORE RETAILING

direct marketing
marketing through various advertising media that interact directly with prospective buyers

  • catalog marketing
  • third-class mail
  • telemarketing
  • TV home shopping
  • WWW
  • - etc.

direct selling
marketing of products to ultimate consumers through face-to-face sales presentations at home or in the workplace

automatic vending
the use of machines to dispense products


STORE LOCATION

  • isolated store
    one store by itself

  • unplanned business district
    a group of stores, developed without coordinated planning

  • (planned) shopping center
    a group of stores developed with planning

  • strip mall
    a line of primarily one-story stores


"Big Box" Retailer
a newer term that tends to be used in reference to larger branded chains of department stores, discount stores, and category killers


Wheel of Retailing
a hypothesis that holds that new types of retailers usually enter the market as low-status, low-margin, low-price operators but eventually evolve into high-cost, high-price merchants

How did Sears get its start?  In what direction is it moving?  How have KMart and Wal*Mart evolved?


ATMOSPHERICS

Every store has a "feel" and image: is it cluttered, bright and airy, charming, plush, somber, upscale, or cheesy looking?  In looking at a store's atmospherics, we must consider its

  • exterior
  • interior
  • layout
How have Sears, KMart, and Wal*Mart changed the atmosphere of their stores over the past two decades?  Do these stores look different than they used to look?

How does a charity thrift store smell different than a bookstore that has a reading area?  Would running a coffee maker in a thrift store change the atmospherics and image of the store?  Might it seem more upscale?  Might it cause people to stay longer in the store, to buy more merchandise, and to pay higher prices?  Two of my classes did projects for a thrift store that changed the location of merchandise categories within the store, changed the way that merchandise was displayed and priced on racks and shelves, and set up a coffee maker near the books.  According to the store manager, these easily-implemented changes resulted in a substantial effect on revenues.


edited 11 JUL 05