Daniel Palmgren
Definitions and terminology - Introduction to retail
Chapter 1 - Introduction to the world of retailing
Retailing -
Is the set of business activities that adds value to products and services sold to consumers
for their personal or family use
Retailer -
Is a business that sells products and/or services to consumers for their personal or family
use
Breaking bulk -
When retailers offer the products in smaller quantities tailored to individual
consumers consumption patterns
Holding inventory -
Having a large set of stock in the store so customers rely on the store for stock
keeping
Wholesalers -
Buy and store merchandise in large quantities from manufacturers and then resell the
merchandise to smaller retailers
Vertical integration -
means that a firm performs more than one set of activities in the chne, as occurs
when a retailer engages in wholesaling activities by operating its own distribution to stores
Backward integration -
Arises when a retailer performs some wholesaling and manufacturing
activities, such as operating warehouses or designing private label merchandise
Forwards integration -
Occurs when a manufacturer undertakes retailing and wholesaling activities,
such as apple operating its own retail stores
Bottom of pyramid (BoP) -
The majority of people, with low income but a large population who have
a large spending power
Corporate Social Responsibility -
Involves an organisation voluntarily engaging in business practices
that meet or exceed the ethical and legal expectations of its stakeholders.
Conscious marketing -
Entails a sense of purpose for the firm higher than simply making a profit by
selling products and services
Intratype competition -
When retailers use the same approach and sell the same products such as
supermarkets only compete with other supermarkets
Scrambled merchandising -
When retailers offer merchandise not typically associated with their type
of store, such as clothing in a drug store
Is the Overall Appearance and Feel that (a retailer) presents to customers, primarily its look and layout, the sort of range it stocks and the approach taken to pricing.
Refers solely to external appearance - Distinct from Format
Have grown exponentially over the past few years - Movement - Cheap - Scarcity
Retailing strategy that is not Store-based - Ex: Internet, Catalog and Direct Mail, Direct Selling, Television Home Shopping, Vending Machines, and Social Media
The largest channel is __________
Largest Non-Store Channel is ________
Which format is growing the fastest?
4 Types of Internet Retailers
- Catalogues
- Consumer Goods
- Retail Chains
- Web Only
- Rapidly growing channel due to convince and creativity - Takes a bigger slice of the pie
Door-to-Door selling of products or calling you directly asking to sell you something - Ex: Girl Scout Cookies - Has been on the rise when it was expected of dying out
- Person-to-Person - Party Plan - Other
- Providing information and Demonstrations is costly - Party Plan Systems - Multi-level Network - Pyramid Schemes
Merchandise is demonstrate in a party atmosphere
Master distributors sells to distributors who sell merchandise
Firms sells to other distributors and little if any merchandise goes to end users
- Was also supposed to die due to the recession; but actually thrived from the recession
Issues with Television Home Shopping
- Few consumers watch regularly - Most purchases made by small proportion of viewers - Customers can't examine merchandise - Customers must wait for merchandise - Sells mostly jewelry, apparel, cosmetics, kitchenware, exercise equipment
Vending Machine Retailing
- New technology helping sales growth - Portable venue for companies
Key Influences on Online and In-store Shoppers
Most Influential: - Online Ratings and Reviews - Google Search - Email Promotion - Paper Catalog Least Influential: - Pinterest - Twitter - Mobile Advertising - Facebook
More than doubled online sales
- Is the evolution of multi-channel retailing, but is concentrated more on a seamless approach to the consumer experience through all available shopping channels Examples of Omni-Channel: - Buying online and picking up in-store - Buying in-store and initiating a return online
Obstacles Retailers Face in Achieving a True Omni-Channel Organization
1. Technological & Integration Barriers 2. Organizational & Operational Challenges 3. Opportunities exist to make the physical store a strategic asset
Technology & Integration Barriers
This primarily comes into play with supply chain issues. - Retailers need to have a consolidated, accurate view of real-time inventory across stores & DC's
Organizational& Operational Challenges
Problems include lack of in-store employee training. - Conflicting priorities between channels, separate organizational silos for each channel, and difficulty in sharing data between channels
Opportunities Exist to Make the Physical Store a Strategic Asset
Examples include the need for dedicate areas for both pick-up of online products and return of online ordered products
North American Industry Classification System (NAICS)
The U.S., Canada, and Mexico have developed a classification scheme to collect data on business activity in each country
Is the number of merchandise categories a retailer offers
Is the number of different items offered in a merchandise category
Breadth of Merchandise; Depth of Merchandise
Variety is often referred to as ______ __ _______, and Assortment is referred to as _______ __ _______
Each different item of merchandise is called a ___________ ______
Is a large, self-service retail food store offering groceries, meat, and produce, as well as some nonfood items, such as health and beauty aids and general merchandise
Limited-Assortment Supermarkets or Extreme-Value Food Retailers
Only stock about 1,500 SKUs
Fresh-Merchandise categories are located in the areas around the outer walls of a supermarket and include the dairy, bakery, meat, florist, produce, deli, and coffee bar
Is the practice of purchasing from factories that pay workers a living wage, considerably more than the prevailing minimum wage, and offer benefits such as outside medical treatment
Are large stores (160,000-200,000 Square Feet) that combine a supermarket with a full-line discount store Ex: Walmart
Are large (160,000-200,000 Square Feet), combination food (60-70%) and general merchandise (30-40%) stores
Both Supercenters and Hypermarkets face challenges in finding locations for new ______ (large, limited service) ______
Are retailers that offer a limited and irregular assortment of food and general merchandise with little service at low prices for ultimate consumers and small businesses Ex: Sam's Club and Costco
Provide a limited variety and assortment of merchandise at a convenient location in 3,000 to 5,000 Square-Foot stores with speedy checkout
Are retailers that carry a broad variety and deep assortment, offer customer services, and organize their stores into distinct departments for displaying merchandise
(Nondurable or Consumable Goods) - Which have a shorter lifespan such as cosmetics, clothing, and bedding
Aka: Durable Goods - Which are manufactured items that are expected to last several years, such as appliances, furniture, and consumer electronics
To differentiate their merchandise offerings and strengthen their image, departments stores are aggressively seeking ______ ______, in which national brand vendors sell them merchandise that is not available elsewhere.
Aka: Store Brands - Department stores are placing more emphasis on developing their own _______ _______ - These items are developed and marketed by the retailer, available only in its stores
Full-Line Discount Stores
Are retailers that offer a broad variety of merchandise, limited service, and low prices
Are Big-Box Stores that offer a narrow but deep assortment of merchandise
By offering a complete assortment in a category, Category Specialists can "kill" a category of merchandise for other retailers
Concentrate on a limited number of complementary merchandise categories and provide a high level of service
A special type of retail store where merchandise is donate and proceeds go to charity.
Another type of retail store that accepts used merchandise from people and pays them after it is sold
Specialty stores that concentrate on health and beauty care (HBC) products
Aka: Dollar Stores - Are small discount stores that offer a broad variety but shallow assortment of household goods, health and beauty care (HBC) products, and groceries
Offer an inconsistent assortment of brand-name merchandise at a significant discount off the manufacturers' suggested retail price (MSRP)
Are end-of-season merchandise that will not be used in following seasons
Are merchandise with minor mistakes in construction
An online twist to off-price retailing are flash sale sights such as Gilt Groupe, Rue La La, and HauteLook - Each day at the same time, members receive an e-mail that announces the deals available
Are Off-Price retailers owned by manufacturers or retailers - Also known as "Factory Outlets"
Firms that primarily sell services rather than merchandise, are large and growing part of the retail industry
Wholesale-Sponsored Voluntary Cooperative Group
An organization operated by a wholesaler offering a merchandising program to small, independent retailers on a voluntary basis
Is a contractual agreement in which the franchisor (the company) sells the rights to se its business trademark, service mark, or trade name, or another commercial symbol of the company, to the franchisee for a one-time franchise fee and and ongoing royalty fee, typically expressed as a percentage of gross monthly sales