Retail Management
General Merchandise Retailers
(1) Department Stores (2) Discount stores (3) Specialty stores (4) Drugstores (5) Category Specialists (6) Extreme Value Retailers (7) Off-price retailers (8) Home Improvement Centers
Trends in supermarket retailing
- Offering more ready-to-eat meals - Providing a better shopping experience
The microenvironment - Consumers
-Broad demographic trends in society -Broad lifestyle trends in the society
Earned media
-External to the retailer itself -Earned media are created by others, and published beyond the retailers owned media channels, on some third-party site or page -Forms: word of mouth, search engine optimization (SEO) ex.Online reviews on Yelp or Tripadvisor tend to appear more authentic, trustworthy, and credible, and drive consumer behavior.
Franchising
-Franchiser sells rights to use business trademark to franchisee for a fee - Accounts for $70 billion in the U.S. Annual sales Advantages - Success rate - training, location, protected territory Disadvantage - Start up cost - Must follow rules/ guidelines
Difference between service and merchandise retailers
-Intangibility -Simultaneous production -Perishability -Inconsistency of offerings to customers
Conscious Retailing Principles
-Recognition of the retailers greater purpose ......
Independent, single store establishments
-Rely on owner/manager capabilities to make retail decisions -Some join wholesale-sponsored voluntary cooperative groups -fitness person opening their own shop
Corporate retail chains
-Retail chains operate multiple units under common ownership -Centralized decision-making for defining and implementing strategy -range from a drugstore with two stores
Why do we need retailers?
-Retailers break down products and don't sell in bulk. -They provide services -More marketing
Costs of Channel Activities
-Value-creating activities increase the costs of products -The costs in the supply chain can be almost as much as the cost to make the product
The role of influencers
1. Brand and its message 2. Influencer 3. Influencer's followers 4. Impact How a retailer can use an influencer to broadcast its message to its network and ultimately influence the followers' purchases.
The 7C framework of digital retailing
1. Core goals 2. Contextual elements (design & navigation) 3. Content 4. Community 5. Communication 6. Commerce 7. Connection This framework encompasses seven critical elements that retailers must consider when devising a digital or online marketing strategy and creating websites to target and appeal to both potential and current customers.
Retailers create value
1. Providing product assortments 2. Providing services 3. Breaking bulk 4. Holding inventory
Two diff perspectives on retailing
1. Retailing has not changed 2. Retailing is dynamic Although the purpose of retailing stays the same, the way it functions keep changing
Four elements of the retail mix are particularly useful for classifying retailers
1. Types of merchandise 2. Variety and assortment of merchandise 3. Level of customer service 4. Price of merchandise
Distribution Channels around the world: U.S.
1. U.S. has the largest retail market in the world 2. Retailers operate their own warehouses, eliminating the need for wholesalers 3. The combination of large stores and large firms results in an efficient distribution system
Distribution channels around the world; China
1. World's fastest growing retail market and leads the world in e-commerce sales 2. Chinese retail industry is highly fragmented
Conventional Super market
A large self service retail food store - Perishables (meats, baking goods, dairy, produce) - 40,000 SKUs
The retailers role in a supply chain
A supply chain is a set of firms that make and deliver goods and services to consumers
Wholesaler
A type of business that buys goods in large amounts and resells them to other businesses in smaller lots.
Hypermarkets
Are also large similar in design and size to supercenters - not common in U.S.
Category specialists
Are big box stores that offer a deep assortment but narrow variety of merchandise. They rely on self-service approach a retailer that offers a narrow variety but a deep assortment of merchandise -Books: Barnes and Noble -Consumer electronics: Best Buy
Drugstores
Are specialty stores that concentrate on health and beauty care products Drugstores face competition from pharmacies, and some food retailers, they - offer wider assortment of merchandise -offer more services with drive0through windows, curbside pick up and in store medical clinics
Department stores
Carry a broad variety and deep assortment, offer customer services, and organize their stores into distinct departments for displaying merchandise. Can be categorized in three tiers: - Upscale, high fashion chains: Nordstrom -Moderate pricing with less customer service: Macys -Value oriented: Khols
Category killers
Category specialists can "kill" a category of merchandise for other retailers by offering a complete assortment
Specialty stores
Concentrate on a limited number of complementary merchandise categories and provide a high level of service. They offer deep but narrow variety along with sales associates who have substantial expertise. They are among the most profitable and fastest growing firms in the world (more professional with better customer service) -Exercise attire and equipment: Lululemon
Owned media
Consists of the content that retailers create and publish -E-commerce websites -Blogs -Social media pages -Chat platforms -Email marketing -Mobile apps -Owned media often represents the point of purchase -To drive traffic to owned media, retailers
Role in society- Two notions
Corporate social Responsibility (CSR)- Involving an org voluntarily engaging in business practices that meet or exceed the ethical and legal expectations of it stakeholders Conscious retailing- Entailing a sense of purpose for the firm, higher than making profit
Ch 3
Digital retailing
7C- Commerce
E-commerce: consumers buy products that retailers are selling on some digital platform, and the "storefront" they visit is the retailer's website or mobile app. - adding a "buy now" button - including promotional offers or coupons
Stock keeping unit (SKU)
Each different item of merchandise (green coffee chair)
Closeouts (off price retailers)
End of season merchandise that will not be used in following seasons
Retailer characteristics: Services
Expected Services: -Grab and go -Pharmacy -Accepting credit cards -Providing parking -Convenient hours Other Services: -Online ordering -Delivery -Curbside pickup -Gift wrapping
Vertical Integration
Firms performs more than one set of activities in the channel ex. ikea
Location-Based Technologies
Geotargeted advertising: Using location data that mobile users provide, retailers can determine which stores are closest to each shopper, then personalize the app to send push notifications about exciting in-store events. (Sephora uses push notifications through its app to drive customers to its stores)
Relevance (4Rs)
How the influencer and their followers link with the brand and its message
Mobile and Social retailing
In addition to a good website, digital retailers also establish a presence on mobile and social media channels. - For example, Wendy's offers a mobile app and appears on all the major social platforms. (Wendy's actively tweets and also participates in viral fads, such as live-streaming on twitch)
Management and Entrepreneurial opportunities
In addition to playing an important role in society, retailing provides personal opportunities Management opportunities Entrepreneurial opportunities
Wholesaling and Production Activities
In some supply chains, the manufacturing, wholesaling, and retailing activities are performed by independent firms However, most supply chains feature some degree of vertical integration
Influencer marketing
Influencer marketing is a paid media strategy that uses seeds (opinion leaders, often popular on social media) to deliver messages to a targeted audience. Seeds can be influencers or everyday consumers. Types of influencers 1. Traditional (ariana grande) 2. Social/mobile influencers (james charles) -Big-time influencers like Ariana Grande have millions of followers and can command almost a million dollars for a sponsored post.
Microenvironment Competitors
Intratype competition - Competition between the same type of retailers: Department stores against Department stores (7/11 versus other gas stations) Intertype Competition - Competition amoung retailers that sell similar merchandise (super markets against drugstores) - When retailers offer merchandise not typically associated with their type of store, the result is scrambled merchandising which leads to intertype competition (7/11 versus Costsco)
Supercenters
Large stores combining full-line discount stores with supermarkets in one place. - carry larger percentage of nonfood items - competes with retailers in other sectors
Process
Manufacturer-> wholesaler->Retailer->End user
Forward integration
Manufacturers undertake retailing activities
Retailers employ people with expertise and interests in
Marketing Finance Purchasing Accounting International Business
Irregulars (off price retailers)
Merchandise with minor mistakes in construction
Types of merchandise (Codes)
North American Industry Classification System (NAICS) - six digit code assigned to every business Alternative: Standard Industrial Classification (SIC) - four digit code
Types of Media
Owned media-website, blog site, social media sites, chat platforms, email marketing, and mobile apps Paid media-digital advertising: search display, banner, pay per click, influencer, and social media ads Earned media-online sharing and mentions: online reviews, customer conversations, mentions, shares, likes, and SEO
Examples of social responsibility
Patagonia invented a reusable climbing piton that didn't damage rock
Retailer characteristics
Retail mix, or the elements retailers use to satisfy their customer needs is used to describe the different types of retailers
Backward Integration
Retailer performs some distribution and manufacturing activities
Retailers role in supply chain
Retailers buy products from wholesalers and/or manufacturers and resell them to consumers
7C- Community
Retailers can leverage their online websites to help customers interact, socialize, share information, and create a sense of community by - posting comments, reviews, responses, images, videos, and suggestions for new products or services. - crowdsourcing, in which users submit ideas for a new product, and/or comment and vote on the ideas submitted by others (Betarand). - linking shoppers to social media platforms. For example, Gymshark has emphasized the use of its online Gymshark Central blog which includes articles, exercises, and video tutorials about health and fitness activities.
7C- Core goals
Retailers can pursue multiple core goals with interactive websites, including >Engaging visitors. >Facilitating commerce. >Encouraging visitors to spend time viewing and interacting with the website's content. -Example: Both Walmart and Amazon have a core goal of encouraging immediate purchase. • If the core goal of a retailer is to get customers to buy, the retailer might provide an in-depth, interactive website that features plenty of information to help them make the final purchase decision. • If the core goal of a retailer is to increase consumer trust, so they will feel comfortable paying for an online coffee purchase, it might provide reviews by prior customers.
Mobile retailing
Retailers have devised three main responses to ensure they are available when and where consumers want them: 1. Mobile-friendly websites 2. Mobile apps 3. Location-based technologies
limited assortment supermarkets
Retailers that offer only one or two brands or sizes of most products (usually including a store brand) and attempt to achieve great efficiency to lower costs and prices. (Save a lot, Aldi) - offer one or two brands and sizes - 1400 SKUs
Economic and Social significance of retailing
Role in developed economies Role in society
Social Media-Based Retailing
Social media include various forms of electronic communication, which users can employ to create online communities in which they share ideas and information, interpersonal messages, and other content. -Major facilitators: YouTube, Facebook (which also owns Instagram), Pinterest, Twitter, and TikTok. -Can be used to engage customers in proactive dialogue. -Little control over customers' messaging. -Lower cost per exposure compared with traditional media.
Retailer characteristics: Prices
Stocking a deep and broad assortment is costly for retailers -To carry many SKUs > retailers must have backup stock for each SKU > it leads to rise in inventory investment cost Some store space should be used for > child care facilities, restrooms, and dressing rooms
Influencer marketing assessment
The amount of leverage an influencer has can be measured in several ways (4Rs) -Relevance -Reach -Response -Return
Understanding the world of retailing
The critical environmental factors in retailing are -The macroenvironment > Technological, social, and ethical/legal/political >(Outside the business but still effects) -The microenvironment > Competitors and customers >(Inside business but still effects) (Has to do with the internal and external factors.. bonus question)
Food retailers
The food retailing landscape is changing dramatically - 30 years ago, consumers purchased food primarily at conventional supermarkets - Conventional supermarkets now account for less than 45% of food sales - Online grocery store sales experience steady growth - Full-line discount stores offer grocery items
Types of Ownership
The major classifications of retail establishments: 1. Independent, single-store establishment 2. Corporate retail 3. Franchiser
Assortment (depth)
The number of different items offered in a merchandise category (in the form of models, sizes and brands) -subcategory
Variety (breadth)
The number of merchandise categories offered by a retail (Jewelry, clothing...) (Soda, water, sport drinks, fruit juice)
Paid media
The retailer pays a fee to appear on paid media-Similar to conventional advertising -A good strategy to attract new customers, build a customer base, and move buyers closer to a purchase Prominent forms -Search ads on websites like google -Display ads that pop up on websites -Ads as overlays or interruptions on videos -Ads displayed on social media channels -Banner advertisements -Pay per click search engine marketing (SEM) results
Retailing
The set of business activities that add value to products and services sold to consumers for their personal or family use - includes products bought at stores, through catalogs, and over the Internet, as well as services like fast-food restaurants, airlines, and hotels. (stores, app, and online)
retail management decision process
The world of retailing Retailing strategy Merchandising Management ...
Responsive website design
This design approach includes programming to ensure that all the retailer's web pages adjust automatically to appear attractively on any device users might use to access them, such as smartphones and tablets with smaller touchscreens or pcs with larger, non-touch screens.
Crowdsourcing
Users submit ideas for a new product or service, and/or comment and vote on the ideas submitted by others.
Internet Exercise
Visit Wendy's Facebook, Twitter, and Instagram pages and evaluate its social media presence. How is its content similar and different across sites? Do its social media posts promote connection? Do you feel encouraged to make a purchase?
Digital Retailing Classification
We can classify digital retailing according to -the types of channels it involves (online, mobile, or social) -the types of media it reflects (paid, owned, or earned)
7C- Connection
Websites and social media pages help customers obtain a sense of connection by allowing customers to - buy products and services - post reviews and comments - share info with others ex. The artist Fred Jourdain's retail website provides vivid visual depictions of his pieces, excerpts of interviews with the artist, and descriptions of his artistic process to help visitors feel connected.
7C- Communication
Websites should provide mechanisms for customers to communicate with the retailer which include: - Ways for customers to communicate with the retailer (live chat, chatbot). - Phone or e-mail contact information. - Hours of operation - Directions to store
Retailer
a business that sells products and/or services to consumers for personal or family use -Retailers link manufacturers to consumers
home improvement center
a category specialist offering equipment and material used by do-it-yourselfers and contractors to make home improvements.
assortment
a lot of items in one category
Convenience store
a miniature supermarket, carrying only a limited line of high-turnover convenience goods -Provide a limited variety and assortment of merchandise at a convenient location in small stores with a speedy checkout
Extreme value retailers
also called dollar stores, are small discount stores that offer a broad variety but shallow assortment of household goods, health and beauty care products, and groceries
warehouse club
an off-price retailer that sells a limited selection of brand name grocery items, appliances, clothing, and other goods at deep discounts to members who pay annual membership fees (offer limited and irregular assortment of food and general merchandise at low prices) - costco, sams club - simple interior and concrete floors
Supply chain
consists of all parties involved, directly or indirectly, in obtaining raw materials or a product
Digital retailers
create and maintain websites, blogs, mobile apps, and pages on various social media platforms (e.g., Facebook, Twitter, Instagram, TikTok, Pinterest, YouTube) to interact with customers.
Digital retailing
is the online business activities and digital assets used for creating, capturing, communicating, and delivering value to customers.
Full-Line Discount Stores
offer a broad variety of merchandise, limited service, and low prices These stores confront intense competition from category specialists, such as bed bath and beyond Walmart response: -Converted many discount stores into supercenters -online order Target response:
Off-price retailers
offer an inconsistent assortment of brand name merchandise at a significant discount (20%-60%) off the manufacturers suggested retail price (MSRP) -off price retailers have unique buying and merchandising practices: Buying opportunistically -Special type is outlet stores
Service providers
primarily sell services and offer a few products that go along with those services
Role in developed economies
retail sale- 5.3 trillion in Us sales in 2019 The base of the pyramid (BoP) -Reducing worldwide poverty
Variety
several categories
Mobile Apps
• 85 percent of mobile shoppers prefer to use mobile applications (apps). - Augmented reality feature, checking loyalty points, personalized recommendations, item scans, ... • Can establish strong cross-channel bonds and an omnichannel presence. • Apps have the lowest shopping cart abandonment rate and users spend more on average. (shopping cart abandonment rates by digital channel)
TikTok
• A massive opportunity for retailers targeting teens and young adults under 24 (70 percent of its users) • Some brands have achieved tremendous success in their TikTok campaigns. Example: In honor of National Avocado Day, Chipotle launched a Guac Dance challenge, urging fans of the healthy fruit post their choreography, resulting in 250,000 submissions and 430 million views.
7C- Context Elements
• Another element of website design involves traditional elements, such as design (color, font) and navigation. • Design and navigation must be in alignment with the target market. - Example: Walmart's and Amazon's websites feature simple appearances and navigation to aid consumer search. - Other examples: Satya Organic Skin Care, Bliss
Mobile-Friendly websites
• Attracting and appealing to users. • Must be designed exclusively for mobile devices. • Content generally appears in a single column, and the drop-down navigation options are more prominent. • A responsive website design automatically formats page designs differently, depending on the size of the device screen.
7C- Content
• Digital retailers have to consider their core goals, including education or exciting shoppers, when designing the content to present in the context they have established for their site. • The information content on the site (text, graphic, video, and audio) must be relevant to shoppers. • At a minimum, a retail website needs a top or side menu that provides links to shop, contact the retailer, learn the term of service, and understand the return policy. • The firm's purpose must be clear on the first page; if not, visitors will quickly exit the site: Beardbrand
• The largest social media platform with more that 2 billion active users • A forum for interacting with new consumers and fans • An appealing means for small retailers to target local consumers: "Jolly Biz, the Membership Elf" campaign • Not just for small businesses: Fitbit uses Facebook less as a platform to advertise its products and more as a place to engage with fitness communities around the world.
• The limit on the number of characters forces retailers to come up with short, timely, and relevant posts. • Retailers use Twitter for purposes like announcing fast-changing information and time-limited promotions to excite consumers. • Both small and large retailers actively use Twitter. • Twitter has changed the way customers get product or service information and register praise and complaints.
• The second largest social media platform in the United States, owned by Facebook, with more than 1 billion monthly users worldwide • Invaluable to retailers targeting teens and young adults • Beneficial for retailers to engage with customers and introduce new products, particularly when they rely on influencers • Instagram stories are viewed by around 500 million people every day, so they offer a way for retailers to connect with customers, without clogging up users' main feeds.
YouTube
• The second most widely used social media platform globally • YouTube gives retailers a chance to clearly and effectively emphasize their core goals and identities
• The third largest social media platform in the United States with more than 300 million users monthly • An effective selling tool for online businesses, due to its visual nature and retail-friendly audience