MRKT425- Ch. 2 Types of Retailers

Consignment Store

-Accepts used merchandise from people and pays them after it is sold

Category Specialist

-Big-box stores that offer a narrow but deep assortment of merchandise (Best Buy, Barnes and Noble, Home Depot, Staples) -Self-service approach -"Category Killers"

Department Stores

-Carry broad variety and deep assortment, offer customer services, organize store into distinct department s for displaying merch (Sears, Macy's, Kohl's, JCP, Dillards) -Often located in large regional malls (less convenient) -Offer hard and soft goods. More focused on soft goods -Categorized into three tiers: (Upscale, high-fashion chains & high customer service) [Nordstrom] (Traditional, modestly priced, less customer service) [Dillards, Macy's] (Value Oriented, price conscious consumers) [Sears, JCP, Kohl's] -To compete: 1. Increase exclusive merch, 2. increase private label merch, 3. expand multichannel presence

"Category Killers"

-Category specialist stores that can kill a category of merchandise for other retailers -Category dominance and buying power allows them to buy products at low price and

Specialty Stores

-Concentrate on a limited number of complementary merchandise categories and provide a high level of service - (Sephora, The Buckle, Apple, Potery Barn, Zales, Sunglass Hut, Bath and Body, Zappos) -Offer deep but narrow assortments and sales associate expertise -Resale stores/Consignment

Franchising

-Contractual agreement in which the franchisor (company) sells the rights to use its business trademark, service mark, trade name, commercial symbol to the franchisee for a one-time franchise fee and an ongoing royalty fee

Private-Label Brand/Store Brands

-Developed and marketed by retailer, available only in stores

Closeouts

-End-of-season merchandise that will not be used in following seasons

Independent Single Store Establishments

-Entrepreneurial activity -Management to customer contact

Service Retailer

-Firms that primarily sell services rather than merch (Airlines, Banks, Fitness, Insurance, Restaurants, Fast Food)

Hypermarkets

-Large store (160,000 to 200,000 sq ft) - Combination food and general merchandise -Stock fewer SKUs than supermarkets -Not common in the US (started in Europe) -Difference between super and hyper: Hypermarkets carry larger proportion of food items than do supermarkets (emphasize perishables)

Supercenter

-Large store (160,000 to 200,000 sq ft) combine a supermarket with a full-line discount store (Walmart) -One stop shopping experience -General merchandise is bought on impulse when primary reason for shopping is groceries (higher margins on general merch) -Have large percentage nonfood items and focus on dry groceries (instead of fresh perishables)

Warehouse Clubs

-Large stores (100,000 to 150,000 sq ft.) [smaller than super center] -Retailers that offer limited and irregular assortment of food and general merchandise with little service at low prices for ultimate consumers and small businesses (Costco, Sam's Club) -Heavy food sampling for shopping experience -Package sizes are large, Simple interiors, concrete floors, Wide isles for forklifts, Little service -Low costs because: low cost location, inexpensive store design, offer little customer service, low inventory holding costs because carry limited assortment of fast-selling items -Buy merchandise opportunistically (i.e. old models) -Two types of members: (Wholesaler members- small business owners) (Individual members- purchase for their own use) -Annual fee to be member

"Big-Box Stores"

-Large, Limited-service (i.e. Walmart) Take up large amount of land -Opposition to big box stores: (drive local retailers out, offer low wages, provide nonunion jobs, unfair labor practices, threaten us workers through purchase of imported merch, cause excessive auto and delivery traffic)

"Hard/Durable Goods"

-Manufactured items that are expected to last several years (appliances, furniture, electronics)

Thrift Shop

-Merchandise is donated and proceeds go to charity

Irregulars

-Merchandise with minor mistakes in construction

Exclusive Brands

-National brand vendors sell merch not available elsewhere (i.e. Kohl's carries Jen Lopez brand exclusively)

"Soft Goods"

-Nondurable or consumable goods -Shorter lifespan (i.e. cosmetics, clothing, bedding)

Outlet Store/Factory Outlets

-Off-price retailer owned by manufacturers or retailers -Opportunity to sell irregulars, production overruns, and merchandise returned by retailers -Selling excess merchandise

Off Price Retailers

-Offer an inconsistent assortment of brand-name merchandise at a significant discount off the manufacturers' suggested retail price (MSRP) (TJMaxx, Marshalls) -Merch is bough opportunistically that have overruns, canceled orders, forecasting mistakes, closeouts, and irregulars -Buy excess inventory from other retailers

Full-Line Discount Stores

-Offer braod variety of merch, limited service, low prices (Walmart, Target, Kmart) -Many have converted to supercenters due to competition (i.e. Target converted to Super Target) -Many have expanded into more urban locations (smaller store fronts) and appealing to price-oriented markets

Online Off-Price Retailer

-Offer flash-sale sights (each day at the same time, members receive an email that announces the deals available. Each deal lasts for a specific time)

Retail Chain

-Operates multiple retail units under common ownership and usually has centralized decision making for defining and implementing its strategy

Wholesaler Sponsored Voluntary Cooperative Group

-Organization operated by a wholesaler offering a merchandising program to small, independent retailers on a voluntary basis (Ace Hardware) -Engage in buying, warehousing, distribution, and offer advice on store design and layout, site selection, bookkeeping, and inventory management systems, employee training programs

Extreme-Value Retailers/Dollar Stores

-Small discount stores that offer a broad variety but shallow assortment of household goods, health and beauty care, products, and groceries (Dollar General, Family Dollar) -Target low income consumers (often offer smaller packages to these retailers) -Located near low income consumers homes

Convenience Stores

-Small store (2,000 to 5,000 sq ft) -Provide limited variety and assortment of merchandise at convenient locations with speedy checkout -More than half items bought are consumed within 30 min of purchase -Charge higher prices -Try to appeal to "on-the-go" consumers -Located close to where consumers shop and work

Resale Store

-Specialty store that sell secondhand or used merchandise (Goodwill) -Thrift shop, consignment store

Drug Stores

-Specialty stores that concentrate on health and beauty care (HBC) [Walgreens, CVS, Rite Aid]

Differences between Service and Merchandise Retailers

1.) Intangibility 2.) Simultaneous production and consumption 3.) Perishability 4.) Inconsistency of the offering to customers

4 ways to classify retailers

1.) Type of Merchandise 2.) Variety and Assortment 3.) Services Offered 4.) Price

Conventional supermarkets differentiate by:

1.) emphasizing fresh perishables (dairy, meat, pre-made meals) 2.) targeting green and ethnic consumers (organic, natural etc.) 3.) providing better value with private-label merchandise 4.) providing a better shopping experience

Private-Label Merchandise

Benefit to consumer: lower price, similar ingredients Benefit to retailer: store loyalty, differentiation, higher gross margins than national brands

Limited-assortment supermarket/ Extreme- value food retailers

Carry only one or two brands, one of which is store brand. Lower cost- less service (usually about 1,500 SKUs) (Save-A-Lot, ALDI)

NAICS (North American Industry Classification System

Classification scheme that collects data on business activity in each country Each business is assigned a hierarchical six-digit code based on the type of products and services it sells

Ethnic Merchandise

Example: Target hispanic consumers (have different shopping patterns than general population)

Locavore Movement

Focuses on reducing the carbon footprint caused by the transportation of food throughout the world. (Food miles= distance foods travel from farm to dinner plate)

Power perimeter

Fresh merchandise area's located in areas around the outer walls of a supermarket

Conventional supermarket

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 (usually about 30,000 SKUs)

MSRP

Manufacturer's Suggested Retail Price

SKU

Stock-keeping unit (each different item of merchandise a business offers) (the various types of product)

Assortment

The number of different items offered in a merchandise category (Depth of the merchandise)

Variety

The number of merchandise categories a retailer offers (Breadth of the merchandise)

Fair Trade

The practice of purchasing from factories that pay workers a living wage, considerably more than the prevailing minimum wage, and offer other benefits such as onsite medical treatment