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Chapter 14

Retailing
1-2 McGraw-Hill/Irwin
Copyright 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

After studying this chapter you should be able to:

Understand

the economic importance of retailing and its role in the marketing channel. evidence of the globalization of retailing.

Cite

Discuss

some of the advances in retailing technology. the reasons behind the growth of non-store retailing

Explain
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After studying this chapter you should be able to:

Describe

key factors in the retail marketing environment, and understand how they relate to retail strategy. important ethical and legal issues facing retailers.

Cite

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The Role of Retailing

Retailing:
An important part of many marketing

channels, includes all the activities involved in selling products and services to the ultimate, or final, consumer.

Retail Sales:
Sales to final consumers; wholesale sales are

those to other businesses that in turn resell the product or service, or use it in running their own businesses.

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Economic Importance
Company
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Sales ($ millions)

Profits ($ millions)

Employees

Wal-Mart 219,812 Home Depot 53,553 Kroger 50,098 Sears Roebuck 41,078 Target 39,888 Albertsons 37,931 Kmart 36,910 Safeway 34,301 JC Penny 32,004 In the U.S., 3 million Walgreen 24,623

$2.5 trillion in revenues annually!

6,671 1,383,000 3,044 256,300 1,043 288,000 735 310,000 1,368 223,550 501 220,000 (95) 240,525 1,254 193,000 98 270,000 retailers generate 886 106,000

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Retailers Uniqueness in the Channel

Sell Smaller Quantities of Product More Frequently

Provide Product Assortment

Emphasize Store Atmospherics

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Types of Retailers
Independent

Retailers:

Chains:

A retail chain owns

Own and operate

only one retail outlet.

and operates multiple retail outlets.

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Types of Retailers
Franchising:

Retail franchising is a form of chain

ownership in which a franchisee pays the franchisor (parent company) fees or royalties and agrees to run the franchise by prescribed norms, in exchange for use of the franchisors name.
McDonalds

There are 3,000 franchise companies Jiffyin Lube the U.S. that operate 558,000 Holidayseparate Inn establishments!
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Top 10 International Retail Franchises

1. 2. 3. 4. 5. 6. 7. 8.

9.
10.

McDonalds Great Wraps Subway Kentucky Fried Chicken Kumon Math and Reading Centers Meineke Discount Muffler Shops TCBY Treats Thrifty Car Rental Blimpie Subs & Salads Mail Boxes Etc.

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Types of Retailers
Leased

Departments:

Leased departments are sections in a retail

store that the owner rents to a second party.

Cooperatives
Retail

Cooperatives:

Independent retailers banding together to

counter chain store competition.

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Trends in Retailing

Global Retailing

Technological Advances

Stronger Customer Service

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Nonstore Retailing
Direct

Retailing Direct Marketing E-Retailing Direct Selling Stores account for 90% of retail sales, but Vending Machine Sales nonstore retailing is
growing faster than store-based retailing!

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Developing Retailing Strategy

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Uncontrollable Factors
Consumers Competition Economic

Conditions Seasonality

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Controllable Factors

Location
Central Business District (CBD) Strip Centers Shopping Malls Freestanding Sites

Goods and Services

Pricing
Marketing Communications

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Types of Strategy Mix

Specialty

Stores Department Stores Convenience Stores Margin and Turnover Strategy Mixes Gross Margin Inventory Turnover

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Ethical and Legal Issues in Retailing

Consumer

Fraud Supplier Labor Practices Retail Theft Slotting Allowances Use of Customer Information Ecological Considerations

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