Lecture Retailing management (6/e): Chapter 2 - Levy Weitz

Chapter 2
Types of Retailers

McGraw­Hill/Irwin
Retailing Management, 6/e

Copyright © 2007 by The McGraw­Hill Companies, Inc. All rights reserved.


2--

The World of Retailing

Increasing Industry
Concentration

Globalization

Growing Diversity
of Formats

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2--

General Trends in Retailing
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3

New Types of Retailers
Increased Concentration
Globalization
Growth In Services Retailer
Demise of Pure Electronic Retailers (Webvan,
eToys, etc)
• Growth in Use of Multi-Channel Retailing by
Traditional Retailers
• Increase Use of Technology to Reduce Cost,
Increase Value Delivered


2-4

Merchandise Offering
• Variety (breadth of merchandise)
The number of merchandise categories

Jack Star/PhotoLink/Getty Images

C Squared Studios/Getty Images

Stockbyte/Punchstock Images

• Assortment (depth of merchandise)
The number of items in a category (SKUs)

Royalty-Free/CORBIS

Royalty-Free/CORBIS

Royalty-Free/CORBIS

Royalty-Free/CORBIS


2-5

Variety and Assortment of Bicycles


2--

Types of Retailers
Food Retailers
Mom and Pop Stores
Convenience Stores
Supermarkets
Supercenters

General Merchandise Retailers
Department Stores
Specialty Stores
Discount Stores
Category Specialists
Off-Price Retailers

Warehouse Clubs

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2--

NAICS Codes for Retailers

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Food Retailers
Primary Shopping Format for Food Sales
Growth Rates by Retail Format

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Globalization of Wal-Mart

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Characteristics of Food Retailers

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Limited Assortment Supermarkets

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Save-A-Lot’s limited assortment format
means that stores carry the most
frequently purchased grocery items in
the most popular size and variety
The company carries high quality
exclusive brands – many produced by
the
same manufacturers of leading name
brands – and an assortment of
nationally
branded items.
Used by permission of Save-A-Lot

This allows Save-A-Lot to offer
savings of up to 40% compared to
conventional grocery stores – without
asking shoppers to sacrifice quality.


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Conventional Supermarket Survival Pack
Emphasize Fresh Perishables

Target health conscious and ethnic consumers
Provide a better in-store experience
Offer more private label brands


Food Retailers
Supermarkets
-Cars, highways and TV to build
brands
-Knowledgeable customers – self
service
-Perishable vs. packaged goods

Big Box Retailers
-Warehouse Clubs
-Supercenters
-Hypermarkets

Convenience Stores

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2-14

Convenience Stores Fight Competition
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Tailors associates to local market
Stores are more convenient to shop
Offers fresh food
Fast, casual restaurants
Financial services available
Opening smaller stores closer to
consumers – like airports


Issues in Food Retailing
Competition from Discount Stores
Efficient
Distribution

Lower Costs

Lower Prices

Changing Consumption Patterns
Time Pressure

Eating Out More

Meal Solutions

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2-16

Types of General Merchandise Retailers
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Department Stores
Specialty Stores
Category Specialists
Home Improvement Centers
Discount Stores
Drugstores
Off-Price retailers
Extreme Value Retailers


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Characteristics of General Merchandise
Retailers


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Issues in Department Store Retailing
• Competition
-Discount Stores on Price
-Specialty Stores on Service, Depth of
Assortment
• Lower Cost by Reducing Services (?)
-Centralized Cash Wraps
• More Sales (?)
-Customers Wait for Sale
• Focus on Apparel and Soft Home
• Develop Private Labels and Exclusive Brands


Three Tiers of Department Stores

2-19

First Tier: upscale, high fashion chains with
exclusive designer merchandise and excellent
customer service.
Example: Nordstrom, Neiman Marcus,
Bloomingdales, Saks
Second Tier: Retailers sell more modestly
priced merchandise with less customer service:
Example: Macy’s
Third Tier: Value oriented caters to more price
conscious customer
Example: JCPenney, Sears, Kohl’s

Rob Melnychuk/Getty Images


2-20

What To Do With an Eroding Market
To deal with an eroding market Department stores are:
•attempting to increase the amount of exclusive merchandise
they sell
•undertaking marketing campaigns to develop strong images
for their stores and brands
•building better relationships with
their key customers

Royalty-Free/CORBIS


Issues in Discount Store Retailing

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• Only Big Three Left
Wal-Mart, Kmart, Target
• Wal-Mart’s Dominance
• Differentiate Strategy
Wal-Mart = Low Price and Good value
Target = More Fashionable Apparel
• Competition from Category Specialists
Toys-R-Us, Circuit City, Sports Authority

McGraw-Hill Companies,
Inc./Gary He,
photographer


Issues in Specialty Store Retailing

2-22

Mall-Based Apparel Retailers
Decline in Mall Shopping and
Apparel Sales
-Lack of New Fashions
-Less Interest in Fashion
-Increase Price Consciousness
McGraw-Hill Companies, Inc./Gary He, photographer

Lifestyle Formats – Abercrombie
and Fitch and Hot Topics


Issues in Drug Store Retailing
• Consolidation – Walgreens, CVS,
Rite-Aid
• Competition from Supermarkets,
discount Stores and mail-in orders
• Evolution to a New Format
• -Stand Alone Sites with Drive Thru
Windows
• -offering more frequent purchase

food items
• Improved systems provide
personalized service in the
pharmacy

2-23

Keith Brofsky/Getty Images


Category Specialists

2-24

• Deep and Narrow Assortments
Destination Stores
• Low Price and Service
• Wholesaling to Business
Customers and Retailing to
Consumers
• Incredible Growth
Ryan McVay/Getty Images


Issues in Home Improvement
Centers
Home Depot and Lowes act as both:
Retailer
Wholesaler

Consumer

and

Business

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