1. Supplementary Slides
(optional reading)
Retailing Concepts
© G da Silva 1

2. Supplementary Slides on Retailing Concepts
• The next set of slides are from my own general
marketing course notes.
• You can have a quick overview of what retailing is
all about, what are the key concepts and
classification of retailing and what trends are
happening in the world of retailing.
• Understand the changes taking place in
the world of retailing
© G da Silva 2

3. Types of Retailers
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 1-3
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4. There shouldn’t be a standard interpretation o
of retailing: it can come in many forms
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5. © G da Silva 5

6. Types of Retailers
Retailers are classified based on:
Amount of Service They Offer
Breadth & Depth of Product Lines
Relative Prices Charged
How They Are Organized
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7. Amount of Service
• Self-Service Retailers:
– Serve customers who are willing to
perform their own “locate-compare-
select” process to save money.
• Limited-Service Retailers:
– Provide more sales assistance because
they carry more shopping goods about
which customers need information.
• Full-Service Retailers:
– Usually carry more specialty goods for
which customers like to be “waited on.”
© G da Silva 7

8. Product Line Classification
Specialty Stores:
Carry narrow product lines with deep assortments
within those lines.
Department Stores:
Carry a wide variety of product lines—typically
clothing, home furnishings, and household goods.
Each line is operated as a separate department
managed by specialist buyers or merchandisers.
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9. Product Line Classification
Supermarket:
Large, low-cost, low-margin, high-volume,
self-service store that carries a wide variety of food,
laundry, and household products.
Convenience Stores:
Small stores located near residential areas that
are open long hours 7 days a week and carry
a limited line of high-turnover convenience goods.
© G da Silva 9

10. Product Line Classification
Superstores:
Much larger than regular supermarkets and
offer a large assortment of routinely purchased
food products, nonfood items, and services.
Category Killers:
Giant specialty stores that carry a very deep
assortment of a particular line and is staffed
by knowledgeable employees.
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12. Relative Prices Classification
Discount Store:
A retail institution that sells standard merchandise
at lower prices by accepting lower margins and
selling at higher volume.
Off-Price Retailer:
Retailer that buys at less-than-regular wholesale
prices and sells at less than retail. Examples are
factory outlets, independents, and warehouse
clubs.
© G da Silva 12

13. Relative Prices Classification
Factory Outlet:
Off-price retailing operation that is owned and
operated by a manufacturer and that normally
carries the manufacturer’s surplus, discontinued,
or irregular goods.
Independent Off-Price Retailer:
Off-price retailer that is either owned and run by
entrepreneurs or is a division of a larger retail
operation.
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14. Relative Prices Classification
Warehouse Club:
Off-price retailer that sells a limited selection of
brand-name grocery items, appliances, clothing,
and a hodgepodge of other goods at deep
discounts to members who pay annual
membership fees.
© G da Silva 14

15. Organizational Classification
Chain Stores:
Two or more outlets that are owned and controlled,
have central buying and merchandising, and sell
similar lines of merchandise.
Voluntary Chain:
A wholesaler-sponsored group of independent
retailers that engages in bulk buying and common
merchandising.
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16. Watson is part of a chain of stores
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17. Organizational Classification
Retailer Cooperative:
A group of independent retailers that bands
together to set up a jointly owned, central
wholesale operation and conducts joint
merchandising and promotion efforts.
Franchise:
A contractual association between a manufacturer,
wholesaler, or service organization (a franchiser)
and independent businesspeople (franchisees) who
buy the right to own and operate one or more
units in the franchise system.
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18. Examples of Franchise Operations:
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20. How Do Retailers Create Value?
Consumers have changed their preference for price and
quality
Lifestyles have become more casual
Retailers must
go beyond low
price to create
value
Mustafa Store
24/7
Wide merchandise
Competitive prices Mustafa Store Singapore
1-20

21. Using the Four P’s to Create Value in
Retailing
Product, price, promotion, place
$$
1-21

22. Retailer Marketing Decisions
Figure 11.1
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23. Assortment and Services Decisions
Product Assortment:
Brand of merchandise
Merchandising events
Services Mix:
Different numbers and types of
services are key to non-price store
differentiation
Store Atmosphere:
Physical layout and “feel” of the store
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24. Price, Promotion, & Place Decisions
Price strategy must fit its target market and positioning,
product and service assortment, and competition
Can use any or all of the promotion tools—advertising,
personal selling, sales promotion, public relations,
and direct marketing—to reach consumers
Retailers can locate in CBDs, various types of
shopping centers, malls or in the heartland location
© G da Silva 24

25. Product
Providing the right mix of
merchandise and services
1-25

26. Harvey Norman and Audio House both carry
wide ranges of consumer electronics- they
compete both on the product lines and prices
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27. Retail stores
communicate the
brand’s positioning
strategy. Here we
see examples of
the entrances to a
Louis Vuitton store
exuding every bit of
opulence to
complement the
prestige of the
product
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28. Store presentation communicates the brand
Size of displays
“creating anticipation”
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29. How does the Apple Store layout and
presentation communicate the brand?
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30. Price
Price defines the value of both the
merchandise and the service
provided
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31. Retailers compete on many different aspects
other than just price
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32. Promotion
Retailers use a wide variety of
promotions, both within their retail
environment and through mass
media
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 1-32

33. Promotions used by local retailers
© G da Silva 33

34. Place (location)
Convenience is a key
ingredient to success
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35. Changes in retailing trends
1. New Retail Forms and Shortening Retail Life
Cycles
2. Growth of Non-store Retailing
3. Retail Convergence
4. Rise of the Mega-retailers
5. Growing Importance of Retail Technology
6. Global Expansion of Major Retailers
7. Retail Stores as “Communities” or
“Hangouts
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36. New retailing forms
• As a result of changes in consumer shopping
patterns, new types of retail formats will arise
• And some will diminish because retail types do
have life cycles
• Specialty stores appear to favor certain consumer
segments
• Think of the following
– Popularity of small stores in Orchard CineLeisure
– Phenomenal growth of the Petrol Station as a major
retailing point
– Decline in popularity of the traditional department store
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37. Petrol Station Retailing
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38. Decline in department store popularity
Straits Times 9/May/2009
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39. Growth in non-store retailing
• Products and services available without the need
for a store
– Internet
– Kiosks
– Catalogue Marketing
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40. Retail Convergence
• Retail convergence is when many retailers of the
same products coexist within a convenient location
of the consumer without much differentiation in
price.
• One example of retail convergence would be a
shopping mall where consumers can compare
pricing and models at different locations less than a
quarter mile from another store.
• The world's largest retail convergence has already
begun, it is called the Internet.
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41. Examples of retail convergence
Queensway Shopping Centre
Sim Lim Square
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42. The Changing Retail Landscape
The Big Middle: Part of the market where
most firms compete
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 42

43. Mega-Retailers
• Have tremendous economic power
• Brand name attracts large number of shoppers
• Sales volume enables the mega-retailer to buy in
bulk
• Stronger bargaining power with suppliers
• An example where the retailer (instead of the
manufacturer can exercise ‘channel power’
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44. Large retailers often compete with the
manufacturer by introducing their own brands
• Private label brands
• The manufacturer will need to
compete with the private brand in the
stores
• Battle for shelf space
• Private label brands may be lower in
quality but more attractive in price
• Value brands
© G da Silva 44

45. Growing importance of Retail Technology
• Using technology for all aspects of distribution
• Supply chain: using IT to help plan for inventory
levels and deliveries
• RFID (radio frequency identification) on packages
• Using the internet to access customers on-line
© G da Silva 45

46. RFID in retailing and supply chain
• Tracking items in the store
• See this YouTube example of how HP uses RFID
technology for buyers and for connecting to its
supply chain
http://www.youtube.com/watch?v=1EfMdD2eIgs
© G da Silva 46

47. Global Expansion of Retailers
• Many retailers from the US and Europe has
expanded overseas and have become household
brand names
RMT students will do an
advanced subject in
year 3 on International
Marketing and Retailing
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48. Retailing as a ‘customer experience’
• The store is not just a place to display merchandise
• It is where customers come into contact with the
brands and the store staff
• Customer interface and interaction helps to bring
about a good or bad customer experiences
• Customers want something more than just the
product
– Information
– Sampling the product
– Feeling good
– Remember the ‘augmented product?’
© G da Silva 48

49. Apple stores provide positive customer
experiences
“high-tech and high-touch experiences”
The store environment, visual merchandising
and customer service all contribute towards
creating an exciting and engaging customer
experience
© G da Silva 49

50. Creating experiences in the store :
Build-a-Bear example
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51. Many retail outlets such as Starbucks have become places
for customer hangouts
© G da Silva 51

52. Internet and Electronic Retailing
Bricks and mortar
Many retailers use the
internet to complement
the traditional store
retailing
Multichannel retailers
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53. Entrepreneurial Marketing : Jeff Bezos
Building Amazon.com
Plan for an extensive, on-
stop Internet catalog for
books
Wanted to create the
“world’s most customer
centric company. The
place where people come
to find and discover
anything they might want
to buy online.”
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54. What are the benefits of the Internet in
Retailing?
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55. But there are also obstacles to internet
retailing
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