Retail Marketing
Introduction and overview “Today’s shoppers want the total customer experience: superior solutions to their needs, respect, an emotional connection, fair prices and convenience. Offering four out of five pillars isn’t enough; a retailer must offer them all” (Berry 2001)
Marketing: integrating the retailing effort
(McGoldrick 2000)
Top 10 global retailers Company
Country of Origin Rank
2006 Retail Sales
(US$mil)
CAGR 2001-2006
Wal-Mart US 1 345.0 11.1 percent
Carrefour France 2 97.9 2.3 percent
The Home Depot, Inc US 3 90.8 11.1 percent
Tesco UK 4 80.0 12.5 percent
Metro Germany 5 74.9 4 percent
The Kroger Co. US 6 66.1 5.7 percent
Target Corporation US 7 59.5 8.3 percent
Costco Wholesale Corporation US 8 59.0 11.6 percent
Sears Holdings Corporation US 9 53.0 8 percent
Schwarz Unternehmens Treuhand KG Germany 10 52.4 12 percent
http://www.interbrand.com/images/studies/
85_Interbrand_Best_Retail_2009.pdf
ESSENTIAL READING
Graduates and retailing
“Managerial skills and competences are
critical determinants of a retailer’s ability to
operate successfully in a highly turbulent
environment” (Dawson 1995)
“The retail sector has some of the most
innovative and successful companies in the
world yet it is only recently that retailing has
become recognised as a true profession”
(Jennison 1997)
Could this be you? Guess who?
Area Manager
Are you a born leader? Do you have the drive and strength of character to help
shape the global success story?
As we expand throughout Europe, North America and Australia, our reputation
is growing, but our guiding principles remain constant.
The most important element in achieving this is having the right people, which is
why we attach such importance to our employees and their development. We're
looking for the best individuals, the brightest of their generation; we expect a
great deal from them and offer something very special in return.
We offer an individual training plan that's designed especially for you, a
market leading package and fantastic prospects:
£40000 plus a fully expensed Audi A4 rising to £63500 plus pension,
private healthcare, life assurance, five weeks’ holiday and opportunity for
directorship within five years. Opportunities nationwide.
Retailing defined
“The sale of goods and services to the ultimate consumer for personal, family or household use” (Cox and Brittain)
“The sale of articles either individually or in small numbers, directly to the consumer” (Freathy)
“Any business that directs its marketing effort towards satisfying the final consumer based upon the organisation of selling goods and services as a means of distribution” (Gilbert)
“The sale of goods and services to consumers for their own use” (McGoldrick)
Scope and purpose of retail marketing
Understand customer values
Create a retail offer that satisfies these values
Communicate these values to the target audience
Create a retail format and experience that delivers these values
Manage the process to ensure maximisation of customer value
The value equation in retailing
Higher prices = more money
Long queues = more time
Poor layout = more stress
Unknown brands = more risk
Key components of retailing
Culture and retail
customers
Retail locations and
outlets
Shopkeepers/retail
managers
Product sourcing and
distribution
Business relationships
Merchandising and
selling
Context, social interaction,
psychosocial meaning (Aldi/Lidl in UK,
Tesco in Thailand, IKEA in China)
Locations and formats, demographic
change, shopping motivation
(destination, social, leisure)
Business Managers, sole traders, 24
hour trading, 600 staff, £100 million
turnover store
Selection and assembly of
merchandise, operational efficiency
and competitive advantage eg local
sourcing
Lean and agile supply chains as SCA
(Zara)
Range, assortment, presentation and
display
Driving retail success: The Retail Growth
Cycle (McGoldrick 2000)
Retail evolution – retail life cycle
Introduction Growth Maturity Decline
Sales
Market share
Dept
store
Grocery superstore
DIY superstore
Variety store Furniture
hypermarket
Clothing
superstore
Internet grocery
Based on McGoldrick
Tesco set to enter this
Market?
Implications of retail life cycle
Assess value of long term investment in
expensive property assets (buy or rent
decisions, 2005 Tesco £600 million sale and
leaseback deal)
Shorter timescale for ROI
Multiple format operators can use portfolio
analysis to assess position of various assets
which might lead to renewal or exit prior to
sharp decline in format
The wheel of retailing
Somerfield
Tesco
Aldi
Aldi: trading up phase?
Quality Food Awards 2012
Have you ever paid so little for such a lot?
Bigger
Brighter
Better stores
More exotic
merchandise
Types of shopping trips
ESSENTIAL
PURPOSIVE
EXPERIENTIAL
CONVENIENCE
EXPERIMENTAL
Replenishment, food,
Tesco
Major item, retail park,
Comet
Gift, Shopping mall,
Borders
Top up, ready meal,
Alldays, Co-op
Organic, fun, on-line,
farm shop
Characteristics of small store formats (based on Dawson and Burt)
FORMAT CUSTOMER NEEDS EXAMPLE
Discount Low prices Aldi, Lidl
Convenience Time saving Alldays, Shell
Specialist Choice Oddbins, TieRack
Style Design, originality Benetton, Bally
Branded Reputation, attachment Estee Lauder, YSL
Service Added value Mr Minit, Timpsons
Locality specific Impulse/emotion Tourist, National
Trust
Variability in retail concepts and
transactions (Based on Burt and Sparks)
Build transaction and information links Clubcard, personal finance
Grow infrastructure links Extra, Metro formats,
Tesco.com
Operational links for customers “Every little helps”, “One in
front”
Personal contact Service desks, service
areas
Expertise links Baby club, wine club, 0800
Emotional links Computers for schools, low
brand prices, healthy eating
Financial links Personal finance products
Availability links Direct, clothing catalogue,
specialist magazines
Retail trends
Increase in large food and non-food superstores
New retail centres
Growth of sales and floor space
Extension of product ranges in superstores
Large retailers taking control of supply chain
Sophisticated technologies
Greater awareness of retailer activity
Bricks, bricks and clicks, clicks only
Shift in balance of power (McGoldrick
2000)
“Of the top 25 European retail brands 60% offer private label brands that
contribute between 30% and 100% of revenues” Interbrand (2009)
Retailing challenges
Over supply of retail floor space
Turbulence in retail environment
Brand and brand extensions
Hyper-competition
Discounting
E-tail (growth/share/profitability). Do you have
to be on-line to survive?
Ownership (private/public)
Week 1: summary
Marketing is central to integrating the retailing
effort
Understand the value equation for different
segments of shoppers
Understand what benefits customers seek
from their shopping trip
Build lasting relationships with customers on
different transactional levels