Retailing and B2C E-Commerce

Retailing

• Final stop on the distribution path

• The process by which products are sold to consumers for personal use

• Retailers add value with image, inventory, service quality, location, and pricing policies

Retail sales ($billion), by type of businessRetail sales ($billion), by type of business

The Wheel of Retailing

• New types of retailers find it easiest to enter the market by offering goods at lower prices than competitors; after they gain a foothold, they gradually trade up, improving facilities and increasing the quality and assortment of merchandise, and offering special amenities; up scaling increases costs causing prices to rise; higher prices open the door for a new entrant charging lower prices

The wheel of retailingThe wheel of retailing

Retail Life Cycle• Retailers are also products because they provide

benefits and must offer a competitive advantage to survive– Introduction: new retailer takes a unique approach to

doing business– Growth: retailer catches on with shoppers, sales and

profits rise, others start to copy it so retailer expands offerings

– Maturity: many have copied it and an entire industry has formed, profits decline

– Decline: retail format becomes obsolete

The retail life cycleThe retail life cycle

Factors Affecting the Future of Retailing

• Demographics

Convenience for working women

Catering to specific age segments

Recognizing ethnic diversity• Technology

• Globalization

Classifying Retailers

• All retailers are classified by the NAICS codes

• Some lines still blurred– scrambled merchandising - strategy of carrying

a combination of food and nonfood items

Classifying Retailers by Service

• Self-service retailers

• Full-service retailers

• Limited-service retailers

Classifying Retailers by Merchandise Selection

• Merchandise breadth is the number of different product lines available– Narrow versus Broad assortments

• Merchandise depth is the variety of choices available for each specific product– Shallow versus Deep assortments

Breadth versus depth of merchandise linesBreadth versus depth of merchandise lines

Merchandise Selection

Store Types

• Convenience stores• Supermarkets• Specialty stores• Department stores• Hypermarket stores

• Discount stores– General merchandise

discount stores

– Off-price retailers

– Warehouse clubs

– Factory outlet store

Supercenters are a popular store format.Supercenters are a popular store format.

Nonstore Retailing

• Any method a firm uses to complete an exchange that does not require a customer visit to a store– Direct selling– Automatic vending

Forms of nonstore retailingForms of nonstore retailing

Direct Selling

• Direct selling occurs when a salesperson presents a product to one individual or a small group, takes orders, and delivers the merchandise– Door-to-Door Sales– Parties and Networks

• party plan systems

• multilevel pyramid schemes

Automatic Vending

• Appealing for selling convenience goods because of small space required, and minimal personnel to maintain and operate– French fries– Software– Levi’s jeans

B2C E-Commerce

• Online exchange between companies and individual consumers

E-Commerce and the Customer

• Benefits– Shop 24/7

– Less travel

– More choices

– More information

– Price competition

– Fast delivery

• Limitations– Lack of security

– Fraud

– Can’t touch items

– Hard to distinguish color/ texture online

– Expensive to return

E-Commerce and the Marketer

• Benefits– The world is your

marketplace

– Decreases costs

– Very specialized businesses possible

– Real-time pricing

– Tracking of consumer behavior

• Limitations– Lack of security

– Must maintain site

– Price competition

– Conflicts with conventional retailers

– Legal issues not resolved

Developing a Store Positioning Strategy

• Store image– how the target market perceives the store– its market position relative to the competition

• Atmospherics– the use of color, lighting, scents, furnishings,

sounds, and other design elements to create a desired setting

Mapping a Store’s Personality

Store Design: Setting the Stage

• Store layout and traffic flow

• Fixture type and merchandise density

• The sound of music

• Color and lighting

• The Actors: Store Personnel

• Pricing policy

Building the Theater: Store Location

• Types of Locations

• Site Selection– Location planners evaluate trade area and

conduct site evaluation • traffic flow, number of parking spaces available,

ease of delivery access, visibility from street, local zoning laws, population characteristics, community life cycle, mobility, degree of competition