topic 1 mkt326 intro to retail mktg

8/14/2019 Topic 1 Mkt326 Intro to Retail Mktg

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INTRODUCTION TO

RETAIL MARKETING

Introduction and Core Concept



The Functions of Retailing

Retailing in Society Retailer part of supply chain for any product it sells

Supply Chain consist of different stages:Raw material final consumer

Links raw material producers, manufacturer, wholesalers and

transport firms with the retailer and the final consumer

Involves a distribution system that arranges for the

shipment of the product from producer to final consumer




The retailer comes at the end of the supply chain and provides thefinal link between producer and consumer.

Modern retailing – link very closely to whole supply chain or evenbe dominant part of the supply process.

Major grocery retailers – TESCO – play a very active role inarranging distribution of products to their stores.

Other retailers own production facilities and some producers of fashion items also operate stores as well as selling to other retailers.




Economic Significance – retailing is responsible for about 9 percent of output and employment

Social Institution – important because 30 percent of spending goes on products and services that we buyfrom retailers: Immense changes in the products and services we use, the

way we work, in family life and our leisure activities. Made possible due to changes in retailing – large

supermarket or superstore and advances in distribution thathave significantly reduced the cost of shopping for groceries, electrical goods and many other items.




Politically important – large out-of-townshopping centres have been developed alongwith the increase in car ownership.

Modern technology – retailers becomesophisticated users:

E.g. electronic tills are linked to computers to helpcontrol stock and track customer spending andvarious technical devices are increasingly used tocombat retail crime.



The Retail Industry

Retailing and the Retail Industry Retailing is selling products to consumers

Also sells services – e.g. MacDonald’s

Public house operators and industrial caterers declaredthemselves to be retailers

Medical and health services have also begun to behave as

retailers with the opening of local health centres (but the

government classifies these as belonging to the hospitality and

health industries respectively – it restricts the retailing industryto product retailers)

In the context of our study, retailing will include the selling of

products and services



The Retail Industry

Measuring the Retail Industry Measure its share of national output using Gross Domestic

Product (GDP)

Standard Industrial Classification system (SIC) divides theeconomy into different major industry groups, one of which is

retailing.

Retail employment in relation to total employment

Monetary contribution of retailing is through the total net

output or value added of all the firms in the industry. Level of retail activity, which is given by gross sales (or

turnover) of retailers and is another indicator of the economic

and social importance of the industry.



The Retail Industry

Retail Industry Structure Predominantly food stores

Sales of food, drink and tobacco account for more than half

of total sales by value. They are divided into: Non-specialized food stores: include supermarkets, co-

operative stores and convenience store that carry a wide

range of food items and also other non-food lines.

Specialized food stores: include bakers, butchers,

dairies, fishmongers, greengrocers, healthfood shops,delicatessens, and tobacconists



The Retail Industry

Retail Industry Structure Predominantly non-food stores

Non-specialized non-food stores Mix retailers that sell a wide range of merchandise

Department stores such as Parkson, variety chains such as Woolworthand multi-sector retailers such as Boots.

Textiles, clothing and leather footwear Stores selling fashion, footwear, and leather goods and household

textiles Include department stores such as Debenhams and variety chains such

as Marks & Spencer, where clothing and household textiles are adominant feature of the stores

Household good stores Include china and glass stores, do-it-yourself (DIY) and hardware

stores, electrical household appliances, furniture, lighting, music, radioand television.



Retail Industry Structure

Other stores Wide collection of stores including antique stores, bookshops

and stationers, carpet and floorcovering stores, catalogue

retailers, computer stores, office supplies, florists, gardencentres, pharmacies, and drugstores, photo/optical, sportsand leisure stores, second-hand shops, toys and gamesstores, wallpaper shops

Non-store retailing and repair

General mail order firms Non-store retailers, including market stalls, door-to-door

retailers, vending machines and mobile shops Repair of personal and household goods



Retail Business Structure

Retail Outlets by Ownership Owned by independent (1 outlet)

Owned by large independents (2 – 9 outlets)

Owned by multiples (incl. co-ops)



Retail Business Structure

Retailers take on different forms and sell to us indifferent ways: Sell to us through shops, such as the supermarkets and

the local corner shop Sell to us through mail order catalogue, such as

FREEMANS

Sell to us through television, such as QVC

Sell to us through the Internet, such as amazon.com Sell us services, such as McDonald’s, the local pub and

the local bank



Definition of Retailing

Retailing is a set of activities that markets

products or services to final consumers for their

own personal or household use. It does this byorganizing their availability on a relatively large

scale and supplying them to consumers on a

relatively small scale.




1. Retailers sell to the final (non-business) consumer.The final consumer buys final products that do notundergo any further change outside the home or non-

work environment.1. E.g. Timber is a final product when sold to a householder

to build fence. On the other hand, timber is an intermediateproduct when it is sold to a carpenter to build fence for acustomer

2. Retailers buy in large quantities and sell in smallquantities to consumers, who buy for their ownpersonal or household use.




3. Retailers often buy products from a wide variety

of distant, even global sources.

1. Resell them at nearby store, mail order, televisionor the Internet

2. Organized the required delivery and collection

services




4. Retailers can sell services

1. Diverse range of activities such as garages,

restaurants and banks.

2. Require additional manual and technical skills or

knowledge

3. Invest substantial amounts in their facilities and

operating systems.




5. Retailers sell to many different consumers

1. Prepared to sell to whoever will buy their products

2. Restricted to only by legal restraint – alcohol to

minors and by any discriminatory practices they

operate.




Retailers meet the needs of their customers by providingthe following essential services: Accessibility of location

Convenience of timing

Convenience of size

Information

Lifestyle support



Social Role of Retailing

People want to see improvement in the general level of consumption and social cohesion over time.

Retailers that are seen to contribute to the local or nationalcommunity generally receive greater political support that allowsthem to operate more profitably.

Enhance their perceived value to the community by acting as afocal point and through effective public relations and promotionscampaigns including sponsorship. E.g. Teck Kong Trading



Retail Formats (The Store

Package) Location

Size

Merchandise: Product mix Merchandise assortment

Breadth – measured by the number of different merchandizebrands stocked

Depth – measured by the average number of stock-keepingunits (SKUs) within each brand




Package) Price

Atmosphere and Service

Neighbourhood-based stores: General stores – old fashioned, with low level of self-

services. Variety stores – tend to have mixed or scrambled

merchandise, the range of which will vary with size of store

Convenience grocery stores – open till late evening




Package) One-stop stores:

Supermarkets Department stores

Hypermarkets and superstores

Specialist stores Computer shop, fancy dress hire and hobby shops

Mass merchandisers Discounters

Discount stores Off-price stores



Successful Retailing

Building Success The retailer established its market position to serve

the needs of a well-defined group or groups of

consumers The retailer supports its market position

It prices the products to maintain perceived value for money relative to competitors

It uses appropriate layout and display to evoke thecustomer’s hidden and perceived needs to enhance theshopping experience and so increase sales

It promotes the products effectively over the period tosell them according to plan




The retailer effectively manages store operations or mail

order, television or internet sales system

The retailer manages behind the scenes operationseffectively: Appropriate administration and personnel management

procedures

Proper financial management and control procedures Take advantage of technology in physical distribution and in

information technology in planning effective distribution




The retailer maintains its business andcommunity standing: Uses appropriate publicity to show that it

understands its local community and deals withconsumers in a socially acceptable manner

Larger businesses pay due regard to environmental

concerns and contribute to wider communityparticipation of events and support communityactivities



Business Strategy

Senior management has to develop a business

plan based on the most important factors in the

organisation’s success: Identify the strategic forces acting on the firm

Identify direction of change

Develop strategic responses

Ensure that there is an appropriate organisationalstructure through which the strategic response can

be communicated and implemented.



Type of Business

The major types of business in retailing are: The unincorporated business – sole proprietorship

or partnership

The private company

The public company

Co-operatives



The Value of the Business

Is the price it would fetch if it were sold as a going

concern in the open market: Depends on how investors view the potential future profits,

taking into account the business’s previous financial history,market growth and potential competition and the state of the

economy.

Value of the property owned plus the goodwill of the business

(the extra value the owners have acquired through building up

customer loyalty, giving it a competitive edge in the market

and therefore higher profits.



The Value of the Business

The market value of the business is important

because:

It provides long-term wealth for its owners

It provides the asset base on which loans were

made

It affects the price at which firms raise new money

through selling shares



Questions?

topic 1 mkt326 intro to retail mktg

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