types of retailers

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  • 1. Retailer Characteristics type of merchandise sold variety and assortment of merchandise level of customer service price of the merchandise

2. Types of Merchandise The US Bureau of the Census uses ahierarchical set of four digit codes calledthe Standard Industrial Classification(SIC). The US Bureau along with Mexico andCanada, adopted a new classificationsystem, the North American IndustrialClassification System (NAICS). 3. NAICS Code Hierarchy 4. Variety and Assortment Variety is the number of differentmerchandise categories a retailer offers(breadth). Assortment is the number of differentitems in a merchandise category (depth) Each different item of merchandise iscalled a stock keeping unit (SKU). 5. Services Offered Customers expect retailers to providesome services--accepting creditcards, proving parking, and displayingmerchandise. Some retailers go beyond this andprovide other services such as giftwrapping and home delivery, at acharge. 6. Price Offering more depth and breadth ofmerchandise is appealing to customers. Offering services attracts customers. To make a profit with more depth andbreadth or services retailers mustcharge higher prices. 7. Sales and GrowthRate for Retail Sectors 8. Food Retailers Conventional Supermarket Limited Assortment Supermarket Supercenter Warehouse Club Convenience Store 9. Characteristics of FoodRetailers 10. Supermarket Self-service Offer Groceries Meat Produce Limited non-food items 11. Supercenters Fastest growing sector of food retailer. 150,000 to 200,000 sq. ft. stores thatcombine a superstore and a full-linediscount store. Sell groceries at low prices to build storetraffic. One stop shopping 12. Warehouse Clubs Large ( about 100,000 sq. ft.) andlocated in low rent districts. Little service at low prices to ultimateconsumers and small businesses. Reduce costs by carrying a limitedassortment of fast-selling items. Members must pay an annual fee 13. Convenience Stores Modern versions of the neighborhoodmom-and pop stores. Convenient location in a 2,000 to 3,000sq. ft. store with a speedy checkout. Limited variety and assortment ofmerchandise. Gasoline and cigarettes account for over55% of annual sales. 14. General Merchandise Retailers Department stores Full-line discount stores Specialty stores Drug stores Category specialists Home improvement centers Off-price retailers. 15. Characteristics of GeneralMerchandise Retailers 16. Department Stores Broad variety and deep assortment Offer considerable customer services Organized into separate departments fordisplaying merchandise womens , mens and childrens clothing andaccessories home furnishing and furniture kitchenware and small appliances. 17. Department StoresCategorized into three tiers Tier One Upscale High-fashion chains Exclusive designer merchandise Neiman Marcus Bloomingdales Saks Fifth Avenue 18. Department StoresCategorized into three tiers Tier Two Modestly priced merchandise Less customer service Macys Dillards 19. Department StoresCategorized into three tiers Tier Three Value-oriented More price-conscious consumers Sears Kohls JCPenny 20. Full-Line Discount Stores Offers low prices Broad variety of merchandise bothprivate labels and national brands. Major Players Walmart Target Kmart 21. Specialty Stores Narrow variety but deep assortment High level of service Target specific market segments Victorias Secret Levis Apple Polo/Ralph Lauren 22. Drug Stores Specialty stores that concentrate onhealth and personal groomingmerchandise. Prescription pharmaceuticals representalmost 70% of sales. Walgreens CVS Rite Aid 23. Category Specialists Big-box store that offers a narrow varietybut deep assortment . Often called category killers They can use their buying power tonegotiate lower prices, excellentterms, and assured supply when itemsare scarce. 24. Category Specialists 25. Home Improvement Centers Combines the traditional hardware storeand lumberyard. Focuses on providing material andinformation. Merchandise is displayed in awarehouse atmosphere. Salespeople are available to assistcustomers in seeking merchandise andto tell them how to use it. 26. Extreme-Value Retailers Small discount stores Limited merchandise assortment Very low prices Target market low-income consumers Dollar General Family Dollar Dollar Tree 27. Off-Price Retailers Inconsistent assortment of brandname, fashion-oriented soft goods at lowprices. Typically, merchandise is purchased atone-fifth to one-fourth of the originalwholesale price. 28. Services Retailing Sell services rather than products Important differences Intangibility Simultaneous Production and Delivery Perishability Inconsistency of the Offerings 29. Continuum of Merchandise andServices Retailers 30. Types of Ownership Another way to classify retailers is bytheir ownership. Independent, Single-Store Establishment Corporate Chains Franchises 31. Independent, single-storeestablishments Many retail start-ups are owner-managed Direct contact with customers Not bound by bureaucracies inherent inlarge retail organizations Very flexible React quickly to customer needs and market changes 32. Corporate Retail Chain Operates multiple retail units undercommon ownership. Centralized decision making for definingand implementing strategy. May be two stores or many thousandstores. 33. Franchising Contractual agreement between afranchiser and a franchisee that allowsthe franchisee to operate a retail outletusing a name and format developed andsupported by the franchiser. More than 40 percent of all U.S. retailsales are made by franchisees. 34. Franchising Franchisees are motivated to make theirstore successful because they receivethe profits after the royalty is paid. The franchiser is motivated to developnew products and systems to promotethe franchise because it receives aroyalty on all sales. 35. Retailers Using FranchiseBusiness Model