Chapter 17, Retailing, Class Notes

Contents List

Nature of Retailing

Retailing includes all transactions in which the buyer intends to consume.
A Retailer:
Must derive more than 1/2 of their sales from the ultimate consumer of the product to be classified a retailer (less than 1/2, then they are a wholesaler).

1.51 million retailers in the US. The number of retail establishments has remained constant over the last 20 years, but the sales volume has increased *4.
14.67 million employees in the US are involved in retailing.
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Classification of Retail Stores

According to 5 Criteria: Return to Content List
  • Service Price Orientation (Level of Service)

    1 Service oriented retailer strategy.
    2 Slim Profit margins, discount retailers, off-price retailers, deep discounters.
                           High   | Price                 Department Stores
                                  |                       Specialty Stores
       Min  ------------------------------------------------------------Max. 
    Service                       |
          Superstores             |
      Discount Stores             |
      Factory Outlets             |
                              Low |
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  • Where retailing takes place

    In store vs. non store.
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    Strategic Issues in Retailing

    Consumer purchases are often the results of social influences and psychological factors. Need to create marketing strategies to increase store patronage.


    Least flexible of strategic retailing issues and one of the most important. Need to consider:

    Handout...All Decked Out, Stores...

    Discusses the recent developments in retail location, stores moving back to urban areas. It talks about why stores are doing this, which stores are doing this and the implications of (re) locating down-town.
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    Product Assortment:

    Wide and shallow, deep and narrow?
    Look at merchandising policies.

    Handout...Target `Micromarkets' its way to success...

    Retail Positioning:

    Competition is intense. Need to identify an undeserved market segment and service the segment distinguishing yourself from others in the minds of consumers, IE position as high price, high quality with many services, or reasonable quality at "everyday low prices".


    Describes the physical elements in a store's design that appeals to consumers and encourages consumers to buy. Warm, fresh, functional exciting.

    Exterior Atmospherics-store front, display windows, important to attract new customers. Surrounding businesses, look of the mall etc.

    Interior Atmospherics-lighting, color, dressing room facilities etc

    Displays enhance and provide customers with information.
    Need to determine the atmosphere that your target market seeks.
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    Store Image:

    Mental picture that a retailer tries to project to the consumer. To a consumer, it is a persons attitude towards a store. Need to project an image, a functional and psychological image in consumer's minds that is acceptable to the target market. Depends on the atmospherics, reputation, number of services offered, product mix, pricing etc.

    FAO Schwartz "It is important to leave people with a memorable image of your store. At Disneyland, its Cinderellas castle. For us, its the clock."
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    Relationship Marketing:

    Handout...Department Stores target...

    Importance of relationship marketing in order to target your loyal customers.

    Importance of Logistics

    Handout...How Wal-Mart Outdid A Once Touted Kmart in Discount Store Race.

    Discusses the issues that are related to the growth in Wal Mart, and the decline in Kmart. Specifically logistical issues, information technologies that managed inventory systems, location etc.

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