Intro to Retail and Merchandising

Retailing

the set of business activities that adds value to products and services sold to consumers for their personal or family use

Retailer

a business that sells products and/or services to consumers for their personal or family use

Role of Retailers

a key component in a supply chain that links manufacturers to consumers

Supply Chain

a set of firms that make and deliver goods and services to consumers

Retailers Typically Buy From

wholesalers and manufacturers and resell them to consumers

Providing Assortments

offering a wide variety of merchandise categories in one location

Breaking Bulk

purchasing large quantities and selling smaller amounts to consumers

Holding Inventory

keeping products available so customers don’t have to wait

Providing Services

offering help such as customer service, delivery, or credit

Wholesalers

buy merchandise in large quantities from manufacturers and sell to retailers

Vertical Integration

when a firm performs more than one set of activities in the channel

Backward Integration

when a retailer performs wholesaling or manufacturing activities

Forward Integration

when a manufacturer performs wholesaling or retailing activities

Walmart Distribution Centers

an example of vertical integration

Variety

the number of merchandise categories a retailer offers

Assortment

the number of different items offered within a merchandise category

Conventional Supermarket

large self-service food store offering groceries, meat, produce, and some nonfood items

Limited-Assortment Supermarkets

extreme-value food retailers like Aldi and Save-A-Lot

Supermarket Differentiation Strategies

fresh perishables, green/ethnic targeting, private labels, better shopping experience

Retailer Investments

advanced supply chains, assortment planning, pricing systems

Fair Trade

purchasing from factories that pay workers a living wage and provide benefits

Private-Label Brands Benefit Both

true

Private-Label Benefit to Customers

more choices and similar quality at lower prices

Private-Label Benefit to Retailers

loyalty, differentiation, lower promotion costs, higher margins

Supercenters

very large stores combining a supermarket and discount store

Hypermarkets

large stores with mostly food and some general merchandise

Hypermarkets Stock Fewer SKUs Than Supercenters

yes

Hypermarket Merchandise

groceries, hardware, sports equipment, furniture, electronics

Hypermarkets Common in US

no

Hypermarkets and Supercenters Similarity

groceries, general merchandise, self-service, warehouse-style buildings

Hypermarket Difference

higher proportion of food and perishables

Supercenter Difference

more nonfood items and dry/canned groceries

Warehouse Clubs

retailers with limited assortment, low service, and low prices

Major Warehouse Clubs

Costco, Sam’s Club, BJ’s Wholesale Club

General Merchandise Retailers

department, discount, specialty, drugstores, category specialists, extreme-value, off-price, outlets

Department Stores

broad variety, deep assortment, high service, organized into departments

Largest Department Stores

Sears, Macy’s, Kohl’s, JCPenney, Nordstrom, Dillard’s

Department Store Attractions

ambience, service, wide merchandise variety

Department Store Strategies

exclusive merchandise, private labels, multichannel presence

Full-Line Discount Stores

broad merchandise, limited service, low prices

Retail Channel

the way a retailer sells and delivers merchandise and services

Channel

completes a transaction

Medium

communicates information to consumers

Multichannel Retailing

using more than one channel to sell and deliver products

Omnichannel Retailing

coordinated channels creating a seamless customer experience

Fastest Growing Channel

internet retailing

Mobile Channel Growth Rate

highest

Catalog Channel

nonstore channel using mailed catalogs

Direct-Response TV Channel

TV ads that demonstrate products and allow ordering

Television Home Shopping

TV networks that demonstrate products and take orders

Direct Selling

face-to-face selling in a convenient location

Types of Direct Selling

party plan system and multilevel system

Party Plan System

customers host gatherings to sell products

Multilevel System

distributors buy and resell merchandise to others

Automated Retailing

vending machines that dispense products after payment

Major Retail Channels

stores, catalogs, electronic, mobile

Store Channel Benefits

touch, service, risk reduction, instant gratification, experience

Catalog Channel Benefits

convenience, easy browsing, reference anytime

Internet Channel Benefits

wide selection, information, personalization, market expansion

Internet Channel Risk

perceived shopping risk

Multichannel Retailer Challenge

deciding how integrated channels should be

Channel Migration

customer researches one channel but buys from another retailer

Showrooming

researching in-store and buying online at lower price

Buying Process

steps consumers go through when buying a product or service

Five Buying Process Stages

need recognition, information search, evaluation, choice, loyalty

Hedonic Needs

shopping for pleasure and enjoyment

Utilitarian Needs

shopping to accomplish a task

Needs Association

utilitarian with work, hedonic with pleasure

Hedonic Satisfaction Methods

stimulation, status, adventure

Internal Sources

information from memory and past experiences

External Sources

information from media, websites, reviews, and people

Information Search Level

depends on perceived value versus cost

Hedonic Shoppers Search More

true

Information Search Influences

customer traits and buying situation

Marketplace Factors Affecting Search

number of brands and time pressure

Conversion Rate

percentage of visitors who make a purchase

Everyday Low Pricing (EDLP)

consistent low prices between regular and sale prices

Multiattribute Attitude Model

views retailers as collections of attributes

Purpose of Multiattribute Model

predict evaluations based on attributes and importance

Retailer Research Focus

alternatives, attributes, ratings, importance weights

Ways to Increase Store Choice

improve performance beliefs, change importance, add benefits

Retail Strategy

target market, retail format, competitive advantage plan

Target Market

customer segments a retailer focuses on

Retail Format

retailer’s mix used to satisfy target market needs

Sustainable Competitive Advantage

long-term advantage difficult to copy

Retail Market

consumers with similar needs and retailers using similar formats

Conservative Consumers

place little importance on fashion

Traditional Consumers

prefer classic styles

Fashion-Forward Consumers

want the latest fashions

Final Retail Strategy Step

building a sustainable competitive advantage

Sustainable Advantage Approaches

customer relationships, supplier relationships, efficiency

Common Elements of Advantage

loyal customers, strong vendors, effective employees

Customer Relationship Advantage

first sustainable advantage approach

Customer Loyalty

commitment to buy from a specific retailer

Brand Image

attractive, well-known retailer image

Positioning

how a retailer’s image compares to competitors

Positioning Definition

retail mix designed to create an image in customers’ minds

Perceptual Map

shows customer perceptions of retailers

Close Competitors on Map

provide similar benefits and images

Unique Merchandise Effect

builds loyalty through private labels