a set of business activities that adds value to the products and services sold to consumers for their personal or family use.
Retailing
is a business that sells products and/or services to consumers for personal or family use.
EX: JCPenny, Amazon, jiffy lube
retailer
- provide assortment (buy other products at the same time)
- break bulk (buy it in quantities customers want)
- hold inventory (buy it at a convenient place when you want it)
- offer services( see it before you buy it; get assistance)
How retailers add value
firm performs more than one set of activities in the channel
Ex: retailer invests in wholesaling or manufacturing
vertical integration
retailer performs some distribution and manufacturing activities
EX: JCP sells arizona jeans (private label)
backwards integration
manufacturers undertake retailing activities
Ex: Ralph Lauren operates its own stores
forward integration
- Social and political objectives
- geography
- Market size
reasons for differences in distribution systems
The voluntary actions taken by a company to address the ethical, social, and environmental impacts of its business operations, in addition to the concerns of its stakeholders
corporate social responsibility
- Made Infrequently
- Long-term
- Require significant investment
- Not easily reversed
strategic decisions
Dillard’s vs.. JCPenney)
intratype
dillards vs wal-mart
intertype
the target market
the product and service mix
a long-term competitive advantage
a retail strategy should…
wide vs. narrow
- The number of merchandise categories
Variety (breadth of merchandise
deep vs. shallow
-the number of items in a category (SKUs
Assortment (depth of merchandise
Perishables (meat, dairy, produce, and baked goods) account for 30% of supermarket sales
Conventional supermarkets
2000 SKU
Offer one or two brands and sizes
Designed to maximize efficiency and reduce costs
Offer merchandise at 40-60% lower prices than conventional supermarkets
Limited assortment supermarkets (extreme value food retailers)
Conventional
Supermarket Survival Pack
Emphasize Fresh Perishables
Target health conscious and ethnic consumers
Offer more private label brands
Provide a better in-store experience
-Broad variety
-Deep assortment
-Customer service
-Merchandise displayed into
distinct departments
-Soft goods
-Hard goods
Department Store Retailing
Full-Line Discount Stores
Broad variety, limited service, and low prices
Walmart, Target, Kmart
Little variety, great assortment Destination stores Category killers Low price and service Intense competition Wholesaling to business customers and retailing to consumers Incredible growth
Category Specialists (bass pro)
Little number of complementary merchandise Specific market segment Category killers Most profitable and fastest growing Thrift stores and consignment shops
specialty stores (Apple)
Dollar Stores
Broad variety with little assortment of household goods, health and beauty care products, and groceries
Focuses on lower income consumers
Low cost location
Limited services
More private-label options and impulse buys
Adding food services
Extreme Value Retailing
Inconsistent assortment of brand-name merchandise
Close-out retailers
Brand name and designer-label merchandise at 20-60% lower than MSRP
Offer closeouts and irregulars
TJX Companies (which operates T.J.Maxx, Marshalls, Winners, HomeGoods, TKMaxx, AJWright, and HomeSense),
http://www.Overstock.com and http://www.Bluefly.com
Off-Price Retailers
30 – 40% of US retail sales
Franchisee pays fixed fee plus % of sales
Franchisee implements program
Why is this ownership format efficient?
Franchising
Overcome inherent challenges in the existing format
More assortment
Low cost, consistent execution
Current and more information for the consumer and about the consumer
benefits of multi channel retailing
the market segment(s) toward which the retailer plans to focus its resources and retail mix
target market
an advantage over the competition that is
not easily duplicated and can be maintained
over a long time.
Sustainable Competitive
Advantage
A group of consumers with similar needs and a group of retailers that satisfy those needs using a similar retail channel and format.
retail market
Introduces a new retail format toward a market segment that is not currently served by the retailer
diversification
Globally sustainable competitive advantage
Low cost, efficient operations - Wal-Mart, Carrefour
Strong private label brands: Starbucks, McDonalds
Fashion Reputation - The Gap, Zara, H&M
Category dominance – Best Buy, IKEA
Adaptability
Global Culture
Financial Resources
Key to Success in Global Retailing
return on assets (ROA) is the primary focus. ROA is the profit generated by the assets possessed by the firm.
financial
– helping to improve the world around us. Societal objectives are related to broader issues that make the world a better place to live.
societal
is a method for summarizing the factors that affect a firm’s financial performance, as measured by return on assets.
Strategic Profit Model-