MT303 Unit 3. Welcome to MT- 303 Store Management Seminar Dear Students, The Seminar will start promptly at the Schedule Time. Remember that the system.

MT303Unit 3

Welcome to MT- 303Store Management Seminar

Dear Students,

The Seminar will start promptly at the Schedule Time.

Remember that the system saves a transcript of everything in the Chat, if you wish to talk among yourselves you may do so, or you may use the Private Chat Option.

Dr. Nardi

Welcome to MT- 303Store Management

Unit 3- SeminarProfessor: Dr. Nardi

TYPES OF RETAILERS

Note: This seminar will be recorded by the instructor.

Agenda

Announcements Unit 2 – Review Unit 3 Topics

Trends in Retail Types of Retailers Non-retailers Services Types of Ownership

Unit 3 – Assignments Wrap Up

Announcements

Good work your discussion posts and quizzes.

Start working on your Research Papers Never to early…..

Our Usual Reminder: Before a question please type ?? Or //

Unit 2

How did it go? Time management? Questions : Grades Review?

Getting familiar with it? Project/Written assignment

Have you started doing research? Have you approached a Store Manager?

Other questions? Concerns?

Review from Last Week What is retailing?

Distribution Types

Selective, Intensive, exclusive Supply Chain

How retailers add value?

Retail differences across the world.

Ethical issues in retail

Career opportunities in retail.

Relationship Management

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Any Questions??

2-9

General Trends in Retailing

New Types of Retailers

Increased Concentration

Globalization

Growth In Services Retailer

Demise of Pure Electronic Retailers (Webvan, eToys, etc)

Growth in Use of Multi-Channel Retailing by Traditional Retailers

Increase Use of Technology to Reduce Cost; Increase Value Delivered

2-10

Types of Retailers Retailers Use Different Retail Mixes

-merchandise: variety (breadth) / assortment (depth)

-services

-store design, visual merchandising

-location

-pricing

Infinite Variations

Some combination of retail mixes satisfy the needs of significant segments and persist over time.

2-11

Types of Merchandise Retailers

Mom and Pop Stores

Convenience Stores

Supermarkets

Supercenters

Department Stores

Specialty Stores

Discount Stores

Category Specialists

Off-Price Retailers

Warehouse Clubs

Value Retailers

Food Retailers General Merchandise Retailers

2-12

NAICS Codes for Retailers

2-13

Merchandise Offering

Variety (breadth of merchandise): wide vs. narrow

- The number of merchandise categories

Assortment (depth of merchandise): deep vs. shallow

-the number of items in a category (SKUs)

2-14

Variety and Assortment of Kayaks in Different Retail Outlets

2-15

Services offered

Retailers differ in the services they offer customers EMS offers assistance

in selecting the appropriate kayak and repairing them

VS Outdoorplay.com and Wal-Mart: doesn’t

provide any services

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Any Questions??

2-17

Prices and the cost of offering breath and depth of merchandise and services

Stocking a deep and broad assortment (like EMS) is costly for retailers.

Many SKUs

Inventory Investment Cost

Because the retailer must have backup stock for each SKU in addition to holding the inventory

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Any Questions??

2-19

Food Retailers

■ Supermarkets■ Supercenters■ Warehouse

Clubs■ Convenience

Stores

Channel preference for food shopping channel where grocery purchasers do most of their food shopping

Food retailers

2-20

Supermarkets

Conventional supermarkets 30,000 SKU

Limited assortment supermarkets (extreme value food retailers) 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

Save-A-Lot, ALDI (German’s Wal-Mart)

2-21

Trends in Supermarket Retailing

Competition from Discount Stores

Changing Consumption Patterns

Efficient

Distribution Lower Costs Lower Prices

Time Pressure Eating Out More Meal Solutions

Trends in Supermarket retailing

2-22

Conventional Supermarket Survival Pack

Chef-crafted meals on the go at EatZi’s

Emphasize Fresh Perishables Wegmans

Target health conscious and ethnic consumers

Provide a better in-store experience

Offer more private label brands

2-23

Supercenters and Warehouse Clubs

The fastest growing retail category

Large stores (150,000 – 220,000 square feet) that combine a supermarket with a full-line discount store

One-stop shopping experience

Supercenters

■ Offer a limited and irregular assortment of food and general merchandise with little service at low prices

■ Use low-locations, inexpensive store design, little customer service

■ Low inventory holding costs by carrying a limited assortment of fast selling items

Warehouse Clubs

2-24

Convenience Store

Tailors assortments to local market

Makes more convenient to shop

Offers fresh, healthy food

Fast, casual restaurants

Financial services available

Opening smaller stores closer to consumers (like airports)

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Any Questions??

2-26

Types of General Merchandise Retailers

Department Stores

Specialty Stores

Category Specialists

Home Improvement Centers

Discount Stores

Drugstores

Off-Price retailers

Extreme Value Retailers

Types of General Merchandise Retailers

2-27

Issues in Department Store Retailing

Competition

-Discount Stores on Price

-Specialty Stores on Service, Depth of Assortment

Lower Cost by Reducing Services (?)

-Centralized Cash Wraps

More Sales (?)

-Customers Wait for Sale

Focus on Apparel and Soft Home

Develop Private Labels and Exclusive Brands

Issues in Department Store Retailing

2-28

Three Tiers of Department Stores

First Tier: Upscale, high fashion chains with exclusive designer merchandise and excellent customer service

Nordstrom, Neiman Marcus, Saks

Second Tier: Retailers sell more modestly priced merchandise with less customer service

Macy’s

Third Tier: Value oriented caters to more price conscious customer

JCPenney, Sears, Kohl’s

2-29

Department Stores:What To Do With an Eroding Market

To deal with an eroding market

Department stores are:

attempting to increase the amount of exclusive merchandise they sell

undertaking marketing campaigns to develop strong images for their stores and brands

building better relationships with their key customers

2-30

Issues in Discount Store Retailing

■ Only Big Left

Wal-Mart, Target

■ Wal-Mart’s Dominance

■ Differentiate Strategy

Wal-Mart = Low Price and Good value

Target = More Fashionable Apparel

■ Competition from Category Specialists

Toys-R-Us, Circuit City, Sports Authority

Issues in Discount Store Retailing

2-31

Issues in Specialty Store Retailing

Mall-Based Apparel Retailers

Decline in Mall Shopping and Apparel Sales-Lack of New Fashions

-Less Interest in Fashion

-Increased Price Consciousness

Lifestyle Formats –

Abercrombie and Fitch

Hot Topics

Issues in Specialty Store Retailing

2-32

Specialty Store Retailers

McGraw-Hill Companies, Inc./Andrew Resek, Photographer

2-33

Issues in Drug Store Retailing

Consolidation – Walgreens, CVS, Rite-Aid

Competition from Supermarkets, discount Stores and mail-in orders

Evolution to a New Format-Stand Alone Sites with Drive

Thru Windows-offering more frequent

purchase food items

Improved systems provide personalized service in the pharmacy

Issues in Drug Store Retailing

2-34

Category Specialists Deep and Narrow Assortments Destination Stores

Category killers

Low Price and Service

Wholesaling to Business Customers and Retailing to Consumers

Incredible Growth

Bass Pro Shops

Category Specialists

2-35

Category Specialists

Sephora,France’s leading perfume/cosmetic chainLVMH’s division

2-36

Category Specialists: Home Improvement Centers

Home Depot and Lowes act as both:

Retailer and Wholesaler

Consumer Business

2-37

Home Improvement Centers

Displayed in a warehouse atmosphere

Customer Service: How to select and how to use merchandise

Competition focuses on price, effort to differentiate and services provided

2-38

Issues in Extreme Value Retailing

Focuses on Lower Income Consumers

Names mostly imply good value not $1 price points

Low Cost Location

Limited Services

One of the Fastest Growing Retail Segments

Dollar Tree Family DollarDollar General 99 Cents Only Store

Issues in Extreme Value Retailing

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Any Questions??

2-40

Off-Price Retailers

Close-out retailers

Offer an inconsistent assortment of brand name merchandise at low pricesTJX companies (T.J. Maxx, Marshalls. HomeGoods)Ross Stores, Burlington Coat factory, Big Lots, Tuesday

Morning

2-41

Types of Non-store Retailers

2-42

Electronic Retailing

Many retailers operate from virtual storefronts on the World Wide Web, usually maintaining little or no inventory, ordering directly from vendors to fill customer orders

History of frenzied investments and false predictions of retail dominance

Primarily used by traditional retailers to compliment store and catalog offerings

Exclusive e-tailers target small and dispersed niche markets

2-43

What are Amazon and eBay?

http://www.Amazon.com – Merchandise to consumers. Provides website development and fulfillment services to other retailers

eBay – Acts as a mall or other shopping center providing a “place” for buyers and sellers to meet

Don Farrall/Getty Images

2-44

Issues in Catalog Retailing Low Start Up Cost

Evolution of Multi-Channel Offering

Hard to compete with large well established firms

Increasing Mail Costs

Clutter from other Catalogs

Specialty Catalogs like Victoria Secret

General merchandise catalogs like JC Penney

Issues in Catalog Retailing

2-45

Issues in Direct Selling

Completely bypasses retailers and wholesalers Manufacturers set up their own channels to sell their

products directly to consumers

Party plan system: merchandise is demonstrated in a party atmosphere

Multi-level network: Master distributors sell to distributors who sell merchandise

Pyramid schemes: Firm sells to other distributors and little if any merchandise goes to end users

2-46

Issues in Television Home Shopping Consumers watch cable stations, infomercials or direct response ads

Few consumers watch regularly

Most purchases made by small proportion of viewers

Customers can’t examine merchandise

Customers must wait for merchandise to come on

Sells predominately jewelry, apparel, cosmetics, kitchenware, and exercise equipment

2-47

Issues in Vending Machine Retailing

Automatic Merchandising About $25 billion worth of convenience goods are sold to

Americans through 4.7 million vending machines

Sales growth has been declining due to higher prices and healthier eating habits

New technology may help sales growth

Trend of placing machines in captive consumer locations

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Any Questions??

2-49

Services vs. Merchandise Retailers

■ Intangibility Problems in Evaluating Service Quality Performance of Service Provider

■ Simultaneous Production and Delivery Importance of Service Provider

■ Perishability No Inventory, Must Fill Capacity

■ Inconsistency of the Offering Importance of HR Management

Services vs. Merchandise Retailers

Characteristics of Service Retailing

Intangibility

•No patent protection possible•Difficult to display/communicate service benefits

•Service prices difficult to set•Quality judgment is subjective

•Some services involve performances/experiences

Characteristics of Service Retailing

Inseparability

•Consumer may be involved in service production•Centralized mass production difficult

•Consumer loyalty may rest with employees

Characteristics of Service Retailing

Perishability

•Services cannot be inventoried•Effects of seasonality can be severe

•Planning employee schedules can be complex

Characteristics of Service Retailing

Variability

•Standardization and quality control hard to achieve•Services may be delivered in locations

beyond control of management•Customers may perceive variability even when it does not actually occur

2-54

Type of Service Service Retail Firms

Airlines American, Delta, British Airways, Singapore Airways

Automobile maint/repair Jiffy Lube, Midas, AAMCO

Automobile rental Hertz, Avis, Budget, Alamo

Banks Citibank, NCNB, Bank of America

Child care centers Kindercare, Gymboree

Credit cards American Express, VISA, Mastercard

Education University of Florida, Babson College

Entertainment parks Disney, Universal Studios, Six Flags

Express package delivery Federal Express, UPS, US Postal Service

Financial services Merrill Lynch, Dean Witter

Fitness Jazzercise, Bally’s, Gold’s Gym

Health Care Humana, HCA

Home maintenance Chemlawn, MiniMaid, Roto-Rooter

Examples of Service Retailers

2-55

Examples of Service Retailers

Type of Service Service Retail Firms

Hotels and motels Hyatt, Sheraton, Marriott, Days Inn

Income tax preparation H & R Block

Insurance Allstate, State Farm

Internet access/Elec info. American On-Line, CompuServe

Movie theaters AMC, Loews/Sony, Universal

Real estate Century 21, Coldwell Banker

Restaurants TGI Friday’s, Wendy’s, Pizza Hut

Truck rentals U-Haul, Ryder

Weight loss Weight Watchers, Jenny Craig

Video rental Blockbuster, Hollywood Video

Vision centers Lenscrafter, Pearle

Consumer Perceptions of Service Retailing

Lessons in Service Retailing

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Any Questions??

2-59

Merchandise/Service Continuum

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Any Questions??

2-61

Types of Retail Ownership

Independent, Single Store Establishments Wholesale-sponsored

voluntary group

Corporate Retail Chains

Franchises

2-62

Retailers Using Franchise Business Model

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Any Questions??

Unit 3Assignments

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Any Questions??

Wrap Up

Discussion: Remember 1 Answer AND at least 2 Peer to Peer Comments per Question. Answer ALL Questions. Post on Three (3) separate days – First post by Saturday.

Remember you have assignments due this week. Due on Tuesday by 11:59 PM E.T. Late? Let me know

BEFORE!

Pending Assignments? Get them to me ASAP – contact me for instructions on

how to make them up or follow my instructions if I already contacted your.

Last day for Unit 1 assignments- Tuesday of Unit 3

Contact

you can contact me

through my email: [email protected] ,

through AOL Instant Messaging

my AOL IM name is nknardi,

(put me on your buddy list)

Office Hours or through the “Instructor’s Office” link under the

Course Home page

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Any Questions??

Thanks

Thank you for Attending!!!!

See you in the Discussion Thread Questions and in Next Week’s Seminar

Next Week – Unit 4Multi-Channel

Retailing