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Retail Management

Retail Management. Module 2: Retail Environment Analysis. Retailer Classification. Structural Organization of Retailers. Five Primary Ownership Types: Corporate chain: multiple stores, central ownership, and consistent standards operating on a large scale

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Retail Management

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  1. Retail Management Module 2: Retail Environment Analysis

  2. Retailer Classification

  3. Structural Organization of Retailers Five Primary Ownership Types: • Corporate chain: multiple stores, central ownership, and consistent standards operating on a large scale • Independent store: buy products through wholesalers which apply an upcharge for warehousing and handling product • Wholesaler: product distributors focused on supply chain and logistics • Franchise: owned by individual business owners who have contracted with larger company • Co-op: when several independent retailers join together to consolidate purchases, increasing buying power

  4. Advantages and Disadvantages of Retailer Types Club and Warehouse Stores: offer greatest value, but require memberships and have high priced items Mass Merchandisers: low prices, but busy Convenience and Drug Stores: limited selection Discount and Dollar Stores: low prices but less known brands Natural and Organic Stores: array of unique items at high price Specialty Retailers Online Retailers Traditional Grocers: wide assortment, but not low prices

  5. Food Retailers

  6. Changes in Food Retailing Convenience: is the store nearby? Is there ample parking? Will they have what I need?Customer Service: is this a place I like to shop? Is the store clean? Are the staff available/helpful, can I get in and out quicklyGroceries have moved to whole host of other channels, where non-traditional formats use groceries to increase store traffic and revenue

  7. Variety and Assortment of Goods in Food Retail Categories such as soup divided into several segments & sub-segments, which can be further divided into brands and into Stock Keeping Units • Segments and sub-segments: dry soup (ramen), ingredients • Leading brands: Campbell’s, Progresso Retailers make assortment decisions at category, segment, brand, & SKU level • Family Dollar vs. Sam’s Club Limit to how much differentiation there will be by company

  8. Current Trends in Food Retail Rise of healthy foodSingle living through foodDiversity in foodThe future is convenientHome automationCost pressure

  9. Service and Merchandise Retailers

  10. Assortment Levels and Types of Retailers • Department stores: offer broad assortments of products with multiple departments separating product categories • Category specialist: retailers that specialize in one category of products (Office Depot, Toys R Us) • Specialty stores: specific type of products they sell (florists, locksmiths, hardware stores) • Full line discount stores: retailers that provide name-brands at lower cost • Drug stores: smaller variety, but have depth in assortment of health products • Off-price stores: high quality products at cheap prices

  11. Adapting to the Current Landscape Lack of product differentiation is reason some retailers have developed private label or store brand itemsMerchandise retailers: focus more on product quality to differentiate themselves from competitionCustomer service: focus of service retailers

  12. Types of Service Retailers No service, such as Amazon Go concept stores that don’t have associates or check lanesSelf-service, such as most grocery shopping experiences: product available on-shelf for shopper’s selectionFull-service: accepting multiple forms of payment, delivery services, recommendations, allowing returns, allowing special orders, providing customer loyalty programs • cost is increased labor, requires premium pricing

  13. Store-Based Strategy Mixes

  14. Wheel of Retailing • Entry: retailer penetrates a new market, ex: low prices, low retailer margins, low customer awareness • focus on streamlining operations to support new venture • Growth: retailer has foothold in new market and seeks to expand • higher prices and retailer margins, improved customer awareness • Maturity: retailer operates at full capacity • robust infrastructure, capabilities, and service • Decline: retailer is vulnerable to lower cost operations • doesn’t mean retailer will fail

  15. Scrambled Merchandising Retail tactic in which retailer broadens assortment to include items that are generally outside their focusAdds to shopping experience rather than distracting Risk comes when unexpected items are included in assortment that confuse shoppers. Can detract from experience and tarnish retailer’s brand image

  16. Evolving Through Mergers, Diversification, and Downsizing Throughout 1990s, retail food industry underwent period of consolidationConsolidation lead to long-term trend where sales are concentrated among fewer number of retailers (1992, 20 largest food retailers accounted for 39.2% of grocery sales; 2000, 54.7%, 2016, 66.6%)Mergers and Acquisitions: transactions in which ownership of companies & business organizations are combined

  17. Competitive Analysis

  18. Obtaining Information on Competition Industry: • Government reports, white papers, industry publications Specific competitors: • Press releases, financial reporting, weekly circulars, store visits US federal government publishes information on industry trends or you can set up Google Alerts to track competitionBegin with weekly circulars published by competitors and evaluate their items or spend time visiting competition

  19. NAICS Codes and Direct Competitors North American Industry Classification System: https://www.naics.com/Common codes: • 445110: supermarkets and grocery stores • 445120: convenience stores • 445220: fish and seafood markets • 445230: fruit and vegetable markets • 446110: pharmacies and drug stores • 452311: warehouse clubs and supercenters • 452319: all other general merchandise stores

  20. Quick Review • Over 20 years, groceries have moved from grocery stores and supermarkets to whole host of other channels • Existing grocery formats are competing with host of new competitors • Pressure of e-commerce will continue, and mobile technology has changed shopper behavior • Demographic changes in population: baby-boomers are reflecting interest in health and wellness • Wage pressure: cost of labor is concern but companies are trying to ease these pressures • Many reasons to be optimistic for future of retail: moving into period of experiential shopping, rise in specialty stores

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