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This 13 page Bundle was uploaded by Edie Lotus on Monday February 9, 2015. The Bundle belongs to RFPD 2010 at Ohio University taught by Trina Gannon in Fall. Since its upload, it has received 134 views. For similar materials see Intro to Retail in Economcs at Ohio University.
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Date Created: 02/09/15
Types of Retailers Chapter 2 01202015 General Trends in Retailing 0 New types of retailers Increased concentration 0 Globalization 0 Growth in Services Retailer Demise of Pure Electronic Retailers Webvan eToys etc 0 Growth in use of MultiChannel Retailing by Traditional Retailers 0 Increase use of Technology to Reduce Cost Increase Value Delivered Types of Retailers Retailers use different retail mixes 0 Merchandise Variety breadth Assortment depth Services Store Design Visual Merchandising Location 0 Pricing 0 In nite Variations COO 0 Some combination of retail mixes satisfy the needs of signi cant segments and persist over time Retailer Characteristics 0 Variety breadth 0 Assortment depth 0 Services Offered 0 Prices and the cost of offering breath and depth of merchandise and serVIces Merchandise Offering 0 Variety breadth of merchandise wide vs narrow o the number of merchandise categories 0 Assortment depth of merchandise deep vs shallow o the number of items in a category SKUs eg cell phones carried Supermarkets Conventionalsupermarkets 0 30000 SKU Limited assortment supermarkets extreme value food retailers o 2000 SKU 0 Offer one or two brands and sizes 0 Designed to maximixe efficiency and reduce costs 0 Offer merchandise at 4060 lower prices than conventional supermarkets ALDI39s Strategy 0 8500 worldwide including 1000 stores in 26 US States 0 90 percent of population in Germany shop at Aldi Cheap 0 Only two brands of toilet paper and one brand of pickeles o STRATEGY 0 Stores sell less products 0 ALDI exclusive label 0 High quality of products at cheaper prices 0 HOW 0 Strong control over quality and price 0 Simplify shipping and handling 0 Reduce labor costs by keeping limited store staff etc Trends in Supermarket Retailing Competition from Discount Stores 0 Efficient Distribution 0 Lower costs 0 Lower prices 0 Changing consumption patterns 0 Time pressure 0 Eating out more Three Tiers of Department Stores 0 First Tier Upscale high fashion chains with exclusive designer merchandise and excellent customer service 0 Nordstrom Neiman Marcus Saks Second Tier Retailers sell more modestly priced merchandise with less customer service 0 Macy39s 0 Third Tier Value Oriented caters to more price conscious customer 0 JC Penney Sears Kohl39s Issues in Fullline Discount Store Retailing 0 Only Big Left 0 WalMart Target WaIMart39s Dominance Differentiate Strategy 0 WaIMart Low Price and Good value 0 Target More fashionable apparel 0 Competition from Category Specialists 0 ToysRUs Best Buy Sports Authority Issues in Specialty Store Retailing Mallbased Apparel Retailers Decline in Mall shopping and Apparel Sales 0 Lack of new fashions 0 Less interest in fashion 0 Increased Price Consciousness 0 Lifestyle Formats 0 Abercrombie and Fitch o Victoria39s Secret 0 Manufacturers opening their own stores Issues in Drug Store Retailing Consolidation o Walgreens CVS RiteAid Competition 0 Supermarkets Discount Stores and Mailin orders 0 Evolution to a New Format 0 Stand alone sites with drive thru windows o Offering more frequent purchase food items 0 Improved systems provide personalized service OffPrice Retailers Closeout Retailers 0 Offer an inconsistent assortment of brand name merchandise at low pnces o TJX Companies which operates TJMaxx Marshalls Winners HomeGoods TKMaxx AJWright and HomeSense Ross Stores Big Lots Burlington Coat Factory Overstockcom OOOO Types of Retail Ownership 0 Independent Single Store Establishments o Wholesalesponsored voluntary group 0 Corporate Retail Chains Franchises More attention to longterm strategic planning than ever before 0 Due to the emergence of 0 New competitors 0 New formats 0 New technologies 0 Shifts in customer needs Elements in Retail Strategy 0 Target Market 0 the market segments toward which the retailer plans to focus its resources and retail mix 0 Retail Format 0 the nature of the retailers operations its retail mix 0 Sustainable Competitive Advantage 0 an advantage over the competition Criteria For Selecting A Target Market 0 Attractiveness Large growing little competition gt More Pro ts Consistent with your competitive advantages Customer Loyalty o More than simply liking one retailer over another 0 Customers will be reluctant to patronize competitive retailers Retailers build loyalty by 0 Developing a strong brand for the store or store brands 0 Developing clear and precise positioning strategies 0 Creating an emotional attachment with customers through loyalty programs Retail Branding Stores use brand stores name and store brands private label brands to build customer loyalty 0 Retail Brand Can create and emotional tie with customers that build their trust and loyalty Facilitates store loyalty because it stands for a predictable level of quality Approaches for Building Customer Loyalty Brand Image Positioning Unique Merchandise 0 Customer Service 0 Customer Relationship Management Programs Example of Positioning Chart 0 Page 117 Human Resources Management 0 quotEmployees are key to build a sustainable competitive advantagequot 0 Strategies for recruiting and retaining talented employees 0 Employee branding 0 Develop positive organizational culture Distribution and Info Systems 0 Flow of Information 0 Vendor gt Distribution Center gt Store quotquotquotquot By decreasing costs here there is more money available to investin 0 Better services 0 Increase in breadth and depth 0 Decrease in prices Location 0 What are the three most important things in retailing 0 quotlocation location locationquot 0 Location is a competitive advantage 0 A high density of Starbucks stores 0 Creates a topof mind awareness 0 Makes it very dif cult for a competitor to enter a market and nd good locations Growth Strategies 0 Market penetration 0 Market expansion 0 Retail format development 0 Diversi cation 0 Related vs Unrelated Market Penetration 0 Attract customers from target market Walgreens quoton every cornerquot 0 Get current customer to visit store more often or buy on each visit 0 Cross Selling Sales associates in one department sell complimentary merchandise from other departments eg Manicurist sells services plus hand lotionpolish eg Salesperson sells leaf blower directs customer to electrical department to purchase a 100 foot extension cord Market Expansion 0 Market expansion growth opportunity involves using the existing retail format in new market segments 0 Dunkin39 Donuts new stores and at gas stations outside northeastern o Abercrombie amp Fitch for college students opens lowerpriced chain Hollister Co for high school students Retail Format Development 0 Develops a new retail format with a different retail mix for the same target market Multichannel retailing 0 UK based TESCO o Tesco express small stores located close to where customers live and work 0 Tesco metro bring convenience to city center location by specializing in readytoeat meals Tesco superstores traditional stores 0 Tesco extra onestop destination with the widest range of food and nonfood products 0 Objectives and Goals 0 Financial 0 Not necessarily pro ts but return on investment ROI Primary focus Societal 0 Helping to improve the world around us 0 Personal 0 Selfgrati cation status respect The Strategic Pro t Model An Overview 0 Chart in textbook 0 Net Pro t Margin Re ects the pro ts generated from each dollar of sales 0 Asset Turnover assesses the productivity of a rms investment Pro t Margin Management Path Net Sales Gross Sales Promotional Allowances Return Cost of Good Solds COGS Gross Margin GM Net Sales COGS Operating Expense 0 Variable eg sales commissions o Fixed rent depreciation staff salaries 0 Selling general and administrative SGampA expenses Operating pro t margin 0 Operating pro t margin Gross margin Operating expenses Extraordinary recurring operating expenses 0 Net pro t margin Operating pro t margin Taxes lnterest Extraordinary nonrecurring expenses Gross margin percentage is gross margin divided by net sales Retailers use to compare 0 the performance of various types of merchandise 0 their own performance with that of other retailers with higher or lower levels of sales 0 Gross MarginNet Sales Gross Margin SG amp A or operating expenses can be expressed as a percentage of net sales to facilitate comparisons across items stores and merchandise categories within and between rms 0 Operating expensesNet Sales Operating expenses Net operating pro t percentage is gross margin minus operating expenses divided by net sales 0 Gross Margin Operating ExpensesNet Sales Net Operating Pro t Asset Management Path Assets 0 Economic Resources eg inventory buildings computers store xtures owned or controlled by a rm Current Asset and Fixed Asset 0 Current Assets Cash Account Receivable Inventory Other current assets 0 Accounts receivable are primarily the monies owed to the retailer by customers that have bought merchandise on credit 0 Fixed Assets Fixture Stores owned 0 Asset Turnover SalesTotal Assets 0 Inventory Turnover COGSAvg Inventory cost Inventory Turnover A measure of the Productivity of Inventory 0 It is used to evaluate how effectively retailers utilize their investment in inventory 0 Shows how many times on average inventory cycles through the store during a speci c period of time usually a year 0 Inventory Turnover COGSavg inventory cost 0 Inventory Turnover Salesavg inventory retail Analysis of Financial Strength 0 Cash Flow Analysis 0 Retailers need cash to meet their obligations ie salary rent vendors etc 0 Cash ow is calculated by making adjustments to net pro t involving adding or subtracting differences in revenue and expenses that occur from one period to the next
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