ADM2320X summer 2008-ch 15

ADM2320X summer 2008-ch 15 - 1 Retailing to create value...

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Unformatted text preview: 1 Retailing: to create value and customer satisfaction Chapter 15 2 Definition of retailing • All activities involved in: – Selling – Renting; and – Providing goods and services to ultimate consumers for: – Personal, – Family, or – Household use. 3 Value of retailing in Canada • In 2006, retail sales were about $350 Billion • 2 millions persons employed in retail sector • Major retail sectors are: – Automotive (Canadian Tire and auto dealers) – Food (Loblaws, Sobeys) – Furniture (Leon’s, The Brick) – Clothing (department stores) 4 Classifying retail outlets • Form of ownership: – Independent retailer – Corporate chain – Contractual system • Level of service: – Self-serve – Limited service – Full service • Merchandise: – Depth of line – Breadth of line 5 Form of ownership • Independent retailer (mom & pop) – Accounts for 60% of total retail trade in Canada – Competes on convenience, quality, personal service & lifestyle • Corporate chain (national chain – Zellers) – Multiple outlets under common ownership – Decision-making & purchasing are centralized – Volume discounts on purchases support competitive prices – Inventory management & cost-controls systems are common • Contractual system (coop arrangement – Home Hardware) – Independently-owned stores organize to achieve economies of a chain (e.g. retailer-sponsored cooperatives; wholesaler-sponsored voluntary chains; franchises) 6 Franchises • Franchisor enters into franchise agreement with franchisee to own and operate a: – Business-format franchise (McDonald’s); or – Product-distribution franchise (car dealership) • Franchise provides site location, equipment, and set up, management, marketing, training support • Franchisee pays franchise fee & annual royalty tied to sales • Franchisors finance franchise expansion by using the franchise fees paid by franchisors 7 Level of service • Self-serve – Customer performs most functions (gas stations & self- service kiosks used in grocery stores, airlines, hotels) • Limited service – Some services are provided to customers (department stores provide returns and credit services) • Full service – Specialty stores which services are customized (funeral homes) 8 Merchandise • Depth of product line – No. of items within in each product line – Specialty outlets have depth in one product (shoes) – Category killers specialize in one type of product at very competitive prices (i.e. Chapters for books) • Breadth of product line – No. of different product lines in a store – General merchandise stores have broad product line with limited depth (department stores) – Scrambled merchandise: unrelated product lines in a single retail store (health & beauty, bath & linens, produce sold at Loblaws & Wal-Mart supercentre outlets). There is intertype competition between dissimilar types of retail outlets, under the same roof. 9 Nonstore retailing • Automatic vending...
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ADM2320X summer 2008-ch 15 - 1 Retailing to create value...

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