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Unformatted text preview: BMGT350 Chapter 13 Retailing Retailing: all the activities directly related to the sale of goods and services to the ultimate consumer for personal, nonbusiness use • Mirrors the needs and styles of US society • Over 90% of all retailers operate just one store • Wal-Mart’s annual sales account for 5% of all retail sales A retail establishment can be classified according to: • Ownership: independent, part of a chain, or franchise outlet o Independent retailers: retailers owned by a single person or partnership and not operated as part of a larger retail institution (ex: local florists and ethnic food markets) o Chain stores: owned and operated as a group by a single organization. The home office for the entire chain handles many administrative tasks and the buying of merchandise (ex: Gap and Starbucks) o Franchises: owned and operated by individuals but are licensed by a larger supporting organization (ex: Subway and Quiznos). This combines the advantages of independent ownership with those of the chain store organization • Level of service: Services can be classified along a continuum from full service to self-service • Product assortment: Classifying stores by the breadth and depth of their product line o Specialty stores have the most concentrated product assortments, carrying single or narrow product lines but in considerable depth o Full line discounters typically carry broad assortments of merchandise with limited depth o Factory outlet stores may carry only part of a single line o Discount specialty stores carry a broad assortment in concentrated product lines (Home Depot) • Price: o Department stores and specialty stores charge full suggested retail price o Discounters, factory outlets, and off-price retailers use low prices as a major lure o Gross margin: how much the retailer makes as a percentage of sales after the cost of goods sold is subtracted The level of gross margin and price level generally match *Retailers use level of service, assortment, and price to position themselves in the competitive marketplace MAJOR TYPES OF RETAIL OPERATIONS: • Department Stores: carry a wide variety of shopping and specialty goods, including apparel, cosmetics, house-wares, electronics, and sometimes furniture o Each department is treated as a separate buying center o Buyer: a department head who not only selects the merchandise for his or her department but may also be responsible for promotion and for personnel o Central management sets broad policies about the types of merchandise carried and price ranges. Central management is also responsible for the overall advertising program, credit policies, store expansion, and customer service o Ex: Macy’s, JCPenney, Sears, Dillard’s, and Nordstrom • Specialty Stores: allow retailers to refine their segmentation strategies and tailor their merchandise to specific target markets. Not only a type of store, but also a method of retail operations- specializing in a given type of merchandise...
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This note was uploaded on 11/15/2010 for the course BMGT 350 taught by Professor Boyd during the Spring '08 term at Maryland.
- Spring '08