amazon

MKT 3210 Ch. 2 Types of Retailers

1

TYPES OF RETAILERS

MKT 3210 Instructor: Dr. Pilsik Choi

Criteria for Classifying Retailers

■ Type of merchandise

■ Variety and assortment • Variety (breadth): # of merchandise

categories • Assortment (depth): # of different items in

a category

■ Level of customer service

■ Price of merchandise

MKT 3210 Ch. 2 Types of Retailers

2

Types of Store-Based Retailers

■ Food retailers • Conventional

supermarkets • Supercenters • Hypermarkets • Warehouse clubs • Convenience stores • Online grocery

retailers

■ General merchandise retailers • Department stores • Full-line discount

stores • Category

specialists • Specialty stores • Drugstores • Extreme-value

retailers • Off-price retailers

Supermarkets and Convenience Stores

■ Conventional supermarkets • Examples: Save-A-Lot, ALDI, Kroger • Large, self-service food stores offering

groceries, meat, and produce with limited non-food items

■ Convenience stores • Example: 7-Eleven • Limited variety and assortment at a

convenient location  higher prices • Mostly part of gas station franchises

MKT 3210 Ch. 2 Types of Retailers

3

Big-Box Food Retailers ■ Supercenters

• Examples: Walmart Supercenters, Target Supercenters

• Wide variety of food and non-food merchandise

• One-stop shopping experience

■ Hypermarkets • Example: Carrefour

• Similar to supercenters, but more emphasis on perishable food items

■ Warehouse clubs • Examples: Costco, Sam’s Club, BJ’s

• Limited assortment of food and general merchandise with little service

• Bulking packaging with lower per-unit costs

Department Stores ■ Three tiers

• High-end: Bloomingdale’s, Saks Fifth Avenue, Nordstrom, Neiman Marcus

• Middle: Macy’s, Dillards • Low-end: JCPenney, Kohl’s

■ Broad variety and deep assortment with some customer service

■ Lost market share due to: • Discount stores on price and convenience • Amazon effect

■ Responses • Increasing exclusive merchandise, increasing private-

label merchandise, and expanding omnichannel and social media presence

MKT 3210 Ch. 2 Types of Retailers

4

Discount Stores and Specialty Stores

■ Full-line discount stores • Examples: Walmart (EDLP), Target (fashionable

merchandise) • Broad variety, limited service, and low prices • Conversion to supercenters • Competition from category specialists and

extreme-value retailers

■ Specialty stores • Examples: A&F, Forever 21, Crate & Barrel,

Tiffany, Sephora, Apple • Limited number of complementary categories

with a high level of service

Category Specialists (Killers)

■ Examples: Best Buy, Staples, Bed Bath & Beyond, Home Depot

■ Discount stores with a narrow variety but deep assortment

■ Mostly self-service, but salespeople ready on the floor

■ Strong buying power to negotiate low prices and assured supply

■ Intense competition  lower prices  lower profits  focus on cost reduction, more service

MKT 3210 Ch. 2 Types of Retailers

5

Extreme-Value Retailers ■ Examples: Dollar General, Dollar Tree, Family

Dollar ■ Small discount stores with a board variety but

shallow assortment ■ Generally target low-income families with lower

prices ■ Low-cost operation

• Low-cost locations • Inexpensive interior • Limited service

■ Offering more perishable food items  competition to Walmart

Off-Price Retailers

■ Examples: TJ Maxx, Marshalls, HomeGoods, Big Lots

■ Inconsistent assortment of brand-name, fashion- oriented soft goods at significant discounts

■ Opportunistic buying • Excess inventory, closeouts, irregulars (with minor

mistakes)

■ Outlet stores • Owned by manufacturers (factory outlets) or by

department or specialty stores

• More revenues and more control to manufacturers

• Better store image for department or specialty stores

MKT 3210 Ch. 2 Types of Retailers

6

Types of Retail Ownership

■ Independent, single-store establishments • Owner-managed stores • Wholesale-sponsored voluntary cooperative

group (e.g., IGA, Ace Hardware, NAPA)

■ Corporate retail chains • Multiple retail units under common

ownership • Some parent companies own multiple retail

store brands.

■ Franchising • Popular in restaurant business

Important Issues in Retailing ■ Amazon effect

• Increasing number of struggling malls ■ Showrooming and webrooming

• Retailers must provide great omnichannel shopping experience.

■ Faster delivery • Click-and-collect • Same-day delivery

■ Adoption of new technologies • Well adopted: retargeting, mobile pay (digital

wallets), data analytics • Experimenting: AI, AR, VR