Retail Marketing Introduction and overview Today s shoppers want the total customer experience: superior solutions to their needs, respect, an emotional connection, fair prices and convenience. Offering four out of five pillars isn t enough; a retailer must offer them all (Berry 2001)
Marketing: integrating the retailing effort (McGoldrick 2000)
Company Top 10 global retailers Country of Origin Rank 2006 Retail Sales (US$mil) CAGR 2001-2006 Wal-Mart US 1 345.0 11.1 percent Carrefour France 2 97.9 2.3 percent The Home Depot, Inc US 3 90.8 11.1 percent Tesco UK 4 80.0 12.5 percent Metro Germany 5 74.9 4 percent The Kroger Co. US 6 66.1 5.7 percent Target Corporation US 7 59.5 8.3 percent Costco Wholesale Corporation US 8 59.0 11.6 percent Sears Holdings Corporation US 9 53.0 8 percent Schwarz Unternehmens Treuhand KG Germany 10 52.4 12 percent ESSENTIAL READING http://www.interbrand.com/images/studies/ 85_Interbrand_Best_Retail_2009.pdf
Graduates and retailing Managerial skills and competences are critical determinants of a retailer s ability to operate successfully in a highly turbulent environment (Dawson 1995) The retail sector has some of the most innovative and successful companies in the world yet it is only recently that retailing has become recognised as a true profession (Jennison 1997)
Could this be you? Guess who? Area Manager Are you a born leader? Do you have the drive and strength of character to help shape the global success story? As we expand throughout Europe, North America and Australia, our reputation is growing, but our guiding principles remain constant. The most important element in achieving this is having the right people, which is why we attach such importance to our employees and their development. We're looking for the best individuals, the brightest of their generation; we expect a great deal from them and offer something very special in return. We offer an individual training plan that's designed especially for you, a market leading package and fantastic prospects: 40000 plus a fully expensed Audi A4 rising to 63500 plus pension, private healthcare, life assurance, five weeks holiday and opportunity for directorship within five years. Opportunities nationwide.
Retailing defined The sale of goods and services to the ultimate consumer for personal, family or household use (Cox and Brittain) The sale of articles either individually or in small numbers, directly to the consumer (Freathy) Any business that directs its marketing effort towards satisfying the final consumer based upon the organisation of selling goods and services as a means of distribution (Gilbert) The sale of goods and services to consumers for their own use (McGoldrick)
Scope and purpose of retail marketing Understand customer values Create a retail offer that satisfies these values Communicate these values to the target audience Create a retail format and experience that delivers these values Manage the process to ensure maximisation of customer value
The value equation in retailing Higher prices = more money Long queues = more time Poor layout = more stress Unknown brands = more risk
Key components of retailing Culture and retail customers Retail locations and outlets Shopkeepers/retail managers Product sourcing and distribution Business relationships Merchandising and selling Context, social interaction, psychosocial meaning (Aldi/Lidl in UK, Tesco in Thailand, IKEA in China) Locations and formats, demographic change, shopping motivation (destination, social, leisure) Business Managers, sole traders, 24 hour trading, 600 staff, 100 million turnover store Selection and assembly of merchandise, operational efficiency and competitive advantage eg local sourcing Lean and agile supply chains as SCA (Zara) Range, assortment, presentation and display
Driving retail success: The Retail Growth Cycle (McGoldrick 2000)
Retail evolution retail life cycle Based on McGoldrick Tesco set to enter this Market? Grocery superstore Sales Market share Clothing superstore Internet grocery Furniture hypermarket DIY superstore Variety store Dept store Introduction Growth Maturity Decline
Implications of retail life cycle Assess value of long term investment in expensive property assets (buy or rent decisions, 2005 Tesco 600 million sale and leaseback deal) Shorter timescale for ROI Multiple format operators can use portfolio analysis to assess position of various assets which might lead to renewal or exit prior to sharp decline in format
The wheel of retailing Somerfield Aldi Tesco
Aldi: trading up phase? Quality Food Awards 2012 Bigger Brighter Better stores Have you ever paid so little for such a lot? More exotic merchandise
Types of shopping trips ESSENTIAL PURPOSIVE EXPERIENTIAL CONVENIENCE EXPERIMENTAL Replenishment, food, Tesco Major item, retail park, Comet Gift, Shopping mall, Borders Top up, ready meal, Alldays, Co-op Organic, fun, on-line, farm shop
Characteristics of small store formats (based on Dawson and Burt) FORMAT CUSTOMER NEEDS EXAMPLE Discount Low prices Aldi, Lidl Convenience Time saving Alldays, Shell Specialist Choice Oddbins, TieRack Style Design, originality Benetton, Bally Branded Reputation, attachment Estee Lauder, YSL Service Added value Mr Minit, Timpsons Locality specific Impulse/emotion Tourist, National Trust
Variability in retail concepts and transactions (Based on Burt and Sparks) Build transaction and information links Clubcard, personal finance Grow infrastructure links Operational links for customers Personal contact Extra, Metro formats, Tesco.com Every little helps, One in front Service desks, service areas Expertise links Baby club, wine club, 0800 Emotional links Financial links Availability links Computers for schools, low brand prices, healthy eating Personal finance products Direct, clothing catalogue, specialist magazines
Retail trends Increase in large food and non-food superstores New retail centres Growth of sales and floor space Extension of product ranges in superstores Large retailers taking control of supply chain Sophisticated technologies Greater awareness of retailer activity Bricks, bricks and clicks, clicks only
Shift in balance of power (McGoldrick 2000) Of the top 25 European retail brands 60% offer private label brands that contribute between 30% and 100% of revenues Interbrand (2009)
Retailing challenges Over supply of retail floor space Turbulence in retail environment Brand and brand extensions Hyper-competition Discounting E-tail (growth/share/profitability). Do you have to be on-line to survive? Ownership (private/public)
Week 1: summary Marketing is central to integrating the retailing effort Understand the value equation for different segments of shoppers Understand what benefits customers seek from their shopping trip Build lasting relationships with customers on different transactional levels