Retail Marketing

Frank Quix, van der Kind Rob

• Publisher: Routledge
• Year: 2019
• eBook ISBN: 9781000035926
• Topic: Business
• Subtopic: Business General
• Index: Business

In today's turbulent business environment, maintaining and optimizing retail strategies are of crucial importance. Retail Marketing is a complete guide to how retailing works in the non-food sector.

Focusing on operational applications of retailing, this textbook puts students on the inside track to success in the fast-moving retail industry. This new edition offers an integrated approah to internet and cross-channel retailing and adds new material on lost sales and market research in addition to coverig new research.

Retail Marketing is a comprehensive textbook for students in this area and provides the perfect overview for anyone interested in this vital industry.

PART 1
Description of the industry

1 Retail marketing

2 Goods retail: the classification criteria

3 The retail in international perspective

4 Trends in retail towards 2020

In part 1 we discuss the structure (and specifically the development of this structure) of the retail sector. In chapter 1 we discuss what exactly is to be understood under retail and which changes have occurred through the course of time in the interpretation of the concept of retail.

Chapter 2 discusses some frequently used classification criteria of retail. In chapter 3 we discuss the significance of retail for the European economy, in particular retail. The chapter is supplemented by a comparative analysis of retail in different countries. We also look at the differences between retail marketing and industrial marketing. In chapter 4 we discuss the retail trends towards 2020. Here we use a method to determine the potency of trend bundles.

1
Retail marketing

1.1 The concept of retailing

1.2 Retail

1.3 Changing function of retail

1.4 Consequences of the changing function of retail

1.5 Position of retail in economic theory

1.6 Marketing and retail marketing

The positioning of retail marketing is the central topic of this chapter. Before discussing the concepts of marketing and retail marketing, the definition of retail will be explained in detail. By defining retail, it is important to reflect on the changing function of retail over time. Furthermore, it is important to determine the position retail occupies in the economic theory.

1.1 The concept of retailing

Retailing

With retailing we mean ‘all business management activities that focus on direct sales of goods and services to consumers, provided that the goods and services are paid out of the net income of the consumers’.

Direct marketing

With direct marketing we imply the direct deliveries to the consumer. Companies that make use of brokering in order to deliver products to the consumer do not participate in retail marketing, but in trade marketing. Unilever does not deliver directly to the consumers and therefore participates in trade marketing. The Body Shop, which does deliver its products directly to the consumer, does retail marketing.

The expenditures should come from the net income, in other words: from the gross income following deductions of social security contributions and (income) tax. Compulsory pension insurance is not included in the retail expenditures. A private investment account, intended for a rainy day, is however included in the retail expenditures. The cost of a business trip (tax deductible) does not apply as retail expenditures, but the cost of a leisure trip does.

Retail expenditures

Retail expenditures can roughly be divided into:

• expenditure on services by consumers, such as banking services, insurance, medical services and leisure trips;
• expenditure on goods by consumers.

Retail expenditures

Since the sale of consumer goods to consumers takes place primarily through retail, the totality of that expenditure is also called retail expenditure.

The goods sector is contained within the retail sector, and thus the retail, the clearest in terms of structure. The reason is that retail businesses often only sell to individuals, while suppliers in the services sector – in addition to selling to individuals – are almost always selling to businesses as well. The distinction between private and business is not always used clearly. Selling to the so-called business sector is always much more important to banking companies and insurance companies than selling to individuals. Add to this that production and retailing often take place in the service environment within the same organisation (where the retail function is considered secondary to the production function), it becomes clear why service retail is a much less clearly demarcated area than the products sector.

Retailing

Although the concept of retailing implies much more than just goods retailing, the two concepts are often used interchangeably in practice. This is understandable due to the indistinctness described above. In this book, the retail sector of the Dutch economy will largely be explained from the merchandise sector, thus predominantly from goods retail. However, examples from the services sector will be used regularly. Not in the least because of the emergence of mixed forms. Goods retailers are more and more often including service packages in their product ranges, such as insurance, the possibility to draw money and to purchase mobile telephony and internet subscriptions. In late 2013, HEMA announced that it would be teaming up with health care insurer Menzis. The purpose of the cooperation was to create an affordable insurance in combination with 10% discount on all purchases at HEMA. Also other services were added by HEMA such as notary services and training and educational programs.

1.2 Retail

Retail

Defined in the simplest of terms, retail is ‘that part of the total economic activity that deals with the sale of goods directly to consumers’.

Economic textbooks usually classify the activity using the business chain. Retail will always be located at the bottom of the business chain and is therefore the final link in the process of supplying goods to the consumers (figure 1.1).

FIGURE 1.1 The business chain in general

Customers Suppliers

The immediate environment of retail within the business chain is formed by both the customers (the consumers) and the suppliers. The suppliers may be manufacturers of end products that supply directly to the retail. As the concentration and the size of the retailers increase, this will occur more and more often (figure 1.2). This may also be wholesale dealers, as was predominantly the case in the past: peddlers that tried to bridge the imbalances that originated between the large manufacturers and the small storekeepers.

FIGURE 1.2 The immediate retail environment

The problem with using the business chain – in order to explain the function of the retail – is that the supply process is generally very much product determined. You can draw up a business chain for the product ‘CD’s’, or for the product ‘books’. At the bottom of this business chain you will always find one or more forms of retail that have or will include the specific product in the product range. But does the description of retail as the final link in the production process also imply that retail has been described in all its complexity?

If that were true, the retail form ‘department stores’, which has both books and CD’s in the product range, would be quite comparable with the retail form ’record shop’ or ‘bookstore’ from its position in the market. As we all know, this does not really correspond with reality.

The description of retail as the final link in a production process that propels the goods from the manufacturer to the consumer is therefore incomplete. The conceptual understanding of retail as part of a single product oriented business chain dates from the time that retail was compared to ‘the art of distribution’. The old function of retail was ‘redistributing the flow of goods from the manufacturer to the consumer by time, by location and by quantity’. This redistribution was necessary since the industrial revolution caused the rise of mass production. Therefore production and consumption no longer coincided, in contrast to the previous period.

Redistribution in time

The redistribution in time involves the stock function of retail: bridging the period between completion of the production by the manufacturer and the date of purchase by the consumer, often caused by the occurrence of irregularities between demand and production (for example due to seasonal fluctuations).

Redistribution to location

The redistribution to location involves the geographic distribution function: the place of production is rarely the same as the place of consumption. The goods must therefore be delivered to the final place of ‘demand’.

Redistribution in quantity

The redistribution in quantity involves solving the differences between the ‘output quantities’ with the manufacturer and the ‘input quantities’ with the consumer. From a cost perspective, the manufacturer creates large quantities at the same time, while consumer demands only relate to one or a few products. The output quantity of the manufacturer should therefore be divided into a number of smaller quantities.

1.3 Changing function of retail

Goods producing process

The old distribution concept dates back to the period when the power in the business chain was still found with the manufacturers. In this concept, retail was considered to be part of a goods producing process. In fact, we are therefore dealing with an industrial approach to distribution. At the time, retail consisted primarily of product specialty stores: relatively small stores that specialise in a relatively small product range, with strong similarities in terms of product characteristics, like the hardware specialists, the timber trade, the grocer, the milk man, the greengrocer and the pharmacist.

Seller’s market
Buyer’s market

The change of function that has occurred over the last few decades, is due to the fact that the power has gradually shifted from the retail suppliers (the manufacturers of consumer products) to retail customers (the consumers). With the transition from a seller’s market to a buyer’s market an oversupply is created which is offered to increasingly more discerning consumers using a variety of outlet channels. In such a situation it is no longer the manufacturer that determines what is offered when and through which channels, it is the consumer who determines what, when and through which stores he wants to buy. It is the wishes of the consumer and how the retailer responds to these wishes that currently determine the success of retail businesses, and no longer the degree of efficiency in the distribution of products and/or services. In fact, this change in function corresponds with the general shift from an industrial economy to a service economy: retail is no longer a box mover for the industry, but a service provider for the consumer.

Demand supply

The essence of the change is that the function no longer primarily consists of the redistribution of a production flow from current sections of the business chain, but much more from meeting the demand of the underlying sections of the business chain: the consumers. Distribution aspects should indeed be implemented in this new function of retail (supply on demand),...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Introduction
• Part 1 Description of the industry
• Part 2 The market strategic process in retail
• Part 3 External analysis
• Part 4 Internal analysis
• Part 5 Translation from analysis to strategy
• Part 6 Internal marketing mix
• Part 7 Control
• Literature
• Index