International retailing

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International RetailingInternational Retailing
BYBY
NISHANTH HNISHANTH H

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The Role of RetailingThe Role of Retailing
► Retailing:Retailing:
 An important part of many marketing channels,An important part of many marketing channels,
includes all the activities involved in sellingincludes all the activities involved in selling
products and services to the ultimate, or final,products and services to the ultimate, or final,
consumer.consumer.
► Retail Sales:Retail Sales:
 Sales to final consumers; wholesale sales areSales to final consumers; wholesale sales are
those to other businesses that in turn resell thethose to other businesses that in turn resell the
product or service, or use it in running theirproduct or service, or use it in running their
own businesses.own businesses.

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Economic ImportanceEconomic Importance
Sales Profits
Company ($ millions) ($ millions)
Employees
1. Wal-Mart 219,812 6,671 1,383,000
2. Home Depot 53,553 3,044 256,300
3. Kroger 50,098 1,043 288,000
4. Sears Roebuck 41,078 735 310,000
5. Target 39,888 1,368 223,550
6. Albertson’s 37,931 501 220,000
7. Kmart 36,910 (95) 240,525
8. Safeway 34,301 1,254 193,000
9. JC Penny 32,004 98 270,000
10. Walgreen 24,623 886 106,000In the U.S., 3 million retailers generate
$2.5 trillion in revenues annually!

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Retailers’ UniquenessRetailers’ Uniqueness
in the Channelin the Channel
Provide
Product
Assortment
Emphasize
Store
Atmospherics
Sell Smaller
Quantities of Product
More Frequently

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Types of RetailersTypes of Retailers
► IndependentIndependent
Retailers:Retailers:
 Own and operateOwn and operate
only one retailonly one retail
outlet.outlet.
► Chains:Chains:
 A retail chain ownsA retail chain owns
and operatesand operates
multiple retailmultiple retail
outlets.outlets.

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►Franchising:Franchising:
 Retail franchising is a form of chainRetail franchising is a form of chain
ownership in which a franchisee pays theownership in which a franchisee pays the
franchisor (parent company) fees or royaltiesfranchisor (parent company) fees or royalties
and agrees to run the franchise byand agrees to run the franchise by
prescribed norms, in exchange for use of theprescribed norms, in exchange for use of the
franchisor’s name.franchisor’s name.
►McDonald’sMcDonald’s
►Jiffy LubeJiffy Lube
►Holiday InnHoliday Inn
►Franchising:Franchising:
 Retail franchising is a form of chainRetail franchising is a form of chain
ownership in which a franchisee pays theownership in which a franchisee pays the
franchisor (parent company) fees or royaltiesfranchisor (parent company) fees or royalties
and agrees to run the franchise byand agrees to run the franchise by
prescribed norms, in exchange for use of theprescribed norms, in exchange for use of the
franchisor’s name.franchisor’s name.
►McDonald’sMcDonald’s
►Jiffy LubeJiffy Lube
►Holiday InnHoliday Inn
There are 3,000 franchise companies
in the U.S. that operate 558,000
separate establishments!

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Top 10 InternationalTop 10 International
Retail FranchisesRetail Franchises
1.1. McDonald’sMcDonald’s
2.2. Great WrapsGreat Wraps
3.3. SubwaySubway
4.4. Kentucky Fried ChickenKentucky Fried Chicken
5.5. Kumon Math and Reading CentersKumon Math and Reading Centers
6.6. Meineke Discount Muffler ShopsMeineke Discount Muffler Shops
7.7. TCBY TreatsTCBY Treats
8.8. Thrifty Car RentalThrifty Car Rental
9.9. Blimpie Subs & SaladsBlimpie Subs & Salads
10.10. Mail Boxes Etc.Mail Boxes Etc.

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► Leased Departments:Leased Departments:
 Leased departments are sections in a retailLeased departments are sections in a retail
store that the owner rents to a secondstore that the owner rents to a second
party.party.
► CooperativesCooperatives
► Retail Cooperatives:Retail Cooperatives:
 Independent retailers banding together toIndependent retailers banding together to
counter chain store competition.counter chain store competition.

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International Retailing DefinedInternational Retailing Defined
All the activities involved in sellingAll the activities involved in selling
products and services to finalproducts and services to final
international consumersinternational consumers
for their personal consumption.for their personal consumption.

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Retail Formats: Variations in Different MarketsRetail Formats: Variations in Different Markets
►Specialty StoresSpecialty Stores
 Retailers offering a narrow product line and wideRetailers offering a narrow product line and wide
assortmentassortment
- Virgin Records (music products)Virgin Records (music products)
- Mango (youth fashion)Mango (youth fashion)
►Specialized MarketsSpecialized Markets
 Markets that house stores specializing in a particularMarkets that house stores specializing in a particular
product categoryproduct category
- Jade market (Hong Kong)Jade market (Hong Kong)
- Spice market (Istanbul)Spice market (Istanbul)

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►Department StoresDepartment Stores
 Offer a broad variety of goods and wide assortmentsOffer a broad variety of goods and wide assortments
 U.S. and Canada: recent substantial lossesU.S. and Canada: recent substantial losses
 Europe: expansion of national chains throughout theEurope: expansion of national chains throughout the
European UnionEuropean Union
 Asia: on the declineAsia: on the decline

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►General Merchandise DiscountGeneral Merchandise Discount
StoresStores
 Sell high volumes of merchandiseSell high volumes of merchandise
 Offer limited serviceOffer limited service
 Charge lower pricesCharge lower prices
 Types:Types:
- All-purpose: offer wide variety ofAll-purpose: offer wide variety of
merchandise and limited depthmerchandise and limited depth
- Category specialists (category killers): carryCategory specialists (category killers): carry
a narrow variety of merchandise and offer aa narrow variety of merchandise and offer a
wide assortmentwide assortment

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►Off-Price RetailersOff-Price Retailers
 Sell brand name and designer merchandise at belowSell brand name and designer merchandise at below
regular retail pricesregular retail prices
 Overruns, irregular products, previous seasons’Overruns, irregular products, previous seasons’
productsproducts
 Examples:Examples:
- Factory outlet storesFactory outlet stores
- Close-out retailers (broad, inconsistentClose-out retailers (broad, inconsistent
assortments)assortments)
- Single-price retailers (all products for theSingle-price retailers (all products for the
same price)same price)

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►Catalog ShowroomsCatalog Showrooms
 Offer high-turnover, brand name goods at discount pricesOffer high-turnover, brand name goods at discount prices
 Internationally, however, goods sold through this venue tendInternationally, however, goods sold through this venue tend
not to be brand name, but, rather, goods that have not sold thenot to be brand name, but, rather, goods that have not sold the
last season through the cataloglast season through the catalog

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International Food RetailersInternational Food Retailers
►ConventionalConventional
SupermarketsSupermarkets
 Self-service retailers withSelf-service retailers with
annual sales higher thanannual sales higher than
$2 million and less than$2 million and less than
20,000 square feet of20,000 square feet of
store spacestore space

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International Food RetailersInternational Food Retailers
►SuperstoresSuperstores
 Combination stores (food and drug)Combination stores (food and drug)
 Hypermarkets – combine supermarket, discount, andHypermarkets – combine supermarket, discount, and
warehouse retailingwarehouse retailing

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Food RetailersFood Retailers
►Warehouse Clubs (Wholesale Clubs)Warehouse Clubs (Wholesale Clubs)
 Require members to pay an annual feeRequire members to pay an annual fee
 Operate in low-overhead, warehouse-type facilitiesOperate in low-overhead, warehouse-type facilities
 Offer limited lines of brand-name and dealer-brandOffer limited lines of brand-name and dealer-brand
merchandise at a substantial discountmerchandise at a substantial discount

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Food RetailersFood Retailers
►Convenience StoreConvenience Store
 Small residential retailers or retail chains consisting of smallSmall residential retailers or retail chains consisting of small
neighborhood storesneighborhood stores
 Open long hoursOpen long hours
 Carry limited lines of higher-turnover necessitiesCarry limited lines of higher-turnover necessities
 One-stop shoppingOne-stop shopping

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Nonstore RetailingNonstore Retailing
►Internet RetailingInternet Retailing
 Also known as interactive home shopping or electronicAlso known as interactive home shopping or electronic
retailingretailing
 Includes both new dot-com companies and traditionalIncludes both new dot-com companies and traditional
retailers attempting additional market penetrationretailers attempting additional market penetration
 Increase company diversificationIncrease company diversification
►Vending MachinesVending Machines
 Increasingly popularIncreasingly popular

Extent of use varies from country to countryExtent of use varies from country to country

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►Television Home ShoppingTelevision Home Shopping
 A venue for selling merchandise to consumers in theirA venue for selling merchandise to consumers in their
homes using cable channelshomes using cable channels
 Examples: infomercials and direct response advertisingExamples: infomercials and direct response advertising
 Popular in North America and Europe, and becomingPopular in North America and Europe, and becoming
increasingly popular in Asian marketsincreasingly popular in Asian markets

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►Catalog Retailing and Direct MailCatalog Retailing and Direct Mail
RetailingRetailing
 Venues for selling merchandise to consumers usingVenues for selling merchandise to consumers using
catalogs and other types of direct mailcatalogs and other types of direct mail
 It allows for the international expansion of retailersIt allows for the international expansion of retailers
 Must be adapted to local market needs and practicesMust be adapted to local market needs and practices

Obstacles in developing countries:Obstacles in developing countries:
- deficient telephone servicedeficient telephone service
- unreliable mail serviceunreliable mail service
- low incomelow income
- unavailability of credit cardsunavailability of credit cards

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►Direct SellingDirect Selling
 A retailing venue whereby a salesperson, typically anA retailing venue whereby a salesperson, typically an
independent distributor, contacts a consumer,independent distributor, contacts a consumer,
demonstrates product use and benefits, takes ordersdemonstrates product use and benefits, takes orders
and delivers the merchandiseand delivers the merchandise
 Direct selling firms are most active in the growth marketsDirect selling firms are most active in the growth markets
(in emerging markets, in particular)(in emerging markets, in particular)

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Network MarketingNetwork Marketing
►Variation on direct sellingVariation on direct selling
►Involves signing up sales representatives toInvolves signing up sales representatives to
go into business for themselves withgo into business for themselves with
minimal start-up capital and sell moreminimal start-up capital and sell more
"distributorships" and merchandise"distributorships" and merchandise
►Network marketing is growing rapidly,Network marketing is growing rapidly,
especially in emerging marketsespecially in emerging markets

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Developing Retailing StrategyDeveloping Retailing Strategy

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Uncontrollable FactorsUncontrollable Factors
►ConsumersConsumers
►CompetitionCompetition
►Economic ConditionsEconomic Conditions
►SeasonalitySeasonality

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Controllable FactorsControllable Factors
► LocationLocation
 Central Business DistrictCentral Business District
(CBD)(CBD)
 Strip CentersStrip Centers
 Shopping MallsShopping Malls
 Freestanding SitesFreestanding Sites
► Goods and ServicesGoods and Services
► PricingPricing
► Marketing CommunicationsMarketing Communications

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Types of Strategy MixTypes of Strategy Mix
► Specialty StoresSpecialty Stores
► Department StoresDepartment Stores
► Convenience StoresConvenience Stores
► Margin and Turnover StrategyMargin and Turnover Strategy
MixesMixes
► Gross MarginGross Margin
► Inventory TurnoverInventory Turnover
► Specialty StoresSpecialty Stores
► Department StoresDepartment Stores
► Convenience StoresConvenience Stores
► Margin and Turnover StrategyMargin and Turnover Strategy
MixesMixes
► Gross MarginGross Margin
► Inventory TurnoverInventory Turnover

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Ethical and Legal IssuesEthical and Legal Issues
in Retailingin Retailing
► Consumer FraudConsumer Fraud
► Supplier Labor PracticesSupplier Labor Practices
► Retail TheftRetail Theft
► Slotting AllowancesSlotting Allowances
► Use of CustomerUse of Customer
InformationInformation
► Ecological ConsiderationsEcological Considerations
► Consumer FraudConsumer Fraud
► Supplier Labor PracticesSupplier Labor Practices
► Retail TheftRetail Theft
► Slotting AllowancesSlotting Allowances
► Use of CustomerUse of Customer
InformationInformation
► Ecological ConsiderationsEcological Considerations

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► International Retail Companies have several inherent challenges thatInternational Retail Companies have several inherent challenges that
they face in their line of business. Product innovation and product mixthey face in their line of business. Product innovation and product mix
happen to be the biggest challenges for these companies both athappen to be the biggest challenges for these companies both at
global as well as country specific domestic levels. The survival andglobal as well as country specific domestic levels. The survival and
growth of the brand is directly dependent upon these challenges. Thegrowth of the brand is directly dependent upon these challenges. The
global retailers have to be tuned in to the international as well asglobal retailers have to be tuned in to the international as well as
domestic specific fashion in each of the countries and get their productdomestic specific fashion in each of the countries and get their product
mix right for each of the markets. Service quality and merchandisingmix right for each of the markets. Service quality and merchandising
methods too, play an important role in the brand visibility andmethods too, play an important role in the brand visibility and
reputation. Pricing of products is yet another challenge faced by thereputation. Pricing of products is yet another challenge faced by the
brands. Developing and emerging markets are highly price sensitive.brands. Developing and emerging markets are highly price sensitive.
When the international brands are trying to make an entry into the newWhen the international brands are trying to make an entry into the new
markets, they have got to have an entry strategy that takes intomarkets, they have got to have an entry strategy that takes into
account the price sensitivity and profitability as well.account the price sensitivity and profitability as well.

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► Procurement and Supplier reliability as well as quality marks one of theProcurement and Supplier reliability as well as quality marks one of the
challenges that these companies face as they happen to sourcechallenges that these companies face as they happen to source
materials and products from several countries. Quality and reliability asmaterials and products from several countries. Quality and reliability as
well as in time supplies and logistics is always a challenge that canwell as in time supplies and logistics is always a challenge that can
make or break the business which is highly seasonal in each country.make or break the business which is highly seasonal in each country.
In the recent years we have seen the emergence of ethical practicesIn the recent years we have seen the emergence of ethical practices
playing a vital role in the procurement policies of these internationalplaying a vital role in the procurement policies of these international
companies. The companies have got to ensure that their sourcingcompanies. The companies have got to ensure that their sourcing
partners do not employ child labour or employ unethical methods inpartners do not employ child labour or employ unethical methods in
manufacturing the products and as principle buyers these companiesmanufacturing the products and as principle buyers these companies
are held responsible. Ethical buying has gained global visibility andare held responsible. Ethical buying has gained global visibility and
these companies have had to be watchful to ensure compliance or riskthese companies have had to be watchful to ensure compliance or risk
unwanted publicity and public outcry.unwanted publicity and public outcry.

International retailing

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