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Retail Marketing Summary
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Media Gallery - Retail Marketing and StrategyCHAPTER 1
Clip 1.1: Introduction to the Retail Industry
What is retail?
All activities from companies and organizations that focus on the direct delivery of goods and
information through all available channels to consumers, where the goods and services are paid out
of the net income of consumers.
Direct delivery is important! This highlights the difference between wholesale and retail. With
wholesale, there is one step between the customer and the manufacturer.
Example of direct sales:
Goods and services are sold directly to the consumer without the intervention of an intermediary.
For example: Albert Heijn and Amazon are selling their products directly to the end user.
When Unilever wants to sell products, most of the time they are using companies like AH or
Amazon to sell their products… and sometimes they sell it directly to the end user.
Brands are going retail:
Unilever is not only a manufacturer anymore but also a retailer (they are also selling directly to the
end user).
More examples of brands that are going retail:
Lego opening their own stores
Vans selling their shoes directly to the end user in physical stores (besides online)
Nike’s house of innovation: they sell directly to consumers and give opportunity to design
their own shoes.
Car industry: with restaurant and bar where they showcase their product but not sell their product.
Retail is not only goods. It is GOODS, SERVICES and INFORMATION!
Retail expenditures on services by consumers
o Financial services (bank giving you a loan = also retail), communications services
(selling networks), travel and entertainment
Retail expenditures on goods by consumers
o Including goods which can be consumed immediately (restaurants are considered to
be retailers)
Net income of consumers:
,H&M: they are many different brands under H&M.
>>
What is then retail trade?
That part of the total economic activity that deals with the sales of goods and services directly to
consumers.
Different forms of retail
Online retail
Trade on open market
Door to door sale
House parties
Business chain
Retail is almost the last step (redistributing products to the end user)
Direct retail environment
Evaluation of distributer
,Why is retail still existing? If everybody can sell products to the consumer?
Transaction cost theory: retail can only exist when the costs via the retailer is cheaper than
doing this directly. Not only costs, but also stock risks (risk = different kind of costs).
Clip 1.2: Changing function of Retail
Retail has significantly changed over time and this will certainly keep on changing.
- Due to the industrial revolution, production and consumption no longer took place at the
same time and place. > focus of retail was on distribution.
>> Re-allocation of the flow of goods:
Time
o Retailers had a stock function: bridge the period between completion of production
of the manufacturer and the moment of purchase by the consumer. Products were
waiting to be purchased and stocked by the retailer.
Place
o Place of production (fabric) is barely the same and the place of consumption (stores).
Quantity
o Manufacturer are used to produce large quantities of products. It is the function of
the retailer to enable consumers to buy the quantities that they want (most of the
time, just one).
The traditional retail functions
Part of the goods producing process
o Manufacturers produce products and they were pushed to the business chain to the
end customers. The power was in hands of the manufacturers since they decide
what is in store and not the retailer itself. Retailers did not have a lot of creativity,
but luckily this changed:
Retailers no longer only focus on distribution anymore, but rather meeting
customer demands. Main focus is to component a demand-related product/
assortment. Retail therefore becomes more challenging and also more fun.
Having knowledge about products and distribution is not enough anymore
nowadays.
Product push
Seller’s market
The current retail functions:
Shifting power towards consumers: buyer’s market
Compose range of demand-related products that meet consumers needs
Demand satisfying process
Demand pulls through the business chain with regards to our needs and wishes (when we
want to have the products, etc.)
Old business chain:
, Retail is represented in every different column. This is because retail used to have a very specialized
assortment in the past. Being a customer and wanted to remodel your house for example, was quite
challenging as you needed to visited all these kinds of retailers (time consuming and inconvenient).
New business chain:
The customer is on top. Since the assortment of the retailer is much broader now than it was in the
past, the main challenge nowadays for the retailer is to compose their assortment that meets the
demand of your customers.
Forwards integration:
A manufacturer (seller) takes over a part of the retailer. For example, when a manufacturer opens
their own store (Beneton, Levi’s, etc.)
Example of The Body Shop: started their own shop and now it is in hands of Unilever and a
Spanish manufacturer.
Backwards integration:
Retailer takes over part of the function of the manufacturer. For example, IKEA: they bought a forest
to get better control of their supply chain. IKEA moved back towards raw materials and further away
from the final customer in the value chain, and therefore this is a good example of backwards
integration.
It is more efficient because they have more control over the supply chain, but it is also more cost
effective and efficient from a marketing perspective.
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