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Chapter

ch 2 part 1


Department
Retail Management
Course Code
RMG 200
Professor
Brent Barr

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Ch: 2 Types of Retailers
TRENDS IN THE RETAIL INDUSTRY
Some of the most important changes involve:
Changing consumer preferences
Increasing industry concentration
Globalization of retail
The use of multiple channels to interact with customers
Increasing competition in the Canadian marketplace
The growing importance of technology to retail success
The blurring of retail channels
Retail branding
Growing Diversity of Retail Formats
The initial category specialists in toys, consumer electronics, and home improvement supplies have been
joined by a host of new specialists including Sport Chek, Bed Bath and Beyond, PETsMART
Grocery stores such as Loblaws are adding pharmacies and clothing and home décor products to expand their
retail mix
Many new types of retailers coexist with traditional retailers
Increasing Industry Concentration
Number of different types of retailers has grown, the number of competitors within each format is decreasing
The Canadian marketplace is powered by a small number of large retailers who dominate in their specific retail
category (eg. Walmart, Shoppers Drug Mart, Best Buy, Future Shop, Costco)
Trend toward a blurring of retail channels will continue (eg. Drugstores move into high end cosmetics and
grocery stores invaded pharmacy business)
RETAILER CHARACTERISTICS
A. Price-Cost Trade Off
The difference between the retail mixes of department and discount stores illustrates the trade-off retailers
make between the price and assortment of merchandise they sell and the services they offer to their customers
B. Type of Merchandise
North American Industry Classification System (NAICS): Classification of retail firms into a hierarchical set of
six digit codes based on the types of products and services they produce and sell
o First two digits firm’s sector
o Remain four digits various subsectors
C. Variety and Assortment
Even if retailers sell the same type of merchandise, they might not compete directly because they appeal to
different customer needs and thus offer different assortments and varieties of merchandise and services
Variety (breadth of merchandise): the number of different merchandise categories within a store or
department (eg. Shoes, appliances, apparel, and cosmetics)
Assortment (depth of merchandise/stock): the number of SKUs within a merchandise category
(eg. Running shoes, dress shoes, children’s shoes, walking shoes)
SKU (stock keeping unit): the smallest unit available for keeping inventory control. In soft goods merchandise,
a SKU usually means size, colour, and style
D. Customer Services
Eg. Bicycle stores offer assistance in selecting appropriate bicycle, adjusting bicycles to fit individual
Eg. Accepting credit and debit payment, provide parking, being open in convenient hours
E. Cost of Offering Breadth and Depth of Merchandise and Services
Stocking a deep assortment is appealing to customers but costly for retailers
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