Place
Marketing
Retail and wholesale
• Retailing is a way of selling usually smaller volume to the final
end consumer – i.e. doing „small sales“. In the retail sector,
there are many different forms of store types, such as the sale
rack, self-service stores, supermarkets, hypermarkets,
department stores, outlets etc.
• The opposite to a retail is wholesaler who represents the sale
and distribution of goods on a large scale, often just to retail
sales network and NOT the final end consumer. It may be a
direct trade between producers and other traders or trade
between specialty shops of particular assortment and retailers.
Wholesale sales units are mostly supplying other wholesale or
retail network.
Retailing
• Retail environment has a high degree of competition
(depending on assortment) and a significant downward
pressure on consumer prices.
• Depending on the field and assortment it may not be decided
purely by price, but also by other factors (luxury, prestige,
brand, current trends, different bonuses, competitions and
previous positive experiences, etc.).
Wholesale
• It is largely a trade between businesses (business to business,
B2B).
• Wholesale prices are always lower than retail prices, which are
increased by the appropriate retail margin. This margin must cover
transportation to stores, fixed costs for a place in shops, storage,
electricity, salaries of clerks, in some cases funds for sales
promotion (advertising).
• The partnership of wholesale supplier and retail purchaser is
advantageous for both parties, because the supplier gets specific
number of sales of its products (easy to plan production). The
concern that the goods in question are sold is taken over by the
buyer, who buys it at wholesale prices and aims to sell at retail
prices thus generating revenue.
Wholesale
• Wholesale units usually have the form of large warehouses, storage
of raw materials, transshipment of goods and materials,
supplemented by any necessary administrative and operational
background.
• They are sometimes supplemented by a retail store intended for the
local population and employees of the company. Some wholesale
equipment may also be linked to commercial packaging premises,
devices designed for drying vegetables, fruit ripening (bananas),
nuts roaster, additional adjusting of goods, etc., including a number
of additional technical services (e.g. transport, logistics, handling,
maintenance, etc.).
Supply Chain
Material Parts Producer Retailer Consumer
Plastic Intel processor CZC David
Aluminium USB ports Lenovo Okay James
Copper Microsoft software Alza Melanie
Silicon Seagate HDD Datart Petr
Supplier network Distribution channels
Distribution channels
DIRECT DISTRIBUTION – own stores, door-to-door, direct marketing
INDIRECT DISTRIBUTION – one or more intermediator
PRODUCER CUSTOMER
PRODUCER RETAIL CUSTOMER
PRODUCER WHOLESALE CUSTOMER
PRODUCER WHOLESALE RETAIL CUSTOMER
PRODUCER WHOLESALE
MIDDLEMAN OR
BROKER
RETAIL CUSTOMER
What are advantages and
disadvantages of the two?
Direct distribution
• Direct contact with the
customer.
• Feedback and possibility for
individual approach.
• No margin for intermediator.
• Need for establishing many
contacts.
• Storage and logistic cost.
• Hard to cover whole market.
Indirect distribution
• Less processes for producer.
• Intermediary experience and
contacts.
• Lower costs for storage and
supplies.
• Producer is partly loosing control
over the distribution.
• Information barrier between
producer and customer.
• Need for motivation system for
intermediaries
• Dependency on retail and
wholesale marketing strategy.
• Transaction risks.
PUSH Strategy
Producent Wholesaler Retail Customer
Communication
Distribution
Strategy PULL
Communication
Distribution
Producent Wholesaler Retail Customer
Distribution strategies
Intensive distribution
• sales through as many stores as possible
• in order to make the product commercially available
• FMCG – fast moving consumer goods
Frequent consumption items that are cheap and expensive
purchased habitually or goods of an emergency character
Exclusive distribution
sales of products through a very limited number of retailers
expensive, luxury goods,
it has its psychological justification, because it promotes the exceptional
nature of the goods
Selective distribution
the manufacturer cooperates with a larger number of distributors
who expect a good partnership relationship and above average
sales effort
occasional consumer goods that are bought after careful comparison
clothing, footwear, consumer electronics
Typology of retail stores
• There are 7 main types of retailers which can be defined by the size of their
business and the way they in which they sell their products:
1. Department Store
2. Supermarkets / Hypermarkets
3. Warehouse retailers
4. Speciality retailers
5. Speciality warehouse
6. Convenienec store
7. Discount retailer
8. E-tail
1. Department store
• This type of retailer is often the most complex offering a
wide range of products and can appear as a collection of
smaller retail stores managed by one company.
• The department store retailers offer products at various
pricing levels.
• This type of retailer adds high levels of customer service by
adding convenience enabling a large variety of products to
be purchased from one retailer.
1. Department store
• Range of products: wide, deep including food, restaurant
(refreshment), "comprehensive shopping under one roof„
• Prices: medium and higher at medium and higher quality
goods
• Localization: city centers, regional shopping malls
• Trends: stagnation due to the market saturation
2. Supermarket/Hypermarket
• Generally this type of retailer concentrates in supplying a
range of food and beverage products.
• However many have now diversified and supply products
from the home, fashion and electrical products markets too.
• Supermarkets and hypermarkets have significant buying
power and therefore often retail goods with reasonable
margin.
• Supermarkets: 400 - 2 500 m2
• Hypermarkets: from 2 500 m2
2. Supermarket/Hypermarket
• Range of products: comprehensive range of food and basic
non-food goods
• Prices: medium at a standsrd quality level of goods
• Localization: residential areas with an accessibility range of
400 - 700 m according to the density of the area, city
boundaries with access roads and parking
• Form of sale: self-service combined with counter sale
• Trend: slows down due to saturation of the market,
rebuilding and innovations are starting
3 Warehouse retailers
•This type of retailer is usually situated in retail or
Business Park and where premises rents are lower.
•This enables this type of retailer to stock, display and
retail a large variety of good at very competitive
prices.
3 Warehouse retailers
•Range of products: comprehensive range of food and
basic non-food goods
•Prices: lower due lower logistic expenses
•Localization: suburbs, city exits with access roads and
parking
•Form of sale: self-service
•Trends: stagnation due to increasing customer
convenience requirements
4 Speciality retailers
•Specialising in specific industries or products, this type
of retailer is able to offer the customer expert
knowledge and a high level of service.
•They also add value by offering accessories and
additional related products at the same outlet.
•Examples are cycling, skiing, office supplies, footwear,
fashion, computer technology, cosmetics, photo.
4 Speciality retailers
•Range of products: very narrow with considerable
depth, goods of occasional and long-term
consumption prevail
•Prices: higher, sales with specialized services (costs of
professional staff)
•Localization: city centers and shopping malls,
departent stores
•Trend: growing
5 Speciality warehouse
•Specialising in specific industries or products, this type
of retailer is able to offer the customer expert
knowledge and a high level of service.
•From 800m2 and more.
•Examples are IKEA, HORNBACH, DECATHLON, OBI,
SCONTO.
5 Speciality warehouse
•Range of products: very narrow with considerable
depth
•Prices: low to medium
•Localization: suburbs, city exits with access roads and
parking
•Form of sale: self-service
•Trends: fast development at the expense of
specialized stores
6. Convenience retailer
•Usually located in residential areas this type of
retailer offers a limited range of products at
premium prices due to the added value of
convenience.
•Some of them has long open hours and provide
customers with products of daily consumption.
6. Convenience retailer
•Range of products: medium wide with a small depth,
focusing on daily necessities with a significant
dominance of food
•Prices: higher
•Localization: countryside and less dense urban areas
•Form of sale: self-service combined with counter sale
•Trends: decrease due to the concentration of
supermarkets and shopping centers
7. Discount retailer
•This type of retailer offers a variety of
discounted products.
•They offer low prices on less fashionable
branded products from a range of suppliers by
reselling end of line and returned goods at
discounted prices.
7. Discount retailer
•Range of products: up to 800 items, narrow with a
small depth
•Prices: lower
•Localization: residential areas with an accessibility
range of 400 - 700 m according to the density of the
area, city boundaries with access roads and parking
•Form of sale: self-service
•Trends: stagnation
8. E-tailer
•This type of retailer enables customers to shop
on-line via the internet and buy products which
are then delivered.
•This type of retailer is highly convenient and is
able to supply a wider geographic customer
base.
•E-tailers often have lower rent and overheads so
offer very competitive pricing.
8. E-tailer
•E-tail is emerging and complementing (not
replacing) brick and mortar.
•Drugs, fresh fruits and vegetables are convenient
to buy offline.
•Electronics, hobby and books are good examples
of e-tail use.
STORE LAYOUT
1.Factors influencing store layout design
2.Typology of stores
3.Examples and exercises
FACTORS INFLUENCING LAYOUT
1.External factors
1.Competition in location
2.Potential number of customers a day
3.Type of product and its characteristics
4.Entrance for deliveries - supply
FACTORS INFLUENCING LAYOUT
2. Internal factors
1.Speed of movement of goods – replacement
and delivery costs
2.Number of employees
3.Form of selling
4.Expected structure of turnover
BASIC RULES
Good store layout design:
1.Respects flow of customers
2.Respects flow of employees
3.Respects flow of goods
TYPES OF LAYOUT
1.Racetrack design
2.Grid design
3.Open design
4.Counter store design
5.Sector design
Racetrack/loop design
Grid design
Open design
Counter store design
Sector store design
FIND EXAPMLES
1.Racetrack design
2.Grid design
3.Open design
4.Counter store design
5.Sector design
ENVIRONMENT INFLUENCERS
1.Shelf positions
2.Music
3.Smell
4.Light
5.POS/POP materials
ENVIRONMENT INFLUENCERS
Shelf positions
ENVIRONMENT INFLUENCERS
Music
North, A. C., Hargreaves, D. J., & McKendrick, J. (1999). The influence of in-store music on
wine selections. Journal of Applied Psychology, 84(2), 271-276.
ENVIRONMENT INFLUENCERS
Smell
Dunkin 'Donuts has announced that total traffic in South Korea has increased by 16% and sales by even
29%!
ENVIRONMENT INFLUENCERS
Light
ENVIRONMENT INFLUENCERS
Point of sale materials
Empirical retail laws
How to compete in retail?
•Retail market is saturated in most developed countries
•Competition is continuously trying to out-do each
other with: better locations, new stores, improved
layouts, technology, etc.
•Larger market share store chains have larger customer
bases (penetration) and slightly higher loyalty (both
average purchase frequency and average share of
department store shopping trips)
Background of the laws
•Repeat-purchasing patterns that occur in brand buying
also occur in store choice.
•Studies shows this repetitive choices in many areas:
Supermarket chains, Department stores, Petrol
stations, Fast-food chains and Women's fashion
boutiques.
•It underlines the logic of habitual buying in category
of FMCG
9 empirical laws of shopping in retail
1. Purchase goals
2. Mental and physical availability
3. Limited time
4. Many short trips
5. Selective purchasing
6. Top-selling items
7. Colors and symbols
8. Specials
9. Set paths
1. Purchase goals
• Shoppers go to stores because the stores have something they want
to buy.
• Almost everyone enters a store with a purchase goal in mind (very
often specific brand).
• This mental list does not preclude them from buying other things.
• Retailer advertising almost always shows product.
• Primary source of shopper dissatisfaction is not being able to find the
product they wanted to buy.
2. Mental and physical availability
• Mental and physical availability largely determine store choice.
• Customers need to know about you and you must be at hand.
• They miss your competitor on their way to your store only if it is not
in their mental availability (store exist, store sells what they want).
• Stores need to advertise to build memory structures.
3. Limited time
• Shoppers only spend a certain amount of time in store.
• If the entire purchase process takes time, customers buy less.
• When they find what they need quickly, they tend to look after other
goods.
• At a time when most of the bite shopping time search products,
customers spend much less money.
4. Many short trips
• People make many short shopping trips and fewer longer shopping
trips
• 15% shopping trips are to buy single item, even in supermarkets.
• 50% of them are for 5 or less items.
• Frequently purchased items should not move – it extends search
time.
• Visible category and clearly labeled diagram of selling space.
5. Selective purchasing
• A typical household buys only 300 to 400 stock-keeping units from
supermarket in an entire year.
• Shoppers are very loyal to their set of favorite products.
• Supermarkets offers up to 60 thousands of those items.
• The amount the customer chooses the strategy of repeat purchases in
places where he knows where to find products.
• Again, be careful with moving products.
6. Top-selling items
• While typical supermarket sells 30.000 to 50.000 items, the topselling
1000 items will make up about half of the supermarket‘s
sales
• Best selling products should be accessible, not hidden in the most
remote corner, as some traders do.
• If you are a repeat purchase, and I am selective, I do not pay attention
to surrounding products.
7. Colors and symbols
• Shoppers read very little in store – instead they react to colours and
symbols.
• Eye-tracking studies show that customers read very little, and i so,
they carefully choose what to read – to save their shopping time.
• Colors and symbols are ways to streamline shopping with minimal
time loss for the customer.
8. Specials
• Shoppers have been trained to buy specials
• Highlighting discounts, special offers, news, best selling goods, etc.
can help in this effort.
• Brand sold in special offer must be known - research shows that
people who do not have a brand in mind rarely respond to these
offers.
9. Set paths
• Shoppers follow pathways of open space, and the checkout is a
magnet.
• Shoppers speed up towards checkouts.
• Monitoring customer pathways is an important part of the design
shopping area.
• In heat maps we can see most frequently visited space for important
products.
Thank you