Retailing

Types of Retailers

Amount of Service

Product Line

Relative Prices

Organizational Approach

Retailer Marketing Decisions

Target Market and Positioning Decision

Target—or Tar-zhay as many fans call it—has developed its own distinct targeting and positioning. "Going to Target is a cool experience, and everybody now considers it cool to save money," says one retailing consultant. "On the other hand, is it cool to save at Kmart, at Wal-Mart? I don't think so." Target isn't Wal-Mart, the giant that wooed suburbia with its acres of guns and gummy bears. And it definitely isn't Kmart, which still seems downscale despite its Martha Stewart tea-towel sets. Target's aim is more subtle: Stick to low prices, of course, but rise above the discount fray with upmarket style and design and higher-grade service. Target's ability to position itself as an upscale alternative really separates it from its mass-merchant peers. "We have a very clear strategy and a very clear brand," says Target vice chairman Jerry Storch. And it's all based on a clearly defined customer. Target's "expect more, pay less" positioning appeals to more-affluent consumers. Its average customer is typically female, 40, and college educated, with a household income approaching $50,000. On average, Target customers spend $40 a visit, almost twice that of other mass merchants. "The higher-income, better educated guest is in our stores," says Storch. "As your income rises, you love Target more and more." Target's upscale discount niche has helped insulate it from giant competitor Wal-Mart. "Wal-Mart is the greatest retailer that ever was," says Storch. "Very few have been able to compete with them and survive." Now 1,100 stores strong, more than survive, Target has thrived. "People used to say, ‘Ooh, a Nordstrom's coming to town,'" says the consultant. "Those same people now say, ‘Ooh, we're getting a Target!'"⁸

Product Assortment and Services Decision

Price Decision

Promotion Decision

Place Decision

The Future of Retailing

New Retail Forms and Shortening Retail Life Cycles

Growth of Nonstore Retailing

Retail Convergence

Retail convergence is the coming together of shoppers, goods, and prices. Customers of all income levels are shopping at the same stores, often for the same goods. Old distinctions such as discount store, specialty store, and department store are losing significance: The successful store must match a host of rivals on selection, service, and price.

The American consumer's road map for where products can be found has shifted from a segmented approach to a consolidation that is almost a throwback to the 1800s, when a general store was the place to shop for everything from coffee to a coffeepot. In the 1900s, shoppers migrated from the Sears catalog to the department store, and then to the shopping mall and specialty stores. A few years ago, the coffeepot customer may have gone to Williams-Sonoma or even Starbucks. Today, it could be Target or Wal-Mart.

Where you go for what you want—that has created the biggest challenge facing retailers. Consider fashion. Once the exclusive domain of the wealthy, fashion now moves quickly from the runways of New York and Paris to retailers at all levels. Ralph Lauren sells in department stores and in the Marshall's at the strip mall. Designer Stephen Sprouse, fresh off a limited edition of Louis Vuitton handbags and luggage, has designed a summer line of clothing and other products for Target.¹⁷

The Rise of Megaretailers

The Growing Importance of Retail Technology

In the past, life was simple. Retailers connected with their customers through stores, through their salespeople, through the brands and packages they sold, and through direct mail and advertising in the mass media. But today, life is more complex. There are dozens of new ways to attract and engage consumers. . . . Indeed, even if one omits the obvious—the Web—retailers are still surrounded by technical innovations that promise to redefine the way they and manufacturers interact with customers. Consider, as just a sampling, touch-screen kiosks, electronic shelf labels and signs, handheld shopping assistants, smart cards, self-scanning systems, virtual reality displays, and intelligent agents. So, if we ask the question, Will technology change the way [retailers] interface with customers in the future? the answer has got to be yes.¹⁹

Global Expansion of Major Retailers

[Customers came] by the hundreds of thousands—up to 175,000 on Saturdays alone—to China's first Wal-Mart Supercenter and Sam's Club. They broke the display glass to snatch out chickens at one store and carted off all the big-screen TVs before the other store had been open an hour. The two outlets . . . were packed on Day One and have been bustling ever since.²⁰

Carrefour now operates more than 5,300 discount stores in 30 countries in Europe, Asia, and the Americas, including 657 hypermarkets. By purchasing or merging with a variety of retailers, Carrefour has accelerated its hold over the European market, where it now claims retail dominance in four leading markets: France, Spain, Belgium, and Greece; it's the number two retailer in Italy. But one of the retailer's greatest strengths is its market position outside of France and Europe. In South America, for instance, Carrefour is the market leader in Brazil and Argentina, where it operates more than 300 stores. By comparison, Wal-Mart has only 25 units in those two countries. In China, the land of more than a billion consumers, Carrefour operates 22 hypermarkets to Wal-Mart's five supercenters and one Sam's Club. In the Pacific Rim, excluding China, Carrefour operates 33 hypermarkets in five countries to Wal-Mart's five units in South Korea alone. Carrefour is also on track to beat the competition into the Japanese market, the world's second largest nation in terms of consumption. In the all-important emerging markets of China, South America, and the Pacific Rim, Carrefour outpaces Wal-Mart five-to-one in actual revenue. In short, Carrefour is bounding ahead of Wal-Mart in most markets outside North America. The only question: Can the French titan hold its lead? While no one retailer can rightly claim to be in the same league with Wal-Mart as an overall retail presence, Carrefour stands a better chance than most to dominate global retailing.²²

Retail Stores as "Communities" or "Hangouts"

Welcome to today's bookstore. The one featuring not only shelves and cash registers but also cushy chairs and coffee bars. It's where backpack-toting high school students come to do homework, where retirees thumb through the gardening books, and parents read aloud to their toddlers. If no one actually buys books, that's just fine, say bookstore owners and managers. They're offering something grander than ink and paper, anyway. They're selling comfort, relaxation, community.²³

Sony Computer Entertainment America (SCEA) actively builds community among its Playstation®2 customers. Its recent Playstation.com campaign created message boards where its game players could post messages to one another. The boards are incredibly active, discussing techie topics but also providing the opportunity for members, fiercely competitive and opinionated, to vote on lifestyle issues, such as music and personal taste, no matter how trivial. Although SCEA is laissez-faire about the boards and does not feed them messages, the company sees the value in having its customers' adamant conversations occur directly on its site. "Our customers are our evangelists. They are a very vocal and loyal fan base," says an SCEA spokesperson. "There are things we can learn from them."²⁴