Collaborators and Place Retail

Question 1

The power of retailing

Answer 1

over $5 Trillion per year in US
$453 B in ecommerce

USA: consumer spending accounts for about 70% of GDP in US

China: $4.84 T per year in China
36% of GDP
$1.1T in ecommerce

influences and incorporates every aspect of business

Question 2

What is this example?

Walmart accounts for3% of US GDP. Walmart is the world’s largest retail company.
established 1962 in Rogers, AR. Has over 11,000 outlets worldwide, $495 B in revenue and over $32.8 B EBITDA.
2.1 M employees. #1 in groceries, toys, pet care, diapers

Answer 2

retailing

Question 3

Retail industry overview

Answer 3

• it is a low barrier to entry industry
• replication and scale
• cash flow and growth

Question 4

Traditional Metrics?

Answer 4

1 Total Revenue (top line)
2 gross margin %
3 revenue per square foot
4 inventory turn

Question 5

Inventory Turn calculations

Answer 5

COGS for year/ Cost of Current inventory

balance sufficient variety between slower turning items and stock outs

slow turning - long tail (online)

Question 6

The Long Tail Online

Answer 6

See Diagram
online, you can stock more. even the less popular brands can be sold online - like brands draw customer from anywhere.

eg think the diaper thing where you can only buy adult specific diapers online

Question 7

Walmart Strategies:

Answer 7

• Geographic Segmentation
• Tight control over distribution channels - lowest cost structure in industry, technologically advanced systems
• EDLP
• “Agents for customers” - reduce cost of living for customers

Question 8

Whole Foods strategies:

Answer 8

479 stores, $16B in revenue, $954 M in EBITDA

position away from Walmart

Customer: target Affluent, liberal, educated customers

Place: locate in university towns and urban areas

Amazon purchased for $13.7B in 2017

Pricing: higher prices = higher margins

Product: Private labels brand

Question 9

Retailers creating brands

why? (5)

Answer 9

1 greater profit opportunity
2 reduce double marginalization
3 placement/ slotting advantage
4 differentiation for customers from retail competitors
5 increase bargaining clout with national brand suppliers who need the spaces

Question 10

Brads want to become retailers why? (6)

Answer 10

1 use their retail stores as ad billboards
2 greater market coverage
3 control over brand message
4 other retailers get information free-riding like department stores around there
5 ability to offer full product line
6 profit reduces double marginalization

Question 11

What is this example?

Nike store on 5th avenue is a huge billboard

Answer 11

Brands want to become retailers

Question 12

What is this example?

Zara on 5th avenue bleeds money

Answer 12

Brands use billboards to advertise

Question 13

what is this example?

Apple opened their horizontal stores as advertising because salespeople had hard time. didnt know how to use Apple so thy never sold them. They now have over a million visitors each day. 500 store, 20B in revenue, 15th largest retailer in the world. more than $5546 sales/sq. ft (Tiffany has $2951 sales/sq.ft)

Answer 13

Brands using stores as advertising

Question 14

Alibaba - strategies: China’s platform for B2B B2C C2C sales in Taobao Tmall
virtual store within store

$39.9B USD in revenue
$14.6B EBITDA USD

Answer 14

Promotion: singles day 11/11

Collaborators: Allows people to create their own stores

Question 15

Trends

Answer 15

1 Disintermediation
2 Integration
3 Retailers creating brands
4 Brands becoming retailers
5 Omni Channel distribution
6 Online to Offline (O2O)

Question 16

What is this example?

Warby Parker is opening stores instead of doing everything online. Show rooming

Answer 16

O2O online to offline

Question 17

What is this example?

Amazon Go stores

Answer 17

O2O online to offline

Question 18

Stores Trends (5)

Answer 18

Used to be stack it high and watch it fly strategy

now there is more 
1 show rooming
2 own customers 
3 delivery pickup point
4 growth in convenience and food
5 experience

Question 19

What is this example?

WSJ says that malls used to have spas and gyms who paid low rent and didnt shop. now they really like them and want gyms

Answer 19

experience trend

Question 20

The Retailing Success Matrix by Barbara Kahn

Answer 20

See diagram

Product Benefits = Product Brand superiority, or low price

Customer experience = experiential enhanced customer experience, frictionless shopping - total convenience and comprehensive customer understanding (Amazon)

increase pleasure (experience and product brand) 
eliminate pain points (low price and frictionless)

this is the retail proposition and delivers superior competitive advantage

Question 21

omnichannel

Answer 21

all channels are available to customer (mobile, store, social media, etc.) and they are all connected

multichannel was when they were all available to customer but not connected