Lecture Retailing management (6e) Chapter 1 Levy Weitz

Chapter 1 Introduction to the world of retailing. Chapter 1 describes the role of retailing as a keystone to the Canadian economy, the functions retailers perform, and the variety of decisions they make to satisfy customers’ needs in the rapidly changing, highly competitive Canadian marketplace.

The World of Retailing

Introduction to Retailing Types of Retailers

Multi-Channel Retailing Customer Buying Behavior

What is Retailing?

• Retailing – a set of business activities that

adds value to the products and services

sold to consumers for their personal or

family use.

A retailer is a business that

sells products and/or services

to consumers for personal or

family use

James Darell/Getty Images

The Distribution Channel

Distribution Channel

PPT 1-4

Examples of Retailers

Retailers:

Kohl’s, Macy’s, Wendy’s,

Amazon.com, Jiffy Lube, AMC

Theaters, American Eagle Outfitter,

Kroger

Firms that are retailers and

wholesalers that sell to other

business as well as consumers:

Office Depot, The Home Depot,

United Airlines, Bank of America,

Manufacturing, Wholesaling and Retailing

Vertical Integration – firm performs more than one set of

activities

Ex: retailer invests in wholesaling or manufacturing

Backward Integration – retailer performs some distribution

and manufacturing activities

Ex: JCPenney sells Arizona jeans (Private Label)

Forward Integration – manufacturers undertake retailing

activities

Ex: Ralph Lauren operates its own stores

How Retailers Add Value

How Retailers Add Value

The value of the product and service

increases as the retailer performs functions.

Bicycle is developed

at manufacturer

Bicycle is developed in several styles

Bicycle is offered in convenient locations

in quantities of one

Bicycle is featured

on floor display

Bicycle can be bought on credit or put on layaway

World’s Largest Retailers

Social and Economic Significance of Retailing

• Community Support

• Over $3.4 trillion in annual U.S sales

greater than medical care, housing, recreation combined

• Employs 27 million people

21% of non-agricultural US workforce

• Management training opportunities

• Entrepreneurial opportunities

Retailing is Big Part of Economy

Services (45.8%)

Manufacturing (11.2%) Retail (21.8%)

Government (16.6%)

Other 5.6%

Retailers are a Business Like

Manufacturers

Accounting

Marketing Finance

Human Resources Operations

MIS

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

Nature of Retail Industry is Changing

Mom and Pop Store

To Today’s Retailer

Retailing is a High Tech Industry

• Selling Merchandise over

Globalization of Retailing

Source Merchandise From Around the World

Wal-Mart Operates in U.S., China, Mexico, UK,

Germany

Carrefour has Stores in 25 Countries

Don Farrall/Getty Images

Comparison of Distribution Channels

Across the Globe

Retail Management Decision Process

JCPenney’s Strategic Evolution

• Main Street private label soft goods retailer

• Changes in environment increased

disposable income, growth of suburbs,

interstate highway program

• Emulate Sears in enclosed suburban malls

• Focus on soft goods drop automotive,

sporting goods, hardware

• Develop catalog, develop electronic retailing

• Stand alone stores

• Centralized checkout

Sears Holdings’ Strategic Evolution

• Large number of merchandise categories

appliances, hardware, apparel

• Malls evolved into places for buying soft goods, hard goods sold at category killers

• The Softer Side of Sears

• Refocused on value Testing carts in stores

• Acquired Lands’ End

• Reviewed training program for new managers

• New growth with Kmart

Organic and natural foods supermarket chain

Assortment beyond organic/natural foods

– Private labels - Whole Food™, 360 Day Value™ – Love, trust, and employee empowerment

– Always innovation:

Candy Island

Lamar Street Greens

Fifth Street Seafood

In-store Massage Therapist

Whole Foods Implementation

Claire’s Retail Mix

Retail Strategy

Customer Service Location

Merchandise Assortment

Pricing Communication Mix

Store Design

and Display

Claire’s Retail Mix

Enclosed malls

Customer Service

MerchandiseAssortment

PricingCommunication Mix

Store DisplayAnd Design

Location Strategy

Claire’s Retail Mix

Location

PricingCommunication Mix

Assortment Strategy

Claire’s Retail Mix

Claire’s Retail Mix

Communication Mix

TV and Magazine Ads

Store DesignAnd Display

Customer Service

Location

Merchandise Assortment

Pricing

Claire’s Retail Mix

Store Design and Display

Bright, fashionable and fun

boutique layout

Customer Service Location

Merchandise Assortments

PricingCommunication Mix

Claire’s Retail Mix

Macy’s Retail Mix

Retail Strategy

Customer Service Location

Merchandise Assortment

Pricing Communication Mix

Store Design

and Display

Macy’s Retail Mix

Enclosed Malls

Customer Service

MerchandiseAssortment

PricingCommunication Mix

Store DisplayAnd Design

Location Strategy

Macy’s Retail Mix

Location

PricingCommunication Mix

Macy’s Retail Mix

Pricing Strategy

Macy’s Retail Mix

Communication Mix

TV, Newspaper Ads and Special Events

Store DesignAnd Display Merchandise Assortment

PricingCustomer Service

Location

Macy’s Retail Mix

Store Design and Display

Racetrack with Displays

Customer Service Location

Merchandise Assortments

PricingCommunication Mix

Macy’s Retail Mix

Target’s Retail Mix

Retail Strategy

Customer Service Location

Merchandise Assortment

Pricing Communication Mix

Store Design

and Display

Target’s Retail Mix

Free-standing Stores

Customer Service

MerchandiseAssortment

PricingCommunication Mix

Store DisplayAnd Design

Location Strategy

Target’s Retail Mix

Location

PricingCommunication Mix

Target’s Retail Mix

Target’s Retail Mix

Communication Mix

TV and Newspaper Insert Ads

Store DesignAnd Display

Customer Service Location

Merchandise Assortment

Pricing

Target’s Retail Mix

Store Design and Display

Colorful, wide aisles displays

for products with a grid layout

Customer Service Location

Merchandise Assortments

PricingCommunication Mix

Target’s Retail Mix

Ethical Situations for a Retail Manager

• Should a retailer sell merchandise that is suspects was made using child labor?

• Should it advertise that its prices are lowest in area even

though some items are not?

• Should a buyer accept an expensive gift from a vendor?

• Should salespeople use high-pressure sales when they know the product is not the best for the customer’s needs?

• Should a retailer give preference to minorities when making a promotion decision?

• Should a retailer treat some customers better than others?

Checklist for Making Ethical Decisions

You are Faced with an Ethical Decision:

What Can You Do?

• Ignore your personal values and do what

your company asks you to do – you will

probably feel dissatisfied with your job

• Take a stand and tell your employer what

you think Work to change the policies.

• Refuse to compromise your principles –

you could lose your job!

Start Your Own Business

• Walton Family (Wal-Mart)

• Fisher (The Gap)

• Wexner (limited)

• Menard (Menard’s)

• Marcus, Blank (The Home Depot)

• Kellogg (Kohl’s)

• Schulze (Best Buy)

• Levine (Family Dollar)

• Gold (99Cent Only)

List of Retail Entrepreneurs on Forbes 400 Richest Americans

Misconceptions About Careers in

• No opportunity for women and minorities

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

Why You Should Consider Retailing

• Entry level management positions

-Department manager or assistant buyer/planner

-Manage and have P&L responsibility on your first job

• Starting pay average with great benefits

- Some retailers pay graduate school

• No two days are alike

• Buying and planning for financially analytically oriented

• Management for people-people

Types of Jobs in Retailing

store management or buying, but there’s…

-accounting and finance -real estate

-human resource management -supply chain management

-advertising -public affairs -information systems -loss prevention

-visual merchandising