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Chapter 1

Chapter 1. Introduction to the World of Retailing. The World of Retailing. Types of Retailers. Introduction to Retailing. Customer Buying Behavior. Multi-Channel Retailing. What is Retailing?.

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Chapter 1

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  1. Chapter 1 Introduction to the World of Retailing

  2. The World of Retailing Types of Retailers Introduction to Retailing Customer Buying Behavior Multi-Channel Retailing

  3. 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

  4. The Distribution Channel

  5. 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, Costco The McGraw-Hill Companies, Inc./John Flournoy, photographer The McGraw-Hill Companies, Inc./Andrew Resek, photographer

  6. 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

  7. How Retailers Add Value • Break Bulk -Buy it in quantities customers want • Hold Inventory -Buy it at a convenient place when you want it • Provide Assortment -Buy other products at the same time • Offer Services -See it before you buy, get credit, layaway Ryan McVay/Getty Images

  8. How Retailers Add Value The value of the product and service increases as the retailer performs functions. Bicycle can be bought on credit or put on layaway Bicycle is featured on floor display Bicycle is offered in convenient locations in quantities of one Bicycle is developed in several styles Bicycle is developed at manufacturer

  9. World’s Largest Retailers

  10. 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

  11. Retailing is Big Part of Economy Retail (21.8%) Manufacturing (11.2%) Government (16.6%) Services (45.8%) Other 5.6%

  12. Accounting Retailers are a Business Like Manufacturers Finance Marketing MIS Operations Human Resources The McGraw-Hill Companies, Inc./Andrew Resek, photographer

  13. Nature of Retail Industry is Changing To Today’s Retailer Mom and Pop Store

  14. Retailing is a High Tech Industry • Selling Merchandise over the Internet • Using Internet to manage supply chains • Analyze POS data to tailor assortments to stores • Computer systems for merchandise planning Ryan McVay/Getty Images

  15. 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

  16. Comparison of Distribution Channels Across the Globe

  17. Retail Management Decision Process

  18. 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

  19. 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

  20. Whole Foods Implementation Organic and natural foods supermarket chainAssortment 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

  21. Claire’s Retail Mix Customer Service Location Retail Strategy Merchandise Assortment Store Design and Display Pricing Communication Mix

  22. Customer Service Store Display And Design Merchandise Assortment Communication Mix Pricing Claire’s Retail Mix Location Strategy Enclosed malls

  23. Claire’s Retail Mix Assortment Strategy Customer Service Location Jewelry, accessories and cosmetics for tweens and teens Store Design and Display Communication Mix Pricing

  24. Claire’s Retail Mix Pricing Strategy Location Customer Service Merchandise Assortment Store Design and Display Communication Mix Modest with Sales

  25. Claire’s Retail Mix Customer Service Location Communication Mix Store Design And Display Merchandise Assortment Pricing TV and Magazine Ads

  26. Claire’s Retail Mix Store Design and Display Customer Service Location Bright, fashionable and fun boutique layout Merchandise Assortments Communication Mix Pricing

  27. Claire’s Retail Mix Customer Service Modest Location Merchandise Assortment Store Design and Display Pricing Communication Mix

  28. Macy’s Retail Mix Customer Service Location Retail Strategy Merchandise Assortment Store Design and Display Pricing Communication Mix

  29. Customer Service Store Display And Design Merchandise Assortment Communication Mix Pricing Macy’s Retail Mix Location Strategy Enclosed Malls

  30. Macy’s Retail Mix Assortment Strategy Customer Service Location Many Items in Apparel and Soft Home Store Design and Display Communication Mix Pricing

  31. Macy’s Retail Mix Pricing Strategy Location Customer Service Merchandise Assortment Store Design and Display Communication Mix Moderate with Frequent Sales

  32. Macy’s Retail Mix Customer Service Location Communication Mix Store Design And Display Merchandise Assortment Pricing TV, Newspaper Ads and Special Events

  33. Macy’s Retail Mix Store Design and Display Customer Service Location Racetrack with Displays Merchandise Assortments Communication Mix Pricing

  34. Macy’s Retail Mix Customer Service Modest Location Merchandise Assortment Store Design and Display Pricing Communication Mix

  35. Target’s Retail Mix Customer Service Location Retail Strategy Merchandise Assortment Store Design and Display Pricing Communication Mix

  36. Customer Service Store Display And Design Merchandise Assortment Communication Mix Pricing Target’s Retail Mix Location Strategy Free-standing Stores

  37. Target’s Retail Mix Assortment Strategy Customer Service Location Large Number of Categories Private Labels Few Items in Each Category Store Design and Display Communication Mix Pricing

  38. Target’s Retail Mix Pricing Strategy Location Customer Service Merchandise Assortment Store Design and Display Communication Mix Low to Modest

  39. Target’s Retail Mix Customer Service Location Communication Mix Store Design And Display Merchandise Assortment Pricing TV and Newspaper Insert Ads

  40. Target’s Retail Mix Store Design and Display Customer Service Location Colorful, wide aisles displays for products with a grid layout Merchandise Assortments Communication Mix Pricing

  41. Target’s Retail Mix Customer Service Limited Location Merchandise Assortment Store Design and Display Pricing Communication Mix

  42. 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?

  43. Checklist for Making Ethical Decisions

  44. 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!

  45. Career Opportunities in RetailingStart Your Own Business List of Retail Entrepreneurs on Forbes 400 Richest Americans • 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)

  46. Misconceptions About Careers in Retailing • Don’t need college • Low pay • Long hours • Boring • Dead-end job • No benefits • Everyone is part-time • Unstable environment • No opportunity for women and minorities The McGraw-Hill Companies, Inc./Andrew Resek, photographer

  47. 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

  48. Types of Jobs in Retailing Most entry level jobs are in 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

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