Chapter 1Introduction to the World of Retailing

The World of Retailing

Introduction to RetailingTypes of RetailersMulti-Channel RetailingCustomer 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: Kohls, Macys, Wendys, 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./Andrew Resek, photographer

The McGraw-Hill Companies, Inc./John Flournoy, photographer

Manufacturing, Wholesaling and RetailingVertical Integration firm performs more than one set of activitiesEx: retailer invests in wholesaling or manufacturing

Backward Integration retailer performs some distribution and manufacturing activitiesEx: JCPenney sells Arizona jeans (Private Label)

Forward Integration manufacturers undertake retailing activitiesEx: Ralph Lauren operates its own stores

How Retailers Add ValueBreak Bulk

-Buy it in quantities customers wantHold Inventory

-Buy it at a convenient place when you want itProvide Assortment

-Buy other products at the same timeOffer Services

-See it before you buy, get credit, layawayRyan McVay/Getty Images

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

Worlds Largest Retailers

Social and Economic Significance of RetailingCommunity SupportOver $3.4 trillion in annual U.S. sales

greater than medical care, housing, recreation combinedEmploys 27 million people

21% of non-agricultural US workforceManagement training opportunitiesEntrepreneurial opportunities

Retailing is Big Part of EconomyServices (45.8%)Manufacturing (11.2%)Retail (21.8%)Government (16.6%)Other 5.6%

Sheet:

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

East

West

North

Retailers are a Business Like Manufacturers

MarketingFinanceHuman ResourcesOperationsMISThe McGraw-Hill Companies, Inc./Andrew Resek, photographer

Nature of Retail Industry is ChangingMom and Pop StoreTo Todays Retailer

Retailing is a High Tech IndustrySelling 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

Globalization of Retailing

Source Merchandise From Around the World

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

Carrefour has Stores in 25 CountriesDon Farrall/Getty Images

Comparison of Distribution Channels Across the Globe

Retail Management Decision Process

6.bin

JCPenneys Strategic EvolutionMain Street private label soft goods retailerChanges in environment -- increased disposable income, growth of suburbs, interstate highway programEmulate Sears in enclosed suburban mallsFocus on soft goods -- drop automotive, sporting goods, hardwareDevelop catalog, develop electronic retailingStand alone storesCentralized checkout

Sears Holdings Strategic EvolutionLarge number of merchandise categories -- appliances, hardware, apparelMalls evolved into places for buying soft goods, hard goods sold at category killersThe Softer Side of SearsRefocused on value -- Testing carts in storesAcquired Lands EndReviewed training program for new managersNew growth with Kmart

Whole Foods ImplementationOrganic and natural foods supermarket chain

Assortment beyond organic/natural foodsPrivate labels - Whole Food, 360 Day ValueLove, trust, and employee empowermentAlways innovation:

Candy Island Lamar Street Greens Fifth Street Seafood In-store Massage Therapist

Claires Retail MixRetail StrategyCustomer ServiceLocationMerchandiseAssortmentPricingCommunication MixStore Designand Display

Claires Retail Mix

Enclosed mallsLocation Strategy

Claires Retail Mix

LocationPricingCommunication MixStore Design and DisplayCustomer Service Jewelry, accessories and cosmetics for tweens and teensAssortment Strategy

Claires Retail Mix

LocationCommunication MixStore Design and DisplayCustomer ServiceMerchandise AssortmentModest with SalesPricing Strategy

Claires Retail Mix

Communication MixTV and Magazine AdsStore DesignAnd DisplayCustomer ServiceLocationMerchandise AssortmentPricing

Claires Retail Mix

Store Design and DisplayBright, fashionable and funboutique layoutCustomer ServiceLocationMerchandise AssortmentsPricingCommunication Mix

Claires Retail Mix

Customer ServiceModestLocationMerchandise AssortmentPricingCommunication MixStore Design and Display

Macys Retail MixRetail StrategyCustomer ServiceLocationMerchandiseAssortmentPricingCommunication MixStore Designand Display

Macys Retail Mix

Enclosed MallsLocation Strategy

Macys Retail Mix

LocationPricingCommunication MixStore Design and DisplayCustomer ServiceMany Items in Apparel and Soft HomeAssortment Strategy

Macys Retail Mix

LocationCommunication MixStore Design and DisplayCustomer ServiceMerchandise AssortmentModerate with Frequent SalesPricing Strategy

Macys Retail Mix

Communication MixTV, Newspaper Ads andSpecial EventsStore DesignAnd Display

Merchandise AssortmentPricingCustomer ServiceLocation

Macys Retail Mix

Store Design and DisplayRacetrack with DisplaysCustomer ServiceLocationMerchandise AssortmentsPricingCommunication Mix

Macys Retail Mix

Customer ServiceModestLocationMerchandise AssortmentPricingCommunication MixStore Design and Display

Targets Retail MixRetail StrategyCustomer ServiceLocationMerchandiseAssortmentPricingCommunication MixStore Designand Display

Targets Retail Mix

Free-standing StoresLocation Strategy

Targets Retail Mix

LocationPricingCommunication MixStore Design and DisplayCustomer ServiceLarge Number of CategoriesPrivate Labels Few Items in Each CategoryAssortment Strategy

Targets Retail Mix

LocationCommunication MixStore Design and DisplayCustomer ServiceMerchandise AssortmentLow to ModestPricing Strategy

Targets Retail Mix

Communication MixTV and Newspaper Insert AdsStore DesignAnd DisplayCustomer ServiceLocationMerchandise AssortmentPricing

Targets Retail Mix

Store Design and DisplayColorful, wide aisles displaysfor products with a grid layoutCustomer ServiceLocationMerchandise AssortmentsPricingCommunication Mix

Targets Retail Mix

Customer ServiceLimitedLocationMerchandise AssortmentPricingCommunication MixStore Design and Display

Ethical Situations for a Retail ManagerShould 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 customers 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!

Career Opportunities in RetailingStart Your Own BusinessWalton Family (Wal-Mart)Fisher (The Gap)Wexner (limited)Menard (Menards)Marcus, Blank (The Home Depot)Kellogg (Kohls)Schulze (Best Buy)Levine (Family Dollar)Gold (99Cent Only)

List of Retail Entrepreneurs on Forbes 400 Richest Americans

Misconceptions About Careers in RetailingDont need collegeLow payLong hoursBoringDead-end jobNo benefitsEveryone is part-timeUnstable environmentNo 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 jobStarting pay average with great benefits

- Some retailers pay graduate schoolNo two days are alikeBuying and planning for financially analytically orientedManagement for people-people

Types of Jobs in Retailing Most entry level jobs are in store management or buying, but theres-accounting and finance-real estate-human resource management-supply chain management-advertising-public affairs-information systems-loss prevention -visual merchandising