retailing note for chapter one

8/12/2019 Retailing note for chapter one

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CHAPTER 1: AN

INTRODUCTIONTO RETAILING


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2013 Pearson Education Publishing as Prentice Hall 1-2

Chapter Objectives

To define retailing, consider it from differentperspectives, demonstrate its impact, and note

its special characteristics

To introduce the concept of strategic planning

and apply it

To show why the retailing concept is the

foundation of a successful business, with an

emphasis on the total retail experience,

customer service, and relationship retailing

To indicate the focus and format of the text


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Retailing

Retailing encompasses thebusiness activities involved in

selling goods and services toconsumers for their personal,

family, or household use. It

includes every sale to the finalconsumer.


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Issues in Retailing How can we best serve our customers while earning

a fair profit? How can we stand out in a highly competitive

environment where consumers have so many

choices?

High unemployment, low consumer confidence, high

savings rates have reduced consumer spending. At

the same time retail competition has increased

through increased format blurring (sales of cameras

at office supply stores, carpeting and major

appliances at home improvement centers).

How can we grow our business while retaining a

core of loyal customers?


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The Philosophy

Retailers can best addressthese questions by fullyunderstanding and applying

the basic principles ofretailing, as well as theelements in a well-structured, systematic, andfocused retail strategy.


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Figure 1-1: Subway


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An Ideal Candidate for a

Retailing Career

Must be a people person (moreimportant than technical

knowledge). Technical skills can

be taught more easily thanpeople skills

Must be flexible

Should be decisive Must have analytical skills

Must have stamina



Table 1-1: The 10 Largest Retailers in

the United States (2011)

Rank Company Main Emphasis

1 Wal-Mart Full-line discount stores, supercenters,

membership clubs

2 Kroger Supermarkets, convenience stores, jewelry stores

3 Target Full-line discount stores, supercenters

4 Walgreens Drugstores

5 Home Depot Home centers

6 Costco Membership warehouse clubs

7 CVS Caremark Pharmacies8 Lowes Home centers

9 Best Buy Electronics, major appliances

10 Sears Holdings Department store, discount (Kmart)



Figure 1-4: A Typical Channel of

Distribution

Manufacturer

Wholesaler FinalConsumer

Retailer



Figure 1-5: The Retailers Role

in the Sorting Process



Multi-Channel Retailing

A retailer sells toconsumers through multiple

retail formats: Web sites

Physical stores



Multi-Channel Retailing

Cross selling across channels (in-store productavailability info on Web site)

Consistent pricing in all channels (credibility)

Can buy, and return product regardless on channel

Role of each channelo Storetry on, ease of return, fast availability

(immediacy), compare offerings

o Web24/7, product information, product reviews bycustomers, personalization (tailored assortmentbased on past purchases), most current pricing,closeout sales

o Catalog-permanency, true color


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Distribution Types

Exclusive: suppliers makeagreements with one or few

retailers, designating such retailers

as the only ones to carry certainbrands or products within a specified

geographic area

Intensive: suppliers sell through asmany retailers as possible

Selective: suppliers sell through a

moderate number of retailers



Retail Mgt. 12e (c) 2013 Pearson Education, Inc. publishing as Prentice Hall

Exclusive vs Intensive Distribution

Exclusive DistributionFate of retailer istied to manufacturer success, retailer has

no free-rider concerns, retailer has less

price competition, manufacturer is better

assured of high levels of customer support

Intensive Distribution- Manufacturer is

better assured of maximizing sales

(especially for convenience goods),retailers face strong competition for price

and service, intratype competition



Figure 1-7: Comparing

Distribution Types



Figure 1-8: Special Characteristics

Affecting Retailers

Impulse

Purchase

Popularity

of

Stores

RetailersStrategy

SmallAverage

Sale



Retail Strategy

An overall plan for guiding a retail

firm

Influences the firms businessactivities

Influences firms response to

market forces



Six Steps in Strategic Planning

1. Define the type of business(corporate mission)

2. Set long-run and short-run

objectives

3. Determine the customer market

4. Devise an overall, long-run plan

5. Implement an integrated strategy

6. Evaluate and correct (fine-tune)

Fi 1 9 E t M P



Figure 1-9: Expect More. Pay

Less at Target



Aspects of Targets Strategy

Growthobjectives

Appeal to a

prime market Distinctive image

Focus

Customer service

Multiple points of

contact

Employeerelations

Innovation

Commitmentto technology

Communityinvolvement

Monitoringperformance

Fi 1 10 A l i th R t ili



Figure 1-10: Applying the Retailing

Concept

Customer Orientation

Coordinated Effort

Value-driven

Goal Orientation

Retailing

Concept

Retail

Strategy

Fi 1 11 Th B ild A B E i



Figure 1-11: The Build-A-Bear Experience:

Never Boring


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Customer Service

Activities undertaken by a retailer

in conjunction with the basic

goods and services it sells. This

includes: Store hours

Parking

Shopper-friendliness Credit acceptance

Salespeople

Fi 1 12


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Figure 1-12:

A Customer Respect Checklist

Do we trust our customers?Do we stand behind what we sell?

Is keeping commitments to customersimportant to our company?

Do we value customer time?

Do we communicate with customersrespectfully?

Do we treat all customers with respect?

Do we thank customers for their business?

Do we respect employees?


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Relationship Retailing

Retailers seek to establish andmaintain long-term bonds with

customers, rather than act as if each

sales transaction is a completely new

encounter

Concentrate on the total retail

experience

Monitor satisfaction

Stay in touch with customers


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Effective Relationship Retailing

Use a win-win approach It is easier to keep existing customers happy

than to gain new ones (present value of

current customers income streamcost of

keeping existing customers content versus

cost of replacing them with new customer

Develop a customer database (loyalty

programs) Ongoing customer contact is improved with

information on peoples attributes and

shopping behaviors


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Types of Loyalty Programs

Additional discounts at register Not a real loyalty program

1 free with every n items purchased

Easily copied, no customer database

Rebates based on cumulative purchases

Customer maintains records

Can develop heavy half programs like Hilton

Targeted offerings and mailing based on purchase

history

Tesco example Market research staff know more

about my customers than board chairperson

Relationship Management


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Retail Mgt. 12e (c) 2013 Pearson Education, Inc. publishing as Prentice Hall

Relationship Management

Among Retailers and Suppliers

Disagreements may occur in the following areas (channelconflict):

control over channel (private label)

profit allocation (resale price control)

number of competing retailers (exclusive, selective orintensive distribution)

product displays

promotional support (cooperative advertising funds and

restrictions)

payment terms (payment on time)

operating flexibility

gray market sales

markdown monies, chargebacks by dominant retailers


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Approaches to the

Study of Retailing

Institutional

Functional

Strategic

P t f R t il M t


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Parts of Retail Management:

A Strategic Approach

Building relationships and strategicplanning

Retailing institutions

Consumer behavior and informationgathering

Elements of retailing strategy

Integrating, analyzing, and improving

retail strategy


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the United States of America.

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