Introduction to the World of Retailing Chapter 1.

Introduction to the Introduction to the World of RetailingWorld of Retailing

Chapter 1Chapter 1

• 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.

What is Retailing?

Examples of Retailers

• Retailers:

-Sears, Holiday Inn, McDonalds, Amazon.com, Jiffy Lube, AMC Theaters, American Eagle Outfitter, FAO Schwartz, 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, Sams Clubs

How Retailers Add Value

• Breaking Bulk

-Buy it in quantities customers want

• Holding Inventory

-Buy it at a convenient place when you want it

• Providing Assortment

-Buy other products at the same time

• Offering Services

-See it before you buy, get credit, layaway

Doll can be bought on credit or put on

layaway

Doll is featured on floor display

Doll is offered in convenient locations in quantities of oneDoll is developed in

several styles

How Retailers Add Value

Doll is developed at manufacturer

The value of the product and service increases as the retailer performs functions.

Manufacturer’s Perspective

The Four P’s of Marketing

Distribution

Retailers are part of the

distribution channel

Retailers are part of the

distribution channelProduct

Price

Promotion

Distribution Channel

Distribution ChannelPPT 1-4 Distribution Channel

PPT 1-4

Accounting Finance

MISOperations

Marketing

Human Resources

Retailers are a Business Like Manufacturers

Decision Variables for Retailers

Customer Service

Store Design and Display

MerchandiseAssortment

Communication Mix

LocationPricing

Retail

Strategy

Economic Significance of Retailing

• Over $2.5 trillion in annual U.S. sales

-greater than medical care, housing, recreation combine

• Employs 17% of population

-about the same as manufacturing and growing

• Management training opportunities

• Entrepreneurial opportunities

Retailing is Big Part of Economy

Services (50%)

Government (15%)

Manufacturing(18%)

Retail (17%)

Projected Job Gains (2000 – 2010)

Nature of Retail Industry is Changing

Mom and Pop Store

To Today’s Retailer

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

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

Retail Environment Differs Across the Globe

US JapanConcentration High Medium

Store Size Big Small

Role of Low High

Wholesaling

Efficiency High Low

Retail Management Decision Process

JC Penney’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

• Future (?)

Sears’ 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

Whole Foods Implementation

Strategy - organic and natural foods supermarket chain

Assortment beyond organic/natural foods

Private labels - Whole Food™, 360 Day Value™

Love, trust, and employee empowerment

Equality in compensation

Hot Topic’s Retail Mix

Retail Strategy

Customer Service Location

Merchandise

Assortment

PricingCommunication

Mix

Store Design

And Display


Enclosed malls

Customer Service


PricingCommunication Mix

Store DisplayAnd Design

Location Strategy


Location


Mix


Customer Service

Many Different Hot Band

T-shirts and Accessories

Assortment Strategy


Location

Communication Mix


Customer Service

Merchandise Assortment

Modest with Sales

Pricing Strategy


Communication Mix

TV and Magazine Ads

Store DesignAnd Display



Pricing



Heavy Metal, Gothic Look


Merchandise Assortments


Mix


Customer Service

Modest

Location


Pricing

Communication Mix


Macy’s Retail Mix

Retail Strategy

Customer Service

Location




Macy’s Retail Mix

Enclosed Malls

Customer Service




Location Strategy

Macy’s Retail Mix

Location


Mix


Customer Service

Many Items in Apparel and

Soft Home

Assortment Strategy

Macy’s Retail Mix

Location

Communication Mix


Customer Service


Moderate with Frequent Sales

Pricing Strategy

Macy’s Retail Mix

Communication Mix

TV, Newspaper Ads and Special Events

Store DesignAnd Display Merchandise

Assortment

Pricing


Macy’s Retail Mix


Ring with Displays




Mix

Macy’s Retail Mix

Customer Service

Modest

Location


Pricing

Communication Mix


Wal-Mart’s Retail Mix

Retail Strategy

Customer Service

Location





Free-standing Stores

Customer Service



Mix


Location Strategy


Location


Mix


Customer Service

Large Number of Categories

Few Items in Each Category

Assortment Strategy


Location

Communication Mix


Customer Service


Low, EDLP

Pricing Strategy


Communication Mix

TV and NewspaperInsert Ads

Location

Pricing


Customer Service




Basic, Special Displays

for Products




Mix


Customer Service

Limited

Location


Pricing

Communication Mix


Career Opportunities in RetailingStart 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 Retailing

• Don’t need college

• Low pay

• Long hours

• Boring

• Dead-end job

• No benefits

• Everyone is part-time

• Unstable environment

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 for financially oriented people

• Management for people people

Types of Jobs in Retailing

Most entry level jobs are in store management or buying, but…

retailers also have staff specialists:

--accounting and finance

--real estate

--human resource management

--supply chain management

--advertising

--public affairs

Introduction to the World of Retailing Chapter 1.

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