34
CHAPTER 1: AN INTRODUCTION TO RETAILING

CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

  • Upload
    others

  • View
    5

  • Download
    0

Embed Size (px)

Citation preview

Page 1: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

CHAPTER 1: AN INTRODUCTION TO RETAILING

Page 2: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-2

Chapter Objectives • To define retailing, consider it from different

perspectives, 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

Page 3: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-3 3

Retailing Retailing encompasses the

business activities involved in selling goods and services to consumers for their personal, family, or household use. It includes every sale to the final consumer.

Page 4: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-4

• The word 'Retail' is derived from a French word with the prefix re and the verb tailer meaning "to cut again".

• Evidently, retail trade is one that cuts off smaller portions from large lumps of goods.

• It is a process through which goods are transported to final consumers.

• In other words, retailing consists of the activities involved in selling directly to the ultimate consumer for personal, non-business use.

• It embraces the direct-to-customer sales activities of the producer, whether through

his own stores by house-to-house canvassing or by mail-order business.

Page 5: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-5

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?

Page 6: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-6 6

The Philosophy Retailers can best address

these questions by fully understanding and applying the basic principles of retailing, as well as the elements in a well-structured, systematic, and focused retail strategy.

Page 7: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-7

Figure 1-1: Subway

Page 8: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-8

An Ideal Candidate for a Retailing Career

• Must be a people person (more important than technical knowledge). Technical skills can be taught more easily than people skills

• Must be flexible • Should be decisive • Must have analytical skills • Must have stamina

Page 9: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-9

Table 1-1: The 10 Largest Retailers in the Namibia (2011)

Rank Company Main Emphasis 1 Woermann

Brock Hyper Full-line discount stores, supercenters, membership clubs

2 P n P Supermarkets, convenience stores, jewelry stores

3 Big Daddy Full-line discount stores, supercenters

4 Geka Drugstores 5 Home Depot Home centers

6 Sneaker Warehouse

Membership warehouse clubs

7 Victoria Pharmacies

8 Nictus Home centers

9 Hi-FI Centre Electronics, major appliances

10 Game Stores

Department store, discount (Jetmart)

Page 10: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-10

Figure 1-4: A Typical Channel of Distribution

Manufacturer

Wholesaler Final Consumer

Retailer

Page 11: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-11

Figure 1-5: The Retailer’s Role in the Sorting Process

Page 12: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-12

Multi-Channel Retailing

•A retailer sells to consumers through multiple retail formats: • Web sites • Physical stores

Page 13: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-13

Multi-Channel Retailing • Cross selling across channels (in-store product

availability info on Web site) • Consistent pricing in all channels (credibility) • Can buy, and return product regardless on channel • Role of each channel

o Store– try on, ease of return, fast availability (immediacy), compare offerings

o Web– 24/7, product information, product reviews by customers, personalization (tailored assortment based on past purchases), most current pricing, closeout sales

o Catalog-permanency, true color

Page 14: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-14

Figure 1-6: Apple

Page 15: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-15

Distribution Types • Exclusive: suppliers make

agreements with one or few retailers, designating such retailers as the only ones to carry certain brands or products within a specified geographic area

• Intensive: suppliers sell through as many retailers as possible

• Selective: suppliers sell through a moderate number of retailers

Page 16: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-16 16 Retail Mgt. 12e (c) 2013 Pearson Education, Inc. publishing as Prentice Hall

Exclusive vs Intensive Distribution • Exclusive Distribution– Fate of retailer is

tied 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

Page 17: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-17

Figure 1-7: Comparing Distribution Types

Page 18: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-18

Figure 1-8: Special Characteristics Affecting Retailers

Impulse Purchase

Popularity of

Stores

Retailer’s Strategy

Small Average

Sale

Page 19: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-19

Retail Strategy

• An overall plan for guiding a retail firm

• Influences the firm’s business activities

• Influences firm’s response to market forces

Page 20: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-20

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)

Page 21: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-21

Figure 1-9: “Expect More. Pay Less” at Target

Page 22: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-22

Aspects of Target’s Strategy • Growth

objectives • Appeal to a

prime market • Distinctive image • Focus • Customer service • Multiple points of

contact

• Employee relations

• Innovation • Commitment

to technology • Community

involvement • Monitoring

performance

Page 23: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-23

Figure 1-10: Applying the Retailing Concept

Customer Orientation

Coordinated Effort

Value-driven

Goal Orientation

Retailing Concept

Retail Strategy

Page 24: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-24

Figure 1-11: The Build-A-Bear Experience: Never Boring

Page 25: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-25

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

Page 26: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-26

Figure 1-12: A Customer Respect Checklist Do we trust our customers? Do we stand behind what we sell? Is keeping commitments to customers

important to our company? Do we value customer time? Do we communicate with customers

respectfully? Do we treat all customers with respect? Do we thank customers for their business? Do we respect employees?

Page 27: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-27

Relationship Retailing • Retailers seek to establish and

maintain 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

Page 28: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-28

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 stream– cost 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 people’s attributes and shopping behaviors

Page 29: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-29

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”

Page 30: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-30 30 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 (channel conflict):

• control over channel (private label) • profit allocation (resale price control) • number of competing retailers (exclusive, selective or

intensive 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

Page 31: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-31

Page 32: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-32

Approaches to the Study of Retailing

Institutional Functional

Strategic

Page 33: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

©2013 Pearson Education 1-33

Parts of Retail Management: A Strategic Approach

• Building relationships and strategic planning

• Retailing institutions • Consumer behavior and information

gathering • Elements of retailing strategy • Integrating, analyzing, and improving

retail strategy

Page 34: CHAPTER 1: AN INTRODUCTION TO RETAILING · in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in

the United States of America.