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A curriculum aligned with nationally recognized industry skill standards in Customer Service and Sales PARTICIPANT GUIDE Retail Operations

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A curriculum aligned with nationally recognized industry skill standards in Customer Service and Sales

PARTICIPANT GUIDE

RetailOperations

PrefaceThere has never been a more exciting time to study retailing. The rapid evolution of the industry from brick-and-mortar locations to the Internet or one’s cell phone is itself a compelling reason to consider preparing for a career in this business.

Fully one in five working Americans work in retailing today, so it clearly holds an allure for so many committed and open-minded individuals who labor in diverse functional areas from loss prevention and store design to utilizing the latest tools to engage customers through effective marketing. And by tomorrow, more changes will greet those of us who are drawn to this fascinating industry.

Yet retailing requires more than passion—though passion is often mentioned, together with willingness to work hard, as key to succeeding in retailing. The opportunity to grow is tied to a solid understanding and mastery of the critical competencies required to build a successful career.

This curriculum was designed for the entry-level sales and service associate as a tool to increase awareness of and improve skills related to frontline work in a retail environment. Intended to be the first phase of a continuum of training and credentials, the Retail Operations Curriculum is aligned with industry standards, as determined and validated by retail companies from across the U.S., and the nationally recognized Professional Certifications in Customer Service and in Sales, issued by the NRF Foundation.

© 2011 NRF Foundation and Castle Worldwide. All rights reserved.

Standards are a critical component of this program, as they provide the

hand, provides the means to document the achievement of these requisite skills and to distinguished one both academically and professionally.

The Retail Operations Curriculum, developed by retailers and other subject

group discussion, and experiential learning activities. The program is highly interactive and challenges the learner to apply new information to group discussions, exercises, case studies, and projects.

worker, including:• Retail Industry Overview• Customer Service • Selling and Service• Store Operations• Getting the Job

We wish you the best of luck in your studies ahead.

© 2011 NRF Foundation and Castle Worldwide. All rights reserved.

Objectives:Participants will be able to:

• Understand the expectations of the course.

• Become familiar with the strategies employed in interactive learning.

• Understand the importance of the retail industry in the U.S. economy.

• Understand the economics of retail.

• Distinguish between the various sectors in the retail industry.

• Understand consumer behavior and the role of the sales associate in

facilitating customers’ purchase decisions.

RETAIL INDUSTRY OVERVIEW

1

Objectives:To enable participants to:

• Recognize the importance of actively participating in company-provided product

training as well as follow-up training.

• Review and comprehend written and multimedia material pertaining to products

or services produced by the employee’s company or trade organization.

• Experience testing and demonstrating products or services.

• Study competitors’ products or services, including marketing.

• Assess customers’ needs.

• Provide exceptional customer service.

• Apply customer service techniques and tools.

• Demonstrate service excellence to ensure repeat business.

CUSTOMER SERVICE

2

Objectives:Participants will be able to:

• Review and understand sales goals.

• Differentiate the various components of retail strategy.

• Compare various pricing strategies and policies.

• Identify and prioritize potential customers.

• Follow up with customers.

• Observe customers for buying cues.

• Overcome objections and respond to questions.

• Close and confirm sales.

• Discuss specifics of the sale with customers.

• Handle sales transactions.

SELLING AND SERVICE

3

Objectives:Participants will be able to:

• Understand the basic functions of Loss Prevention, Inventory Control, Safety,

and Merchandising.

• Recognize their role in these functional areas of the retail store.

STORE OPERATIONS

4

Objectives:Participants will be able to:

• Discover retail career path options.

• Examine the expectations of a variety of career areas within the retail industry.

• Write an accomplishment-oriented resume.

• Verbally communicate their “S/TARs” to a hiring manager during an interview.

• Examine their current network and access ways to increase and maintain contacts.

• Assess their current skills and develop SMART goals to achieve career success.

GETTING THE JOB

5

© 2011 NRF Foundation and Castle Worldwide. All rights reserved. RETAIL INDUSTRY OVERVIEW O-1

1.1 INTRODUCTION AND COURSE LOGISTICS

http://www.ldpride.net/learningstyles.MI.htm#Learninghttp://people.usd.edu/~bwjames/tut/learning-style/stylest.html

People have different learning styles. Here are the ones most frequently defined:

Visual learners learn through seeing...                   These learners need to see the teacher’s body language and facial expression to fully under-stand the content of a lesson. They tend to prefer sitting at the front of the classroom to avoid visual obstructions (e.g., people’s heads). They may think in pictures and learn best from visual displays including diagrams, illustrated textbooks, PowerPoint presentations, videos, flip charts, and handouts. During a lecture or classroom discussion, visual learners often pre-fer to take detailed notes to absorb the information.

Auditory learners learn through listening...

They learn best through verbal lectures, discussions, talking things through, and listening to what others have to say. Auditory learners interpret the underlying meanings of speech by listening to tone of voice, pitch, speed, and other nuances. Written information may have little meaning until it is heard. These learners often benefit from reading text aloud and using a voice recorder.

Tactile/kinesthetic learners learn through moving, doing and touching...

Tactile/kinesthetic individuals learn best through a hands-on approach, actively exploring the physical world around them. They may find it hard to sit still for long periods and may become distracted by their need for activity and exploration.

O-2 RETAIL OpERATIONS CURRICULUm © 2011 NRF Foundation and Castle Worldwide. All rights reserved.

Exercise: Knowing Your Learning Style Purpose: To understand your own learning style.

(1) Complete the Learning Styles survey.(2) Determine your preferred learning style by adding up the number of a’s, b’s, and c’s you

selected on your survey.

What’s Your Learning Style?For these questions, choose the first answer that comes to mind and select a, b, or c. Don’t spend too much time thinking about any one question.

1: When you study for a test, would you rather: a) Read notes, read headings in a book, and look at diagrams and illustrations. b) Have someone ask you questions, or repeat facts silently to yourself. c) Write things out on index cards and make models or diagrams.

2: Which of these do you do when you listen to music? a) Daydream. b) Hum along. c) Move with the music, tap your foot, etc.

3: When you work at solving a problem, do you: a) Make a list, organize the steps, and check them off as they are done. b) Make a few phone calls and talk to friends or experts. c) Make a model of the problem or walk through all the steps in your mind.

4: When you read for fun, do you prefer: a) A travel book with a lot of pictures in it. b) A mystery book with a lot of conversation in it. c) A book where you answer questions and solve problems.

5: To learn how a computer works, would you rather: a) Watch a movie about it. b) Listen to someone explain it. c) Take the computer apart and try to figure it out for yourself.

6: You have just entered a science museum. What will you do first? a) Look around and find a map showing the locations of the various exhibits. b) Talk to a museum guide and ask about exhibits. c) Go into the first exhibit that looks interesting, and read directions later.

7: What kind of restaurant would you rather NOT go to? a) One with the lights too bright. b) One with the music too loud. c) One with uncomfortable chairs.

© 2011 NRF Foundation and Castle Worldwide. All rights reserved. RETAIL INDUSTRY OVERVIEW O-3

8: Would you rather go to: a) An art class. b) A music class. c) An exercise class.

9: Which are you most likely to do when you are happy? a) Grin. b) Shout with joy. c) Jump for joy.

10: If you were at a party, what would you be most likely to remember the next day? a) The faces of the people there, but not the names. b) The names but not the faces. c) The things you did and said while you were there.

11: When you see the word “d–o–g”, what do you do first? a) Think of a picture of a particular dog. b) Say the word “dog” to yourself silently. c) Sense the feeling of being with a dog (petting it, running with it, etc.).

12: When you tell a story, would you rather: a) Write it. b) Tell it out loud. c) Act it out.

13: What is most distracting for you when you are trying to concentrate? a) Visual distractions. b) Noises. c) Other sensations like hunger, tight shoes, or worry.

14: What are you most likely to do when you are angry? a) Scowl. b) Shout or “blow up.” c) Stomp off and slam doors.

15: When you aren’t sure how to spell a word, which of these are you most likely to do? a) Write it out to see if it looks right. b) Sound it out. c) Write it out to see if it feels right.

16: Which are you most likely to do when standing in a long line at the movies? a) Look at posters advertising other movies. b) Talk to the person next to you. c) Tap your foot or move around in some other way.

Now count your a’s, b’s, and c’s and write the number of each in the space provided.

A ______ B ______ C______

O-4 RETAIL OpERATIONS CURRICULUm © 2011 NRF Foundation and Castle Worldwide. All rights reserved.

Follow the facilitator’s instructions to locate your small group. In your small group:(1) Read the description of your primary learning style. (2) Discuss how you agree or disagree with the description.(3) Prepare a 2-minute recap of your group’s learning style to present to the larger group.

Learning Style Descriptions

If you scored mostly a’s you may have a visual learning style. You learn by seeing and looking. Visual learners have a sharp, clear picture of an experience.

Visual learners:•Takenumerousdetailednotes.•Tendtositinthefront.•Areusuallyneatandclean.•Oftenclosetheireyestovisualizeorremember

something.•Findsomethingtowatchiftheyarebored.•Liketoseewhattheyarelearning.•Benefitfromillustrationsandpresentationsthatusecolor.•Areattractedtowrittenorspokenlanguagerichinimagery.•Preferstimulitobeisolatedfromauditoryandkinestheticdistraction.•Findpassivesurroundingsideal.

Visual learners may ask or say:•CanyouseewhatIamsaying?•Howdoyouseethesituation?•Whatdoyouseestoppingyou?•Thislooksgood.

Visual learners complain that auditory learners don’t pay attention to them because they don’t make eye contact.

If you scored mostly b’s, you may have an auditory learning style. You learn by hearing and listening. Auditory learners identify sounds related to an experience.

Auditory learners:•Sitwheretheycanhearbutneedn’tpayattentionto

what is happening in front.•Maynotcoordinatecolorsorclothes,butcanexplain

why they are wearing what they are wearing.•Humortalktothemselvesorotherswhenbored.•Acquireknowledgebyreadingaloud.•Rememberbyverbalizinglessonstothemselves(if

they don’t have difficulty reading maps or diagrams or handling conceptual assignments like mathematics).

© 2011 NRF Foundation and Castle Worldwide. All rights reserved. RETAIL INDUSTRY OVERVIEW O-5

Auditory learners may say or ask:•Ihearyouclearly.•Iwantyoutolisten.•Thissoundsgood.•Howdoyouhearthissituationgoing?•Whatdoyouhearthatisstoppingyou?•Thatsoundsheavy.

Auditory learners complain that kinesthetic learners don’t listen.

If you had mostly c’s, you may have a kinesthetic learning style. You learn by touching and doing. Kinesthetic learners develop a strong feeling about an experience.

Kinesthetic learners:•Needtobeactiveandtakefrequentbreaks.•Speakwiththeirhandsandwithgestures.•Rememberwhatwasdone,buthavedifficulty

recalling what was said or seen.•Findreasonstotinkerormovewhenbored.•Relyonwhattheycandirectlyexperienceor

perform.•Findthatactivitiessuchascooking,construction,engineeringandarthelpthem

perceive and learn. •Enjoyfieldtripsandtasksthatinvolvemanipulatingmaterials.•Sitnearthedoororsomeplaceelsewheretheycangetupandmovearound.•Areuncomfortableinclassroomswheretheylackopportunitiesforhands-on

experience.•Communicatebytouchingandappreciatephysicallyexpressedencouragement,

such as a pat on the back.

Kinesthetic learners may say or ask:•AreyouintouchwithwhatIamsaying?•Howdoyoufeelaboutthissituation?•I’mgettingahandleonthismaterial.•Let’smovetogether.•DoeswhatIamputtingyouintouchwithfeelright?•Soundsheavy.

Kinesthetic learners complain that auditory and visual people are insensitive!

Reflecting on your discussions, why is interactive learning considered to be an important method for training sales associates?

_______________________________________________________________________

_______________________________________________________________________

O-6 RETAIL OpERATIONS CURRICULUm © 2011 NRF Foundation and Castle Worldwide. All rights reserved.

1.2 UNDERSTANDING THE RETAIL INDUSTRY Levy and Weitz, Retailing Management, 2007, p. 4

Objectives: •ToillustratetheimportanceoftheretailindustryintheU.S.economy.•Tounderstandtheeconomicsofretail.•Todistinguishbetweenthevarioussectorsintheretailindustry.•Todefineconsumerbehaviorinpurchasedecisions.

In this course, you are going to learn about the role of the sales associate:•Deliveringexcellentcustomerservice•Sellingstrategiesthathelpdriveretailsales•Understandingofstoreoperationsfunctions•Gettingandkeepingajobinretail

Let’s look at the story of a successful retailer and examine his views on a career in retail.

Jim Wright, CEO, Tractor Supply

“Retail has the quickest cycle time from idea, to implementation, to assessment and refinement of any industry. The pace is exhilarating. In the stores feedback is instantaneous: customers buy or not, they are pleased or not, and team members can have an immediate impact. Even at senior levels the feedback is real-time.

“I enjoy the people side of retail. More than most industries, the opportunity to mentor and develop young team members is limitless. As I look back over my career, there are numerous examples of cashiers who became store managers—store managers who are today in multi-unit management, merchants, or operating executives. A true joy has been in discovering bright, hard-working, and dedicated people and giving them a chance to build a career. For those who step up to the opportunity, the results are very rewarding for them and their mentor.”

© 2011 NRF Foundation and Castle Worldwide. All rights reserved. RETAIL INDUSTRY OVERVIEW O-7

Exercise: Exploring Your Skills

Purpose: To understand what skills you need to achieve success in retail.

What are the major skills needed to work in retail?

_______________________________________________________________________

_______________________________________________________________________

What are some examples of times where you have demonstrated each of these skills?

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

Do you think you are ready to work in retail? ________________

What Is Retailing?Retailing is comprised of all of the business activities that add value to the products and services customers buy for their personal or family’s use. This includes merchandise assort-ment, packaging, customer service, credit, delivery, guarantees, return policies, and more. Retailers are at the end of the chain of businesses and service providers that links product manufacturers to consumers who buy the products. The acquiring of these products can take place in stores, online, or even door-to door. Retailing does not have to take place in a store. No matter what format it takes, retailing is the method by which consumers acquire products and services. Sometimes retailing is thought of as only selling tangible products, but it also involves the selling of services. For example, a customer may purchase hair care services or a bus ticket.

O-8 RETAIL OpERATIONS CURRICULUm © 2011 NRF Foundation and Castle Worldwide. All rights reserved.

Exercise: Different Types of Retailers

Purpose: To understand the various retail formats.

List as many different types of retail businesses as you can:

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

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Reflecting on your discussions, how important is retailing in this country?

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

What role does retailing play in our lives?

_______________________________________________________________________

_______________________________________________________________________

What would our lifestyle be like if we didn’t have stores or retailers of any kind?

_______________________________________________________________________

_______________________________________________________________________

© 2011 NRF Foundation and Castle Worldwide. All rights reserved. RETAIL INDUSTRY OVERVIEW O-9

1.2.1 IMPORTANCE OF THE UNITED STATES RETAIL INDUSTRY

Retail Industry Information: Overview of Facts, Research, Data & Trivia 2011, by Barbara Farfan, About.com Guide

http://money.cnn.com/magazines/fortune/fortune500/2011/industries/225/index.html

AccordingtotheannualreportfromtheU.S.CensusBureau(calendaryear2009),thetotalamountofsalesfortheU.S.retailindustry(includingfoodserviceandautomotive)was$4.13trillion. This was the second consecutive annual decline for the retail industry, both an effect andcauseoftheU.S.economicrecessionoverall.Mostmajormulti-storeretailchainshadsales declines in the first part of 2009, but saw improvements toward the end of that year, and the upward trend has continued into 2011.

Measuredsolelybyrevenuenumbers,theUnitedStatesistheundisputedleaderoftheretailindustry. Walmart is not only the largest global retailer, it is also one of the largest companies of any kind in the world. According to Fortune Magazine’s 2010 “Global 2000” list, 54 of the largestcompaniesofanytypeintheworldareU.S.-basedcompaniesthataresolelyretailcompanies or companies with significant retail operations.

Oftheworld’s10largestretailcompanies,fiveofthemarefromtheUnitedStatesandfivearefromEurope.Thesetop10globalretailershadcombinedsalesof$1.15trillionin2009,ac-cording to international consulting group Deloitte.

AccordingtotheU.S.BureauofLaborStatistics,14.4millionpeoplewereemployedintheU.S.retailindustryasofApril2010.Althoughretailemploymentwasincreasingeverymonthat the beginning of 2010, retail employment numbers were still the lowest they’ve been for the past decade. Because of the decline in retail jobs and the increase in overall unemploy-ment, the retail job market in 2010 is extremely competitive at all levels.

ThetopU.S.retailersareamixofgeneralmerchandisersandspecialtyretailers.(Revenueislisted as of May 23, 2011.) They are listed below:

U.S. Top Retailers 2011 According to Revenue

Ranking Retail Player Revenue ($ millions)

1 Walmart Stores 421,849.0

2 Costco Wholesale 77,946.0

3 The Home Depot 67,997.0

4 Target 67,390.0

5 Best Buy 49,694.0

6 Lowe’s 48,815.0

7 Sears Holdings 43,326.0

8 macy’s 25,003.0

9 Staples 24,545.1

10 TJX 21,942.2

(http://money.cnn.com/magazines/fortune/fortune500/2011/industries/225/index.html)

O-10 RETAIL OpERATIONS CURRICULUm © 2011 NRF Foundation and Castle Worldwide. All rights reserved.

Internet retailing continues to grow substantially, as seen in the chart below:

Fortune 500 Retail Revenue Ranking Player ($ millions)

78 Amazon.com 34,204.0

92 Google 29,321.0

269 eBay 9,156.3

365 Yahoo 6,324.7

(http://money.cnn.com/magazines/fortune/fortune500/2011/industries/225/index.html)

What trends do you see in the retail market?

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________ What should retailers be doing in order to compete effectively?

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

© 2011 NRF Foundation and Castle Worldwide. All rights reserved. RETAIL INDUSTRY OVERVIEW O-11

1.2.2 THE ECONOMICS OF RETAIL

Retailers sell products and services to consumers for personal or family use. Retailers that provide these products are a link in the channel of distribution, which enable products to flow from the manufacturer to the customer or end user. The distribution channel is generally comprised of the following elements:

MANUFACTURER-->WHOLESALER-->RETAILER-->CUSTOMER

The manufacturer produces the products; the wholesaler buys large quantities of products, often repackages them, and breaks large quantities into smaller ones and resells them to retailers, who receive, store, display, and present them to customers. The retailer selects the merchandise and assembles it for the needs of his particular community, store, or location. In the store he keeps the products in good condition, displays the merchandise, shows the customers how to use the goods, and provides added services such as wrapping, delivery, credit, and guarantees.

Channels of distribution may vary depending on the types of products carried by the store. For example, large department stores may send their buyers directly to manufacturers to procure goods. A retailer such as Walmart has firms that manufacture goods especially for their stores.

Thus, the function of a retailer is to provide its customers with the merchandise they want — when, where, and how they want it.

Which retailers sell directly to customers?

_______________________________________________________________________

_______________________________________________________________________

What are the advantages of doing business with this type of retailer?

_______________________________________________________________________

_______________________________________________________________________

What are the disadvantages of doing business with this type of retailer?

_______________________________________________________________________

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O-12 RETAIL OpERATIONS CURRICULUm © 2011 NRF Foundation and Castle Worldwide. All rights reserved.

1.2.3 DIVERSITY OF THE INDUSTRY

http://www.wordiq.com/definition/Retail%20formats#Kinds_of_retailershttp://www.internetretailer.com/trends/sales/

Retail represents a wide variety of formats:•Departmentstores•Supercenters•Supermarkets•Conveniencestores•Specialtystores•Discountstores•Franchising•Directselling•Onlineretail

The reason there are so many different kinds of retail formats is that there are different kinds of retail customers. In this room there are probably representatives of each of the types of customers.

Exercise: Different Types of Customers Purpose: To understand the various types of retail customers.

What kinds of merchandise do you generally buy? How do you go about finding what you are looking for? Do you scour the various newspaper or online ads? Do you shop for fun or only when you need something? Do you clip or print online coupons? Do you prefer to shop alone or with friends or your spouse? Do you research your purchase options ahead of time or rely on salespeople to educate you about which product would best suit your needs? Do you follow retailers on Facebook, Twitter, or other social media? Are you loyal to any brands or stores? Are you the first to purchase new technology or do you wait until you feel all the “bugs” have been worked out? Has a television or radio ad ever influenced you to make an impulse purchase?

_______________________________________________________________________

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________________________________________________________________________

© 2011 NRF Foundation and Castle Worldwide. All rights reserved. RETAIL INDUSTRY OVERVIEW O-13

Reflecting on your discussions, why are there so many different types of customers?

_______________________________________________________________________

_______________________________________________________________________

Types of retail customers include:Innovative customer:

_______________________________________________________________________

_______________________________________________________________________

Comparison shopper:

_______________________________________________________________________

_______________________________________________________________________ Impulse buyer:

_______________________________________________________________________

_______________________________________________________________________

The follower:

_______________________________________________________________________

_______________________________________________________________________ The diverse shopper:

_______________________________________________________________________

_______________________________________________________________________ The recreational shopper:

________________________________________________________________________

________________________________________________________________________

O-14 RETAIL OpERATIONS CURRICULUm © 2011 NRF Foundation and Castle Worldwide. All rights reserved.

1.2.4 HOW RETAILING ADDS VALUE TO PEOPLE’S LIVES

Levy and Weitz, Retailing Management Newsletter, February 2010

Products and services directly affect the quality of consumers’ lifestyles. Think about whether there was only one kind of toothpaste available, instead of the many brands and formats such as cavity preventing, tooth whitening, or breath-freshening products. Or, what if all cars were black four-door sedans? Customers wouldn’t be able to select the one format, model, or size that best meets their needs.

Think about different lifestyles people have today. Some people work long hours; some people are retired and have free time; some families have several people living in their household; some homes have only one person residing there. The needs of each of these people or groups differ, and influence what they purchase as consumers. Packaged goods and ready-cooked meals help provide quick nourishment to busy working people. Diverse clothing styles pro-vide opportunities for people to dress according to their preferred image, comfort, and bud-get. Over-the-counter medication provides healing and relief to people suffering from aches and pains, colds, and other common ailments.

What customers want, actually or potentially, constitutes what retailers must supply in order to remain competitive and viable as a business. Retailers and their employees who understand that the store is for the customer and NOT that the customer is for the store are more likely to be successful in the industry.

CASE STUDY: Walmart Shifts Strategy

Walmart’s new strategy places more emphasis on the quality of the in-store experience and life in general than on low prices. While this retail giant continues to offer low prices for items like milk and toothpaste that shoppers scrutinize for comparative pricing, the cost for a typical market basket of products at Walmart is not much lower than at Target. To improve the shopping environment, Walmart is removing pallets of merchandise from aisles, replacing dark blue signs with soft blue signage, and lowering shelf height to make merchandise more easilyaccessibletocustomers.AboutathirdofWalmart’s4,600U.S.storeshaveundergoneatop-to-bottom redo, called Project Impact. As a result, Walmart is starting to look more like its competitor, Target. The floor is now shinier, the lighting is brighter, and the main walkway around the store perimeter is wider. Altered signs are simpler, with fewer words and prices rounded to dollars, and Walmart employees wear navy shirts and khaki pants to make them easily recognizable to customers. These changes are reflected in the change Walmart has made in its tagline from “Always Low Prices, Always” to “Save Money, Live Better.”

How has Walmart improved the quality of life for its customers?

_______________________________________________________________________

_______________________________________________________________________

© 2011 NRF Foundation and Castle Worldwide. All rights reserved. RETAIL INDUSTRY OVERVIEW O-15

How has this new strategy made Walmart more competitive?

_______________________________________________________________________

_______________________________________________________________________

1.2.5 CONSUMER BEHAVIOR (WHY PEOPLE BUY)

A retailer’s ability to sell products and service customers depends largely on its understand-ing of their needs, habits, and purchase behavior. A good retailer will not try to be “all things to all people.” In other words, successful retailers select a specific target market, or a defined customer who has the need or desire and ability to buy their products. Then, the retailer identifies the characteristics and needs of these customers and tries to understand how they make purchase decisions. Among the data that help retailers develop a better understanding of customer needs are demographics, which is quantifiable information such as household size, income, education, occupation, and place of residence. This information can help retail-ers predict customer needs. For example, a customer with one infant child living in the city is likely to need baby food, diapers, and a crib. Income occupation and education can help to identify the spending power of this customer. Time might also be an issue for customers who are employed full time and needs a convenient way to quickly acquire child-focused products quickly and efficiently.

Often a customer’s interest in a product is created by a stimulus, which is a cue (social or commercial) or a drive (physical) that motivates a person to act. For example, a social cue might be when a friend says, “I hear a new hamburger restaurant just opened downtown—let’s try it.” A commercial cue might be an advertising message from a manufacturer telling consumers about products. A physical cue might be, “I’ve been working on this project for four hours and I’m hungry.” After exposure to a cue he might be motivated to engage in the purchase decision process.

Research suggests that, following interest or motivation, customers go through a five-stage decision-making process in any purchase. This is summarized in the diagram at right:

Need Recognition ofProblem Awareness

InformationSearch

Post-PurchaseEvaluation

Purchase

Evaluation ofAlternatives

O-16 RETAIL OpERATIONS CURRICULUm © 2011 NRF Foundation and Castle Worldwide. All rights reserved.

1. Need recognition: The customer’s recognition that some product or service may solve an identified problem or fulfill an identified need. He will determine whether or not the problem or need is worth solving. For example: “The sun is strong today so I should have eye protection. My sunglasses are broken, but I can fix them with tape and wear them.” On the other hand he could decide that it would be a good idea to purchase new sun-glasses, and therefore go to the store to look for a pair.

2. Information search: Determining which goods or services will help solve the identified problem and comparing the available alternatives. A typical thought process is as fol-lows: “It’s raining [stimulus]. My old umbrella is broken [problem recognition]. Should I buy one from a street vendor, or should I go to Louis Vuitton or Target to buy a new one [search for alternatives]?”

3. Evaluation of alternatives: Having enough information to select from alternatives, the customer will mentally rank the alternatives based on his established criteria and decide which product to purchase. “We need a new refrigerator. Brand A is the most energy efficient, while Brand B has the most cubic feet of interior space. Based on my desire to conserve energy, I will purchase Brand A.”

4. Purchase: Based on the choice of the best alternative the customer now decides where to buy the selected product. Such criteria as location, store image, customer service, and pricing will figure into the decision. “I have decided to buy a new Dell computer. I can purchase one online, at Best Buy, or at a small computer retail store. Since technical sup-port and customer service are very important to me, I’ll go to Best Buy because they have the Geek Squad to help me.”

5. Post purchase evaluation: After completing the purchase, the customer will review how she felt about the process. If she was happy with the product and the retail experience, she is more likely to repeat the purchase behavior. If not, the next time she needs to make a similar purchase, she is likely to reevaluate the alternatives and the purchase process. “I love my new shoes. They are so comfortable I can wear them all day without my feet hurting, and shopping at Joe’s Shoe Store was such a pleasure—they even gave me a free pair of stockings. I definitely will go back there when I need a new pair of shoes.”

© 2011 NRF Foundation and Castle Worldwide. All rights reserved. RETAIL INDUSTRY OVERVIEW O-17

Exercise: Customer Decision-making

Purpose: To understand and apply the customer decision-making process.

Describe how the consumer decision process would operate for these goods and services:

A new car:

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A winter coat:

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A restaurant:

_______________________________________________________________________

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Reflecting on your discussions, why is it necessary to understand how customers make purchase decisions?

_______________________________________________________________________

_______________________________________________________________________

Now that you have a better understanding of the industry, explain why you want to work in retail.

_______________________________________________________________________

_______________________________________________________________________