Discussion 1

Introduction to the World of Retailing

 The World of Retailing

Introduction to Retailing Types of Retailers

Customer Buying
Multi-Channel Retailing
Behavior

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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

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The Distribution Channel
PPT 1-4
Distribution Channel

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Examples of Retailers
Retailers:
Kohl’s, Macy’s, Wendy’s, 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

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Manufacturing, Wholesaling and Retailing
Vertical Integration – firm performs more than one set of
activities
Ex: retailer invests in wholesaling or manufacturing

Backward Integration – retailer performs some distribution and

manufacturing activities
Ex: JCPenney sells Arizona jeans (Private Label)

Forward Integration – manufacturers undertake retailing

activities
Ex: Ralph Lauren operates its own stores
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 How Retailers Add Value
• Break Bulk
-Buy it in quantities customers want
• Hold Inventory
-Buy it at a convenient place when you
want it
• Provide Assortment
-Buy other products at the same time
• Offer Services
-See it before you buy, get credit, layaway

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How Retailers Add Value
The value of the product and service
increases as the retailer performs functions.
Bicycle can be
bought on credit or
put on layaway

Bicycle is featured
on floor display

Bicycle is offered in
convenient locations
in quantities of one
Bicycle is
developed in
several styles
Bicycle is developed
at manufacturer
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Social and Economic Significance of Retailing
• Community Support
• Over $3.4 trillion in annual U.S. sales
greater than medical care, housing, recreation combined
• Employs 27 million people
21% of non-agricultural US workforce
• Management training opportunities
• Entrepreneurial opportunities

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Retailing is Big Part of Economy
Retail (21.8%)
Manufacturing (11.2%)

Government
(16.6%)

Services (45.8%)
Other 5.6%

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Retailers are a Business Like Manufacturers
Accounting Finance

Marketing
MIS

Operations Human Resources

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Nature of Retail Industry is Changing

To Today’s Retailer

Mom and Pop Store

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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
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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 Countries

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Don Farrall/Getty Images
Comparison of Distribution Channels Across the Globe

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Retail Management Decision Process

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Claire’s Retail Mix

Customer Service Location

Store Design Merchandise

Retail Strategy Assortment
and Display

Communication Mix Pricing

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Claire’s Retail Mix
Location Strategy

Enclosed malls

Customer Service

Store Display
And Design Merchandise
Assortment

Communication Mix
Pricing

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Claire’s Retail Mix
Assortment Strategy

Customer Service
Location

Store Design Jewelry, accessories and

and Display
cosmetics for tweens and
teens

Communication Mix
Pricing

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Claire’s Retail Mix
Location
Pricing Strategy
Customer Service
Merchandise Assortment

Store Design
and Display

Communication Mix

Modest with Sales

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Claire’s Retail Mix
Customer Service
Location

Communication Mix Store Design

And Display Merchandise Assortment

Pricing

TV and Magazine Ads

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Claire’s Retail Mix

Store Design and Display

Customer Service Location

Bright, fashionable and fun Merchandise Assortments

boutique layout

Communication Mix Pricing

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Claire’s Retail Mix

Customer Service

Modest

Location

Merchandise Assortment

Store Design and Display

Pricing

Communication Mix

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Macy’s Retail Mix

Customer Service Location

Store Design Merchandise

Retail Strategy Assortment
and Display

Pricing
Communication Mix

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Macy’s Retail Mix
Location Strategy

Enclosed Malls

Customer Service

Store Display
And Design Merchandise
Assortment

Communication Mix
Pricing

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Macy’s Retail Mix
Assortment Strategy

Customer Service
Location

Store Design Many Items in Apparel

and Display

and Soft Home

Communication Mix
Pricing

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Macy’s Retail Mix
Location
Pricing Strategy
Customer Service
Merchandise Assortment

Store Design
and Display

Communication Mix
Moderate with
Frequent Sales

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Macy’s Retail Mix
Customer Service
Location

Communication Mix Store Design

And Display Merchandise Assortment

Pricing

TV, Newspaper Ads and

Special Events

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Macy’s Retail Mix

Store Design and Display

Customer Service Location

Racetrack with Displays Merchandise Assortments

Communication Mix Pricing

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Macy’s Retail Mix

Customer Service

Modest

Location

Merchandise Assortment

Store Design and Display

Pricing

Communication Mix

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Target’s Retail Mix

Customer Service Location

Store Design Merchandise

Retail Strategy Assortment
and Display

Communication Mix Pricing

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Target’s Retail Mix
Location Strategy

Free-standing Stores

Customer Service

Store Display
And Design Merchandise
Assortment

Communication Mix
Pricing

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Target’s Retail Mix
Assortment Strategy

Customer Service
Location

Store Design
Large Number of Categories
and Display
Private Labels
Few Items in Each Category
Communication Mix
Pricing

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Target’s Retail Mix
Location
Pricing Strategy
Customer Service
Merchandise Assortment

Store Design
and Display

Communication Mix

Low to Modest

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Target’s Retail Mix

Communication Mix

TV and Newspaper
Insert Ads

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Target’s Retail Mix

Store Design and Display

Customer Service Location

Colorful, wide aisles displays

Merchandise Assortments
for products with a grid layout

Communication Mix Pricing

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Target’s Retail Mix

Customer Service

Limited

Location

Merchandise Assortment

Store Design and Display

Pricing

Communication Mix

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JCPenney’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
• Stand alone stores
• Centralized checkout

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Sears Holdings’ 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
• New growth with Kmart
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Whole Foods Implementation
Organic and natural foods supermarket chain

Assortment beyond organic/natural foods

• Private labels - Whole Food™, 360 Day Value™
• Love, trust, and employee empowerment
• Always innovation:
Candy Island
Lamar Street Greens
Fifth Street Seafood
In-store Massage Therapist

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Ethical Situations for a Retail Manager
• Should 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 customer’s needs?
• Should a retailer give preference to minorities when making a
promotion decision?
• Should a retailer treat some customers better than others?

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Checklist for Making Ethical Decisions

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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!

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Career Opportunities in Retailing
Start Your Own Business
List of Retail Entrepreneurs on Forbes 400 Richest Americans

• 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)
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Misconceptions About Careers in Retailing

• Don’t need college

• Low pay
• Long hours
• Boring
• Dead-end job
• No benefits
• Everyone is part-time The McGraw-Hill Companies, Inc./Andrew Resek, photographer

• Unstable environment
• No opportunity for women and minorities
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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 and planning for financially analytically oriented
• Management for people-people

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TypesMost
of entry
Jobslevel
injobs
Retailing
are in
store management or buying, but there’s…
-accounting and finance
-real estate
-human resource management
-supply chain management
-advertising
-public affairs
-information systems
-loss prevention
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-visual merchandising
End