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An Introduction to
Retail Management
&
Marketing
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 Book 1
What is
Retailing ?
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 Introduction to Book 1

Can you think what might affect both of these retailers in a

similar way?

Both are affected by forces in the retail environment-

economic, competitors, customers, & other forces that
make
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 Session 2: What is Retailing
Outline
1. Defining retailing
2. Understanding customer value

3. Creating and delivering customer value

4. Development of retailing
5. Conclusions
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 1. Defining retailing
• Retailers : Specialist providers offer items for sale
that are ready for us to use & for our consumption
• Providers are called retailers
• It is the relationship between quantity of goods(G)
sold & type of customer served which help to define
the meaning of retailing
• Convenience store : local store selling a limited
variety of products (P) (food & household
necessities), open for longer hours than other
retailers
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• Retailing has its origins in French verb retailler, 'to cut
up‘, one of the fundamental retailing activities
 To buy in larger quantities & sell on in smaller ones.
• Retailer is not only type of business to 'break bulk'.
• A wholesaler also buys in larger quantities & sells on to
their customers in smaller quantities.
• Customers rather than activities distinguish a retailer
from other distributive traders:
• Retailer sells to final consumers
• Wholesaler sells on to a retailer
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• Retailers should know which P to sell to meet our
needs & how to make available P we want
 Important part of the retailing definition
• Modern retailer does more than 'buy in larger
quantities and sell on in smaller ones‘
 They study needs to present us with what we want,
when we want & at a price we are prepared to pay.
o Yet, Retailers have not always been so responsive

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 2. Understanding customer value
• Traditionally, retailing was considered a passive activity
• Goods passing from manufacturer to wholesaler then to
the retailer & finally to individual customers.
• Retailers display available P & attempt to sell them
regardless of customer wants.
By understanding customer, they stock right P, sell it at
right price & at last increase profits rather than having
to push P they had in stock at reduced prices.
• The era of 'stack them high & sell them cheap' is over
 Increased importance of understanding & satisfying
customer needs
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According to Jobber, companies are using a marketing

approach creating:

Customer value in order to attract & retain customers

Aim: deliver superior value to target customers.

So, it is the marketing concept: meeting customer

needs better than competition

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Customer value: Benefits - Sacrifices
- Different things to different people
Ex: benefit is low cost, choose Tesco's
benefit is low calories, choose Birdseye at 99 cal

Product Average Calorie content per

  price 100 grams
 
Birdseye Healthy Options £1.49 99
Chicken Curry    
 
Tesco Chicken Curry £1.00 120
     
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Today, retailing means:

 Understanding customer wants & how to add

value

 Creating & delivering customer value by

developing suitable P ranges & Services 

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3. Creating & delivering customer value

Retailers can create value through Products they

sell, Services they offer,

& Stores from which they sell

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a. Products
Different implications of selling different P
a) P vary in value & price: different financial inv &
security. Ex, birthday cards vs. diamond
b) P vary in volume: Implications on logistics &
storage. Ex, wardrobe display space vs. 100 of CDs
c) P vary in perishability: implications for stock
holding & stock management. Ex: Bread shelf life
vs. fine wines
d) P vary in tangibility: Ex: Furniture vs. insurance
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• Retailers also need to consider logistics &
distribution
• Physical goods such as cans of beans, produced in
bulk at one location & are sold in reduced quantities
at another.
 Activities coordination is important to the success
of a retail organization selling physical goods.

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b. Services
• P & S are closely linked
• Retailers sell tangible G & add S to enhance offers to
customers
• Services are intangible, ex; holiday, hotel reservation
These are called Service products.
 S are ‘P’ that do not necessarily result in ownership
 S may be linked to a physical good
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Differentiating goods from services
– Tangible & Intangible :
• Tangible: mobile phones& shoes
• Intangible: haircut & a bank account
– Variability:
• Individuals delivering S are unlikely to perform in
exactly the same way
– Inseparability:
• If you cannot separate the process of production &
consumption then the offer is a S.
– Perishability:
• If a retailer sells pure G, they can be stored until
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 Figure 2.1 The goods-services scale

At one end of the scale are pure G: those P that don’t

normally have any form of S attached ex: Clothing
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 Services matching customer expectations

• G & S deliver customer value in ≠ ways

• Potential problems for selling service :

Quality of the performance

Matching S product to customer

expectations

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 Parasuraman et al. (1985 and 1990)
found that matching customer
expectations of a S with their actual
experiences of a S is key to delivering
customer value & ultimately
satisfaction.
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 There should be No gaps between
expectations & actual experiences
! knowledge gap: ≠ between what retailer thinks
customer expects & customer's actual expectations.
! Standards gap: ≠ between service quality expected
& operational standards retailer achieves
! Delivery gap: ≠ between what retailer promises to
deliver & what it actually delivers
! Communication gap: ≠ between what company
states it will achieve & level of S customer receives.

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c. Stores
• Retailing activities focus on place products are sold.
• Shop or via home shopping methods ex; via net/catalogue.
• Outlets should meet operational requirements, suit needs of
customer & create value
• Visual merchandising &store layouts are also important
• Place retailer sells from affects choice of P, manner in which P
are displayed & extent of customer service
• Each retailer selects what is important to their customers &
designs
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 4. Development of retailing

Three theories explain patterns of retail

development:

1) The accordion theory

2) The Wheel of retailing

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3) The retail life-cycle 23
1) The Accordion Theory (Generalist-specialist tendency)

How retail industry tends to alternate between periods of

growth in specialist retailers that offer narrow product

assortments, & periods of growth in generalist retailers

that sell a greater variety of products.

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•Accordion theory is limited in its ability to predict

future retail trends in general or explain what is

happening in retail sector in particular.

•Yet, theory shows that change takes place & that

diversification & specialization work in certain trading

situations.
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2) The wheel of retailing
• Same as Accordion Theory, it is cyclical.
• “Decline in popularity of an established retail
format is caused by entry into the retail market by
an innovative method of retailing”
– New types of retailers enter market as low-status, low-
margin, low-priced operators.
– Gradually they acquire elaborate establishment with both
increased inv & higher operating costs.
– Finally, they mature as higher-cost, higher-priced
merchants, vulnerable to newer types, who in turn, go
through same pattern
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 Lessons from the wheel of retailing
a) High prices provide an 'umbrella' under which discounters
can flourish
b) Management must be eternally vigilant(attentive) on costs,
as failure to do so can destroy competitive advantage

c) New & unexpected forms of competition will inevitably

arise & prove difficult to respond to
d) Success in retailing is ephemeral(short) & contains the
seeds
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of eventual failure 27
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3) The retail life-cycle
• To overcome wheel of retailing problems, retail
life-cycle introduction
• The retail life-cycle suggests:
– An introduction phase for a new type of retail operation
– A growth stage where sales are growing rapidly but
profits are still low
– A maturity stage where competitors grow stronger
– Decline stage.
 This theory shows how retail life-cycles are
shortening & this is important for retail planners. 
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•These cyclical theories suffer from weaknesses

of being inflexible & focus on patterns rather

than processes

•Factors affecting retail development are

political, legal, economic, social, technological

& environmental trends.

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