CHAPTER 1

An Introduction to Retailing

RETAIL
MANAGEMENT:
A STRATEGIC
APPROACH,
9th Edition

BERMAN EVANS
 ‫االهداف‬
Chapter Objectives ‫وجهات‬
‫نضر‬
 To define retailing, it different perspectives and its
‫تأثير‬
impact on market.
‫المفهوم‬
 To introduce concept of strategic planning and how
‫ تتطبيق‬to apply it.
‫االساس‬
‫ تو‬ To show why the retailing concept is the foundation
of a successful retail business.
‫القضايا‬
 What are issues in retailing.
‫االشارة‬ ‫شكله‬ ‫النص‬
 To indicate the focus and format of the text
Retailing In KSA
‫األهمية االكثر‬ ‫الصناعات‬
• Retailing is the most important industries in KSA

‫تاريخيا‬
• Historically retailing has been viewed as the sales of
‫المستهلكين‬ ‫عن طريق‬
• goods to the consumers through retail shops. ‫محل‬

‫مع ذالك‬
• However ,Retailing today should be viewed as being
rather in broader concept.
‫بدال‬ ‫على نطاق أوسع‬
 Retailing
‫يشمل‬
Retailing encompass the business activities
‫ متعلقه‬involved in selling goods and services to
consumers for their personal, family, or
household use.
‫ايضا‬ ‫يشمل‬
It also includes every sale to the final
consumer.
Issues in Retailing
‫بينما‬ ‫كسب‬
1. How can we best serve our customers while earning a
fair profit?
‫عادله‬ ‫ربح‬

2. How can we stand out in a highly competitive

environment where consumers have too many choices?

3. How can we grow our business, while retaining a core of

loyal customers?
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.
 Functions of a retailer

From the customer point of view, the retailer

serves him by providing the goods that he
needs in the required assortment, at the required
place and time.
From an economic standpoint, the role of a
retailer is to provide real added value or utility
to the customer. This comes four different
perspectives

7
 Functions of a retailer
1. Form: First is utility regarding the form of a product that is
acceptable to the customer.
 The retailer does not supply raw material, but rather offers
finished goods and services in a form that the customers want.
 The retailer performs the function of sorting the goods and
providing us with an assortment of product in various
categories.
2. Time: He cerates Time utility by keeping the store open when
the consumers prefer to shop.
 preferable shopping hours.
 Functions of a retailer
3. Place: Available at a convenient location, it creates place of utility.

4. Ownership: Finally, when the product is sold, ownership is created.

Apart from these functions retailer also performs like:

5. Arranging Assortment: manufacturers usually make one or a variety of

products and would like to sell their entire inventory to few buyers to
reduce costs. Final consumers, in contrast prefer a large variety of goods
and services to choose from and usually buy them in small units.

• Retailers are able to balance the demands of both sides, by collecting an

assortment of goods from different sources, buying them in sufficiently
large quantities and selling them to consumers in small units
 Functions of a retailer
5. Breaking Bulk: To reduce transportation costs,
manufacturer and wholesalers typically ship large cartons
of the products, which are then tailored by the retailers into
smaller quantities to meet individual consumption needs

6. Holding stock: Retailers maintain an inventory that allows

for instant availability of the product to the consumers. It
helps to keep prices stable and enables the manufacture to
regulate production.

7. Promotional support: small manufacturers can use

retailers to provide assistance with transport, storage,
advertising, and pre- payment of merchandise.
 Retail Functions
• The retail outlets may provide some or all the following services:
1.Convenient Location
2. Merchandise Products
3. Processing merchandising in acceptable forms
4. Breaking Bulk into small quantities so sold easily
5. Holding of stocks at relative market price
6. Information not only customer as well as supplier also.
7. Product guarantees after and service
8. Awareness about the product Quality
9. Information about product offers and Promotions
10. Some facilities for social intercourse e.g health and hygine
Major type of retail stores

There is no universally accepted method of classifying retailer. Various

schemes have been proposed to categories retailers based on
 Number of outlets
 Margin vs. turnover
 Location
 Size.
Because of overlap of classification criteria, some stores may qualify as
under two different categories.
Type of Retail Market
General merchandise retailer: general merchandise retailer carry a
variety of product lines, with considerable depth. Some major types of
these stores include supermarkets and hypermarkets , discount stores,
mini markets, Baquala and convenience stores.

1. Super market: A supermarket is a large self service retail store that

carries a wide variety of consumer products under one roof , such as
complete line of food products , household maintenance items. In KSA
some supermarkets are very ideal for managing household items like
Panda, Bindawood Noree Supermakets etc.
Discount stores
o Discount store: these stores are self service, standard general
merchandise retailers regularly offering brand name and private
brand items at low price, earn lower margins and push for high
sales turnover.
o The characteristics of true discount stores include
 Selling products at discounted price
 Carry standard international , national, or store brands
 Self service stores to minimize operational costs
 Preferred store location are low rent areas.
Like best known discount store Top Ten Max Discount
Minimarket store
o Minimarket store: a department store is larger retail store than Baquala
offering a broad verity and depth of product lines.
o The product mix may include food products and other household
goods.
 Like Ismat Supermarkets
 Fashion related department stores in KSA are Mango, Top Tens,
pantaloons, lifestyles.
Specialty Stores:
2. Specialty Stores:
specialty stores carry a narrow product mix with depth of
assortment within the line.
 The emphasis is on a limited number of complimentary products
and high level of customer service
 Specialty store often sell shopping goods such as Jewelry, apparel,
computers, mobile phones, TV music systems, sporting goods.
 Like; Extra Tanishq, Computer Market, .
Shopping Malls:
3. Shopping Malls: shopping malls typically deal with several bases
and product categories and provide a large variety of merchandise
products and services.
4. There are several malls operating in Makkah as well as in Saudi
Arabia.
• Makkah Mall
• Aziziyah Mall
• Arabian mall
• Galeriya Mall
Retail chains:
4. Retail chains: a retail chain operates multiple retail outlets under
common ownership in different cities and towns.

 To some extent the purchasing function and decision making are

coordinated or centralized.
 Like Albaik, KFC,Tazaj Food, McDonald's . Etc.
Convenience Store
• Convenience Store

• Example Meed Stores

Characteristics of ideal Candidate in
Retail
• Discussions
An Ideal Candidate for Retailing Career
Be a Smart person
Be flexible
Be decisive
Have analytical skills
Have stamina for Long working hour
Have good communication Skill
 Figure 1.4 A Typical Channel of Distribution

Retailer

Manufacturer

Final
Consumer
Wholesaler / Marketing Company
Figure 1.5 The Retailer’s Role in the Sorting
Process
Multi-Channel Retailing
A retailer sells to consumers through
multiple retail formats
Web sites
Physical stores
Relationship Management Among Retailers
and Suppliers
• Disagreements may occur:
control over channel
profit allocation
number of competing retailers
product displays
promotional support
payment terms
operating flexibility
Retail Distribution Types
• Exclusive: suppliers make agreements with one or few
retailers that designate the latter as the only ones in a
specified geographic area to carry certain brands or
products
• Intensive: suppliers sell through as many retailers as
possible
• Selective: suppliers sell through a moderate number of
retailers
Figure 1.8 Special Characteristics Affecting
Retailers

Small
Impulse
Average
Purchase
Sale

Retailer’s
Strategy

Popularity
of
Stores
Retail Strategy

An overall plan for guiding a retail firm

Influences the firm’s business activities
Influences firm’s response to market forces
Six Steps in Strategic Planning
1. Define the type of business
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
 SMART Objectives

• S : Specific
• M Measurable
• A : Achievable
• R: Realistic
• T: time
Aspects of Target’s Strategy
Multiple points of
Growth-oriented contact
objectives Employee relations
Appeal to a prime Innovation
market Commitment to
Distinctive company technology
image Community involvement
Focus Constantly monitoring
performance
Strong customer
service
Customer Service
• Activities undertaken by a retailer in conjunction with
the basic goods and services it sells.
Store hours
Parking
Shopper-friendliness
Credit acceptance
Salespeople
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?
 Effective Relationship Retailing
• Use a win-win approach
• It is harder to get new customers than to keep existing ones happy
• Develop a customer database
• Ongoing customer contact is improved with information on people’s
attributes and shopping behavior
Question
&
Answers