Introduction to Retailing

1 Consumer Behavior Ignacio J. Vázquez E. © 2007
5th
Edition

McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 5/e Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
Introduction to theIntroduction to the
World of RetailingWorld of Retailing
Chapter 1Chapter 1

• 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.
What is Retailing?

Examples of Retailers
• Retailers:
-Sears, Holiday Inn, McDonalds, Amazon.com, Jiffy
Lube, AMC Theaters, American Eagle Outfitter, FAO
Schwartz, 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, Sams Clubs

How Retailers Add Value
• Breaking Bulk
-Buy it in quantities customers want
• Holding Inventory
-Buy it at a convenient place when you want it
• Providing Assortment
-Buy other products at the same time
• Offering Services
-See it before you buy, get credit, layaway

Doll can be bought
on credit or put on
layaway
Doll is featured on
floor display
Doll is offered in
convenient
locations in
quantities of oneDoll is developed in
several styles
How Retailers Add Value
Doll is developed at
manufacturer
The value of the product and service increases
as the retailer performs functions.

Manufacturer’s Perspective
The Four P’s of Marketing
Distribution
Retailers are part of the
distribution channel
Retailers are part of the
distribution channel
Product
Price
Promotion

Distribution Channel
Distribution Channel
PPT 1-4

Accounting Finance
MISOperations
Marketing
Human Resources
Retailers are a Business Like Manufacturers

Decision Variables for Retailers
Customer Service
Store Design
and Display
Merchandise
Assortment
Communication
Mix
LocationPricing
Retail
Strategy

Economic Significance of Retailing
• Over $2.5 trillion in annual U.S. sales
-greater than medical care, housing, recreation combine
• Employs 17% of population
-about the same as manufacturing and growing
• Management training opportunities
• Entrepreneurial opportunities

Nature of Retail Industry is Changing
Mom and Pop Store
To Today’s Retailer

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

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

Retail Environment Differs Across the Globe
US Japan
Concentration High Medium
Store Size Big Small
Role of Low High
Wholesaling
Efficiency High Low

JC Penney’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
• Future (?)

Sears’ 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

Whole Foods Implementation
Strategy - organic and natural
foods supermarket chain
Assortment beyond
organic/natural foods
Private labels - Whole
Food™, 360 Day Value™
Love, trust, and employee
empowerment
Equality in compensation

Hot Topic’s Retail Mix
Retail Strategy
Customer Service Location
Merchandise
Assortment
PricingCommunication
Mix
Store Design
And Display

Enclosed malls
Customer
Service
Merchandise
Assortment
Mix
Store Display
And Design
Location Strategy

Location
Pricing
Communication
Mix
Store Design
and Display
Customer
Service
Many Different
Hot Band
T-shirts and
Accessories
Assortment Strategy

Location
Communication
Mix
Store Design
and Display
Customer
Service
Merchandise
Assortment
Modest with Sales
Pricing Strategy

Communication Mix
TV and
Magazine Ads
Store Design
And Display
Customer
Service Location
Merchandise
Assortment
Pricing

Store Design and Display
Heavy Metal,
Gothic Look
Customer
Service Location
Merchandise
Assortments
Pricing
Communication
Mix

Customer Service
Modest
Location
Merchandise
Assortment
Pricing
Communication
Mix
Store Design
and Display

Macy’s Retail Mix
Retail Strategy
Customer
Service
Location
Merchandise
Assortment
Pricing
Communication
Mix
Store Design
And Display

Macy’s Retail Mix
Enclosed Malls
Customer
Service
Merchandise
Assortment
Mix
Store Display
And Design
Location Strategy

Macy’s Retail Mix
Location
Pricing
Communication
Mix
Store Design
and Display
Customer
Service
Many Items in
Apparel and
Soft Home
Assortment Strategy

Macy’s Retail Mix
Location
Communication
Mix
Store Design
and Display
Customer
Service
Merchandise
Assortment
Moderate with
Frequent Sales
Pricing Strategy

Macy’s Retail Mix
Communication Mix
TV, Newspaper Ads
and Special Events
Store Design
And Display Merchandise
Assortment
Pricing
Customer
Service Location

Macy’s Retail Mix
Ring with Displays
Customer
Service Location
Merchandise
Assortments
Pricing
Communication
Mix

Macy’s Retail Mix
Customer Service
Modest
Location
Merchandise
Assortment
Pricing
Communication
Mix
Store Design
and Display

Wal-Mart’s Retail Mix
Retail Strategy
Customer
Service
Location
Merchandise
Assortment
Mix
Store Design
And Display

Free-standing Stores
Customer
Service
Merchandise
Assortment
Pricing
Communication
Mix
Store Display
And Design
Location Strategy

Location
Pricing
Communication
Mix
Store Design
and Display
Customer
Service
Large Number
of Categories
Few Items
in Each Category
Assortment Strategy

Location
Communication
Mix
Store Design
and Display
Customer
Service
Merchandise
Assortment
Low, EDLP
Pricing Strategy

Communication Mix
TV and Newspaper
Insert Ads
Location
Pricing
Store Design
and Display
Customer
Service
Merchandise
Assortment

Basic, Special
Displays
for Products
Customer
Service Location
Merchandise
Assortments
Pricing
Communication
Mix

Customer Service
Limited
Location
Merchandise
Assortment
Pricing
Communication
Mix
Store Design
and Display

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

Misconceptions About Careers in Retailing
• Don’t need college
• Low pay
• Long hours
• Boring
• Dead-end job
• No benefits
• Everyone is part-time
• Unstable environment

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 for financially oriented people
• Management for people people

Types of Jobs in Retailing
Most entry level jobs are in
store management or buying, but…
retailers also have staff specialists:
--accounting and finance
--real estate
--human resource management
--supply chain management
--advertising
--public affairs

Centro de Comercio Detallsita
• www.gda.itesm.mx/ccd
• ADMINISTRACIÓN DE MERCANCÍAS / PRECIOS: Aprenderás el manejo de compras,
resurtidos e inventarios que realizan las empresas de comercio al detalle. Analizarás
la tecnología que está revolucionando el retail y estudiarás la administración y el
establecimiento de precios, así como el desarrollo y presentación de líneas de
producto, dando especial atención a las relaciones comprador-proveedor.
• INTERNSHIP I Y II: Aplicarás tus conocimientos dentro de una empresa detallista. en
el verano trabajarás 7hrs. diarias por 5 semanas en una empresa de comercio al
detalle, en donde conocerás las diferentes áreas de la empresa y tendrás la
oportunidad de resolver algún problema o realizar un proyecto específico.
• ADMINISTRACIÓN DE LA TIENDA Y SERVICIO AL CLIENTE: Analizarás los procesos
en el manejo y administración de una tienda. Aprenderás temas relacionados con
sistemas de información, recursos humanos, imagen y diseño de la tienda (visual
merchandising), servicio al cliente y CRM (Customer Relationship Management),
entre otros.
• ESTRATEGIA DE COMERCIO DETALLISTA MULTICANAL: Conocerás las estrategias
que siguen los principales detallistas y su implicación en las ventas. Comprenderás
la metodología para la ubicación de puntos de venta. Aplicarás las estrategias de
publicidad y promoción que se utilizan en el comercio detallista. Además,
aprenderás la nueva tendencia en el retail de administración por categorías.

Introduction to Retailing

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