Chapter 1

An Introduction to Retailing

RETAIL MANAGEMENT: A STRATEGIC APPROACH,
9th Edition

BERMAN

EVANS

Chapter Objectives
z To define retailing, consider it from different perspectives, demonstrate its impact, and note its special characteristics z To introduce the concept of strategic planning and apply it z To show why the retailing concept is the foundation of a successful business, with an emphasis on the total retail experience, customer service, and relationship retailing z To indicate the focus and format of the text
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Retailing
Retailing encompasses the business activities involved in selling goods and services to consumers for their personal, family, or household use. It includes every sale to the final consumer.
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Issues in Retailing zHow can we best serve our customers while earning a fair profit? zHow can we stand out in a highly competitive environment where consumers have too many choices? zHow can we grow our business. while retaining a core of loyal customers? 1-4 .

1-5 . systematic. and focused retail strategy.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.

Figure 1.1 Boom Times for Costco 1-6 .

Figure 1.2 Career Pathways to Success 1-7 .

Career Pathways to Success 1-8 .

An Ideal Candidate for Retailing Career zBe a people person zBe flexible zBe decisive zHave analytical skills zHave stamina 1-9 .

400 2.797 34.348 3.381 2.150 369 1.500 193.553 50.770 1.028 34.414 1.C.301 32.1 The 10 Largest Retailers in the U.812 53.000 270.000 . 2001 Rank Company $ Sales (million) # of stores # of employees 1 2 3 4 5 6 7 8 9 10 1-10 Wal-Mart Home Depot Kroger Sears Target Albertson¶s Kmart Costco Safeway J.000 223.525 64.960 1.773 3.383. Penney 219.534 2.300 288.098 41.004 4.000 256.Table 1..931 37.000 240.500 220.078 39.362 37.S.000 310.

3 The High Costs and Low Profits of Retailing 1-11 .Figure 1.

4 A Typical Channel of Distribution Manufacturer Retailer Wholesaler Final Consumer 1-12 .Figure 1.

Figure 1.5 The Retailer¶s Role in the Sorting Process 1-13 .

Multi-Channel Retailing zA retailer sells to consumers through multiple retail formats zWeb sites zPhysical stores 1-14 .

C.Figure 1. Penney and Multi-Channel Retailing 1-15 .6 J.

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 1-16 .

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 1-17 .

Figure 1.7 Comparing Distribution Types 1-18 .

8 Special Characteristics Affecting Retailers Small Average Sale Retailer¶s Strategy Impulse Purchase Popularity of Stores 1-19 .Figure 1.

Retail Strategy zAn overall plan for guiding a retail firm zInfluences the firm¶s business activities zInfluences firm¶s response to market forces 1-20 .

6.Six Steps in Strategic Planning 1. long-run plan Implement an integrated strategy Evaluate and correct 1-21 . 3. 5. 2. Define the type of business Set long-run and short-run objectives Determine the customer market Devise an overall. 4.

Figure 1.9 ³Pay Less + Export More´ at Target 1-22 .

Aspects of Target¶s Strategy z Growth-oriented objectives z Appeal to a prime market z Distinctive company image z Focus z Strong customer service z Multiple points of contact z Employee relations z Innovation z Commitment to technology z Community involvement z Constantly monitoring performance 1-23 .

Figure 1.10 Applying the Retail Concept Customer Orientation Coordinated Effort Value driven Goal Orientation 1-24 Retailing Concept Retail Strategy .

Figure 1.11 Eliminating Shopper Boredom 1-25 .

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 1-26 .

12 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? 1-27 .Figure 1.

Relationship Retailing ‡ Seek to establish and maintain long-term bonds with customers. rather than act as if each sales transaction is a completely new encounter ± Concentrate on the total retail experience ± Monitor satisfaction ± Stay in touch with customers 1-28 .

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 1-29 .

Approaches to the Study of Retailing Institutional Functional Strategic 1-30 .

analyzing. and improving retail strategy 1-31 .Parts of Retail Management: A Strategic Approach zBuilding relationships and strategic planning zRetailing institutions zConsumer behavior and information gathering zElements of retailing strategy zIntegrating.