Retail Management
CENTRALIZED CHECKOUTS
CHAPTER 1: EVOLUTION OF THE RETAIL INDUSTRY
RETAILING
- Direct selling to customers
- Adds value to products and services sold to
consumers for their personal or family use
- Involves the sale of services
o Overnight lodging in a motel
o Doctor’s exam
o Haircut
o Pizza delivery
- Not all retailing is done in stores
o Ordering shirt online
o Buying cosmetics from a salesperson
o Ordering from a catalog
o Streaming a movie
FETCH SYSTEM
- An over the counter system of procuring goods in the
20th century
- Also known as the pharmacy system where the clerk is
given a list then compile everything in a basket and
payment is done over the counter which can be seen
in pharmacies today
- PROBLEMS: flow issue (customer flow), selection
(product selection), staffing
o FLOW:
- process of analyzing the arrival, length of
stay, the activities, and exit of consumers
- people who enter in the first something feel
empowered
- more items in the cart, pabawas ng pabawas
yung confidence (since you will feel like you
are overspending)
- willingness to add more items becomes
lower
o SELECTION:
- Presence of alternatives, additional, excess
product offerings to maximize profit
- Selection draws power from interaction ;
allowing customers to experience
interaction increases their attachment to
products
- ENDOWNMENT EFFECT: strategies are
formed where you are encouraged to try-on
the products for you to interact (ex. Letting
you try/wear an outfit to have an experience
with it)
o STAFFING ISSUE
- Less man power compared to fetch system
- Supermarket = self-service
- Man power reduction = increases traffic
coverage of the flow
AFTER 1946 (CHARACTERISTICS OF MODERN RETAILING)
1. PRINCIPLE OF SELF-SERVICE
- First: Piggly Wiggly Store
- Symbol of Retailing: Shopping Cart
2.
- Counters are strategically placed in located payment
centers
- Manpower reduction
- Increase traffic coverage of the flow
3. BRAND CONSOLIDATION
- More brands can be housed due to comparative
shopping experience (product selection)
 COMPETE – alternative ; COMPLIMENT – additional ;
intensity of selection will vary
4. PRODUCT ASSORTMENT
- Cornerstone of retail marketing
- For revenue flow for any retail enterprise
- Can be internal or external selection of products
- INTERNAL: SM Bonus, Pure Basics
- EXTERNAL: big enterprises (brands)
THE RETAILER’S ROLE IN A SUPPLY CHAIN
RETAILER
- A business that sells products and/or services to
consumers for their personal or family use
- Key component in a supply chain that links
manufacturers to consumers
- Typically buy products from wholesalers and/or
manufacturers and resell them to consumers
SUPPLY CHAIN
- A set of firms that make and deliver goods and
services to consumers
MANUFACTURER →WHOLESALER→RETAILER→CONSUMER
RETAILERS CREATES VALUE
PROVIDING AN ASSORTMENT OF PRODUCTS AND SERVICES
- Enables customers to choose from a wide selection of
products at one location
- Prevents customers from going to different stores to
buy groceries to prepare a single meal
BREAKING BULK
- Reduce transportation costs
- Retailers then offer products in smaller quantities
tailored to consumption patterns
- Allows manufacturers to produce and ship in large
quantities but enables consumers to purchase in small
quantities
HOLDING INVENTORY
- Products will be available when consumers want them
- Important to consumers with limited storage space
PROVIDING SERVICES
- Retailers offer credit for consumers to have a product
now and pay it later
- They display products so consumers can see and test
them before buying
- Some retailers hire salespeople in stores or maintain
websites to answer questions and provide information
about their products.
 - SKU is composed of an alphanumeric combination of
eight-or-so characters ; characters make up a code
CHAPTER 2: TYPES OF RETAILERS
that tracks the price, product details, manufacturer,
RETAILER CHARACTERISTICS
and point-of-sale
- Type of retailer a consumer chooses to patronize
depends on the benefits the customer is seeking - Each different item of merchandise
- Value convenience
- All these retailers survive and prosper because they
satisfy a group of consumers’ needs more effectively
that their competitors
- What qualifies as a good retailer? Unique
characteristics depending on consumer needs
- As consumers needs and competition change, new
retail formats are created and existing formats evolve
- Many retailers are broadening their assortments –
offerings overlap and competition increases

ELEMENTS RETAILERS USE TO SATISFY CONSUMERS’ NEEDS

4 ELEMENTS OF THE RETAIL MIX
1. TYPES OF MERCHANDISE AND/OR SERVICES
OFFERED
2. VARIETY AND ASSORTMENT OF MERCHANDISE SERVICES OFFERED
OFFERED - Displaying merchandise
3. LEVEL OF SERVICE - Accepting credit cards
4. PRICE OF THE MERCHANDISE - Providing parking
- Being open at convenient hours
TYPE OF MERCHANDISE - Home delivery
- The United States, Canada, Mexico have developed a - Gift wrapping
classification scheme (North American Industry
Classification System NAICS) – collect data and FOOD RETAILERS
business activity in each country POWER PERIMETER
- Every business is assigned a hierarchal, six digit code - Includes the dairy, bakery, meat, florist, produce, deli,
based on the type of products and services it sells and coffee bar in a grocery store that are found
around the outer walls of the store
VARIETY - Fresh merchandise
- Breadth
- Number of merchandise categories a retailer offers SUPERMARKET
- Wide vs. narrow - Conventional Supermarket – large, self-service retail
- Brands (noodles), ready to eat food store offering groceries, meat, and produce, as
- Origin (local/imported) well as non-food items (health and beauty aids and
- Format (dry/wet) general merchandise)
- Size - Robinsons Supermarket, SM Supermarket

ASSORTMENT
GREEN MERCHANDISE
- Depth
- Natural, organic, and locally sourced food for those
- Number of different items offered in a merchandise
who are health and environmentally conscious
category
- Fair trade – purchasing from suppliers that pay
- Each different item of merchandise is called stock-
workers a living wage
keeping unit (SKU)
- Locavore movement – reducing the carbon footprint
- Deep vs. shallow
caused by the transportation of food throughout the
- Very specific
world
- Flavor (noodles)
o Lucky me go cup bulalo 40g ETHNIC MERCHANDISE
o Nisin seafood 40g - Prepare meals from scratch, spend more on groceries,
o Nongshim spicy black 114g prefer stores with bilingual staff and signage, and
o Lucky me chilimansi cup 40g place importance on fresh food
o Nisin yakisoba 70g
PRIVATE LABEL MERCHANDISE
STOCK-KEEPING UNIT (SKU) - A business devoted to creating products that third
- A scannable bar code, most often seen printed on parties can sell as their own. For example the brand
product labels in a retail store bonus in SM
- Label allows vendors to automatically track the - Private-label brands benefit both consumers and
movement of inventory and sa2les tracking retailers
 - Customer Advantage: more choices and finding the - 1,229,301 retail outlets in the Philippines – channels
same ingredients and quality as in national brands at a are growing in terms of store count, groceries sees
lower price or higher quality at a similar price to the notable growth followed by convenience stores while
national brands other channels show flat performance
- Retailer Advantage: increased store loyalty, the - That’s why there’s a rise in proximity market or
ability to differentiate themselves from the smaller format outlets
competition, lower promotional costs, higher gross
margins MINIMARTS/COMMUNITY STORE
- New format existing in the Philippines
IMPROVING THE SHOPPING EXPERIENCE
- Better store ambience MERCHANDISE RETAILERS
- Customer service
DEPARTMENT STORES
- Food as theater – in-store restaurants
- Broad variety and deep assortment
- Babysitting services
- Customer service
- Self-service kiosks
- Organize their stores into distinct departments
- Pleasing ambiance, attentive service, wide variety of
SUPERCENTERS
merchandise under one roof
- Large stores
- Soft goods – nondurable or consumable, have shorter
- With full-line discount stores
life span (cosmetics, clothing, bedding)
- Dry groceries
- Hard goods – durable, expected to last several years
(appliances, furniture, consumer electronics)
HYPERMARKET
- First tier – upscale, high-fashion chains (exclusive
- Also large, same as supercenters
designer merchandise), excellent customer service
- Not common in the US
- Second tier – modestly priced, less customer service
- Carry grocery and general merchandise categories and
- Third tier – value-oriented, more price-conscious
offer self-service
- To deal with eroding market share: increase the
- Located in warehouse type structure
amount of exclusive merchandise (merchandise not
- Large parking facilities
available elsewhere), increase use if private-label
- Larger proportion of food items (perishables)
merchandise (store brands), expand omnichannel and
- Stock fewer SKUs than supercenters
social media presence
- SM Hypermarket, Puregold
CATEGORY SPECIALISTS
WAREHOUSE CLUBS
- Big box stores that offer deep assortment but narrow
- Offer a limited and irregular assortment of food and
variety
general merchandise
- Self-service approach
- Little service and low prices
- Intense competition
- Simple interiors
- Category Killers – consumers drawn to deep
- Low inventory holding costs
assortment and competitive prices (buying power)
- S&R, Lander’s
- Mr. DIY, Toy Kingdom, Chris Sports, National
Bookstore
CONVENIENCE STORES
- Provide limited variety and assortment of SPECIALTY STORES
merchandise - Limited number of complementary merchandise
- Enable consumers shop quickly, without having to categories and provide a high level of service
search through a large store and wait in long lines - Very specific market segments by offering a deep
- Convenient assortment but narrow variety, and sales associate
- Higher prices (operating expenses) expertise
- Services: banking - Among most profitable and fastest-growing firms
- 7Eleven, Uncle John’s - Victoria’s Secret, LVMH, Sephora

ONLINE GROCERY RETAILERS DRUGSTORES

- Time-poor consumers are willing to pay more to
access options for ordering groceries online and
having them delivered
- Convenient, back check what you ordered, staying on
budget is easier
- Delivery fee, usage fee, quality of product, out of
stock
- Online retailers continue to expand
- About 30% of orders are for non-food items
- Slim profit items continue to be a problem
- Health and beauty care
- Face competition from pharmacies, some food
retailers, pressure to reduce cost
- Offer wider assortment of merchandise
- Offer more services with drivethru windows, curbside
pickup , in-store clinics
- Mercury Drug, Watsons, Southstar

CHALLENGE IN FINDING NEW LOCATIONS

DIFFERENCES BETWEEN SERVICE AND
CHAPTER 3: MULTICHANNEL AND OMNICHANNEL RETAILING
MERCHANDISE RETAILERS
- Intangibility: something you cannot see or touch RETAIL CHANNEL
- Performance or action - The way a retailer sells and delivers merchandise and
- Simultaneous production and consumption services to its customers
- Perishability - Most common channel used are stores
- Inconsistency - Also use variety of nonstore channels (internet,
mobile, social media, catalogs
TYPES OF OWNERSHIP - Channel – opportunity to complete a transaction, to
sell and deliver merchandise
INDEPENDENT, SINGLE-STORE ESTABLISHMENTS
- Medium – used to communicate information to
- Many retail start-ups are owner-managed,
consumers
management has direct contact with customers and
can respond quickly to their needs
SINGLE-CHANNEL RETAILING
- Very flexible, can react quickly to market changes and
- Retailers sells and deliver merchandise and services to
customer needs
their customers through only one channel
- Negotiate lower prices
- To compete against corporate chains, some join a
MULTICHANNEL RETAILNG
wholesale-sponsored voluntary cooperative group
- Offer more than one channel to sell and deliver
- Everything will be shouldered by owner
merchandise and services to consumers
- Almost all large retailers are that operate stores are
CORPORATE RETAIL CHAINS
multichannel retailers
- Increase in market share, acquire more brands,
centralized decision making
CROSS-CHANNEL RETAILING
- Thrive by acquiring brand and agree to different
- Use multiple channels to make purchases
partnerships
- An approach developed to use several different
- Company that operates multiple retail units under
channels to complete the same purchase
common ownership
- Having multiple channels in turn creates an
- Some are divisions of larger corporations or holding
opportunity for cross-channel retailing
companies
- Customer receive coupon through email, redeems it in
store and buy the product
FRANCHISING
- A contractual agreement in which the franchisor sells
OMNICHANNEL RETAILING
the rights to use its business trademark, service mark,
- Coordinated multichannel retail offering that provides
or trade name
a seamless and synchronized customer experience,
- One-time franchise fee and ongoing royalty fee
using all of the retailer’s shopping channels
- Success rate
- Both parties benefit from the success of the franchise

THE BIG NAMES OF RETAILING

- Herbert Sy
- Rubina Gokongwei

HARD DISCOUNT CONCEPT/DISCOUNTERS

- Limited assortment of products ; stores are not that
big ;
- Increasing the percentage of private labels offered at
low prices ; what sets a discounter apart from other
retailers and they will handpick a specific merchandise
- Establishing and maintaining a high quality/price ratio,
i.e. high quality at low prices
- Efficient operations
- Pioneered in Germany
- Focus location: Rural Areas ; their rent is not
expensive since mostly in rural areas
- Core of discounter: lower prices
- ARE HARD DISCOUNTERS POSE A THREAT TO
INCUMBENT GROCERS? Hard discounters are gaining
traction in the Philippines and since we are a third
world country
RELATIVE STRENGTHS OF RETAIL CHANNELS
IN-STORE RETAILING
- Stores offer several benefits to customers that they
cannot get when they shop through other, nonstore
channels
TOUCH AND SMELL OF PRODUCTS
- Greatest benefit offered by stores is the opportunity
for customers to use all five senses (touching,
smelling, tasting, seeing, and hearing) when
examining and evaluating products
- Technological representations do not provide the
same level of information customers get when they
actually try on the product or smell a candle
PERSONAL SERVICE
- Sales associates have a unique ability to provide
meaningful, personalized information
- When you go to a luxury store such as LV, their sales
associate really knows their products and what to
recommend to their customers due to extensive
training to provide a meaningful and personalized
information

RISK REDUCTION
- The physical presence of the store reduces perceived
risk and increases customers’ confidence that any
problems with a purchase will be corrected
- Customers can easily access people in store to resolve
issues
- You buy an iPhone from the Apple Store, you open it
in the store but it wasn’t working, they will be able to
change it right away

IMMEDIATE GRATIFICATION
- Customers can use merchandise immediately after
they buy it in stores
- You need a last minute gift for a party, you do not
have to wait for a day or two for the delivery of a gift
from Shopee or Lazada

ENTERTAINMENT AND SOCIAL EXPERIENCE

- In-store shopping can be a stimulating experience for
some people, providing a break in their daily routine
and enabling them to interact with friends

CASH PAYMENT
- Stores are the only channel through which consumers
can make cash payments
- Some prefer cash over card or other electronic
payments since it is quicker, resolves the transaction
immediately, and does not result in potential interest
payments or excessive debt