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An Introduction to Retailing

RETAIL MANAGEMENT: A STRATEGIC APPROACH


11th Edition BERMAN EVANS

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

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Chapter Objectives
To define retailing, consider it from different

perspectives, demonstrate its impact, and note its special characteristics To introduce the concept of strategic planning and apply it 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 To indicate the focus and format of the text
Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

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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.

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

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Issues in Retailing
How can we best serve our customers while earning a

fair profit? How can we stand out in a highly competitive environment where consumers have so many choices? How can we grow our business while retaining a core of loyal customers?

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

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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.

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

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An Ideal Candidate for a Retailing Career


Must be a people person Must be flexible Should be decisive

Must have analytical skills


Must have stamina

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

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Table 1-1: The 10 Largest Retailers in the United States


Rank Company Main Emphasis

1 2 3 4 5 6 7 8 9

Wal-Mart Home Depot CVS Caremark Kroger Costco Target Walgreens Lowes

Full-line discount stores, supercenters, membership clubs Home centers, design centers Drugstores Supermarkets, convenience stores, jewelry stores Membership clubs Full-line discount stores, supercenters Drugstores

Sears Holdings Department stores, specialty stores Home centers

10

Safeway

Supermarkets
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Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

Figure 1-4: A Typical Channel of Distribution

Manufacturer Retailer

Wholesaler

Final Consumer

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

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Figure 1-5: The Retailers Role in the Sorting Process

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

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Multi-Channel Retailing
retailer sells to consumers through A

multiple retail formats: Web sites Physical stores

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

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Figure 1-6: Brooks Brothers and Multi-Channel Retailing

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

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Relationship Management Among Retailers and Suppliers


Disagreements may occur in the following areas: control over channel profit allocation number of competing retailers product displays promotional support payment terms operating flexibility

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

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Distribution Types
Exclusive: suppliers make agreements with one or few

retailers, designating such retailers as the only ones to carry certain brands or products within a specified geographic area Intensive: suppliers sell through as many retailers as possible Selective: suppliers sell through a moderate number of retailers

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

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Figure 1-7: Comparing Distribution Types

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Figure 1-8: Special Characteristics Affecting Retailers


Small Average Sale Retailers Strategy Impulse Purchase

Popularity of Stores
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Retail Strategy
An overall plan for guiding a retail firm Influences the firms business activities

Influences firms response to market forces

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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

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Figure 1-9: Expect More. Pay Less at Target

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Aspects of Targets Strategy


Growth objectives Appeal to a prime

market Distinctive image Focus Customer service Multiple points of contact

Employee relations Innovation Commitment to

technology Community involvement Monitoring performance

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

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Figure 1-10: Applying the Retailing Concept


Customer Orientation

Coordinated Effort
Value-driven Goal Orientation

Retailing Concept

Retail Strategy

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Figure 1-11: The Build-A-Bear Experience: Never Boring

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

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Customer Service
Activities undertaken by a retailer in conjunction
with the basic goods and services it sells. This includes:
Store hours
Parking Shopper-friendliness Credit acceptance Salespeople

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Figure 1-12: 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?
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Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

Relationship Retailing
Retailers 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

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Effective Relationship Retailing


Use a win-win approach It is easier to keep existing customers happy than to gain new ones Develop a customer database Ongoing customer contact is improved with information on peoples attributes and shopping behaviors

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

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Approaches to the Study of Retailing

Institutional Functional

Strategic

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Parts of Retail Management: A Strategic Approach


Building relationships and strategic planning Retailing institutions Consumer behavior and information gathering Elements of retailing strategy Integrating, analyzing, and improving retail strategy

Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

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