An

Introduction
to Retailing RETAIL
MANAGEMENT:
A STRATEGIC
APPROACH

1-1
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

1-2
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.

1-3
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?

1-4
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.

1-5
Figure 1-2: Careers in Retailing

1-6
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

1-7
Table 1-1: The 10 Largest Retailers in the
United States
Rank Company Main Emphasis
1 Wal-Mart Full-line discount stores, supercenters,
membership clubs
2 Home Depot Home centers, design centers
3 CVS Caremark Drugstores
4 Kroger Supermarkets, convenience stores, jewelry stores
5 Costco Membership clubs
6 Target Full-line discount stores, supercenters
7 Walgreens Drugstores
8 Sears Holdings Department stores, specialty stores
9 Lowe’s Home centers
10 Safeway Supermarkets

1-8
Figure 1-4: A Typical Channel of
Distribution

Manufacturer
Retailer

Final
Wholesaler
Consumer

1-9
Figure 1-5: The Retailer’s Role in the
Sorting Process

1-10
Multi-Channel Retailing
A retailer sells to consumers through
multiple retail formats:
 Web sites
 Physical stores

1-11
Figure 1-6: Brooks Brothers and
Multi-Channel Retailing

1-12
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

1-13
FUNCTIONS OF RETAILERS
Understanding customer needs and wants
Providing an assortment of goods and services
Break bulk
Providing information to suppliers
Holding inventory
Providing services to customer

1-14
Factors influencing retailing business
Retail
org/firm

Competitors
Competitors
and
and their
their
strategy
strategy

Target Pressure
Pressure
groups
groups &&
market govt.
govt. policies
policies

1-15
Factors influencing retailing business
Customers
Convenience
Quality and fashion level goods
Price
Services
Excitement
Competition
Intra type competition
Inter type competition
Environmental trends
Economic factor
Demographic factor

1-16
Social factor
Psychological factor
Brand profusion
Psychographic change
Demographic change
Political change
Technological change

1-17
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

1-18
Figure 1-7: Comparing Distribution Types

1-19
Retail Strategy
An overall plan for guiding a retail firm
Influences the firm’s business activities
Influences firm’s response to market forces

1-20
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

1-21
Figure 1-9: “Expect More. Pay Less” at
Target

1-22
Aspects of Target’s Strategy
Growth objectives Employee relations
Appeal to a prime Innovation
market Commitment to
Distinctive image technology
Focus Community
involvement
Customer service
Monitoring
Multiple points of performance
contact

1-23
Figure 1-10: Applying the Retailing Concept

Customer Orientation

Coordinated Effort
Retailing Retail
Concept Strategy
Value-driven

Goal Orientation

1-24
Figure 1-11: The Build-A-Bear Experience:
Never Boring

1-25
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

1-26
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?

1-27
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

1-28
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 people’s attributes and shopping
behaviors

1-29
Approaches to the Study of Retailing

Institutional
Functional

Strategic

1-30
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

1-31