Retail Management

Module 1: Introduction to Retailing

Retailing
Learning Outcomes: Retailing

• 1.1 Describe retailing, the entities involved, and the impact of decisions on a retail business
• 1.1.1 Define retailing
• 1.1.2 Describe the firms involved in a supply chain
• 1.1.3 Summarize the key challenges facing retailers
Activity

Spend five minutes writing your responses to the following questions:

• When is the last time you went to your favorite retailer?  What store was it? Is it a clothing
store, or is it a grocery store? Maybe you prefer to shop online. Why?
• Have you wondered about the journey those products take before making it out to the
shelves? 
• What is your definition the word “retail.”
Understanding Retailing

Definition of Retail: sale of goods and services to the public for consumption, covering a huge
range of customer needs

Design to create contact efficiency

Define target buyer segments, identify service outputs, and match offerings to provide value to each target

Utilize structural differences among retailers that influence strategies and results

94.5% of retail companies only have one location, and more than one million have fewer than 100
employees
Types of Retail

The retail industry covers an enormous range of consumer needs.

According to the National Retail Federation, there are sixteen major segments in the
industry.

This diversity in size and earnings is reflected in the range of different ownership and
management structures,
Supply Chains

A supply chain is system of organizations, people, activities, information, and resources that
involve transformation in an efficient, nimble, and seamless way

Supplier: person providing service (domestic or international)

Factory: supplier has raw materials made into products
Distribution Center: finished product goes here after leaving factory
Regional Distribution Center: local to area with many advantages
Challenges in Retailing

1. Inventory: having too much or too little can affect reputation of retailer and
perception of consumer

2. Mobile Experience and Engagement: 90% of customers use smartphones while

shopping

3. Digital Disruption: 5 stages (need recognition, information search, evaluating

alternatives, purchase decision, post-purchase evaluation)
Evolution of Retail
Learning Outcomes: Evolution of Retail

1.2 Analyze the evolution of the retail industry

• 1.2.1 Describe the overall change in the structure of the retail industry over the past 60 years

• 1.2.2 Discuss the role information systems have played in the changing retail industry

• 1.2.3 Explain why a willingness to adapt is essential to a retailer's survival

Historical Changes in Retail

Pre-1800s: retail was made up of local merchants who provided full service to customers
(credit, repairs, etc.)

First department store was developed in 1800s, by the 1950s over 4,000 department stores
operated, and by 1970s department stores closed and replaced with malls

1990s: Internet impacted retail industry, online shopping became widely popular and still is to
this day
Information Systems in Retail

Frequently utilized information systems in retail:

• Inventory management software: tracks inventory levels, orders, sales, and deliveries
• Customer Relationship Management: looks at data about current and future customers in
hopes of retaining and building relationships (personal profile/details, sales history,
communication, feedback)
• Accounting Information Systems: system of collecting, storing, and processing data used by
decision makers
Adaptation in Retail

Examples that failed to adapt and why:

• Blockbuster Video: late fees led to its demise, and they were too slow to adapt to changes
• Borders Bookstore: filed for bankruptcy in 2011 because they struggled to fill stores with
products consumers wanted
• Toys R Us: had to lay off over 30,000 employees and sold 15% of toy market, needing to
make up for lost sales
Practice Question

As you consider those shifts also think about how you, the consumer, has changed over time. 

Do you shop differently then you used to a year ago or even a decade ago? 
What have been some of your biggest influencing factors? 
What has been a dramatic shift for you in retail?
Careers in Retail
Learning Outcomes: Careers in Retail

1.3 Recognize career opportunities available in the retail businesses

• 1.3.1 Identify key roles within retail businesses
• 1.3.2 List some challenges of working in the retail field
• 1.3.3 Categorize the general role requirements of a retail manager
• 1.3.4 Discuss the most valuable skills for a retail manager to possess
Key Roles in a Retail Business

Industry offers diverse and unique career paths, and main goal includes intersecting with marketing,
finance, technology, etc. fields

Entry level positions don’t require worker to supervise other workers t same level

Intermediate management is HR, production, strategic, marketing, and/or financial

Management comprises of planning, organizing, staffing, etc.

Understanding Key Roles in a Retail Business

Basic Functions:
• Planning: what needs to happen in the future
• Organizing: implementing pattern of relationships
• Staffing: job analysis, recruitment, hiring people
• Leading/directing: what needs to be done in a situation
• Controlling/monitoring: making adjustments when needed
• Motivating
Depending on size, there will be different positions (first, middle, top levels)
Why Working Retail Is Tough
Inventory levels and assortment: must have right amount of product available at right times
in right places

Mobile engagement and experience: 90% of consumers use smartphones while shopping,
mobile revenue expected to be $420 in 2021

Digital disruption: need recognition, information search, evaluating alternatives, decision to

purchase, post-purchase evaluation

Socially conscious consumer: eco-friendly or “green” products among millennials and

younger
Retail Management Requirements
Middle managers: excellent interpersonal skills relating to communication, motivation, and
mentoring

Front Line Management

• Focus on controlling and directing specific employees
Skill Sets
• Effective at communicating, observing/actively listening, giving/receiving feedback,
prioritizing
Responsibilities
• Expertise required, tasked with hiring, assessing performance, providing feedback, aligning
teams, etc.
Retail Management Requirements

Functional Management:
authority over organizational unit within business, ongoing responsibilities

General Management:
focuses on entire business as a whole, formatting policies, managing daily operations, planning,
managing cost revenue
Mintzberg’s Management Roles

• Interpersonal:
• figurehead, leader, liaison

• Informational:
• mentor, disseminator, spokesman

• Decisional:
• entrepreneur, disturbance handler, resource allocator, negotiator
Skills of a Retail Manager

Technical Skills:
• Learned capacity in any given field of work, study, & play
• Management and communication skills
• Programming, website maintenance, typing, writing, giving presentations
Conceptual Skills:
• Most relevant in upper-level thinking and broad strategic situations
• Ability to formulate ideas, generate values, policies, mission statements, ethics
• Abilities to communicate critical concepts
More Retail Management Requirements

Defining Agendas
• Business application
• know what will be discussed in meetings

Keeping minutes
• verbatim record of what was discussed and made available to public

Relevance to management
• distributing in timely fashion, communication, organization skills
Skills of a Retail Manager (cont.)

Interpersonal Skills:
• Leadership, manager vs. leader
• Communication and interpersonal skills lie at center of considerations
Experiential Learning:
• The process is cyclical with no required starting point or end
• Learning through reflection, focus on learning process for individual
Strategic Planning in Retail Management
Strategic Planning in Retail Management: Learning Outcomes

1.4.1 Differentiate between macroenvironment and microenvironment considerations in

strategic planning
• 1.4.2 Classify the general steps of strategic planning in retail
• 1.4.3 Explain the retail mix
• 1.4.4 Explain the retailing concept
Microenvironment vs. Macroenvironment

Business management: art, science, and craft of formulating, implementing, and evaluating
decisions that will enable an organization to achieve its long-term objectives

Strategic planning: organization’s process of defining strategy and making decisions to pursue
this strategy

Business environment: refers to factors and forces that affect firm’s ability to build and maintain
successful customer relationships
Microenvironment vs. Macroenvironment (cont.)

Micro: small forces within company that affect ability to serve its customers
• Anything in immediate environment (suppliers, customers, competitors, stakeholders

Macro: larger societal forces that affect the microenvironment

• Outside of retailer’s control and of an economic and industry viewpoint
Microenvironment vs. Macroenvironment (cont. II)
Strategic Planning in Retail
Four key elements of strategic planning :
• strengths and weaknesses
• personal values of key implementers (internal)
• industry opportunities/threats &
• broader societal expectations (external)

Steps in strategic retail planning process

• define business mission, conduct situation audit, identify strategic opportunities, evaluate strategic
alternatives, establish specific objectives, develop retail mix, evaluate performance
The Retail Mix

Price: What is strategy for marketing?

Promotion: What tools will you use to influence consumers purchase decision
Place: What are hours of operation, how many employees are needed?
Product: What type do you intend to carry, what is depth that you will carry in assortment?
Presentation: Will there be a free-standing location?
Store Image: What is layout, graphics?
The Retailing Concept
Idea that examines the evolution of the transformation of retail life cycle, suggesting new
retailers will begin with low-cost and low-margin operations

Barnes & Noble example:

• Stage 1: began with variety of books in one location at low cost
• Stage 2: expanded to various locations, increasing sales, brand image, value, and profit
• Stage 3: established, opened new stores, greater profits
• Stage 4: Amazon entered market, allowing customers to browse books online and have
them delivered
Quick Review
• Key challenge in retail: Inventory
• Adequate inventory levels imperative to retailer success
• Too much inventory leads to unproductive sales and lost margin due to markdowns
• If it doesn’t support customer demand, lost sales and negative image of retailer

• The Retail Mix helps with strategic planning

• Technology has transformed the industry in many ways