5th Edition

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 Chapter 1

Introduction to the
World of Retailing

McGraw-Hill/Irwin
2 Levy/Weitz: Retailing Management, 5/e Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
 What is Retailing?

• Retailing – a set of business activities that

adds value to the products and services sold to
consumers for their personal or family use.

• A retailer is a business that sells products

and/or services to consumers for personal or
family use.

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 Examples of Retailers

• Retailers:
-Sears, Holiday Inn, McDonalds, Amazon.com, Jiffy
Lube, AMC Theaters, American Eagle Outfitter, FAO
Schwartz, Kroger

• Firms that are retailers and wholesalers that

sell to other business as well as consumers:
-Office Depot, The Home Depot, United Airlines, Bank
of America, Sams Clubs

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 How Retailers Add Value

• Breaking Bulk
-Buy it in quantities customers want
• Holding Inventory
-Buy it at a convenient place when you want it
• Providing Assortment
-Buy other products at the same time
• Offering Services
-See it before you buy, get credit, layaway
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 How Retailers Add Value

The value of the product and service increases

as the retailer performs functions.

Doll can be bought

on credit or put on
layaway

Doll is featured on
floor display
Doll is offered in
convenient
locations in
Doll is developed in quantities of one
several styles
Doll is developed at
manufacturer
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 Manufacturer’s Perspective

The Four P’s of Marketing

Retailers
Retailersare
are part
part of
of the
the
distribution channel
distribution channel
Product

Distribution Price

Promotion

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 Distribution Channel
PPT 1-4
Distribution Channel

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 Retailers are a Business Like Manufacturers

Accounting Finance Marketing

Operations MIS Human Resources

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 Decision Variables for Retailers

Customer Service

Store Design Merchandise

and Display Assortment
Retail
Strategy
Pricing Location

Communication
Mix

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 Economic Significance of Retailing

• Over $2.5 trillion in annual U.S. sales

-greater than medical care, housing, recreation combine

• Employs 17% of population

-about the same as manufacturing and growing

• Management training opportunities

• Entrepreneurial opportunities

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 Retailing is Big Part of Economy

Manufacturing Retail
(18%) (17%)

Government
(15%)

Services (50%)

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 Projected Job Gains (2000 – 2010)

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 Nature of Retail Industry is Changing

To Today’s Retailer

Mom and Pop Store

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 Retailing is a High Tech Industry

- Selling Merchandise over the Internet

- Using Internet to manage supply chains

- Analyze POS data to tailor assortments to stores

- Computer systems for merchandise planning

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 Globalization of Retailing

Source Merchandise From Around the World

Wal-Mart Operates in U.S., China, Mexico, UK, Germany

Carrefour has Stores in 25 Countries

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 Retail Environment Differs Across the Globe

US Japan
Concentration High Medium

Store Size Big Small

Role of Low High

Wholesaling

Efficiency High Low

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 Retail Management Decision Process

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 JC Penney’s Strategic Evolution

• Main Street private label soft goods retailer

• Changes in environment -- increased disposable
income, growth of suburbs, interstate highway
program
• Emulate Sears in enclosed suburban malls
• Focus on soft goods -- drop automotive, sporting
goods, hardware
• Develop catalog, develop electronic retailing
• Future (?)
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 Sears’ Strategic Evolution

• Large number of merchandise categories --

appliances, hardware, apparel
• Malls evolved into places for buying soft goods, hard
goods sold at category killers
• The Softer Side of Sears
• Refocused on value -- Testing carts in stores
• Acquired Lands’ End
• Reviewed training program for new managers

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 Whole Foods Implementation

Strategy - organic and natural

foods supermarket chain

Assortment beyond
organic/natural foods
Private labels - Whole
Food™, 360 Day Value™
Love, trust, and employee
empowerment
Equality in compensation
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 Hot Topic’s Retail Mix

Customer Service Location

Store Design Merchandise

Retail Strategy Assortment
And Display

Communication Pricing
Mix
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 Hot Topic’s Retail Mix

Location Strategy

Enclosed malls

Customer
Service

Store Display Merchandise

And Design Assortment

Communication
Pricing
Mix

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 Hot Topic’s Retail Mix

Assortment Strategy

Customer
ServiceLocation

Many Different
Store Design
and Display
Hot Band
T-shirts and
Communication
Pricing
Accessories
Mix

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 Hot Topic’s Retail Mix

Location
Pricing Strategy
Customer
Merchandise
Service
Assortment

Store Design
and Display

Communication
Mix Modest with Sales

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 Hot Topic’s Retail Mix

Customer
Service Location

Communication Mix Store Design

Merchandise
And Display
Assortment

Pricing

TV and
Magazine Ads

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 Hot Topic’s Retail Mix

Store Design and Display

Customer
Service Location

Heavy Metal,
Merchandise
Gothic Look Assortments

Communication
Mix Pricing

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 Hot Topic’s Retail Mix

Customer Service

Modest
Location

Merchandise
Assortment

Store Design
and Display Pricing

Communication
Mix

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 Macy’s Retail Mix

Customer
Location
Service

Store Design Merchandise

And Display Retail Strategy Assortment

Pricing
Communication
Mix
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 Macy’s Retail Mix

Location Strategy

Enclosed Malls

Customer
Service

Store Display Merchandise

And Design Assortment

Communication Pricing
Mix

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 Macy’s Retail Mix

Assortment Strategy

Customer
Service Location

Store Design
and Display
Many Items in
Apparel and
Communication
Soft Home
Mix Pricing

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 Macy’s Retail Mix

Location
Pricing Strategy
Customer
Merchandise
Service
Assortment

Store Design
and Display

Communication
Mix
Moderate with
Frequent Sales

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 Macy’s Retail Mix

Customer
Service Location

Communication Mix Store Design

And Display Merchandise
Assortment

Pricing

TV, Newspaper Ads

and Special Events

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 Macy’s Retail Mix

Store Design and Display

Customer
Service Location

Ring with Displays Merchandise

Assortments

Communication
Mix Pricing

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 Macy’s Retail Mix

Customer Service

Modest
Location

Merchandise
Assortment

Store Design
and Display Pricing

Communication
Mix

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 Wal-Mart’s Retail Mix

Customer Location
Service

Store Design Merchandise

And Display Retail Strategy Assortment

Communication Pricing
Mix

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 Wal-Mart’s Retail Mix

Location Strategy

Free-standing Stores

Customer
Service

Store Display Merchandise

And Design Assortment

Communication
Mix Pricing

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 Wal-Mart’s Retail Mix

Assortment Strategy

Customer
Service Location

Large Number
Store Design
and Display
of Categories
Few Items
Communication
Mix Pricing
in Each Category

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 Wal-Mart’s Retail Mix

Location
Pricing Strategy
Customer
Merchandise
Service
Assortment

Store Design
and Display

Communication
Mix Low, EDLP

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 Wal-Mart’s Retail Mix

Customer
Service Location

Communication Mix
Store Design Merchandise
and Display Assortment

Pricing

TV and Newspaper
Insert Ads

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 Wal-Mart’s Retail Mix

Store Design and Display

Customer
Service Location

Basic, Special
Merchandise
Displays Assortments
for Products
Communication
Mix Pricing

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 Wal-Mart’s Retail Mix

Customer Service

Limited

Location

Merchandise
Assortment

Store Design
and Display Pricing

Communication
Mix

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 Career Opportunities in Retailing
Start Your Own Business
List of Retail Entrepreneurs on
Forbes 400 Richest Americans
• Walton Family (Wal-Mart)
• Fisher (The Gap)
• Wexner (limited)
• Menard (Menard’s)
• Marcus, Blank (The Home Depot)
• Kellogg (Kohl’s)
• Schulze (Best Buy)
• Levine (Family Dollar)
• Gold (99Cent Only)
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 Misconceptions About Careers in Retailing

• Don’t need college

• Low pay
• Long hours
• Boring
• Dead-end job
• No benefits
• Everyone is part-time
• Unstable environment

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 Why You Should Consider Retailing

• Entry level management positions

-Department manager or assistant buyer/planner
-Manage and have P&L responsibility on your first job
• Starting pay average with great benefits
- Some retailers pay graduate school
• No two days are alike
• Buying for financially oriented people
• Management for people people

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 Types of Jobs in Retailing

Most entry level jobs are in

store management or buying, but…

retailers also have staff specialists:

--accounting and finance
--real estate
--human resource management
--supply chain management
--advertising
--public affairs
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