Lecture Retailing management (6e) Chapter 1 Levy Weitz

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Chapter 1
Introduction to the World of Retailing

McGraw-Hill/Irwin
Retailing Management, 6/e

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.


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The World of Retailing

Introduction to Retailing

Types of Retailers

Multi-Channel Retailing

Customer Buying
Behavior


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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.
James Darell/Getty Images


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The Distribution Channel


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Examples of Retailers
Retailers:
Kohl’s, Macy’s, Wendy’s,
Amazon.com, Jiffy Lube, AMC
Theaters, American Eagle
Outfitter, 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,
Costco

The McGraw-Hill

Companies, Inc./John
Flournoy, photographer

The McGraw-Hill Companies,
Inc./Andrew Resek,
photographer


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Manufacturing, Wholesaling and Retailing
Vertical Integration – firm performs more than one set of
activities
Ex: retailer invests in wholesaling or manufacturing
Backward Integration – retailer performs some distribution
and manufacturing activities
Ex: JCPenney sells Arizona jeans (Private Label)
Forward Integration – manufacturers undertake retailing
activities
Ex: Ralph Lauren operates its own stores


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How Retailers Add Value
• Break Bulk
-Buy it in quantities customers want
• Hold Inventory
-Buy it at a convenient place when you
want it

• Provide Assortment
-Buy other products at the same time
• Offer Services
-See it before you buy, get credit,
layaway

Ryan McVay/Getty Images


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How Retailers Add Value

The value of the product and service
ncreases as the retailer performs functions.

Bicycle can be
bought on credit or
put on layaway
Bicycle is featured
on floor display

Bicycle is offered in
convenient locations
in quantities of one
Bicycle is
developed in
several styles
Bicycle is developed
at manufacturer

World’s Largest Retailers

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Social and Economic
Significance of Retailing

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• Community Support
• Over $3.4 trillion in annual U.S. sales
greater than medical care, housing, recreation
combined
• Employs 27 million people
21% of non-agricultural US workforce
• Management training opportunities
• Entrepreneurial opportunities


Retailing is Big Part of Economy

Manufacturing (11.2%)

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Retail (21.8%)

Government
(16.6%)

Services (45.8%)

Other 5.6%


Retailers are a Business Like
Manufacturers
Accounting

Finance

Marketing

MIS

Operations

The McGraw-Hill Companies,
Inc./Andrew Resek, photographer

Human Resources

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Nature of Retail Industry is Changing

To Today’s Retailer

Mom and Pop Store


Retailing is a High Tech Industry

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• Selling Merchandise over
the Internet
• Using Internet to manage
supply chains
• Analyze POS data to tailor
assortments to stores
• Computer systems for
merchandise planning
Ryan McVay/Getty Images


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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

Don Farrall/Getty Images


Comparison of Distribution Channels
Across the Globe

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Retail Management Decision Process

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JCPenney’s Strategic Evolution

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• 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
• Stand alone stores
• Centralized checkout

Sears Holdings’ 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
• New growth with Kmart

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Whole Foods Implementation
Organic and natural foods supermarket chain
Assortment beyond organic/natural foods
– Private labels - Whole Food™, 360 Day Value™
– Love, trust, and employee empowerment
– Always innovation:
Candy Island
Lamar Street Greens
Fifth Street Seafood
In-store Massage Therapist

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Claire’s Retail Mix

Customer Service

Location

Merchandise

Store Design
and Display

Retail Strategy

Communication Mix

Assortment

Pricing

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Claire’s Retail Mix
Location Strategy

Enclosed malls

Customer Service

Store Display
Merchandise

And Design

Assortment

Communication Mix

Pricing

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Claire’s Retail Mix
Assortment Strategy

Customer Service
Location

Jewelry, accessories and
cosmetics for tweens and
teens

Store Design
and Display

Communication Mix
Pricing

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Claire’s Retail Mix
Pricing Strategy

Location

Customer Service
Merchandise Assortment

Store Design
and Display

Communication Mix

Modest with Sales

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