Presentation on theme: "An Introduction to Retailing"— Presentation transcript:
1 An Introduction to Retailing LOG 561 Retail ManagementAn Introduction to Retailing
2 RetailingRetailing 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.
3 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.
4 Examples of Retailers Retailers: -Holiday Inn, McDonalds, Amazon.com..Firms that are retailers and wholesalers that sell to other business as well as consumers:-The Home Depot, United Airlines, Bank of America..
5 How Retailers Add Value Breaking Bulk-Buy it in quantities customers wantHolding Inventory-Buy it at a convenient place when you want itProviding Assortment-Buy other products at the same timeOffering Services-See it before you buy, get credit, layaway
6 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 layawayDoll is featured on floor displayDoll is offered in convenient locations in quantities of oneDoll is developed in several stylesDoll is developed at manufacturer
7 Manufacturer’s Perspective The Four P’s of MarketingRetailers are part of thedistribution channelRetailers are part of thedistribution channelProductPriceDistributionPromotion
9 Retailers are a Business Like Manufacturers FinanceAccountingMarketingOperationsHuman ResourcesMIS
10 Decision Variables for Retailers Customer ServiceRetailStrategyStore Design and DisplayMerchandise AssortmentPricingLocationCommunication Mix
11 Hot Topic’s Retail Mix Retail Strategy Customer Service Location Store DesignAnd DisplayMerchandiseAssortmentCommunicationMixPricing
12 STRATEGIC IMPLICATIONS: RETAIL MARKETING STRATEGY A retailer develops a marketing strategy based on the firm’s goals and strategic plansTwo fundamental steps:Picking a target market: size and profit potential. POSITION.Developing a retailing mix to satisfy the chosen target market4Ps + Personnel & Presentation used to create a retail image
13 The Retailing Mix Target Market Product Price Place Promotion PersonnelPresentation
14 Issues in RetailingHow 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?High unemployment, low consumer confidence, high savings rates have reduced consumer spending. At the same time retail competition has increased through increased format blurring (sales of cameras at office supply stores, carpeting and major appliances at home improvement centers).How can we grow our business while retaining a core of loyal customers?
15 The PhilosophyRetailers 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.
16 Top 100 Retailers Walmart, Kroger, Costco, Target, The Home Depot, Walgreen, CVS Caremark, Lowe’s, Amazon.com, Safeway... https://nrf.com/2014/top100-table
17 A Typical Channel of Distribution RetailerManufacturerWholesalerFinalConsumer
19 Multi-Channel Retailing A retailer sells to consumers through multiple retail formats:Web sitesPhysical stores
20 Multi-Channel Retailing Cross selling across channels (in-store product availability info on Web site)Consistent pricing in all channels (credibility)Can buy, and return product regardless on channelRole of each channelStore– try on, ease of return, fast availability (immediacy), compare offeringsWeb– 24/7, product information, product reviews by customers, personalization (tailored assortment based on past purchases), most current pricing, closeout salesCatalog-permanency, true color
21 Non-Store Retailing Vending: hi costs; hi prices (flat sales) Vending is a $40 billion U.S. marketCashless vending=wave of futureDirect Marketing (Mail, Catalog, Telemarketing)E-tailing (TV shopping, online)M-commerce: buy from mobile devices(e.g., cell phones)
23 Distribution TypesExclusive: 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 areaIntensive: suppliers sell through as many retailers as possibleSelective: suppliers sell through a moderate number of retailers
24 Exclusive vs Intensive Distribution Exclusive Distribution– Fate of retailer is tied to manufacturer success, retailer has no “free-rider” concerns, retailer has less price competition, manufacturer is better assured of high levels of customer supportIntensive Distribution- Manufacturer is better assured of maximizing sales (especially for convenience goods), retailers face strong competition for price and service, intratype competitionRetail Mgt. 12e (c) 2013 Pearson Education, Inc. publishing as Prentice Hall
26 Special Characteristics Affecting Retailers ImpulsePurchaseSmallAverageSaleRetailer’sStrategyPopularityofStores
27 Retail Strategy An overall plan for guiding a retail firm Influences the firm’s business activitiesInfluences firm’s response to market forces
28 Six Steps in Strategic Planning 1. Define the type of business (corporate mission) 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 (fine-tune)
29 Applying the Retailing Concept Customer OrientationRetailingConceptCoordinated EffortRetailStrategyValue-drivenGoal Orientation
31 Customer ServiceActivities undertaken by a retailer in conjunction with the basic goods and services it sells. This includes:Store hoursParkingShopper-friendlinessCredit acceptanceSalespeople
32 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?
33 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 encounterConcentrate on the total retail experienceMonitor satisfactionStay in touch with customers
34 Effective Relationship Retailing Use a “win-win” approachIt is easier to keep existing customers happy than to gain new ones (present value of current customers income stream– cost of keeping existing customers content versus cost of replacing them with new customerDevelop a customer database (loyalty programs)Ongoing customer contact is improved with information on people’s attributes and shopping behaviors
35 Types of Loyalty Programs Additional discounts at registerNot a real loyalty program1 free with every “n” items purchasedEasily copied, no customer databaseRebates based on cumulative purchasesCustomer maintains recordsCan develop “heavy half” programs like HiltonTargeted offerings and mailing based on purchase historyTesco example “Market research staff know more about my customers than board chairperson”
36 Relationship Management Among Retailers and Suppliers Disagreements may occur in the following areas (channel conflict):control over channel (private label)profit allocation (resale price control)number of competing retailers (exclusive, selective or intensive distribution)product displayspromotional support (cooperative advertising funds and restrictions)payment terms (payment on time)operating flexibilitygray market salesmarkdown monies, chargebacks by dominant retailersRetail Mgt. 12e (c) 2013 Pearson Education, Inc. publishing as Prentice Hall
37 Approaches to the Study of Retailing InstitutionalFunctionalStrategic
38 Parts of Retail Management: A Strategic Approach Building relationships and strategic planningRetailing institutionsConsumer behavior and information gatheringElements of retailing strategyIntegrating, analyzing, and improving retail strategy
39 Retailing is a set of functions that adds value to products/services that are sold to end users = functional understanding,Retailing is a specific institution within a marketing channel that executes retail functions = institutional understanding