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Retailing Management 8e© The McGraw-Hill Companies, All rights reserved. 1 - 1 CHAPTER 2CHAPTER 1 Introduction to the World of Retailing CHAPTER 01 McGraw-Hill/Irwin.

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Presentation on theme: "Retailing Management 8e© The McGraw-Hill Companies, All rights reserved. 1 - 1 CHAPTER 2CHAPTER 1 Introduction to the World of Retailing CHAPTER 01 McGraw-Hill/Irwin."— Presentation transcript:

1 Retailing Management 8e© The McGraw-Hill Companies, All rights reserved. 1 - 1 CHAPTER 2CHAPTER 1 Introduction to the World of Retailing CHAPTER 01 McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

2 1 - 2 CHAPTER 2CHAPTER 1 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.

3 1 - 3 CHAPTER 2CHAPTER 1 Examples of Retailers Retailers: Kohl’s, Macy’s, Wendy’s, www.Amazon.com, Jiffy Lube, AMC Theaters, American Eagle Outfitter, Avon, J.Crew www.Amazon.com Firms that are retailers and wholesalers - sell to other business as well as consumers:wholesalers Office Depot, The Home Depot, United Airlines, Bank of America, Costco

4 1 - 4 CHAPTER 2CHAPTER 1 Distribution Channel

5 1 - 5 CHAPTER 2CHAPTER 1 The Retailer’s Role in a Supply Chain Retailers are the final business within a supply chain which links manufacturers to consumers. A Supply Chain is a set of firms that make and deliver a given set of goods and services to the ultimate consumer.

6 1 - 6 CHAPTER 2CHAPTER 1 Manufacturing, Wholesaling and Retailing Vertical Integration – firm performs more than one set of activities in the channel Ex: retailer invests in wholesaling or manufacturing Backward Integration – retailer performs some distribution and manufacturing activities

7 1 - 7 CHAPTER 2CHAPTER 1 Manufacturing, Wholesaling and Retailing Forward Integration – manufacturers undertake retailing activities Ex: Ralph Lauren (New York Jones, Liz Claiborne) operates its own stores Large retailers engage in both wholesaling and retailing Ex: Wal-Mart, Lowe’s, Safeway, Brown Shoe Company

8 1 - 8 CHAPTER 2CHAPTER 1 Do Retailers Add Value? a box of crackers at a grocery store costs $1 to manufacturer sells at a price of $2 Retailers add significantly to the prices consumers face Why not buy directly from the manufacturer? Does that mean that grocery stores are very profitable? Example

9 1 - 9 CHAPTER 2CHAPTER 1 ■ Provide Assortment Buy other products at the same time (brands, designs, sizes, etc.) ■ Break Bulk Break Bulk Buy it in quantities customers want ■ Hold Inventory Hold Inventory Buy it at a convenient place when you want it ■ Offer Services ■ Increasing value of products and services How Retailers Add Value Ryan McVay/Getty Images

10 1 - 10 CHAPTER 2CHAPTER 1 Retail Sales: Over $4.1 trillion in annual U.S. sales in 2005 Employment: Employs over 24 million people in 2005 One of the largest sectors for job growth in US Social responsibility Global player Social and Economic Significance of Retailing

11 1 - 11 CHAPTER 2CHAPTER 1 Corporate social responsibility The voluntary actions taken by a company to address the ethical, social, and environmental impacts of its business operations, in addition to the concerns of its stakeholders Social Responsibility

12 1 - 12 CHAPTER 2CHAPTER 1 The nature of retailing and distribution channels in the U.S. is unique. Has the greatest retail density Has the greatest concentration of large retail firms Large enough to operate their own warehouses, eliminating the need for wholesaling. The combination of large stores and large firms result in a very efficient distribution system. Structure of Retailing and Distribution Channels around the World: The United States CHINA The United States

13 1 - 13 CHAPTER 2CHAPTER 1 Opportunities in Retailing: Management Opportunities People with a wide range of skills and interests needed because retailers’ functions include Finance Purchase Accounting Management information system (MIS) Supply management including warehouse and distribution management Design and new product development

14 1 - 14 CHAPTER 2CHAPTER 1 Opportunities in Retailing: Entrepreneurial Opportunities Retailing provides opportunities for people who want to start their own business Some of the world’s richest people are retailing entrepreneurs Examples of retailing entrepreneurs Sam Walton (Wal-Mart) Jeff Bezos (www.Amazon.com)www.Amazon.com Ingvar Kamprad (IKEA) Anita Roddick (the Body Shop) Wal-Mart: Sam Walton IKEA: Ingvar Kamprad

15 1 - 15 CHAPTER 2CHAPTER 1 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 (The Limited) Menard (Menard’s) Marcus (The Home Depot) Kellogg (Kohl’s) Schulze (Best Buy) Levine (Family Dollar) Gold (99Cent Only)

16 1 - 16 CHAPTER 2CHAPTER 1 A retail strategy should identify the target market the product and service mix a long-term comparative advantage Retail Strategy

17 1 - 17 CHAPTER 2CHAPTER 1 Special Characteristics Affecting Retailers Retailer’s Strategy Small Average Sale Impulse Purchase Popularity of Stores

18 1 - 18 CHAPTER 2CHAPTER 1 Need to identify the competition Intratype competition Competition among firms in the same type of business. Intertype competition Intertype competition Competition among firms in different types of businesses but which sell the same product. Retail Strategy

19 1 - 19 CHAPTER 2CHAPTER 1 Identifying customers What are the significant demographic and life- style trends Who are your target customers Retail Strategy

20 1 - 20 CHAPTER 2CHAPTER 1 Aspects of Target’s Strategy  Growth-oriented objectives  Appeal to a prime market  Distinctive company image  Focus  Strong customer service  Multiple points of contact  Employee relations  Innovation  Commitment to technology  Community involvement  Constantly monitoring performance

21 1 - 21 CHAPTER 2CHAPTER 1 Applying the Retail Concept Customer Orientation Coordinated Effort Value driven Goal Orientation Retailing Concept Retail Strategy

22 1 - 22 CHAPTER 2CHAPTER 1 Decision Variables for Retailers Retail Strategy Customer Service Merchandise Assortment Location Communication Mix Pricing Store Design and Display

23 1 - 23 CHAPTER 2CHAPTER 1 Customer Service Activities undertaken by a retailer in conjunction with the basic goods and services it sells.  Store hours  Parking  Shopper-friendliness  Credit acceptance  Salespeople

24 1 - 24 CHAPTER 2CHAPTER 1 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?

25 1 - 25 CHAPTER 2CHAPTER 1 Relationship Retailing 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

26 1 - 26 CHAPTER 2CHAPTER 1 Effective Relationship Retailing Use a win-win approach It is harder to get new customers than to keep existing ones happy Develop a customer database Ongoing customer contact is improved with information on people’s attributes and shopping behavior

27 1 - 27 CHAPTER 2CHAPTER 1 Misconceptions About Careers in Retailing College not needed Low pay Long hours Boring Dead-end job No benefits Everyone is part-time Unstable environment No opportunity for women and minorities The McGraw-Hill Companies, Inc./Andrew Resek, photographer


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