© 2006 Pearson Education Canada Inc. 1.1 PowerPoint Presentation Tracy Tuten Ryan Virginia Commonwealth University Laurie Logan Algonquin College Chapter 1 An Introduction to Retailing

© 2006 Pearson Education Canada Inc. 1.2 Chapter Objectives 1. To define retailing, consider it from various perspectives, demonstrate its impact, and note its special characteristics 2. To introduce the concept of strategic planning and apply it 3. To show why the retailing concept is the foundation of a successful business, with an emphasis on the total retail experience, customer service, and relationship retailing 4. To indicate the focus and format of the text

© 2006 Pearson Education Canada Inc. 1.3 Retailing Retailing 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.

© 2006 Pearson Education Canada Inc. 1.4 Key Issues in Retailing 1. How can we best serve our customers while earning a fair profit? 2. How can we stand out in a highly competitive environment where consumers have so many choices? 3. How can we grow our business while retaining a core of loyal customers?

© 2006 Pearson Education Canada Inc. 1.5 Retail Management: A Strategic Approach Retailers can best address these questions by fully understanding and applying the basic principles of retailing in a well-structured, systematic, and focused retail strategy.

© 2006 Pearson Education Canada Inc. 1.6 Figure 1-1 Boom Times for Costco

© 2006 Pearson Education Canada Inc. 1.7 An Ideal Candidate for A Retailing Career  Be a people person  Be flexible  Be decisive  Have analytical skills  Have stamina To learn more about retailing career opportunities visit

© 2006 Pearson Education Canada Inc. 1.8 Figure 1-5: Top Ten Retailers in Canada, 2003 RankCompanyHead- quarters Net Sales ($US Mil) Total Stores 1Loblaw Companies Ltd.Canada13,4411,641 2Empire Company Ltd.Canada7,9131,311 3Wal-Mart (CDN sales) U.S.7, Hudson’s Bay CompanyCanada5, Costco (CDN sales) U.S.5, Canadian Tire Corp. Ltd.Canada4, Shoppers Drug Mart Corp.Canada4, Sears Canada (CDN sales) U.S.4, Safeway (CDN sales) U.S.4, Home Depot (CDN sales) U.S.3,243102

© 2006 Pearson Education Canada Inc. 1.9 Example A Typical Retail Distribution Channel Manufacturer Wholesaler Final Consumer Retailer

© 2006 Pearson Education Canada Inc Role of Retailers and the Distribution function  Communicate with manufacturers, wholesalers and customers  Can provide assistance by transporting, storing, marking, advertising, and pre-paying for products  Complete transactions with customers  Engage in multi-channel retailing

© 2006 Pearson Education Canada Inc Multi-Channel Retailing A retailer sells to consumers through multiple retail formats  Web site  Physical store  Catalogue  Toll-free phone number

© 2006 Pearson Education Canada Inc Relationship Management Among Retailers and Suppliers Disagreements may occur over:  control over the distribution channel  profit allocation  number of competing retailers  product displays  promotional support  payment terms  operating flexibility

© 2006 Pearson Education Canada Inc Distribution Types Exclusive: suppliers make agreements with one or few retailers that designate the retailer as the only ones in a specified geographic area to carry certain brands or products Intensive: suppliers sell through as many retailers as possible Selective: suppliers sell through a moderate number of retailers

© 2006 Pearson Education Canada Inc Figure 1-7 Comparing Distribution Types

© 2006 Pearson Education Canada Inc Special Characteristics of Retailing 1. The average amount of a sales transaction for retailers is much less than for manufacturers 2. Final consumers make many unplanned or impulse purchases 3. Retail customers usually visit a store, even though mail, phone, and Web sales have increased

© 2006 Pearson Education Canada Inc Customer Impulse Purchases The high frequency of impulse purchases shows the value of: In-store displays Attractive store layouts Well-organized stores Catalogues Web sites

© 2006 Pearson Education Canada Inc Popularity of Stores Retailers need to consider the following to attract customers to their store: Store location Transportation Store hours Proximity of competitors Product selection Parking Advertising

© 2006 Pearson Education Canada Inc Figure 1-8 Special Characteristics Affecting Retailers Retailer’s Strategy Small Average Sale Impulse Purchases Popularity of Stores

© 2006 Pearson Education Canada Inc Retail Strategy  Is the overall plan guiding a retail firm  It influences the firm’s business activities  It influences the firm’s response to market forces, such as competition and the economy

© 2006 Pearson Education Canada Inc Six Steps in Retail Strategic Planning 1. Define the type of business 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

© 2006 Pearson Education Canada Inc Figure 1-9 The Real Canadian Superstore

© 2006 Pearson Education Canada Inc Aspects of Loblaws’ Strategy  Growth-oriented objectives  Appeal to a prime markets  Multi Format  Distinctive Image  Focus  Strong customer service  Employee relations  Innovation  Commitment to technology  Community involvement  Constant performance monitoring

© 2006 Pearson Education Canada Inc The Retailing Concept These concepts should be applied by all retailers: 1.Customer orientation 2.Coordinated effort 3.Value Driven 4.Goal oriented

© 2006 Pearson Education Canada Inc Figure 1-10 Applying the Retail Concept Customer Orientation Coordinated Effort Value driven Goal Orientation Retailing Concept Retail Strategy

© 2006 Pearson Education Canada Inc Total Retail Experience Includes all elements designed to encourage or inhibit consumers Elements to be directed toward the selected market segment’s appeal should include: Salespeople Displays Prices Brands carried Inventory

© 2006 Pearson Education Canada Inc Figure 1-11 Eliminating Shopper Boredom CREATE AN ELEMENT OF UNIQUE EXCITEMENT

© 2006 Pearson Education Canada Inc Customer Service  Store hours  Parking  Shopper- friendliness  Credit acceptance  Salespeople  Gift wrapping  Rest rooms  Employee politeness  Delivery policies  Check-out lines  Customer follow-up Activities undertaken by a retailer in conjunction with the basic goods and services it sells.

© 2006 Pearson Education Canada Inc Figure 1-12: 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?

© 2006 Pearson Education Canada Inc 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 with customer service –Stay in touch with customers

© 2006 Pearson Education Canada Inc 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 behaviour

© 2006 Pearson Education Canada Inc Twenty Trends for No more one size fits all 2.Wal-Mart keeps smiling 3.Supercentres keep rolling 4.Surviving the supercentre 5.Department store death spiral 6.Malls get mauled 7.Re-concept 8.Experience excels 9.E-commerce 10.Smart Shopping 11. Smart stores 12.M-commerce 13.Global land rush continues 14.Retailers act like suppliers 15.Retailers as brand managers 16.Brand sharing 17.Uber retailers 18.Suppliers act like retailers 19.Suppliers become retailers 20.Consumers call the shots

© 2006 Pearson Education Canada Inc Approaches to the Study of Retailing Institutional Functional Strategic

© 2006 Pearson Education Canada Inc Parts of Retail Management: A Strategic Approach  Building relationships and strategic planning  Retailing institutions  Consumer behaviour and information gathering  Elements of retailing strategy  Integrating, analyzing, and improving retail strategy