1. Building and Sustaining Relationships in Retailing
Chapter 2
Building and Sustaining Relationships in Retailing
RETAIL
MANAGEMENT:
A STRATEGIC
APPROACH,
10th Edition
BERMAN EVANS

2. Chapter Objectives
To explain what “value” role in retailers’ building and sustaining relationships
To describe how both customer relationships and channel relationships in today’s highly competitive marketplace
To examine the differences in relationship building between goods and services retailers
To discuss the impact of technology on relationships in retailing and retailers’ ethical

3. What is Value? The bottom line: Channel Perspective
Consumers will demand more for less from the shopping experience, spend less time shopping, and split the value-added from commodity vs shopping trip
Channel Perspective
Value is a series of activities and processes - the value chain - that provides a certain value for the consumer
Customer Perspective
Value is a perception that the shopper has of the value chain
It is the view of all the benefits from a purchase versus the price paid

4. 3 Aspects of Value-Oriented Retail Strategy
Retail Value Chain
Represents the total bundle of benefits offered to consumers through a channel of distribution
Store location and parking, retailer ambience, customer service, brands/products carried, product quality, retailer’s in-stock position, shipping, prices, image, and other elements
3 Aspects of Value-Oriented Retail Strategy
Expected
Augmented
Potential

5. Potential Pitfalls to Avoid in Planning a Value-Oriented Retail Strategy
Planning value with just a price perspective
Providing value-enhanced services that customers do not want or will not pay extra for
Competing in the wrong value/price segment
Believing augmented elements alone create value
Paying lip service to customer service

6. Figure 2-2: A Value-Oriented Retailing Checklist
Is value defined from a consumer perspective?
Does the retailer have a clear value/price point?
Is the retailer’s value position competitively defensible?
Are channel partners capable of value-enhancing services?
Does the retailer distinguish between expected and augmented value chain elements?
Has the retailer identified potential value chain elements?
Is the retailer’s value-oriented approach aimed at a distinct market?
Is the retailer’s value-oriented approach consistent?
Is the retailer’s value-oriented approach effectively communicated?
Can the target market clearly identify the retailer’s positioning?
Does the retailer’s positioning consider sales versus profits?
Does the retailer set customer satisfaction goals?
Does the retailer measure customer satisfaction levels?
Is the retailer careful to avoid the pitfalls in value-oriented retailing?
Is the retailer always looking out for new opportunities that will create customer value?

7. Customer Service Expected customer
service is the service level that customers want to receive from any retailer, such as basic employee courtesy
Augmented customer
service includes the activities that enhance the shopping experience and give retailers a competitive advantage

8. Figure 2-4: Classifying Customer Services

9. Fundamental Decisions
What customer services are expected and what customer services are augmented for a particular retailer?
What level of customer service is proper to complement a firm’s image?
Should there be a choice of customer services?
Should customer services be free?
How can a retailer measure the benefits of providing customer services against their costs?
How can customer services be terminated?

10. Table 2-1: Typical Customer Services
Credit
Delivery
Alterations/ Installations
Packaging/Gift wrapping
Complaints/Return handling
Gift certificates
Trade-ins
Trial purchases
Special sales
Extended store hours
Mail and phone orders

11. Table 2-1: Miscellaneous Customer Services
Bridal registry
Interior designers
Personal shoppers
Ticket outlets
Parking
Water fountains
Pay phones
Restrooms
Restaurants
Baby-sitting
Fitting rooms
Beauty salons
Shopping bags
Information

12. Figure 2-6: Turning Around Weak Customer Service
Focus on
Customer Concerns
Empower Frontline
Employees
Show That You Are
Listening
Express Sincere
Understanding
Apologize and Rectify
the Situation

13. Principles of Category Management
Retailers listen more to customers
Profitability is improved because inventory matches demand more closely  in = out
By being better focused, each department is more desirable for shoppers
Retail buyers are given more responsibilities and accountability for category results
Retailers and suppliers must share data and be more computerized
Retailers and suppliers must plan together

14. Figure 2-7: Elements Contributing to Effective Channel Relationships

15. Three Kinds of Service Retailing
Rented goods services
Owned goods services
Nongoods services
4 Characteristics of Services Retailing
Intangibility
Inseparability
Perishability
Variability

16. Figure 2.8a: Characteristics of Service Retailing
Intangibility
No patent protection possible
Difficult to display/communicate service benefits
Service prices difficult to set
Quality judgment is subjective
Some services involve performances/experiences

17. Figure 2.8b: Characteristics of Service Retailing
Inseparability
Consumer may be involved in service production
Centralized mass production difficult
Consumer loyalty may rest with employees

18. Figure 2.8c: Characteristics of Service Retailing
Perishability
Services cannot be inventoried
Effects of seasonality can be severe
Planning employee schedules can be complex

19. Figure 2.8d: Characteristics of Service Retailing
Variability
Standardization and quality control hard to achieve
Services may be delivered in locations
beyond control of management
Customers may perceive variability
even when it does not actually occur

20. Figure 2-9: Consumer Perceptions of Service Retailing

21. Figure A2-1: Lessons in Service Retailing

22. Strategic Planning in Retailing
Chapter 3
RETAIL
MANAGEMENT:
A STRATEGIC
APPROACH,
10th Edition
Strategic Planning in Retailing
BERMAN EVANS

23. Chapter Objectives
To show the value of strategic planning for all types of retailers
To explain the steps in strategic planning for retailers: situation analysis, objectives, identification of consumers, overall strategy, specific activities, control, and feedback
To examine the individual controllable and uncontrollable elements of a retail strategy
To demonstrate how a strategic plan can be prepared

24. Retail Strategy
The overall plan or framework of action that guides a retailer
One year in duration
Outlines mission, goals, consumer market, overall and specific activities, and control mechanisms

25. Figure 3-1: Elements of a Retail Strategy

26. Benefits of Strategic Retail Planning
Provides analysis of the requirements for doing business for different types of retailers
Outlines retailer goals
Allows retailer to determine how to differentiate itself from competitors
Allows retailer to develop an offering that appeals to a group of customers
Offers an analysis of the legal, economic, and competitive environment
Provides for the coordination of the firm’s total efforts
Encourages anticipation and avoidance of crises

27. Organizational Mission
Retailer’s commitment
to a type of business
and to a
distinctive role in the marketplace

28. Figure 3-2: The Focused Organizational Mission of Frisch’s Restaurants

29. Ownership and Management Alternatives
A sole proprietorship is an unincorporated retail firm owned by one person
A partnership is an unincorporated retail firm owned by two or more persons, each with a financial interest
A corporation is a retail firm that is formally incorporated under state law; it is a legal entity apart from its officers

30. Figure 3-3: Checklist to Consider When Starting a New Business

31. Figure 3-4: Checklist for Purchasing an Existing Retail Business

32. Figure 3-5a: Selected Kinds of Retail Goods and Service Establishments
Durable Goods Stores:
Automotive group
Furniture and appliances group
Lumber, building, and hardware group
Jewelry stores
Nondurable Goods Stores:
Apparel group
Food group
General merchandise group
Gasoline service stations

33. Figure 3-5b: Selected Kinds of Retail Goods and Service Establishments
Service Establishments (Personal):
Laundry and dry cleaning
Beauty/barber shops
Funeral services
Health-care services
Service Establishments (Amusement):
Movie theaters
Bowling alleys
Dance halls
Golf courses

34. Figure 3-5c: Selected Kinds of Retail Goods and Service Establishments
Service Establishments (Repair):
Automobile repair
Car washes
Consumer electronics repair
Appliance repairs
Service Establishments (Hotel):
Hotels
Motels
Trailer parks
Camps

35. by consumers and others
Image and Positioning
An image represents
how a given retailer is
perceived
by consumers and others

36. Positioning Approaches
Mass merchandising is a positioning approach whereby retailers offer a discount or value-oriented image, a wide or deep merchandise selection, and large store facilities
Niche retailing occurs when retailers identify specific customer segments and deploy unique strategies to address the desires of those segments rather than the mass market

37. Figure 3-7: Selected Retail Positioning Strategies

38. Target Market Selection
3 techniques
Mass marketing
Concentrated marketing
Differentiated marketing
Target Market Selection
Retailer’s location
Goods and service mix
Promotion efforts
Price orientation
Strategy
Strategic Implications of Target Market Techniques

39. Figure 3-9: Developing an Overall Retail Strategy
Controllable
Variables:
Store location
Managing business
Merchandise
management
and pricing
Communicating
with customer
Uncontrollable
Variables:
Consumers
Competition
Technology
Economic
conditions
Seasonality
Legal restrictions
Retail
Strategy

40. Table 3-4a: Legal Environment and Retailing
Store Location
zoning laws
environmental laws
direct selling laws
local ordinances
leases and mortgages
Managing the Business
licensing provisions
personnel laws
antitrust laws
franchise agreements
business taxes
recycling laws

41. Table 3-4b: Legal Environment and Retailing
Merchandise Management and Pricing
trademarks
merchandise restrictions
product liability laws and lemon laws
sales taxes
unit-pricing laws
collusion laws
sale prices
price discrimination laws

42. Table 3-4 c: Legal Environment and Retailing
Communicating with the Customer
truth-in-advertising and selling laws
truth-in-credit laws
telemarketing laws
bait-and-switch laws
inventory laws
labeling laws
cooling-off laws

43. Table 3-6: Sample Strategic Plan
Sally’s is a small, independently-owned, high fashion ladies clothing shop located in a suburban strip mall. It is a full-price, full-service store for fashion-forward shoppers. Sally’s carries sportswear from popular designers, has a personal shopper for busy executives, and has an on-premises tailor. The store is updating its strategic plan as a means of getting additional financing for an anticipated expansion.

44. Additional Concerns for Global Retailing
In addition to the strategic planning process:
assess your international potential
get expert advice and counseling
select your countries
develop, implement, and review an international retailing strategy

45. Factors Affecting the Success of a Global Retailing Strategy
Timing
A balanced international program
A growing middle class
Matching concept to market
Solo or partnering
Store location and facilities
Product selection

46. Figure A3-1: Factors to Consider When Engaging in Global Retailing