Chapter 1 An Introduction to Retailing RETAIL MANAGEMENT

Chapter 1 An Introduction to Retailing RETAIL MANAGEMENT: A STRATEGIC APPROACH, 10 th Edition BERMAN EVANS

Chapter Objectives þ To define retailing, consider it from different perspectives, demonstrate its impact, and note its special characteristics þ To introduce the concept of strategic planning and apply it þ 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 þ To indicate the focus and format of the text 1 -2

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. 1 -3

Issues in Retailing How 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? How can we grow our business, while retaining a core of loyal customers? 1 -4

The Philosophy Retailers 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. 1 -5

Figure 1 -1: Boom Times for Lowe’s 1 -6

An Ideal Candidate for a Retailing Career Be a people person (human being) Be flexible Be decisive Have analytical skills Have stamina (Patient) 1 -7

Table 1 -1: The 10 Largest Retailers in the United States Rank Company Main Emphasis 1 Wal-Mart Full-line discount stores, supercenters, membership clubs 2 Home Depot Home centers, design centers 3 Kroger Supermarkets, convenience stores, jewelry stores 4 Target Full-line discount stores, supercenters 5 Costco Membership clubs 6 Albertson’s Supermarkets, drugstores 7 Walgreens Drugstores 8 Lowe’s Home centers 9 Sears Department stores, specialty stores 10 Safeway Supermarkets 1 -8

Figure 1 -4: A Typical Channel of Distribution Manufacturer Retailer Wholesaler 1 -9 Final Consumer

Figure 1 -5: The Retailer’s Role in the Sorting Process 1 -10

Multi-Channel Retailing A retailer sells to consumers through multiple retail formats Web sites Physical stores 1 -11

Distribution Types • Exclusive: suppliers make agreements with one or few retailers that designate the latter 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 1 -12

Figure 1 -7: Comparing Distribution Types 1 -13

Figure 1 -8: Special Characteristics Affecting Retailers Small Average Sale Impulse Purchase Retailer’s Strategy Popularity Of Stores Through location… 1 -14

Six Steps in Strategic Planning 1. Define the type of business in term of goods or services (Full service or no frills) 2. Set long-run and short-run objectives (Sales , market share and profits) 3. Determine the customer market on the basis of characteristics 4. Devise an overall, long-run plan gives general direction to firm and employees 5. Implement an integrated strategy that combine such factors , location, product assortment , pricing, advertising, and displays. to achieve objectives 6. Evaluate and correct 1 -15

Figure 1 -9: “Pay Less + Export More” at Target 1 -16

Aspects of Target’s Strategy Growth objectives (Market share , Profit) Appeal to a prime mark (the class of target customer) Distinctive image Focus (delight customers while increase investment ) Customer service Multiple points of contact ( through advertising, stores in different places , open 7 days, … 1 -17 Employee relations Innovation (creating unique ways to delight customers) Commitment to technology Community involvement Monitoring performance

Figure 1 -10: Applying the Retailing Concept Customer Orientation Satisfying needs &wants Coordinated Effort Maximizing efficiency Value Driven Adding Benefits Goal Orientation Setting goals 1 -18 Retailing Concept Retail Strategy

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 1 -19

Figure 1 -12: A Customer Respect Checklist C Do we trust our customers? C Do we stand behind what we sell? C Is keeping commitments to customers important to our company? C Do we value customer time? C Do we communicate with customers respectfully? C Do we treat all customers with respect? C Do we thank customers for their business? C Do we respect employees? 1 -20

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 includes all the elements in a retail offering that encourage consumer during their contact with retailer , no. of sales people parking – Monitor satisfaction – Stay in touch with customers 1 -21

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 1 -22