An Introduction to Retailing

RETAIL MANAGEMENT: A STRATEGIC APPROACH

11th Edition BERMAN EVANS
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Chapter Objectives
To define retailing, consider it from different

perspectives, demonstrate its impact, and note its special characteristics To introduce the concept of strategic planning and apply it 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 To indicate the focus and format of the text
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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.

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?
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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.

Figure 1-1: Boom Times for Dunkin Donuts

Figure 1-2: Careers in Retailing

An Ideal Candidate for a Retailing Career

Must be a people person Must be flexible Should be decisive Must have analytical skills Must have stamina

Table 1-1: The 10 Largest Retailers in the United States

Rank Company Main Emphasis

1 2 3 4 5 6 7 8 9 10

Wal-Mart Home Depot CVS Caremark Kroger Costco Target Walgreens Lowes Safeway

Full-line discount stores, supercenters, membership clubs Home centers, design centers Drugstores Supermarkets, convenience stores, jewelry stores Membership clubs Full-line discount stores, supercenters Drugstores

Sears Holdings Department stores, specialty stores Home centers Supermarkets

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Manufacturer Retailer

Wholesaler

Final Consumer
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Figure 1-5: The Retailers Role in the Sorting Process

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Multi-Channel Retailing
A retailer sells to consumers through

multiple retail formats: Web sites Physical stores

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Figure 1-6: Brooks Brothers and Multi-Channel Retailing

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Relationship Management Among Retailers and Suppliers

Disagreements may occur in the following areas:

control over channel

profit allocation
number of competing retailers product displays

promotional support
payment terms operating flexibility
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Distribution Types

Exclusive: 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 area Intensive: suppliers sell through as many retailers as possible Selective: suppliers sell through a moderate number of retailers

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Figure 1-7: Comparing Distribution Types

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Small Average Sale Retailers Strategy

Impulse Purchase

Popularity of Stores

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Retail Strategy
An overall plan for guiding a retail firm Influences the firms business activities

Influences firms response to market

forces

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Six Steps in Strategic Planning

1. 2. 3. 4. 5. 6. Define the type of business Set long-run and short-run objectives Determine the customer market Devise an overall, long-run plan Implement an integrated strategy Evaluate and correct

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Figure 1-9: Expect More. Pay Less at Target

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Aspects of Targets Strategy

Growth objectives Appeal to a prime Employee relations Innovation Commitment to

market Distinctive image Focus Customer service Multiple points of contact

technology Community involvement Monitoring performance

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Customer Orientation

Coordinated Effort
Value-driven Goal Orientation

Retailing Concept

Retail Strategy

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Figure 1-11: The Build-A-Bear Experience: Never Boring

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Customer Service

Activities undertaken by a retailer in

conjunction with the basic goods and services it sells. This includes:
Store hours Parking Shopper-friendliness

Credit acceptance
Salespeople
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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?
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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 encounter

Concentrate on the total retail experience Monitor satisfaction Stay in touch with customers
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Effective Relationship Retailing

Use a win-win approach

It is easier to keep existing customers happy than to gain new ones Ongoing customer contact is improved with information on peoples attributes and shopping behaviors
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Develop a customer database

Approaches to the Study of Retailing

Institutional Functional

Strategic

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Parts of Retail Management: A Strategic Approach

Building relationships and strategic planning Retailing institutions Consumer behavior and information gathering Elements of retailing strategy Integrating, analyzing, and improving retail

strategy
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