Berman Retailmgmt13e PPT 01

Retail Management: A Strategic
Approach
Thirteenth Edition
Chapter 1
An Introduction
to Retailing
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Learning Objectives
1.1 To define retailing, consider it from different
perspectives, demonstrate its impact, and note its
special characteristics
1.2 To introduce the concept of strategic planning and
apply it
1.3 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
1.4 To indicate the focus and format of the text
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?
• Low consumer confidence and high savings rates have
reduced consumer spending. At the same time retail
competition has increased through increased format
blurring (e.g., sales of cameras at office supply stores,
carpeting and major appliances at home improvement
centers).
• How can we grow our business while retaining a core of
loyal customers?
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 Willingness to Adapt Is
Essential for Retailers
An Ideal Candidate for a Retailing
Career
• Must be a people person (more important than
technical knowledge). Technical skills can be taught
more easily than people skills
• Must be flexible
• Should be decisive
• Must have analytical skills
• Must have stamina
The 10 Largest Retailers in the United
States (2016)
Table 1.1 The 10 Largest Retailers in the United States (2016)
Rank Company Main Emphasis
1 Wal-Mart Full-line discount stores, supercenters, membership clubs
2 Kroger Supermarkets, convenience stores, jewelry stores
3 Costco Membership clubs
4 Home Depot Home centers
5 Walgreen Boots Alliance Drugstores
6 Target Full-line discount stores, supercenters
7 CVS Health Drugstores
8 Amazon.com Web merchant
9 Albertsons Supermarkets, drugstores
10 Lowe's Home centers
Figure 1.4 A Typical Channel of
Distribution
Manufacturer
Retailer
Final
Wholesaler
Consumer
Figure 1.5 The Retailer’s Role in the
Sorting Process
Omnichannel Retailing (1 of 2)
• A retailer sells to consumers through multiple retail
formats:
– Web sites
– Physical stores
– Smartphone apps
– Social media
Omnichannel Retailing (2 of 2)
• Cross selling across channels (in-store product availability info
on Web site)
• Consistent pricing in all channels (credibility)
• Can buy, and return product regardless of channel
• Role of each channel
– Store– try on, ease of return, fast availability (immediacy),
compare offerings
– Web– 24/7, product information, product reviews by
customers, personalization (tailored assortment based on
past purchases), most current pricing, closeout sales
– Catalog-permanency, true color
Figure 1.6 World of Music
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
Exclusive Vs Intensive Distribution
• Exclusive Distribution: Fate of retailer is tied to
manufacturer success, retailer has no “free-rider”
concerns, retailer has less price competition, manufacturer
is better assured of high levels of customer support
• Intensive Distribution: Manufacturer is better assured of
maximizing sales (especially for convenience goods),
retailers face strong competition for price and service,
intratype competition
Figure 1.7 Comparing Distribution
Types
Figure 1.8 Special Characteristics
Affecting Retailers
Small Impulse
Average Purchase
Sale
Retailer’s
Strategy
Popularity
of
Stores
Retail Strategy
• An overall plan for guiding a retail firm
• Influences the firm’s business activities
• Influences firm’s response to market forces
Six Steps in Strategic Planning
1. Define the type of business (corporate mission)
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 (fine-tune)
Aspects of Home Depot’s Strategy
• Growth through product • Employee relations
authority • Innovation
• Targeted appeal to • Commitment to technology
multiple segments
• Community involvement
• Distinctive image
• Adaptive to omnichannel
• Seamless customer trends
service
• Multiple points of contact
Figure 1.9 Applying the Retailing
Concept
Customer Orientation
Coordinated Effort
Retailing Retail
Concept Strategy
Value-driven
Goal Orientation
Figure 1.10 Creating a Unique
Shopping Experience
The Store of the Future
Please click URL to view:
https://youtu.be/IKouQFI1aM4
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
Figure 1.11 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?
Customer Service Lessons: Richard
Branson and Virgin Airlines
Read post here:
https://www.forbes.com/forbes/welcome/?toURL=https://ww
w.forbes.com/sites/carminegallo/2013/05/09/seven-
customer-service-lessons-i-learned-in-one-day-with-richard-
branson-video/&refURL=&referrer=
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
Effective Relationship Retailing
• Use a “win-win” approach
– It is easier to keep existing customers happy than
to gain new ones (present value of current
customers income stream– cost of keeping
existing customers content versus cost of replacing
them with new customer
• Develop a customer database (loyalty programs)
– Ongoing customer contact is improved with
information on people’s attributes and shopping
behaviors
Relationship Management Among
Retailers and Suppliers
• Disagreements may occur in the following areas (channel
conflict):
– control over channel (private label)
– profit allocation (resale price control)
– number of competing retailers (exclusive, selective or
intensive distribution)
– product displays
– promotional support (cooperative advertising funds and
restrictions)
– payment terms (payment on time)
– operating flexibility
– gray market sales
– markdown monies, chargebacks by dominant retailers
Approaches to the Study of Retailing
Institutional
Functional
Strategic
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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