Chapter One: An Introduction to Retailing

Chapter Objectives  To define retailing, consider it from different perspectives, demonstrate its impact, and note its special characteristics  To introduce the foundations of “experiential retailing”  To introduce the concept of strategic planning  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 illustrate some of the career opportunities in 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. Definition and Sales Tax Issues* Retailers in Rhode Island* Retail Channels Table 1-1: The 10 Largest Retailers in the US RankCompanyMain Emphasis 1Wal-MartFull-line discount stores, supercenters, membership clubs 2Home Depot Home centers, design centers 3KrogerSupermarkets, convenience stores, jewelry stores 4TargetFull-line discount stores, supercenters 5CostcoMembership clubs 6Albertson’sSupermarkets, drugstores 7WalgreensDrugstores 8Lowe’sHome centers 9SearsDepartment stores, specialty stores 10SafewaySupermarkets New Retail Paradigms

Relationship Management Among Retailers and Suppliers Disagreements may occur: -control over channel -profit allocation -number of competing retailers -product displays -promotional support -payment terms -operating flexibility Manufacturer Retailer Wholesaler Final Consumer

Special Characteristics Affecting Retailers (Modified from Fig. 1.8) Small Average Sale Impulse Purchase Popularity of Stores Consumptive Experience* Retailer’s Strategy

“Think”“Feel” High Involvement “Informative,” e.g., TV, Washer/ Dryer, Life Insurance “Affective,” e.g., Ground Coffee, Sports Car, Perfume Low Involvement “Habit-Formation,” e.g., Shampoo, Paper Towels, Insecticide “Self-Satisfaction,” e.g., Pizza, Imported Beer, Cigarette The purchase of products and services are essentially extensions of individual’s values, and the benefits of those purchases may be functional, meeting utilitarian needs, symbolic, meeting psychological needs, and experiential, meeting stimulation needs. Consumption may be viewed, then, as a process that entails some combination of thinking and feeling with the goal of providing the individual with products and services that meet functional, symbolic, and experiential needs consistent with one’s values, etc. For retailers, this typically reduces to providing utilitarian and hedonic offerings, i.e., to not only offer products and services that provide benefits, but the shopping experience itself as contributing to satisfaction. Consumptive Experience is both product and shopping experience. Foote, Cone, and Belding (FCB) Grid [Vaugh, 1980; Ratchford, 1987; Kim et al 2007] Derived loosely from Maslow From Hebb, 1955

Build-a-Bear Experience Build-a-Bear Steps Liberty of London Focus on Consumptive Experience, i.e., Experiential Retailing 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 Stay in touch with customers

Retail Strategy An overall plan for guiding a retail firm Influences the firm’s business activities Influences the firm’s response to market forces Six Steps in 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 Applying the Retailing Concept Customer Orientation Coordinated Effort Value Driven Goal Orientation Retailing Concept Retail Strategy Figure 1-10 Build-a-Bear Strategy

Careers in Retailing See Appendix A and Retail CareersRetail Careers Screenshot shown in Figure 1-2 NRF/Careers Website Chapter 1 Discussion Questions: 5, 9