2. Introduction to the World of Retailing
Chapter 1
Introduction to the World of Retailing

3. The World of Retailing Types of Retailers Introduction to Retailing
Customer Buying Behavior
Multi-Channel Retailing

4. What is Retailing?
Retailing – a set of business activities that adds value to the products and services sold to consumers for their personal or family use.
A retailer is a business that sells products and/or services to consumers for personal or family use.
James Darell/Getty Images

5. The Distribution Channel

6. Examples of Retailers Retailers:
Kohl’s, Macy’s, Wendy’s, Amazon.com, Jiffy Lube, AMC Theaters, American Eagle Outfitter, Kroger
Firms that are retailers and wholesalers that sell to other business as well as consumers:
Office Depot, The Home Depot, United Airlines, Bank of America, Costco
The McGraw-Hill Companies, Inc./John Flournoy, photographer
The McGraw-Hill Companies, Inc./Andrew Resek, photographer

7. Manufacturing, Wholesaling and Retailing
Vertical Integration – firm performs more than one set of activities
Ex: retailer invests in wholesaling or manufacturing
Backward Integration – retailer performs some distribution and manufacturing activities
Ex: JCPenney sells Arizona jeans (Private Label)
Forward Integration – manufacturers undertake retailing activities
Ex: Ralph Lauren operates its own stores

8. How Retailers Add Value
Break Bulk
-Buy it in quantities customers want
Hold Inventory
-Buy it at a convenient place when you
want it
Provide Assortment
-Buy other products at the same time
Offer Services
-See it before you buy, get credit, layaway
Ryan McVay/Getty Images

9. How Retailers Add Value
The value of the product and service
increases as the retailer performs functions.
Bicycle can be bought on credit or put on layaway
Bicycle is featured on floor display
Bicycle is offered in convenient locations in quantities of one
Bicycle is developed in several styles
Bicycle is developed at manufacturer

10. World’s Largest Retailers

11. Social and Economic Significance of Retailing
Community Support
Over $3.4 trillion in annual U.S. sales
greater than medical care, housing, recreation combined
Employs 27 million people
21% of non-agricultural US workforce
Management training opportunities
Entrepreneurial opportunities

12. Retailing is Big Part of Economy
Manufacturing (11.2%)
Government (16.6%)
Services (45.8%)
Other 5.6%

13. Retailers are a Business Like Manufacturers
Accounting
Finance
Marketing
MIS
Operations
Human Resources
The McGraw-Hill Companies, Inc./Andrew Resek, photographer

14. Nature of Retail Industry is Changing
To Today’s Retailer
Mom and Pop Store

15. Retailing is a High Tech Industry
Selling Merchandise over the Internet
Using Internet to manage supply chains
Analyze POS data to tailor assortments to stores
Computer systems for merchandise planning
Ryan McVay/Getty Images

16. Globalization of Retailing
Source Merchandise From Around the World
Wal-Mart Operates in U.S., China, Mexico, UK, Germany
Carrefour has Stores in 25 Countries
Don Farrall/Getty Images

17. Comparison of Distribution Channels Across the Globe

18. Retail Management Decision Process

19. JCPenney’s Strategic Evolution
Main Street private label soft goods retailer
Changes in environment -- increased disposable income, growth of suburbs, interstate highway program
Emulate Sears in enclosed suburban malls
Focus on soft goods -- drop automotive, sporting goods, hardware
Develop catalog, develop electronic retailing
Stand alone stores
Centralized checkout

20. Sears Holdings’ Strategic Evolution
Large number of merchandise categories -- appliances, hardware, apparel
Malls evolved into places for buying soft goods, hard goods sold at category killers
The Softer Side of Sears
Refocused on value -- Testing carts in stores
Acquired Lands’ End
Reviewed training program for new managers
New growth with Kmart

21. Whole Foods Implementation
Organic and natural foods supermarket chain Assortment beyond organic/natural foods
Private labels - Whole Food™, 360 Day Value™
Love, trust, and employee empowerment
Always innovation:
Candy Island
Lamar Street Greens
Fifth Street Seafood
In-store Massage Therapist

22. Claire’s Retail Mix Customer Service Location Retail Strategy
Store Design
and Display
Merchandise
Assortment
Pricing
Communication Mix

23. Claire’s Retail Mix Location Strategy Enclosed malls Customer Service
Merchandise
Assortment
Pricing
Communication Mix
Store Display
And Design

24. Claire’s Retail Mix Assortment Strategy
Customer Service
Location
Jewelry, accessories and cosmetics for tweens and teens
Store Design
and Display
Communication Mix
Pricing

25. Claire’s Retail Mix Pricing Strategy Modest with Sales Location
Customer Service
Merchandise Assortment
Store Design
and Display
Communication Mix
Modest with Sales

26. Claire’s Retail Mix Communication Mix TV and Magazine Ads
Customer Service
Location
Communication Mix
Store Design
And Display
Merchandise Assortment
Pricing
TV and Magazine Ads

27. Claire’s Retail Mix Store Design and Display
Customer Service
Location
Bright, fashionable and fun
boutique layout
Merchandise Assortments
Communication Mix
Pricing

28. Claire’s Retail Mix Customer Service Modest Location
Merchandise Assortment
Store Design and Display
Pricing
Communication Mix

29. Macy’s Retail Mix Customer Service Location Retail Strategy
Store Design
and Display
Merchandise
Assortment
Pricing
Communication Mix

30. Macy’s Retail Mix Location Strategy Enclosed Malls Customer Service
Merchandise
Assortment
Pricing
Communication Mix
Store Display
And Design

31. Macy’s Retail Mix Assortment Strategy Many Items in Apparel
Customer Service
Location
Many Items in Apparel
and Soft Home
Store Design
and Display
Communication Mix
Pricing

32. Macy’s Retail Mix Pricing Strategy Moderate with Frequent Sales
Location
Pricing Strategy
Customer Service
Merchandise Assortment
Store Design
and Display
Communication Mix
Moderate with
Frequent Sales

33. Macy’s Retail Mix Communication Mix TV, Newspaper Ads and
Customer Service
Location
Communication Mix
Store Design
And Display
Merchandise Assortment
Pricing
TV, Newspaper Ads and
Special Events

34. Macy’s Retail Mix Store Design and Display Racetrack with Displays
Customer Service
Location
Racetrack with Displays
Merchandise Assortments
Communication Mix
Pricing

35. Macy’s Retail Mix Customer Service Modest Location
Merchandise Assortment
Store Design and Display
Pricing
Communication Mix

36. Target’s Retail Mix Customer Service Location Retail Strategy
Store Design
and Display
Merchandise
Assortment
Pricing
Communication Mix

37. Target’s Retail Mix Location Strategy Free-standing Stores
Customer Service
Merchandise
Assortment
Pricing
Communication Mix
Store Display
And Design

38. Target’s Retail Mix Assortment Strategy Large Number of Categories
Customer Service
Location
Large Number of Categories
Private Labels
Few Items in Each Category
Store Design
and Display
Communication Mix
Pricing

39. Target’s Retail Mix Pricing Strategy Low to Modest Location
Customer Service
Merchandise Assortment
Store Design
and Display
Communication Mix
Low to Modest

40. Target’s Retail Mix Communication Mix TV and Newspaper Insert Ads
Customer Service
Location
Communication Mix
Store Design
And Display
Merchandise Assortment
Pricing
TV and Newspaper
Insert Ads

41. Target’s Retail Mix Store Design and Display
Customer Service
Location
Colorful, wide aisles displays
for products with a grid layout
Merchandise Assortments
Communication Mix
Pricing

42. Target’s Retail Mix Customer Service Limited Location
Merchandise Assortment
Store Design and Display
Pricing
Communication Mix

43. Ethical Situations for a Retail Manager
Should a retailer sell merchandise that is suspects was made using child labor?
Should it advertise that its prices are lowest in area even though some items are not?
Should a buyer accept an expensive gift from a vendor?
Should salespeople use high-pressure sales when they know the product is not the best for the customer’s needs?
Should a retailer give preference to minorities when making a promotion decision?
Should a retailer treat some customers better than others?

44. Checklist for Making Ethical Decisions

45. You are Faced with an Ethical Decision: What Can You Do?
Ignore your personal values and do what your company asks you to do – you will probably feel dissatisfied with your job .
Take a stand and tell your employer what you think. Work to change the policies.
Refuse to compromise your principles – you could lose your job!

46. Career Opportunities in Retailing Start Your Own Business
List of Retail Entrepreneurs on Forbes 400 Richest Americans
Walton Family (Wal-Mart)
Fisher (The Gap)
Wexner (limited)
Menard (Menard’s)
Marcus, Blank (The Home Depot)
Kellogg (Kohl’s)
Schulze (Best Buy)
Levine (Family Dollar)
Gold (99Cent Only)

47. Misconceptions About Careers in Retailing
Don’t need college
Low pay
Long hours
Boring
Dead-end job
No benefits
Everyone is part-time
Unstable environment
No opportunity for women and minorities
The McGraw-Hill Companies, Inc./Andrew Resek, photographer

48. Why You Should Consider Retailing
Entry level management positions
-Department manager or assistant buyer/planner
-Manage and have P&L responsibility on your first job
Starting pay average with great benefits
- Some retailers pay graduate school
No two days are alike
Buying and planning for financially analytically oriented
Management for people-people

49. Types of Jobs in Retailing
Most entry level jobs are in store management or buying, but there’s…
-accounting and finance
-real estate
-human resource management
-supply chain management
-advertising
-public affairs
-information systems
-loss prevention
-visual merchandising