De La Salle – College of Saint Benilde

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Lecture 02: Fundamentals of Retailing

PRESENTED BY:

Ian Agoncillo Pacaña

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Agenda

• Definition of Retailing• Issues in Retailing• Cost and Profits• Distribution Channel• Retailing Process• Value Chain• Creating Value• Customer Service• Effective Channel Relations

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What is Retailing?

• Retailing is the process consisting of business activities involved in selling goods and services to consumers.

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Issues in Retailing

• How can we best serve our customers and earn?

• How do we compete?

• How do we grow our business?

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High Costs and Low Profits of Retailing

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Typical Channel of Distribution

Manufacturer Wholesaler Retailer Final Consumer

• Channel – a means of access• Distribute – to give to several entities

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Typical Retailing Process

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Value Chain

A series of value generating activities

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Retail Value Chain

Represents the bundle of benefits offered to consumers through a channel of distribution

– Store location and parking, retailer ambience, customer service, brands/products carried, product quality, retailer’s in-stock position, shipping, prices, image, and other elements

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Top Global Retailers

Source: Ernst & Young research

The U.S. retail industry generates $3.8 trillion in retail sales annually…

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The Retailer’s Role in the Sorting Process

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What is Value?

Channel Perspective:Value is a series of

activities and processes - the value chain - that provides a certain value for the consumer

Customer PerspectiveValue is the

perception that the shopper has of the value chain

It is the view of all the benefits from a purchase versus the price paid.

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Key is to Create Value

“Value” is the answer to the customer’s question:

“How satisfied am I with what I paid for?”

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Customers demand value

Consumers will demand more for less from the shopping experience

They will spend less time shopping

They will split the commodity-shopping trip from the value-added shopping trip

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Customer Service

• Expected customer service is the service level that customers want to receive from any retailer such as basic employee courtesy

• Augmented customer service includes the activities that enhance the shopping experience and give retailers a competitive advantage

• Augment – grow/increase/intensify

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Typical Customer Services

CreditDeliveryAlterations/

InstallationsPackaging/ gift

wrappingComplaints/ Return

handling

Gift certificatesTrade-insTrial purchasesSpecial salesExtended store

hoursMail and phone

orders

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Miscellaneous Customer Services

Bridal registryInterior designersPersonal shoppersTicket outletsParkingWater fountainsPay phonesBaby strollers

RestroomsRestaurantsBaby-sittingFitting roomsBeauty salonsFur storageShopping bagsInformation

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Turning Around Weak Customer Service

Focus onCustomer Concerns

Empower Front-LineEmployees

Show That You AreListening

Express SincereUnderstanding

Apologize and Rectifythe Situation

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Elements Contributing to Effective Channel Relationships

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Question and Answer

Q & A

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References

• Berman, Barry & Evans, Jpel, Retail Management 10th Ed. (Person)