Ch#1 Intro2Retail M 2013 22
-
Upload
shilpi-islam -
Category
Documents
-
view
219 -
download
0
Transcript of Ch#1 Intro2Retail M 2013 22
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
1/25
M cGraw-Hil l / I rwin
Retail i ng M anagement,
M cGraw-Hil l / I rwin
Retail i ng M anagement,
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
2/25
Computer Source: 44 outlets
1-3
1-4
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
3/25
M cGraw-Hil l / I rwin
Retail i ng M anagement,
Chapter 1
Introduction to the World of Retailing
1-6
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
4/25
1-7
The World of Retailing
Introduction to Retailing
Types of Retailers
Multi-Channel Retailing
Customer Buying Behavior
1-8
Questions
What is retailing?
What do retailers do?
Why is retailing important in our society?
What career and entrepreneurial opportunitiesdoes retailing offer?
What types of decisions do retail managersmake?
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
5/25
1-9
What is Retailing?
Retailing a set of businessactivities that adds value tothe products and servicessold to consumers for theirpersonal or family use
Retailing is a business that
sells products and/orservices to consumers forpersonal or family use.
1-10
Examples of Retailers
Retailers:Otobi
Aarong
AgoraBata
Singer
Firms that are retailers and wholesalers - sell toother business as well as consumers :
Bata, Singer, Hatil
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
6/25
1-11
Manufacturers Perspective
The Four Ps of Marketing
Distribution
Retailers are part o f the
distribution channel
Retailers are part of the
distribution c hannel
Product
Price
Promotion
1-12
Distribution Channel
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
7/25
Typical Supply Chain Network
Suppliers Plants
Distribution
Centers
Customers
retailers
1-14
A Retailers Role in a Supply Chain
Retailers are the final business orgs within asupply chain which links manufacturers toconsumers.
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
8/25
1-15
Manufacturing, Wholesaling and Retailing
Vertical Integration fi rm performs more than one set of activities inthe channel
Ex: retailer invests in wholesaling or manufacturing
Backward Integration retailer performs some distribution andmanufacturing activities
Ex: JCPenney sells Arizona jeans (Private Label)
Forward Integration manufacturers undertake retail ing activities
Ex: Ralph Lauren (New York Jones, Liz Claiborne) operates itsown stores
Large retailers engage in both wholesaling and retailing
Ex: Wal-Mart, Lowes, Safeway, Brown Shoe Company
Vertical Integration
1-16
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
9/25
1-17
Do Retailers Add Value?
a box of crackers at a grocery store
costs $1 to manufacturer
sells at a price of $2
Retailers add significantly to the prices consumers face
Why not buy directly from the manufacturer?
Does that mean that grocery stores are very profitable?
Example
1-18
Manufacturer
Vendor
Distributor
Wholesaler
Retailer
$1.00 $1.20 $2.00
$.85 $.15 $.70
Consumer
Price to
Distributor
Price to
Retailer
Price to
Consumer
Why Not Get Rid of the Middlemen?
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
10/25
1-19
The High Costs and Low Profits of
Retailing
1-20
Better services to
customersMore efficient
Why Not Get Rid of the Middlemen?
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
11/25
1-21
How Retailers Add Value
Prov ide Assortment
Buy other productsat the same time
Break Bulk
Buy i t in quantitiescustomers want
Hold Inv entory
Buy it at aconvenient placewhen you want it
Offer ServicesSee i t before you
buy; get credit;layaway
Ryan McVay/Getty Images
1-22
How Retailers Add Value
The value of the product and servi ce
increases as the retailer performs functions .
Bicycle is dev eloped atmanuf acturer
Bicycle isdev eloped insev eral styles
Bicycle is offered inconvenient locationsin quantities of one
Bicycle is f eaturedon f loor display
Bicycle can bebought on credit or
put on layaway
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
12/25
1-23
Examples: How Retailers Add Values
BagBorrowerSteal.com jewelry and bag rental; Get (not buy, but borrow) exactly what you
want Home Depot
DIYer (Do-it-yoursel fer); Learn how to do it yoursel f with in-storeclinics and online workshops
1-24
Social and Economic Significance of Retailing
Retail Sales:
Over $4.1 trillion in annualU.S. sales in 2005
Employment:
Employs over 24 millionpeople in 2005
One of the largest sectorsfor job growth in US
Social responsibility
Global player
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
13/25
1-25
Social responsibility
Corporate social responsibility The voluntary actions taken by a
company to address the ethical,social, and environmental impactsof its business operations, inaddition to the concerns of itsstakeholders
Examples: Edun - a f air-trade fashionbrand by the U2 lead singer Bono Starbucks: pays its farmers 42%
more than the commodity price ofArabica coffee beans
Target: community giv ing programs(5% of income, $3 million a week)
Retail companies give away 1.7% oftheir prof its, compared with about 0.9%f or companies in other industries
1-26
Worlds 10 Largest Retailers in 2011
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
14/25
1-27
Structure of Retailing and Distribution Channels around theWorld: The United States
The nature of retailing anddistribution channels in the U.S.is unique.
Has the greatest retail density
Has the greatest concentration oflarge retail firms
Large enough to operate theirown warehouses, eliminating theneed for wholesaling.
The combination of large storesand large firms result in a veryefficient distribution system.
CHINAThe United States
1-28
Comparison of Distribution Channelsaround the World
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
15/25
1-29
What have created these differences
in distribution systems?
Social &PoliticalObjectives
China, India: To reduce unemployment byprotecting small businesses
EU: To protect small retailers
To preserve green spaces/town centers
Geography Much lower population density in the US than in India,China, and EU (where less low-cost real estate areavailable for building large stores)
Market size Large retail markets in US, India, China
Countries in EU distribution channels and retailchains operate in a single country (no economy of scalesto be achieved; trade barriers sti ll exist)
1-30
Nature of Retail Industry is Changing
Mom and Pop Store
To Todays Retailer
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
16/25
1-31
Retailing is a High Tech Industry
Selling Merchandise through the Internet
Using Internet to manage supply chains
Analyze POS data to tailor assortments to stores
Computer systems for merchandise planning andtracking
1-32
Retailers are a Business LikeManufacturers
The McGraw-Hill C ompan ies,
Inc./AndrewResek, photographer
MIS
Acco untin g
Operations
Finance
Marketing
Human Resources
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
17/25
1-33
Opportunities in Retailing:
Management opportunities
People with a wide range of skills and interests neededbecause retailers functions include Finance
Purchase Accounting Management information system (MIS) Supply management including warehouse and
distribution management Design and new product development
Financially rewarding 5-year salary of buyers: $50,000 - $60,000 5-year salary of store managers: $120,000 - $160,000
1-34
Opportunities in Retailing:Entrepreneurial opportunities
Retailing provides opportunities forpeople who want to start their ownbusiness
Some of the worlds richest peopleare retailing entrepreneurs
Examples of retailingentrepreneurs
Sam Walton (Wal-Mart)Jeff Bezos (Amazon.com)Ingvar Kamprad (IKEA)Anita Roddick (the Body Shop)
Wal-Mart: Sam Walton
IKEA: Ingv ar Kamprad
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
18/25
1-35
Career Opportunities in Retailing
Start Your Own Business
Walton Family (Wal-Mart)
Fisher (The Gap)
Wexner (The Lim ited)
Menard (Menards)
Marcus (The Home Depot)
Kellogg (Kohls)
Schulze (Best Buy)
Lev ine (Family Doll ar)
Gold (99Cent Only)
List of Retail Entrepreneurs on Forbes 400 Richest Americans
1-36
Misconceptions About Careers in Retailing
College not needed
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 C ompan ies , Inc./AndrewResek, pho tographer
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
19/25
1-37
Why You Should Consider Retailing
Entry level management positions:
Department manager or assistant buyer/planner
Manage and have P&L (Profit & Loss) responsibility on your firs t
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
1-38
Types of Jobs in Retailing
Most entry level jobs are in
store management or buying, but theres
-acc ounting and finance
-real es tate
-human resource management
-supply chain management
-advertising
-public affairs
-information systems
-loss prevention
-visual merchandising
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
20/25
1-39
Retail Management Decision Process
1-40
Decision Variables for Retailers
Customer Service
Store Design
and Display
Merchandise
Assortment
Communication
Mix
LocationPricing
Retail
Strategy
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
21/25
1-41
Wal-Marts Retail Mix
Retail Strategy
MiX
Customer
ServiceLocation
Merchandise
Assortment
PricingCommunication
Mix
Store Design
And Dis play
1-42
Wal-Marts Retail Mix
Location: Free-
standing Stores
CustomerService
MerchandiseAss ortment
PricingCommunication
Mix
Store Display
And Design
Location Strategy
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
22/25
1-43
Wal-Marts Retail Mix
Location
PricingCommunicationMix
Store Design
and Display
CustomerService
MerchandiseAssortment
Large Numberof
Categories
Few Items
in EachCategory
Assortm ent Strategy
1-44
Wal-Marts Retail Mix
Location
CommunicationMix
Store Design
and Display
CustomerService
Merchandise
Ass ortment
Pricing : Low, EDLP
Pricing Strategy
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
23/25
1-45
Wal-Marts Retail Mix
Communication Mix
Comm Mix :TV and NewspaperInser t Ads
Location
Pricing
Store Design
and Display
Customer
Service
Merchandise
Ass ortment
1-46
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
24/25
1-47
Wal-Marts Retail Mix
Store Design and Display
Store Designand Display
Basic, SpecialDisplays
for Products
CustomerService Location
Merchandise
Ass ortments
PricingCommunication
Mix
1-48
Wal-Marts Retail Mix
Customer Service
CustomerServ ice
LimitedLocation
Merchandise
Ass ortment
Pricing
CommunicationMix
Store Desi gn
and Display
-
8/10/2019 Ch#1 Intro2Retail M 2013 22
25/25
1-49
Ethical Situations for a Retail Manager
Should a retailer sell merchandise that they suspect utilizedchild labor?
Should it advertise that its prices are the lowest in an areaeven though some items are not?
Should a buyer accept an expensive gift from a vendor?
Should salespeople use high-pressure sales when they knowthe product is not the best for the customers needs?
Should a retailer give preference to minorities when making apromotion decision?
Should a retailer treat some customers better than others?