PPT 1-1

5th Edition5th Edition

PPT 1-2McGraw-Hill/IrwinLevy/Weitz: Retailing Management, 5/e Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

Introduction to the Introduction to the World of RetailingWorld of Retailing

Chapter 1Chapter 1

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• 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.

What is Retailing?

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Examples of Retailers

• Retailers:

-Sears, Holiday Inn, McDonalds, Amazon.com, Jiffy Lube, AMC Theaters, American Eagle Outfitter, FAO Schwartz, 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, Sams Clubs

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How Retailers Add Value

• Breaking Bulk

-Buy it in quantities customers want

• Holding Inventory

-Buy it at a convenient place when you want it

• Providing Assortment

-Buy other products at the same time

• Offering Services

-See it before you buy, get credit, layaway

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Doll can be bought on credit or put on

layaway

Doll is featured on floor display

Doll is offered in convenient locations in quantities of oneDoll is developed in

several styles

How Retailers Add Value

Doll is developed at manufacturer

The value of the product and service increases as the retailer performs functions.

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Manufacturer’s Perspective

The Four P’s of Marketing

Distribution

Retailers are part of the

distribution channel

Retailers are part of the

distribution channelProduct

Price

Promotion

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Distribution Channel

Distribution ChannelPPT 1-4 Distribution Channel

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Accounting Finance

MISOperations

Marketing

Human Resources

Retailers are a Business Like Manufacturers

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Decision Variables for Retailers

Customer Service

Store Design and Display

MerchandiseAssortment

Communication Mix

LocationPricing

Retail

Strategy

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Economic Significance of Retailing

• Over $2.5 trillion in annual U.S. sales

-greater than medical care, housing, recreation combine

• Employs 17% of population

-about the same as manufacturing and growing

• Management training opportunities

• Entrepreneurial opportunities

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Retailing is Big Part of Economy

Services (50%)

Government (15%)

Manufacturing(18%)

Retail (17%)

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Projected Job Gains (2000 – 2010)

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Nature of Retail Industry is Changing

Mom and Pop Store

To Today’s Retailer

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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

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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

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Retail Environment Differs Across the Globe

US JapanConcentration High Medium

Store Size Big Small

Role of Low High

Wholesaling

Efficiency High Low

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Retail Management Decision Process

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JC Penney’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

• Future (?)

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Sears’ 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

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Whole Foods Implementation

Strategy - organic and natural foods supermarket chain

Assortment beyond organic/natural foods

Private labels - Whole Food™, 360 Day Value™

Love, trust, and employee empowerment

Equality in compensation

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Hot Topic’s Retail Mix

Retail Strategy

Customer Service Location

Merchandise

Assortment

PricingCommunication

Mix

Store Design

And Display

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Hot Topic’s Retail Mix

Enclosed malls

Customer Service

MerchandiseAssortment

PricingCommunication Mix

Store DisplayAnd Design

Location Strategy

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Hot Topic’s Retail Mix

Location

PricingCommunication

Mix

Store Design and Display

Customer Service

Many Different Hot Band

T-shirts and Accessories

Assortment Strategy

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Hot Topic’s Retail Mix

Location

Communication Mix

Store Design and Display

Customer Service

Merchandise Assortment

Modest with Sales

Pricing Strategy

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Hot Topic’s Retail Mix

Communication Mix

TV and Magazine Ads

Store DesignAnd Display

Customer Service Location

Merchandise Assortment

Pricing

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Hot Topic’s Retail Mix

Store Design and Display

Heavy Metal, Gothic Look

Customer Service Location

Merchandise Assortments

PricingCommunication

Mix

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Hot Topic’s Retail Mix

Customer Service

Modest

Location

Merchandise Assortment

Pricing

Communication Mix

Store Design and Display

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Macy’s Retail Mix

Retail Strategy

Customer Service

Location

MerchandiseAssortment

PricingCommunication Mix

Store DesignAnd Display

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Macy’s Retail Mix

Enclosed Malls

Customer Service

MerchandiseAssortment

PricingCommunication Mix

Store DisplayAnd Design

Location Strategy

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Macy’s Retail Mix

Location

PricingCommunication

Mix

Store Design and Display

Customer Service

Many Items in Apparel and

Soft Home

Assortment Strategy

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Macy’s Retail Mix

Location

Communication Mix

Store Design and Display

Customer Service

Merchandise Assortment

Moderate with Frequent Sales

Pricing Strategy

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Macy’s Retail Mix

Communication Mix

TV, Newspaper Ads and Special Events

Store DesignAnd Display Merchandise

Assortment

Pricing

Customer Service Location

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Macy’s Retail Mix

Store Design and Display

Ring with Displays

Customer Service Location

Merchandise Assortments

PricingCommunication

Mix

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Macy’s Retail Mix

Customer Service

Modest

Location

Merchandise Assortment

Pricing

Communication Mix

Store Design and Display

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Wal-Mart’s Retail Mix

Retail Strategy

Customer Service

Location

MerchandiseAssortment

PricingCommunication Mix

Store DesignAnd Display

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Wal-Mart’s Retail Mix

Free-standing Stores

Customer Service

MerchandiseAssortment

PricingCommunication

Mix

Store DisplayAnd Design

Location Strategy

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Wal-Mart’s Retail Mix

Location

PricingCommunication

Mix

Store Design and Display

Customer Service

Large Number of Categories

Few Items in Each Category

Assortment Strategy

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Wal-Mart’s Retail Mix

Location

Communication Mix

Store Design and Display

Customer Service

Merchandise Assortment

Low, EDLP

Pricing Strategy

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Wal-Mart’s Retail Mix

Communication Mix

TV and NewspaperInsert Ads

Location

Pricing

Store Design and Display

Customer Service

Merchandise Assortment

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Wal-Mart’s Retail Mix

Store Design and Display

Basic, Special Displays

for Products

Customer Service Location

Merchandise Assortments

PricingCommunication

Mix

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Wal-Mart’s Retail Mix

Customer Service

Limited

Location

Merchandise Assortment

Pricing

Communication Mix

Store Design and Display

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Career Opportunities in RetailingStart Your Own Business

• 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)

List of Retail Entrepreneurs on Forbes 400 Richest Americans

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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

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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 for financially oriented people

• Management for people people

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Types of Jobs in Retailing

Most entry level jobs are in store management or buying, but…

retailers also have staff specialists:

--accounting and finance

--real estate

--human resource management

--supply chain management

--advertising

--public affairs