chapter 1 - introduction to retailing

8/3/2019 Chapter 1 - Introduction to Retailing

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Food Retailing Management

and Technology HTC610

Ali Mohamad Noor


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Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

Chapter Objectives

To define retailing, consider it from different

perspectives, demonstrate its impact, and note

its special characteristics

To introduce the concept of strategic planning

and apply it

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


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Retailing

Retailing encompasses the business

activities involved in selling goods andservices to consumers for their personal,

family, or household use. It includes every

sale to the final consumer.



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Issues in Retailing

How can we best serve our customers

while earning a fair profit?

How can we stand out in a highlycompetitive environment where

consumers have so many choices?

How can we grow our business while

retaining a core of loyal customers?


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The Framework of Retailing

Retailing involves sale of tangible goodsas well as services.

A service may be the shoppers primary

purchase (haircuts) or it may be part of theshoppers purchase of goods

Retailing may not have to involve a store

Mail / phone / direct selling / webtransaction and vending machine fallwithin the scope of retailing.


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The Impact of Retailing on the

Economy

Retailing is the major of world commerce

Retail sales and employment are vital

economic contribution.

Retail trends is mirror trends in a nation

overall economy.

Retailing as a major source of job


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A Typical Channels of Distribution

Manufacturer Wholesaler

Retailer

Final

Consumer

Retailing is the last stage in the channel of distribution. Retailer as a contact

between manufacturers, wholesalers, and consumer. Manufacturers prefer to

make one basic type of item and sell their entire inventory to a few buyers aspossible, but consumers want to choose from a variety of goods and services

and purchase a limited quantity. Retailers collect assortment from various source,

buy in large quantity, and sell in small amounts. This is called sorting process.

Adopted from Berman & Evans, 2004


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The Retailers Role in the Sorting Process

Manufacturer

Brand A

Manufacturer

Brand F

Manufacturer

Brand E

Manufacturer

Brand D

ManufacturerBrand C

Manufacturer

Brand B

Wholesaler

Wholesaler

Wholesaler

Retailer

Brand A

customer

Brand B

customer

Brand Ccustomer

Brand D

customer

Brand Ecustomer

Brand F

customer

Adopted from Berman & Evans, 2004


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Multi-Channel Retailing

A retailer sells to consumers through

multiple retail formats:Web sites

Physical stores


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Relationship Management Among

Retailers and Suppliers

Disagreements may occur in thefollowing areas:

control over channel

profit allocationnumber of competing retailers

product displays

promotional supportpayment terms

operating flexibility


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Distribution Types

Exclusive: suppliers make agreementswith one or few retailers, designating such

retailers as the only ones to carry certain

brands or products within a specifiedgeographic area

Intensive: suppliers sell through as many

retailers as possible Selective: suppliers sell through a

moderate number of retailers


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Figure 1-7: Comparing Distribution

Types


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The Relationships Among Retailers and Their

Suppliers

Complex relationships retailers are part of the distribution

channel, manufacturers and wholesalers must be concerned

about the caliber of display, customer service, store hours,

retailers reliability as business partners etc.

Retailers and suppliers have different priorities. Channel relations tend to be smoothest with - Exclusive

Distribution

Channel relations tend to be most volatile with Intensive

Distribution With Selective Distribution, suppliers sell through a moderate

number of retailers ( a combines aspects of exclusive and

intensive distribution.


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The Special Characteristics of Retailing

The average amount of sales transaction

for retailers is much less than for

manufacturers.

Final consumers make many unplanned or

impulse purchase

Retail consumers usually visit a store,

even though mail, phone, and Web sale

have increased.


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The Special Characteristics Affecting

Retailers

Small average sale Impulse purchase

Popularity of sources

Retailers

strategy

Taken from Berman & Evans, 2004


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Retail Strategy

An overall plan for guiding a retail

firmInfluences the firms business

activities

Influences firms response tomarket forces


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Six Steps in Strategic Planning

1. Define the type of business

2. Set long-run and short-run objectives

3. Determine the customer market4. Devise an overall, long-run plan

5. Implement an integrated strategy

6. Evaluate and correct


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Aspects of Targets Strategy

Growth objectives

Appeal to a prime

marketDistinctive image

Focus

Customer service

Multiple points of

contact

Employee relations

Innovation

Commitment totechnology

Communityinvolvement

Monitoringperformance


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The Retailing Concept

Customer orientation retailer determines theattributes and needs of its customers andendeavors to satisfy these needs to the fullest.

Coordinated effort the retailer integrates all

plans and activities to maximize efficiency. Value-driven retailer offer good value to

customer, whether it be upscale or discount.This means having prices appropriate to the

level of products and customer service. Goal orientation retailer sets goals and thenuses its strategy to attain them.


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Figure 1-10: Applying the Retailing

Concept

Customer Orientation

Coordinated Effort

Value-driven

Goal Orientation

Retailing

Concept

Retail

Strategy


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Issues that relate to retailers

performance in term of the RetailingConcept

Total retail experience

Customer service Relationship retailing


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Customer Service

Activities undertaken by a retailer inconjunction with the basic goods and

services it sells. This includes:

Store hours

Parking

Shopper-friendliness

Credit acceptance

Salespeople


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Figure 1-12: A Customer

Respect Checklist

Do we trust our customers?

Do we stand behind what we sell?

Is keeping commitments to customers important to

our company?Do we value customer time?

Do we communicate with customers respectfully?

Do we treat all customers with respect?

Do we thank customers for their business?Do we respect employees?


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Relationship Retailing

Retailers 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


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Effective Relationship Retailing

Use a win-win approach

It is easier to keep existing customers happythan to gain new ones

Develop a customer database

Ongoing customer contact is improved with

information on peoples attributes and

shopping behaviors


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Parts ofRetail Management: A Strategic

Approach

Building relationships and strategic

planning

Retailing institutions

Consumer behavior and information

gathering

Elements of retailing strategyIntegrating, analyzing, and improving retail

strategy


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The Importance of Developing and Applying a Retail

Strategy ( An overall plan guiding a retail firm)

The six steps in strategic planning

Define type of business of the goods or services category andthe companys specific orientation.

Set long-run and short-run objectives for sales and profit,market share, image, and so on.

Determine the consumer market to target on the basis of its

characteristics (such as gender and income level) and needs(such as product and brand preferences).

Devise an overall, long-run plan that gives general direction tothe firm and its employees.

Implement an integrated strategy that combines such factors

as store location, product assortment, pricing, and advertisingand displays to achieve objectives. Regularly evaluate performance and correct weaknesses or

problem when observed.

chapter 1 - introduction to retailing

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