Chapter One: An Introduction to Retailing

Chapter Objectives

To define retailing, consider it from different perspectives, demonstrate its impact, and note its special characteristics

To introduce the foundations of “experiential retailing”

To introduce the concept of strategic planning 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

To illustrate some of the career opportunities in retailing

Retailing encompasses the business activities involved in selling goods and services to consumers for their personal, family, or household use. It includes every sale to the final consumer.

• Definition and Sales Tax Issues*

• Retailers in Rhode Island*

• Retail Channels

Table 1-1:

The 10 Largest Retailers in the US

Rank Company Main Emphasis

1 Wal-Mart Full-line discount stores, supercenters, membership clubs

2 Home Depot

Home centers, design centers

3 Kroger Supermarkets, convenience stores, jewelry stores

4 Target Full-line discount stores, supercenters

5 Costco Membership clubs

6 Albertson’s Supermarkets, drugstores

7 Walgreens Drugstores

8 Lowe’s Home centers

9 Sears Department stores, specialty stores

10 Safeway Supermarkets

New Retail Paradigms

Relationship Management Among Retailers and Suppliers

Disagreements may occur:-control over channel

-profit allocation

-number of competing retailers

-product displays

-promotional support

-payment terms

-operating flexibility

Manufacturer Retailer

WholesalerFinal

Consumer

Special Characteristics Affecting Retailers (Modified from Fig. 1.8)

Small Average

Sale

Impulse Purchase

Popularityof

Stores

ConsumptiveExperience*

Retailer’sStrategy

“Think” “Feel”

High Involvement“Informative,” e.g., TV, Washer/

Dryer, Life Insurance “Affective,” e.g., Ground Coffee,

Sports Car, Perfume

Low Involvement“Habit-Formation,” e.g., Shampoo,

Paper Towels, Insecticide“Self-Satisfaction,” e.g., Pizza,

Imported Beer, Cigarette

The purchase of products and services are essentially extensions of individual’s values, and the benefits of those purchases may be functional, meeting utilitarian needs, symbolic, meeting psychological needs, and experiential, meeting stimulation needs.

Consumption may be viewed, then, as a process that entails some combination of thinking and feeling with the goal of providing the individual with products and services that meet functional, symbolic, and experiential needs consistent with one’s values, etc.

For retailers, this typically reduces to providing utilitarian and hedonic offerings, i.e., to not only offer products and services that provide benefits, but the shopping experience itself as contributing to satisfaction. Consumptive Experience is both product and shopping experience.

Foote, Cone, and Belding (FCB) Grid

[Vaugh, 1980; Ratchford, 1987; Kim et al 2007]

Derived loosely from Maslow

From Hebb, 1955

Build-a-Bear Experience Build-a-Bear Steps

Liberty of London

Focus on Consumptive Experience, i.e., Experiential Retailing

Relationship Retailing

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

Retail Strategy

• An overall plan for guiding a retail firm• Influences the firm’s business activities• Influences the firm’s response to market forces

Six Steps in Strategic Planning

1. Define the type of business

2. Set long-run and short-run objectives

3. Determine the customer market

4. Devise an overall, long-run plan

5. Implement an integrated strategy

6. Evaluate and correct

Applying the Retailing Concept

Customer Orientation

Coordinated Effort

Value Driven

Goal Orientation

RetailingConcept

RetailStrategy

Figure 1-10

Build-a-Bear Strategy

Careers in RetailingSee Appendix A and Retail Careers

Screenshot shown in Figure 1-2

NRF/Careers Website

Chapter 1 Discussion Questions: 5, 9