chapter 1 introduction to the world of retailing

7/30/2019 Chapter 1 Introduction to the World of Retailing

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CHAPTER 1

CHAPTER 1

Introduction to the World of

Retailing

CHAPTER 01

McGraw-Hill/Irwin Copyri ght 2012 by The McGraw-H il l Companies, Inc. All ri ghts reserved.


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CHAPTER 1

What is Retailing?

Retailing a set of businessactivities that adds value tothe products and services

sold to consumers for theirpersonal or family use

A retailer is a business thatsells products and/orservices to consumers forpersonal or family use.


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CHAPTER 1

Examples of Retailers

Retailers:Kohls, Macys, Wendys,www.Amazon.com, Jiffy

Lube, AMC Theaters,American Eagle Outfitter,Avon, J.Crew

Firms that are retailers and wholesalers - sell to otherbusiness as well as consumers:

Office Depot, The Home Depot, United Airlines, Bank ofAmerica, Costco
http://www.amazon.com/http://www.amazon.com/http://www.amazon.com/


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CHAPTER 1

Distribution Channel


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CHAPTER 1

The Retailers Role in a Supply Chain

Retailers are the final business within a supply

chain which links manufacturers to

consumers.

A Supply Chain is a set of firms that make and

deliver a given set of goods and services to the

ultimate consumer.


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CHAPTER 1Manufacturing, Wholesaling

and Retailing

Vertical Integration firm performs more than

one set of activities in the channel

Ex: retailer invests in wholesaling or manufacturing

Backward Integration retailer performs some

distribution and manufacturing activities Ex: JCPenney sells Arizona jeans (Private Label)


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CHAPTER 1Manufacturing, Wholesaling

and Retailing

Forward Integration manufacturers undertake

retailing activities

Ex: Ralph Lauren (New York Jones, Liz Claiborne)operates its own stores

Large retailers engage in both wholesaling andretailing

Ex: Wal-Mart, Lowes, Safeway, Brown Shoe Company


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CHAPTER 1

How Retailers Add Value

Provide Assortment

Buy other products at thesame time

Break Bulk

Buy it in quantitiescustomers want

Hold Inventory

Buy it at a convenient placewhen you want it

Offer ServicesSee it before you buy; get

credit; layaway

Ryan McVay/Getty Images


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CHAPTER 1Social and Economic

Significance of Retailing

Retail Sales:

Over $4.1 trillion in annual

U.S. sales in 2005

Employment:

Employs over 24 million

people in 2005

One of the largest sectors forjob growth in US

Social responsibility

Global player


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CHAPTER 1

Social Responsibility

Corporate social responsibility

The voluntary actions taken by a

company to address the ethical,

social, and environmental impactsof its business operations, in

addition to the concerns of its

stakeholders

http://www.asyousow.org
http://www.asyousow.org/http://www.asyousow.org/


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CHAPTER 1

Social Responsibility

IKEA

Starbucks: pays its farmers 42% more

than the commodity price of Arabica

coffee beans

Target: community giving programs (5%

of income, $3 million a week)

Retail companies give away 1.7% of

their profits, compared with about0.9% for companies in other

industries


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CHAPTER 1Opportunities in Retailing:

Management Opportunities

People with a wide range of skills and interestsneeded because retailers functions include

Finance

Purchase Accounting

Management information system (MIS)

Supply management including warehouse anddistribution management

Design and new product development


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Management Opportunities

Financially rewarding

5-year salary of buyers: $50,000 - $60,000

5-year salary of store managers: $120,000 -

$160,000


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Entrepreneurial Opportunities

Retailing provides opportunities for

people who want to start their own

business

Some of the worlds richest peopleare retailing entrepreneurs

Examples of retailing entrepreneurs

Sam Walton (Wal-Mart)

Jeff Bezos (www.Amazon.com)

Ingvar Kamprad (IKEA)

Anita Roddick (the Body Shop)

Wal-Mart: Sam Walton

IKEA: Ingvar Kamprad
http://www.amazon.com/http://www.amazon.com/


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CHAPTER 1Career Opportunities in Retailing

Start Your Own Business

List of Retail Entrepreneurs on Forbes 400

Richest Americans Walton Family (Wal-Mart)

Fisher (The Gap) Wexner (The Limited)

Menard (Menards)

Marcus (The Home Depot)

Kellogg (Kohls)

Schulze (Best Buy)

Levine (Family Dollar)

Gold (99Cent Only)


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CHAPTER 1

Retail Strategy

Need to identify the

competition

Intratype competition

(e.g., Dillards vs..JCPenney)

Intertype competition

(e.g., Dillards vs.. Wal-

Mart)


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CHAPTER 1

Retail Strategy

Identifying customers

What are the significant

demographic and life-

style trends

Who are your target

customers


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CHAPTER 1

A retail strategy

should identify

the target market the product and

service mix

a long-term

comparative

advantage

Retail Strategy


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CHAPTER 1

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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CHAPTER 1

Decision Variables for Retailers

RetailStrategy

CustomerService

MerchandiseAssortment

Location

CommunicationMix

Pricing

Store Designand Display

Y F d ith Ethi l D i i


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CHAPTER 1

You are Faced with an Ethical Decision:

What Can You Do?

Ignore your personal values and do what yourcompany asks you to do you will probablyfeel dissatisfied with your job .

Take a stand and tell your employer what youthink. Work to change the policies.

Refuse to compromise your principles youcould lose your job!


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CHAPTER 1Misconceptions 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 Companies, Inc./Andrew Resek, photographer


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CHAPTER 1

Why You Should Consider Retailing

Entry level management positions: Department manager or assistant buyer/planner

Manage and have P&L responsibility on your firstjob

Starting pay average with great benefits

Some retailers pay graduate school

No two days are alike

Buying and planning for financially analyticallyoriented

Management for people-people


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CHAPTER 1

Types of Jobs in Retailing

Most entry level jobs are in store management

or buying, but theres Accounting and finance

Real estate Human resource management

Supply chain management

Advertising

Public affairs

Information systems

Loss prevention

Visual merchandising


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CHAPTER 1

Keywords

breaking bulk A function performed by retailers or wholesalers in which they

receive large quantities of merchandise and sell them in smaller quantities.

ethics A system or code of conduct based on universal moral duties and

obligations that indicate how one should behave.

holding inventory A major value-providing activity performed by retailers whereby

products will be available when consumers want them. intertype competition Competition between retailers that sell similar merchandise

using different formats, such as discount and department stores.

intratype competition Competition between the same type of retailers (e.g.,

Kroger versus Safeway).

wholesaler A merchant establishment operated by a concern that is primarilyengaged in buying, taking title to, usually storing, and physically handling goods in

large quantities, and reselling the goods (usually in smaller quantities) to retailers

or industrial or business users.

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