Instituto Politecnico de Setubal Levy, M. , Weitz, B. A. : Retailing Management CHAPTER 1 Introduction to the world retailing Retailing is a very important part of global, high-tech business. Because the very large retails are often multinational (or at least divided to really large area), i. e. Wall-Mart, 7-Eleven, Tesco stores …, they have to use very sophisticated communication and information systems to manage their business. Retailing provides considerable value to consumers while giving people opportunities for rewarding and challenging careers.
Retailing industry has to change really quickly because of changes of costumers’ needs and the technology. If retailing is successful, it means it is offering the right product, at the right price, in the right place, at the right time, and making the profit. To make this all happen, retailers have to understand what the costumers want and what the competitors are offering in the same time (both for the present time and for the longest future able to predict). Retail managers have many responsibilities.
They have to make complex decisions in selecting target markets and retail locations, determining what merchandise and services to offer, negotiating with suppliers and distributing merchandise to stores, training and motivating the sales associates, and deciding how to price, promote, and present merchandise. 1 What is retailing? Retailing means “a set of business activities that adds value to the products and services sold to costumers for their personal or family use”. It involves sale of products in stores, but also the sale of services. 1 Retailer’s role in distribution channel
Retailers are the final part of the whole distribution channel. A distribution channel is a set of companies that help get the product from the place of made to the final costumer. If one company more than one set of activities in the channel (manufacturing, wholesaling, retailing …), it means the company is vertical integrated. 2 Functions performed by retailers 1) Providing an assortment of products and services, 2) Breaking bulk, 3) Holding inventory, 4) Providing services, 5) Increasing the value of product and services. 3 Structure of retailing and distribution channels around the world ) U. S. distribution system – large retail firms mostly, 2) Japanese distribution system – many small stores and many relatively small firms, 3) European distribution system – between U. S. and Japanese. 2 Opportunities in retailing 1) Management opportunities – large possibility to learn and responsibilities in many different areas of management. 2) Entrepreneurial opportunities 3 The retail management decision process 1 Understanding the world of retailing Retail managers must understand the environment, costumers and competition to develop and implement really effective strategy.
Critical environmental factors are: ? macroenvironment – technological, social, ethical, legal, political factors, ? microenvironment – retailer’s competitors and costumers. 2 Developing the retail strategy The retail strategy “indicates how the firm plans to focus the sources to accomplish its objectives”. It identifies: ? the target market, ? the nature of merchandise, ? building a long term advantage over competitors. 3 Implementing the retail strategy Managers have to develop a retail mix that satisfies the needs of its target market better than the competitors. The retail mix is the combination of factors retailers use to satisfy costumer needs and influence their purchase decisions. ” Retail mix: ? types of merchandise and services offered, ? merchandise pricing, ? advertising and promotional programs, ? store design, ? merchandise display, ? assistance to costumers provided by salespeople, ? convenience of store’s location. CHAPTER 2 Types of retails There are more types of retails – store-based and nonstore-based and these are divided in many more subgroups. Each of them has a bit different needs for retail mix. 1 Trends in retail industry
Important changes in retail industry: ? greater diversity of retails, ? increasing industry concentration, ? globalization, ? use of multiple channels of costumer interaction. 2 Retailer characteristics The most basic characteristic is retail mix – elements used to classify costumers: ? price-cost trade-off, ? type of merchandise, ? variety and assortment, ? customer service, ? cost of offering breadth and depth of merchandise and services. 3 Food retailers ? conventional supermarkets (self service food stores), ? big-box food retailers (supercenters, hypermarkets, warehouse clubs), ? onvenience stores, There are several issues, food retailers have to face: very quickly increasing competition, new concepts of emphasizing prepared meals and many others. 4 General merchandise retails 1 Discount stores Discount store is “a retail that offers a broad variety of merchandise, limited service, and low prices. It offers both private labels and national brands, but these brands are typically less fashion-oriented than brands in department stores”. 2 Specialty stores A specialty store means a limited number of complementary merchandise categories and high level service. 3 Category specialist
It is a discount store offering a narrow variety but deep assortment of merchandise. 4 Department stores This type of store carries a broad of variety and deep assortment, offers some costumer services, and is organized into separate departments for displaying merchandise. 5 Drugstores 6 Off-price retailers These retails offer an inconsistent assortment of brand-name, fashion-oriented soft goods at low prices. 7 Value retailers Value retailer is a general discount store. 8 Electronic retailing (e-retailing or internet retailing) 9 Catalog and direct-mail retailing 10 Direct selling ? party plan system, multilevel network (with pyramid schemes). 11 Television home shopping 12 Vending machine retailing 5 Service retailing Service retailers are companies that sell primarily services rather than merchandise. They are a very large part of retail industry. Differences between services and merchandise retails: ? intangibility, ? simultaneous production and consumption, ? perishability, ? inconsistency.
6 Types of ownership 1 Independent, single-store establishment Because the competition of corporate chains is very large, some independent retailers are joining wholesale-sponsored voluntary cooperative groups. Corporate retail chains A retail chain is a company operating multiple retail units under common ownership. Usually the decision making process is centralized. 3 Franchising Franchising is a contractual agreement between a franchisor and a franchisee allowing franchisee to operate a retail outlet using a name and the format of franchisor. ———————–  Levy, M. , Weitz, B. A. : Retailing Management, New York: McGraw-Hill/Irwin, Inc. , 2004, page: 6  Levy, M. , Weitz, B. A. : Retailing Management, New York: McGraw-Hill/Irwin, Inc. , 2004, page: 19  Levy, M. , Weitz, B. A. Retailing Management, New York: McGraw-Hill/Irwin, Inc. , 2004, page: 23  Levy, M. , Weitz, B. A. : Retailing Management, New York: McGraw-Hill/Irwin, Inc. , 2004, page: 23  Levy, M. , Weitz, B. A. : Retailing Management, New York: McGraw-Hill/Irwin, Inc. , 2004, page: 48 CHAPTER 3 1Multichannel Retailing – A View into the Future The chapter speaks about different channels of communication with customers – stores, catalogues and internet. It analyses their advantages and disadvantages and possibilities of mixing these channels for making the profit and selling higher. 1. 1Retail channels for interacting with customers
Multichannel retailer is “a retailer that sells merchandise or services through more than one channel” . Single-channel retailers are changing their selling to multichannel to get more customers. 1)Store channel ?browsing ?touching and feeling products ?personal service ?cash payment ?immediate gratification ?entertainment and social experience 2)Catalog channel ?convenience ?safety ?quality and visual presentation 3)Electronic channel ?broader selection ?more information ?personalization ?problem-solving information 1. 2The evolution toward multichannel retailing Reasons to become a multichannel retailer: ?expanding market presence, leveraging existing assets, ?overcoming limitations of existing format, ?insights into customer behavior, ?increasing shares. Problems/issues: ?brand image (same image trough many channels), ?merchandise assortment, ?pricing. 1. 3Shopping in the future This chapter is telling “a story” about shopping in the future. It mixes all the channels with the technology expectations in the future. It also expects, that the stores will know almost everything about their customers (what they like – based on what they bought before, which size they have – based on which sizes they use to buy and a body scan in stores customer file).