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McGraw-Hill/IrwinRetailing Management, 6/e

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 1

Introduction to the World of Retailing

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The World of Retailing

Introduction to Retailing Types of Retailers

Multi-Channel RetailingCustomer Buying

Behavior

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What is Retailing?

• 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.

James Darell/Getty Images

Centro de Comercio Detallsita

• www.gda.itesm.mx/ccd• ADMINISTRACIÓN DE MERCANCÍAS / PRECIOS: Aprenderás el manejo de compras,

resurtidos e inventarios que realizan las empresas de comercio al detalle. Analizarás la tecnología que está revolucionando el retail y estudiarás la administración y el establecimiento de precios, así como el desarrollo y presentación de líneas de producto, dando especial atención a las relaciones comprador-proveedor. 

• INTERNSHIP I Y II: Aplicarás tus conocimientos dentro de una empresa detallista. en el verano trabajarás 7hrs. diarias por 5 semanas en una empresa de comercio al detalle, en donde conocerás las diferentes áreas de la empresa y tendrás la oportunidad de resolver algún problema o realizar un proyecto específico.  

• ADMINISTRACIÓN DE LA TIENDA Y SERVICIO AL CLIENTE: Analizarás los procesos en el manejo y administración de una tienda. Aprenderás temas relacionados con sistemas de información, recursos humanos, imagen y diseño de la tienda (visual merchandising), servicio al cliente y CRM (Customer Relationship Management), entre otros.  

• ESTRATEGIA DE COMERCIO DETALLISTA MULTICANAL: Conocerás las estrategias que siguen los principales detallistas y su implicación en las ventas. Comprenderás la metodología para la ubicación de puntos de venta. Aplicarás las estrategias de publicidad y promoción que se utilizan en el comercio detallista. Además, aprenderás la nueva tendencia en el retail de administración por categorías.   

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The Distribution Channel

Distribution ChannelPPT 1-4

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Examples of Retailers

Retailers: Kohl’s, Macy’s, Wendy’s,

Amazon.com, Jiffy Lube, AMC Theaters, American Eagle Outfitter, 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, Costco

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

The McGraw-Hill Companies, Inc./John Flournoy, photographer

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Manufacturing, Wholesaling and Retailing

Vertical Integration – firm performs more than one set of activities

Ex: retailer invests in wholesaling or manufacturing

Backward Integration – retailer performs some distribution and manufacturing activities

Ex: JCPenney sells Arizona jeans (Private Label)

Forward Integration – manufacturers undertake retailing activities

Ex: Ralph Lauren operates its own stores

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How Retailers Add Value• Break Bulk

-Buy it in quantities customers want• Hold Inventory

-Buy it at a convenient place when you

want it• Provide Assortment

-Buy other products at the same time• Offer Services

-See it before you buy, get credit, layaway

Ryan McVay/Getty Images

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How Retailers Add Value

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

Bicycle is developed at manufacturer

Bicycle is developed in several styles

Bicycle is offered in convenient locations in quantities of one

Bicycle is featured on floor display

Bicycle can be bought on credit or

put on layaway

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World’s Largest Retailers

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Social and Economic Significance of Retailing

• Community Support

• Over $3.4 trillion in annual U.S. sales

greater than medical care, housing, recreation combined

• Employs 27 million people

21% of non-agricultural US workforce

• Management training opportunities

• Entrepreneurial opportunities

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Retailing is Big Part of Economy

Services (45.8%)

Manufacturing (11.2%)Retail (21.8%)

Government (16.6%)

Other 5.6%

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Retailers are a Business Like Manufacturers

Accounting

Marketing

Finance

Human ResourcesOperations

MIS

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

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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

Ryan McVay/Getty Images

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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

Don Farrall/Getty Images

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Comparison of Distribution Channels Across the Globe

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Retail Management Decision Process

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JCPenney’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• Stand alone stores• Centralized checkout

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Sears Holdings’ 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• New growth with Kmart

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Organic and natural foods supermarket chain

Assortment beyond organic/natural foods– Private labels - Whole Food™, 360 Day Value™– Love, trust, and employee empowerment– Always innovation:

Candy Island

Lamar Street Greens

Fifth Street Seafood

In-store Massage Therapist

Whole Foods Implementation

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Claire’s Retail Mix

Retail Strategy

Customer Service Location

Merchandise

Assortment

PricingCommunication Mix

Store Design

and Display

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Claire’s Retail Mix

Enclosed malls

Customer Service

Merchandise

Assortment

PricingCommunication Mix

Store Display

And Design

Location Strategy

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Claire’s Retail Mix

Location

Pricing

Communication Mix

Store Design

and Display

Customer Service

Jewelry, accessories and cosmetics for tweens and teens

Assortment Strategy

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Claire’s Retail Mix

Location

Communication Mix

Store Design

and Display

Customer Service

Merchandise Assortment

Modest with Sales

Pricing Strategy

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Claire’s Retail Mix

Communication Mix

TV and Magazine Ads

Store Design

And Display

Customer ServiceLocation

Merchandise Assortment

Pricing

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Claire’s Retail Mix

Store Design and Display

Bright, fashionable and fun

boutique layout

Customer Service Location

Merchandise Assortments

PricingCommunication Mix

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Claire’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

Merchandise

Assortment

PricingCommunication Mix

Store Design

and Display

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Macy’s Retail Mix

Enclosed Malls

Customer Service

Merchandise

Assortment

PricingCommunication Mix

Store Display

And Design

Location Strategy

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Macy’s Retail Mix

Location

Pricing

Communication 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 Design

And Display Merchandise Assortment

Pricing

Customer ServiceLocation

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Macy’s Retail Mix

Store Design and Display

Racetrack 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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Target’s Retail Mix

Retail Strategy

Customer Service Location

Merchandise

Assortment

PricingCommunication Mix

Store Design

and Display

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Target’s Retail Mix

Free-standing Stores

Customer Service

Merchandise

Assortment

PricingCommunication Mix

Store Display

And Design

Location Strategy

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Target’s Retail Mix

Location

Pricing

Communication Mix

Store Design

and Display

Customer Service

Large Number of Categories

Private Labels

Few Items in Each Category

Assortment Strategy

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Target’s Retail Mix

Location

Communication Mix

Store Design

and Display

Customer Service

Merchandise Assortment

Low to Modest

Pricing Strategy

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Target’s Retail Mix

Communication Mix

TV and Newspaper

Insert Ads

Store Design

And Display

Customer ServiceLocation

Merchandise Assortment

Pricing

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Target’s Retail Mix

Store Design and Display

Colorful, wide aisles displays

for products with a grid layout

Customer Service Location

Merchandise Assortments

PricingCommunication Mix

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Target’s Retail Mix

Customer Service

Limited

Location

Merchandise Assortment

Pricing

Communication Mix

Store Design and Display

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Ethical Situations for a Retail Manager

• Should a retailer sell merchandise that is suspects was made using child labor?

• Should it advertise that its prices are lowest in area even though some items are not?

• Should a buyer accept an expensive gift from a vendor?• Should salespeople use high-pressure sales when they know

the product is not the best for the customer’s needs?• Should a retailer give preference to minorities when making a

promotion decision?• Should a retailer treat some customers better than others?

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Checklist for Making Ethical Decisions

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You are Faced with an Ethical Decision: What Can You Do?

• Ignore your personal values and do what your company asks you to do – you will probably feel dissatisfied with your job .

• Take a stand and tell your employer what you think. Work to change the policies.

• Refuse to compromise your principles – you could lose your job!

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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• No opportunity for women and minorities

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

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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 and planning for financially analytically oriented

• Management for people-people

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Types of Jobs in Retailing Most entry level jobs are in

store management or buying, but there’s…

-accounting and finance

-real estate

-human resource management

-supply chain management

-advertising

-public affairs

-information systems

-loss prevention

-visual merchandising