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De La Salle – College of Saint Benilde
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Lecture 02: Fundamentals of Retailing
PRESENTED BY:
Ian Agoncillo Pacaña
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Agenda
• Definition of Retailing• Issues in Retailing• Cost and Profits• Distribution Channel• Retailing Process• Value Chain• Creating Value• Customer Service• Effective Channel Relations
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What is Retailing?
• Retailing is the process consisting of business activities involved in selling goods and services to consumers.
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Issues in Retailing
• How can we best serve our customers and earn?
• How do we compete?
• How do we grow our business?
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High Costs and Low Profits of Retailing
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Typical Channel of Distribution
Manufacturer Wholesaler Retailer Final Consumer
• Channel – a means of access• Distribute – to give to several entities
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Typical Retailing Process
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Value Chain
A series of value generating activities
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Retail Value Chain
Represents the bundle of benefits offered to consumers through a channel of distribution
– Store location and parking, retailer ambience, customer service, brands/products carried, product quality, retailer’s in-stock position, shipping, prices, image, and other elements
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Top Global Retailers
Source: Ernst & Young research
The U.S. retail industry generates $3.8 trillion in retail sales annually…
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The Retailer’s Role in the Sorting Process
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What is Value?
Channel Perspective:Value is a series of
activities and processes - the value chain - that provides a certain value for the consumer
Customer PerspectiveValue is the
perception that the shopper has of the value chain
It is the view of all the benefits from a purchase versus the price paid.
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Key is to Create Value
“Value” is the answer to the customer’s question:
“How satisfied am I with what I paid for?”
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Customers demand value
Consumers will demand more for less from the shopping experience
They will spend less time shopping
They will split the commodity-shopping trip from the value-added shopping trip
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Customer Service
• Expected customer service is the service level that customers want to receive from any retailer such as basic employee courtesy
• Augmented customer service includes the activities that enhance the shopping experience and give retailers a competitive advantage
• Augment – grow/increase/intensify
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Typical Customer Services
CreditDeliveryAlterations/
InstallationsPackaging/ gift
wrappingComplaints/ Return
handling
Gift certificatesTrade-insTrial purchasesSpecial salesExtended store
hoursMail and phone
orders
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Miscellaneous Customer Services
Bridal registryInterior designersPersonal shoppersTicket outletsParkingWater fountainsPay phonesBaby strollers
RestroomsRestaurantsBaby-sittingFitting roomsBeauty salonsFur storageShopping bagsInformation
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Turning Around Weak Customer Service
Focus onCustomer Concerns
Empower Front-LineEmployees
Show That You AreListening
Express SincereUnderstanding
Apologize and Rectifythe Situation
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Elements Contributing to Effective Channel Relationships
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Question and Answer
Q & A
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References
• Berman, Barry & Evans, Jpel, Retail Management 10th Ed. (Person)