Retailing: Definition, Value and Social Responsibility

Retailing

• Business activities that add value to products/services for personal or family use. Retail sales account for over $4.3 trillion annually in the U.S.
• More than 8% of the U.S. GDP comes from retailing.
• Employs over 14 million people in 2011, and is one of the largest sectors for job growth in the US
• Corporate Social Responsibility: companies taking voluntary actions to address ethical, social, and environmental impacts.

Retailer

• A business that sells products and/or services to consumers for personal or family use (e.g., Kohl's, Macy's, Wendy's).
• Retailers increase prices for consumers.
• A box of crackers that costs $1 to manufacture, can then sell for $2 at a grocery store

Retailer + Wholesaler

• Sells to other businesses and consumers (e.g., Home Depot, Costco, Walmart).

Value of A Retailer

Provide an Assortment of Products

• Retailers allows consumers to buy products at the same time in one place.
• A manufacturer doesn't need to have their store to sell only it's products.

Break Bulk

• Buy in bulk if customers want.
• Manufacturers and wholesalers ship cases or cartons to retailers to reduce transportation costs
• Retailers then offer the products in smaller quantities tailored to individual consumer consumption patterns.
• Break bulk is important to both manufacturer and consumers.
• Allows manufacturers to produce and ship merchandise efficiently and for consumers to purchase in smaller quantities

Hold Inventory

• Products are available when consumers want them, consumers can keep a smaller inventory.

Offer Services

• The retailer can offer services such as "see it before you buy it."
• They can display products so consumers can see and test them before buying.
• Also, gain credit, easy to buy and use, and employ salespeople.

Role of the Retailer in Supply Chain

• Retailers are the final business in a supply chain that links manufacturers to consumers.
• They buy products from wholesalers and/or manufacturers and resell them to consumers.
• Retailers add value and are more efficient at adding this value than manufacturers or wholesalers

Supply Chain

• A set of firms that make and deliver a given set of goods and services to the ultimate consumer.
• Distribution Channel goes in this order: Manufacturing → Wholesaler → Retailer → Consumer

Wholesalers

• Buy and store merchandise in large quantities from manufacturers.
• They resell the merchandise (usually in smaller quantities) to retailers.
• Apple is performing production, wholesaling, and retailing as sell directly to costumers.

Vertical Integration

• Firm performs more than one set of activities in the channel.
• Retailer invests in wholesaling or manufacturing (e.g., JCPenney selling Arizona Jeans, a private label).

Backward Integration

• Retailer performs some distribution and manufacturing activities.
• Ex: JC Penney sells Arizona Jeans (Private Label)

Forward Integration

• The manufacturer undertakes retailing activities.
• Ex: Ralph Lauren operates its own stores

Opportunities in Retailing

• Because retailers' functions include operations like finance, purchasing, accounting, and MIS.
• Financially rewarding (high salary).

Competition

• Need to identify the competition

Intratype Competition

• When businesses of the same type compete for customers
• Ex. Dillard's vs. JCPenny

Intertype Competition

• When different types of businesses compete for the same customers by selling similar products.
• Ex. Walmart and JCPenny

Scrambled Merchandising

• When retailers offer merchandise not typically associated with their type of store, retailers increases intertype competition.

Retail Strategy

• Should identify the target market, product and service mix, and long-term comparative advantage.

Retail Mix

• To implement a retail strategy.
• set of decisions to satisfy consumer needs and influence their purchase decisions.
• Ex. types of merchandise, pricing, advertising, and store design.

NAICS

• A classification scheme used by the United States, Canada, and Mexico used to gather data on business activity.
• Every assigned business is based on the type of products, services, and codes it sells.
• The two numbers identify the firms business sector, and the remaining ones identify various subsectors.

SIC

• Is a classification scheme that relies on four digit codes
• Helps government agencies classify various businesses.

Variety

• The number of merchandise categories a retailer offers (also called breadth).

Assortment

• Is the number of different items offered (also called depth).

Types of Merchandise Retailers

Food Retailers consist of:

• Mom and Pop stores
• Convenience Stores (7-ELEVEN)
• Tailors assortments to local market
• Makes more convenient to shop, offers fresh and healthy food, fast restaurants, financial services, opening smaller stores, smallest variety, and charge higher prices for similar products.

Supermarkets

• A conventional supermarket
• It is is a large, self service retail food store offering groceries, meat, and produce, as well as some nonfood iteams.
• Conventional Supermarkets ex: WEGMANS
• Perishables meats like dairy produce, and baked goods, make up 30% of supermarket sales
• Target health conscious and ethnic consumers

Limited Assortment Supermarkets (ALDI)

• Offer 2000 SKU or less.
• Offers one or two brands and sizes.
• Designs to maximize efficiency and reduce costs.
• Offers merchandise at 40%-60% lower prices than conventional ones!

Supercenters (Hypermarkets) (WALMART)

• Large (100,000-300,000 sq. feet) combination food (60-70%) and general merchandise (30-40%) retailer.
• Supercenter = Large store combining a discount store with a supermarket largest.
• 185,000 square feet.
• One-stop shopping experience.

General Merchandise Retailers

• Includes broad variety, deep assortment, customer service, and distinct merchandise departments
• Department Stores: Macys
• Sells Soft goods
• Now, almost exclusively focus on selling soft goods
• Also sells Hard goods

Tiers

• Tier 1: Upscale, high fashion chains with merchandise and designers
• Tier 2: Macy's are more modestly priced with less customer service.
• Tier 3: Kohls caters more to consumers

Speciality Stores (Furniture Store, Sephora, Kendra Scott)

• A type of store concentrating on a limited number of complementary merchandise categories and providing a high level of service
• Issue: Concentrates complementary merchanise categories and sales associates expertise
• Manufacturers have opened speciality stores.
• Growing interest in resale stores.

Discount Stores (ROSS or Walmart or Target)

• A general merchandise retailer that offers a wide variety of merchandise, limited service, and low prices.
• Issue: broad variety, limited service, and low prices
• Only big one's left with strategy

Category Specialists (BASS PRO SHOPS)

• Has a deep assesment, is a destination stores, intense competition, wholesaling to buisness customers, and relying on self service.
• Target = More fashionabble apparel
• Walmart = low price

Off-Price Retailers (TJ MAXX)

• A retailer with an inconsistent assortment of brand-name, fashion-oriented soft goods at low prices
• Close-out retailers

Warehouse Clubs (COSTCO)

• A retailer offers limited food and general merchandise with little service and low prices to ultimate consumers and small businesses
• Uses cheap locations and stores
• Provides little customer service

Extreme Value Retailers (DOLLAR TREE)

• Small discount stores
• Offers a limited merchandise assortment
• Has a variety but broad assortment
• Consists on lower incomes,names,locations, and food services

Drug Stores

• Speciality stores that concentrate on health and beauty care
• Improved systems provide for personalizing their merchandise
• Consists of a Competition and consolidation

Service Retailing

Primarily sell services but can include hospitals, salonns, and retailers.

Direct Selling

• Able to tailor their custommers
• Are small retailers that react on market and clients rapidly

Wholescale Sponsered voluntary cooperative group

• An organization that offers a merchansizing to small independent rerailers on a voluntary basis

Corporate Retail chains

• Have an agreement to lower pricing mercandise

Franchise

• Has an agreement between a franchisor and franchisee that allows the franchisee to operate to be a franchisee
• Has capital advangates
• Potential to reduce disrtribution costs

Depth of merchandise

• Number os SKU within a marchandise category

Full line discount store

• Offer private brandd and national brands.

Classification System

• Retail stores organized into a six didgit code based of the products and services they sell

Variety

• The number of merchandise categories within a store or department

Digital Retailing

• Online business activities through online platforms

Assesing Efficacy for influence

• Encompasses both that his followers and the relation and mesages

Analyze The information and content

• Analisis on online media tools

MultiChannel Retailing

• Sells merchanside through one + platforms

Non Store Chennals

• Selling channels that are online through retail with sale people
• More expensive
• Retail Chain Operates multiple inits with on ownership usually cenralizing the implentations
• Benefits of the internet Enables different people in online platfroms. Personalization Easier to collect new informations and better merchanside Can collect new information and create a personalized marketing Expanded Can take up a new audience Perveived risks in online shopping
• Secuirty of transactions
• Collecting info

Market peresence

• limited by customers to live and visit stores

Benefit provided by Store

• Touching and feeling merchanside
• Personal sevice

Catolog Channels

• Consumers can look at merchandise and place an order in person,without needing a computer

Post purchase evaluation

• Evaluation of products after use

Satifaction

• Evaluation of what what well
• loyalty
• Consummers experince a pos purchase of cougnitgive dissonance

How to improve customer statisfaction

• Build customer expectations
• provide information of how to improve customer satissfaction
• Guartntee

Types of risk

• Performance
• Social
• Finicial Provide A lof of Information
• More information
• Reduce risk

limited problem solving

• more prior experience
• Customers do this with low value merchansise (ex. toothpaste)

How to attract to customers that arent buying?

• Better products. coupons

Habitual decision makinbg

• Stores are going to keep the regular customers and make their inventory is fully stocked

Family Social Factors influences the buying decision process

• Retailers need to be aware of famil needs, important to different cultures

Reffernce groups affect buying desicions by

• Ofrring Information: Consumers share their experiences with friends

Refffernce gouips will affect buying decisions by

• Providing rewards
• Enhancing a customer's self image

Retail markeg seggment

• A group of customers are attracted towards the retail mix sinc they haves similarr needs

Market seggment

Retailers need to what what to satifsfy needs

Geographic

• segmenting groups of customers based on the where they live

Psychograpbic method

• Segmenters on how they spend their time

Factors determining psychograpbics

• Self values: goals for life
• Self image the mage thye have
• Lifestyles: Describe way that consumers live

Compsirte Segmentation

• Use multipel variables to identify consumers

Store advocatees

• Customeers who shate their positive experinces with friends and fmaioly

More Attention for Long term Planning

• New Technologies
• New SHIFTS IN NEEDS!!!
• Retail format: Operations and retail mix
• Sustained Compatitve advantages sustained over a longer
• Customer loyality
• Customers servce
• Efficint supply chain and vendors
• Employees!
• Brands and customers

Store loyality:

Custsomers aree comminted to buy a perctailer.

Brand Images

Faciliattates customers loyality And what is postioninbg the perpeect of the clients

Consisntet Customer Servce

Not many customers can be made By having a loyalty program

Retail branding

Create a connection with retailers For vendors relationships

Human REsource managmentr

Important for emplyoess need to focus on hiring and and retainging empolyeers.

Distrubition And Information System

How it worls ->Vendor-Distribution center-Stores. Can decrese more and make to available to invent in to

Locaton

the three importnat thiong are in retiailing? Location Locatiotion Is more sustasintabel because it is not easy to duplicate Make sit diffictul tor compatitions.!!!

Gwoth Strateriges

Maket penetration Can the attiraction fro mmarkeet is on every croner Cross Selling:

Market Expolsions

Expanding to other countries

Retatil Format Developmenmt

• Diversificatoin, related or unrelated

Market Globilal Retailing

By expanding international can boost sales Important to use smart managment

Facrots to detemine the Interantinal oppurtuinies

• Size
• AnC
• Risks Adaptaiblity Knowinng hte cuases an cultural differencs in local markets culture for finicial

Retail stratigic process

• What the company wnt to hgo to the market and
• Set of strpas Devleop Stragetgy

Busniess misson

Broad descritpton Aan whta it will focus on What it needs Analysis Anaylissing the market atractiveness Retail markets are more attreactivness to eneter

SWOT Analasys

• Streght What is better

Objectve to create a retail mix

Devleop the mix