Retail Management PDF

RETAIL MANAGEMENT CATEGORIZING RETAILERS RETAILING Census Bureau Consists of the final activities and steps needed to Number of Outlets place merchandise made elsewher...

RETAIL MANAGEMENT CATEGORIZING RETAILERS RETAILING Census Bureau Consists of the final activities and steps needed to Number of Outlets place merchandise made elsewhere into the hands of Margin vs. Turnover the consumer or to provide services to the consumer. Location Size Any firm that sells a product or provides a service to the final consumer is said to be performing the CENSUS BUREAU retailing function. The U.S. Bureau of the Census, for purposes of conducting the CHANGES IN RETAILING Census of Retail Trade, classifies all retailers using three-digit North American Industry Classification System (NAICS) codes. NAICS Code 51 – Information 513 – Broadcasting and telecommunications 5133 – Telecommunications 51332 – Wireless telecommunication carriers 513322 – Cell phone services Identify competitors and customers Find industry reports, ratios and data Benchmark finances Analyze economic development and labor trends NUMBER OF OUTLETS Retailers with several units are a stronger competitive threat because they can: ○ Spread many fixed costs over a larger number of stores. ○ Achieve economies in purchasing. Advantages of single-unit retailers: ○ They have harder-working, more motivated employees. ○ They can focus and tailor their efforts and merchandise in one trade area. Merchandising Methods: Standard stock list — Merchandising method in EXTERNAL ENVIRONMENT FORCES CONFRONTING which all stores in a retail chain stock the same RETAIL FIRMS merchandise. Optional stock list — Merchandising method in which each store in a retail chain is given flexibility to adjust its merchandise mix to local tastes and demands. Channel advisor or Channel captain — Institution in the marketing channel who is able to plan for and get other channel institutions to engage in activities they might not otherwise engage in. ○ Examples could be manufacturer, wholesaler, broker, or retailer.  ○ Large store retailers are often able to Retailers are reaching out for alternative retail sites, perform the role of channel captain. rather than simply renovating the existing stores. Private label branding — Occurs when a retailer Today, the most significant of the new nontraditional develops its own brand name and contracts with a shopping locations could be the one which combines manufacturer to produce the merchandise with the culture with entertainment or shopping. retailer’s brand on it instead of the manufacturer’s name. SIZE ○ Also called store branding. The reason for classifying by size is that the operating ○ The major shortcoming of using the number performance of retailers tends to vary according to of outlets scheme for classifying retailers is size. that it addresses only traditional bricks & With advances in technology, using classification of mortar retailers. size is unclear. MARGINS VERSUS TURNOVERS Gross margin percentage — Gross margin divided by net sales or what percent of each sales dollar is gross margin. Gross margin — Net sales minus the cost of goods sold. Operating expenses — Expenses the retailer incurs in running the business other than the cost of the merchandise. Inventory turnover — The number of times per year, on average, that a retailer sells its inventory. High-performance retailers — Produce financial results substantially superior to the industry average. Low-margin/low turnover retailer — Operates on a low gross margin percentage and a low rate of inventory turnover. Low-margin/high turnover retailer — Operates on a low gross margin percentage and a high rate of inventory turnover. High-margin/low turnover retailer — Operates on a high gross margin percentage and a low rate of inventory turnover. Clicks & mortar retailers — Sell both online and via physical stores. High-margin/high turnover retailer — Operates on a high gross margin percentage and a high rate of inventory turnover. LOCATION Retailers are now aware that opportunities exist in new non-traditional retail areas.