CHAPTER 1
INTRODUCTION TO RETAIL
PRODUCT MANAGEMENT:
SCOPE AND CONCEPTS
LEARNING OBJECTIVES
To define retail product management
 To explore what retail product
management includes and entails (scope)
 To understand what aspects of product
management take place where within a
retail organisation
 To understand the role of product
management within an overall retail
strategy

BASIC CONCEPT: The Product

Types of Product
 complex
tangible
 convenience tangible
 information based
 service
The retailer’s product offer (usually):
physical goods, with services
 Different types of products require
specific product management
approaches

BASIC CONCEPT: The Retailer


The entity at the penultimate position in a
distribution/marketing channel, that sells to
the final consumer
Functions:
 breaks
bulk (distributor of small quantities)
 editor of product range
 provides goods in convenient location
 finances stock

The term retail sector has been used to refer
to a type of retailer, based principally on the
product offer.
Figure 1.1

To Add
Table 1.1 The UK Retail Industry by Sector
Business Type
Total Retail Turnover (£billion)
All Retailers
230.19
Predominantly food stores
103.68
Specialised food stores
15.98
(including fruit and vegetable;
meat; fish bakery etc.)
Non-specialised food stores
87.87
Predominantly non-food stores
116.12
Textiles
0.75
Clothing
29.72
Footwear and leather goods
4.37
Furniture and lighting
9.34
Electrical household appliances
11.82
Hardware/Paint/Glass
8.97
Other specialised non-food stores
30.46
Books/Newspapers/Periodicals
5.26
Pharmaceutical, medical,
4.18
cosmetics and toilet goods
Floor Coverings
1.01
Photographic/Optical/Office supplies
3.83
Second Hand Goods
1.35
Others
14.79
Non specialised non-food stores
20.75
Repair
0.55
Non-store Sales
9.71
%
100
(45.0)
6.9
38.2
(50.4)
0.3
12.9
1.9
4.1
5.1
3.9
2.3
1.8
0.4
1.7
0.6
6.4
9.0
0.2
4.2
THE STRATEGIC ROLE OF
PRODUCT MANAGEMENT



Retailers are close to consumers so they are in the best
position to understand their changing needs
 product and shopping needs and preferences
 short term and long term changes
Retailers add value to the product (e.g. display,
information, after sales service)
Retailers form close relationships with customers
(generate loyalty)
 analysis of information (gathered electronically)
provides insight into customer purchasing habits
 retailers develop a ‘retail brand identity’
THE STRATEGIC ROLE OF
THE PRODUCT RANGE
Captures customers’ interest
 Communicates what a retailer’s business
is all about
 Provides the reason for a shopper to
choose one outlet over another in a
crowded market (differentiates)
 Positions a retailer relative to competitors

RETAIL POSITIONING




A retailer’s place in the market relative to
competition (or ‘ideal’)
The basis upon which a retail offer is
‘measured’ by customers
Positioning attributes:
 price
 product assortment
 convenient to use / visit
 service quality
The product range has a strong influence on
customer perception and retail outlet choice
GENERALIST VS SPECIALIST




Provides solution or
near solution to mass
needs
Wide range (large
number of product
categories)
Limited assortment
(shallow)
Well known brands
and product varieties




Provides solutions to
specific needs
Smaller number of
product categories
More choice within
the category (depth)
Extensive choice of
brands and/or product
variations
Figure 1.2 Different product
assortment strategies

To Add
PRICE POSITIONING

Price is a very effective positioning attribute
 premium
prices / added value (e.g. product quality
or service)
 low price / little added value (e.g. basic selling
environment and service)

Variable price positioning within a general
offer:
 use
of tiered pricing and sub-brands to pitch
specific product ranges to customer groups
 e.g. Tesco Value, Regular, Finest
THE SCOPE OF RETAIL
PRODUCT MANAGEMENT




Making products available
Presenting products appropriately and
attractively
Small retailer: all carried out by owner
manager
Large retailer: central buying office



strategic product management (directors and vice
presidents)
operational product management (buyers, merchandisers)
outlet level product management (store personnel)
STRATEGIC PRODUCT
MANAGEMENT




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Provides the planning guidelines
Direction of growth (e.g. introduction of new
product ranges, extending successful ranges,
rationalising less popular products)
Positioning in market (e.g. which customers to
target and how)
Setting financial objectives: sales, profits,
productivity and control of costs
Assessing and managing risks associated with
new product ranges
OPERATIONAL PRODUCT
MANAGEMENT






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Translate ideas into feasible plans
Select and manage suppliers
Select products and brands
Make products available (forecast, order,
arrange delivery)
Communicate the product offer (promotions,
advertising)
Set prices
Decide where and how to display products
PRODUCT MANAGEMENT
WITHIN THE OUTLET
Implement operational plans
 Allocate display space and arrange
products
 Organise in-store marketing
 Match product features and benefits to
customer needs and desires (personal
selling)

Figure 1.4 The evolution of product management
Buying - led
Buyer
merchandiser
led
Consumer led
Lifestyle led
FIGURE 1.5
BALANCING BENEFITS AND COSTS TO CREATE
VALUE
High quality products
Favourite brands
Wide range of products
Good shopping
environment
Ease of use
Pleasant service
BENEFITS
Money
Shopping time
Travel time
Physical effort
Stress
Risk to personal safety
Risk of wrong purchase
COSTS