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TABLE OF CONTENTS
SECTION I THE WORLD OF RETAILING
CHAPTER 1 INTRODUCTION TO THE WORLD OF RETAILING
What Is Retailing? 6
A Retailer’s Role in a Supply Chain
Retailers Create Value
Developing a Retail Strategy—Section II
7
Employment
7
Ethical and Legal Considerations
9
26
Nonstore Retailers 55
Electronic Retailers 55
37
Catalog and Direct-Mail Retailers
Direct Selling
55
57
Television Home Shopping
57
Vending Machine Retailing
58
Services Retailing 59
Differences between Services and
Merchandise Retailers 60
44
45
Convenience Stores
Types of Ownership 62
Independent, Single-Store Establishments
46
General Merchandise Retailers
Department Stores 47
Full-Line Discount Stores
Corporate Retail Chains
47
Franchising
49
49
51
Summary
65
Key Terms
65
51
Extreme Value Retailers
53
CHAPTER 3 MULTICHANNEL RETAILING
Suggested Readings
74
Internet Channel
74
66
67
Appendix 2A: Comparison Shopping
67
70
Retail Channels for Interacting with Customers
Store Channel 72
Catalog Channel
65
Discussion Questions and Problems
53
62
63
63
Get Out and Do It!
Category Specialists
Off-Price Retailers
26
26
34
39
Warehouse Clubs
Drugstores
25
Appendix 1B: Sources of Information about
Retailing 30
Food Retailers 40
Supermarkets 41
Specialty Stores
25
23
Appendix 1A: Careers in Retailing
13
Prices and the Cost of Offering Breadth and
Depth of Merchandise and Services 39
Supercenters
Key Terms
Suggested Readings
Retailer Characteristics 36
Type of Merchandise 36
Services Offered
25
Discussion Questions and Problems
The Retail Management Decision Process 15
Understanding the World of Retailing—Section I 15
CHAPTER 2 TYPES OF RETAILERS
Summary
Get Out and Do It!
Structure of Retailing and Supply Chains around
the World 11
Opportunities in Retailing 13
Management Opportunities 13
Entrepreneurial Opportunities
21
Whole Foods Market: An Organic and Natural
Food Supermarket Chain 21
9
Variety and Assortment
19
Implementing the Retail Strategy–Sections III and IV
9
9
Global Retailers
17
JCPenney Moves from Main Street to the Mall
Social and Economic Significance of Retailing
Social Responsibility 9
Retail Sales
4
Evolution toward Multichannel Retailing 83
Overcoming the Limitations of an Existing Format
Capabilities Needed for Multichannel Retailing
Who Has These Critical Resources? 86
Will Manufacturers Bypass Retailers and
Sell Directly to Consumers? 87
72
Which Channel Is the Most
Profitable? 88
Issues in Multichannel Retailing 88
Integrated Shopping Experience 89
Brand Image
83
85
89
Merchandise Assortment 90
Pricing
91
Shopping in the Future 91
Shopping Experience 91
Supporting the Shopping Experience
92
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Summary
93
Key Terms
93
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Discussion Questions and Problems
Suggested Readings
Get Out and Do It!
94
93
CHAPTER 4 CUSTOMER BUYING BEHAVIOR
96
The Buying Process 98
Need Recognition 99
Information Search
Market Segmentation 116
Criteria for Evaluating Market Segments
102
105
Composite Segmentation Approaches 123
Purchasing the Merchandise or Service 110
Summary
123
Postpurchase Evaluation
Key Terms
124
111
Types of Buying Decisions 111
Extended Problem Solving 111
Limited Problem Solving
Get Out and Do It!
124
Discussion Questions and Problems
111
Habitual Decision Making
Suggested Readings
112
Social Factors Influencing the Buying Process
Family 113
Reference Groups
116
Approaches for Segmenting Markets 117
Evaluation of Alternatives: The Multiattribute Model
Culture
94
113
125
126
Appendix 4A: Customer Buying Behavior and
Fashion 126
114
114
SECTION II RETAILING STRATEGY
CHAPTER 5 RETAIL MARKET STRATEGY
What Is a Retail Strategy? 134
Definition of Retail Market Strategy
132
Evaluating Global Growth Opportunities
134
Target Market and Retail Format 135
Building a Sustainable Competitive Advantage
Customer Loyalty 138
Location
Entry Strategies
137
141
Distribution and Information Systems
Unique Merchandise
Vendor Relations
141
141
Step 6: Develop a Retail Mix to Implement Strategy
Strategic Planning in the Real World
Multiple Sources of Advantage 142
145
Summary
161
Key Terms
161
Get Out and Do It!
Retail Format Development
145
Suggested Readings
Strategic Opportunities and Competitive Advantage
Global Growth Opportunities 146
Who Is Successful and Who Isn’t? 146
146
159
160
161
Discussion Questions and Problems
145
162
162
Appendix 5A: Using the Market Attractiveness/
Competitive Position Matrix 163
148
CHAPTER 6 FINANCIAL STRATEGY
166
Objectives and Goals 168
Financial Objectives 168
Societal Objectives
Illustration: Kelly Bradford’s Evaluation of the
Gifts-To-Go.com Growth Opportunity 181
Setting and Measuring Performance Objectives
Top-Down versus Bottom-Up Process 185
168
Personal Objectives
169
Strategic Profit Model 169
Profit Margin Management Path
Asset Management Path
Return on Assets
159
Step 7: Evaluate Performance and Make Adjustments
Growth Strategies 144
Market Penetration 144
Keys to Success
159
Step 5: Establish Specific Objectives and
Allocate Resources 159
142
Market Expansion
159
Step 4: Evaluate Strategic Opportunities
142
Customer Service
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154
Step 3: Identify Strategic Opportunities
Human Resource Management
Diversification
The Strategic Retail Planning Process 153
Step 1: Define the Business Mission 154
Step 2: Conduct a Situation Audit
140
150
152
179
176
Accountable for Performance
171
185
Performance Objectives and Measures
Types of Measures
184
186
186
Assessing Performance: The Role of Benchmarks
188
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Summary
190
Key Terms
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Discussion Questions and Problems
Suggested Readings
Get Out and Do It!
192
Types of Locations 194
Unplanned Retail Locations
Freestanding Sites 195
City or Town Locations
Resorts 210
195
Store within a Store
200
Size of Target Market
212
Uniqueness of Retail Offering
Power Centers 201
212
Legal Considerations 213
Environmental Issues 213
201
204
Fashion/Specialty Centers
Outlet Centers
210
Location and Retail Strategy 210
Shopping Behavior of Consumers in Retailer’s Target
Market 210
196
Shopping Centers 199
Neighborhood and Community Shopping Centers
Lifestyle Centers
191
190
CHAPTER 7 RETAIL LOCATIONS
Shopping Malls
191
Zoning and Building Codes
205
205
Theme/Festival Centers
207
Larger, Multiformat Developments—Omnicenters
Mixed Use Developments
207
214
Key Terms
214
Get Out and Do It!
213
214
Discussion Questions and
Problems 215
207
Other Location Opportunities
Airports 209
Summary
208
Suggested Readings
215
Temporary Locations 209
CHAPTER 8 RETAIL SITE LOCATION
216
Evaluating Specific Areas for Locations
Economic Conditions 218
Competition
218
Estimating Potential Sales for a Store Site
Huff Gravity Model 235
219
Regression Analysis 237
Strategic Fit 220
Operating Costs
Analog Approach
220
Number of Stores in an Area 221
Economies of Scale from Multiple Stores
Cannibalization
235
221
221
Evaluating a Site for Locating a Retail Store
Site Characteristics 222
Traffic Flow and Accessibility
222
223
225
240
Terms of the Lease
225
Trade Area Characteristics 227
Trade Area Definition 227
Factors Affecting the Size of the Trade Area
Measuring the Trade Area for a Retail Site
Summary
243
Key Terms
243
Get Out and Do It!
228
242
244
Discussion Questions and
Problems 244
229
Sources of Information about the Trade Area
230
Suggested Readings
245
234
CHAPTER 9 HUMAN RESOURCE MANAGEMENT
246
Gaining Competitive Advantage Through Human
Resource Management 248
Objectives of Human Resource Management 248
The Human Resource Triad
239
Trade Area Characteristics
Negotiating a Lease 241
Types of Leases 241
Locations within a Shopping Center
Competition in the Trade Area
Define Present Trade Area
Match Characteristics of Present
Trade Area with Potential Sites 241
Location Characteristics 224
Restrictions and Costs
238
Illustration of Site Selection:
Edward Beiner Optical 238
Competitive Analysis 239
250
Special HR Conditions Facing Retailers
250
Designing the Organization Structure for a
Retail Firm 252
Matching Organization Structure to Retail Strategy 253
Organization of a Single-Store Retailer 253
Organization of a National Retail Chain
255
Organization Structures of Other Types of Retailers 259
Retail Organization Design Issues 259
Centralization versus Decentralization 259
Coordinating Merchandise and Store Management
Winning the Talent War 261
Attracting Talent: Employment Marketing
262
Developing Talent: Selection and Training
262
260
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Motivating Talent: Aligning Goals
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Keeping Talent: Building Employee Commitment
266
Issues in Retail Human Resource Management
Managing Diversity 269
269
273
Key Terms
273
Get Out and Do It!
274
Discussion Questions and Problems
Legal and Regulatory Issues in Human
Resource Management 270
Use of Technology
Summary
Suggested Readings
275
275
273
CHAPTER 10 INFORMATION SYSTEMS AND SUPPLY CHAIN MANAGEMENT
Creating Strategic Advantage Through Supply Chain
Management and Information Systems 278
Improved Product Availability 279
Higher Return on Investment
Strategic Advantage
Collaboration Between Retailers and Vendors in
Supply Chain Management 295
Using EDI 296
279
Sharing Information
280
297
Collaborative Planning, Forecasting,
and Replenishment 299
Radio Frequency Identification (RFID)
Benefits of RFID 301
Electronic Data Interchange 285
Pull and Push Supply Chains 286
The Physical Flow of Merchandise–Logistics 287
Distribution Centers versus Direct Store Delivery 287
The Distribution Center
Reverse Logistics 292
289
Impediments to the Adoption of RFID
Summary
302
Key Terms
302
Get Out and Do It!
Logistics for Fulfilling Catalog and Internet Orders
292
299
301
303
Discussion Questions and Problems
Suggested Readings
293
CHAPTER 11 CUSTOMER RELATIONSHIP MANAGEMENT
303
303
304
The CRM Process 306
What Is Loyalty? 306
Converting Good Customers into Best Customers
Dealing with Unprofitable Customers
Overview of the CRM Process
Collecting Customer Data
Customer Database 308
Identifying Information
296
Vendor-Managed Inventory
Information Flows 282
Data Warehouse 284
Outsourcing Logistics
276
308
Implementing CRM Programs
Summary 324
308
Key Terms
309
324
Discussion Questions and
Problems 325
Analyzing Customer Data and Identifying
Target Customers 313
Identifying the Best Customers 314
Developing CRM Programs
Customer Retention 318
323
324
Get Out and Do It!
Privacy and CRM Programs 311
322
Suggested Readings
325
318
SECTION III MERCHANDISE MANAGEMENT
CHAPTER 12 MANAGING MERCHANDISE ASSORTMENTS
Merchandise Management Process Overview
The Buying Organization 330
Merchandise Category—The Planning Unit
330
332
Evaluating Merchandise Management
Performance—GMROI 334
Managing Inventory Turnover
337
Types of Merchandise Management Planning Processes 338
Summary
353
Key Terms
354
349
354
Discussion Questions and Problems
342
Suggested Readings
Forecasting Fashion Merchandise Categories
xxviii
Determining Variety and Assortment
Get Out and Do It!
Forecasting Sales 340
Category Life Cycles 340
Forecasting Staple Merchandise
Developing an Assortment Plan 349
Category Variety and Assortment 349
Setting Inventory and Product
Availability Levels 352
Product Availability 352
336
Merchandise Management Process
328
Sales Forecasting for Service Retailers
348
345
355
354
321
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CHAPTER 13 MERCHANDISE PLANNING SYSTEMS
Staple Merchandise Management Systems
The Inventory Management Report 360
359
Fashion Merchandise Management Systems
Monthly Sales Percentage Distribution to
Season (Line 1) 362
Monthly Sales (Line 2)
356
362
363
Monthly Reductions Percentage Distribution to
Season (Line 3) 363
Monthly Reductions (Line 4)
364
BOM (Beginning-of-Month) Stock-to-Sales
Ratio (Line 5) 364
BOM Stock (Line 6)
Monthly Additions to Stock (Line 8) 367
385
Global Sourcing
379
Appendix 13A: Retailing
Inventory Method 379
398
399
Building Partnering Relationships
402
403
Legal and Ethical Issues for Buying Merchandise
394
395
396
Summary
409
Key Terms
409
Get Out and Do It!
404
410
Discussion Questions and Problems
Suggested Readings
410
411
412
416
Pricing Services 433
Matching Supply and Demand
Determining Service Quality
Legal and Ethical Pricing Issues 418
Merchandising Optimization Software
433
435
Pricing Techniques for Increasing Sales
Leader Pricing 435
Setting Retail Prices 420
Setting Prices Based on Costs 420
435
Price Lining 435
422
Profit Impact of Setting a Retail Price:
The Use of Break-Even Analysis 422
Odd Pricing
436
The Internet and Price Competition
Price Adjustments 423
Markdowns 424
Variable Pricing and Price Discrimination
Pricing Strategies 431
High/Low Pricing 431
Everyday Low Pricing
377
Maintaining Strategic Relationships
Considerations in Setting Retail Prices 414
Customer Price Sensitivity and Cost 414
Competition
377
373
Strategic Relationships 401
Defining Strategic Relationships 401
392
Support Services for Buying Merchandise
Resident Buying Offices 395
CHAPTER 15 RETAIL PRICING
Key Terms
Tips for Effective Negotiating
394
Retail Exchanges
377
Negotiation Issues
Developing and Sourcing Private-Label
Merchandise 392
Developing Private-Label Merchandise 392
Sourcing Merchandise
Evaluating the Assortment Plan and Vendors
Summary
373
Negotiating with Vendors 396
Knowledge Is Power 397
Buying National Brand Merchandise 390
Meeting National Brand Vendors 390
National Brand Buying Process
371
382
Brand Alternatives 384
National Brands 384
Private-Label Brands
Timing of Merchandise Allocations to Stores
Analyzing Merchandise Management
Performance 373
Sell-Through Analysis Evaluating Merchandise Plan
Suggested Readings
367
Open-to-Buy System 367
Calculating Open-to-Buy for the Current Period 368
CHAPTER 14 BUYING MERCHANDISE
370
370
Discussion Questions and
Problems 378
366
Evaluating the Merchandise Budget Plan
Type of Merchandise Allocated to Stores
Get Out and Do It!
366
EOM (End-of-Month) Stock (Line 7)
Allocating Merchandise to Stores 369
Amount of Merchandise Allocated to Each Store
427
Summary
437
Key Terms
438
Get Out and Do It!
437
438
Discussion Questions and
Problems 439
Suggested Readings
439
432
Advantages of the Pricing Strategies
432
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CHAPTER 16 RETAIL COMMUNICATION MIX
440
Using Communication Programs to Develop Brand
Images and Build Customer Loyalty 442
Value of Brand Image 442
Building Brand Equity
443
Extending the Brand Name
447
Methods of Communicating with Customers
Paid Impersonal Communications 447
Paid Personal Communications
447
Unpaid Personal Communications
Allocation of the Promotional Budget
Summary
465
Key Terms
465
466
Discussion Questions and Problems
452
Suggested Readings
453
459
463
Plan, Implement, and Evaluate Communication
Programs—Three Illustrations 463
Get Out and Do It!
451
Unpaid Impersonal Communications
Determine the Communication Budget
466
467
Appendix 16A: Implementing
Retail Advertising Programs 467
Strengths and Weaknesses of
Communication Methods 455
Planning the Retail Communication Program
Establish Objectives 457
457
SECTION IV STORE MANAGEMENT
CHAPTER 17 MANAGING THE STORE
474
Store Management Responsibilities 476
Recruiting and Selecting Store Employees
Job Analysis 477
Job Description
Format for Evaluations
477
Screening Applicants to Interview
Selecting Applicants
478
Intrinsic Rewards
479
Legal Issues in Compensation
Training Store Employees
Green and Energy-Efficient Stores
Store Maintenance
483
Motivating and Managing Store Employees
Leadership 485
485
486
Maintaining Morale
488
Sexual Harassment
489
Reducing Inventory Shrinkage
Calculating Shrinkage 499
Summary
503
Key Terms
503
Get Out and Do It!
490
Suggested Readings
Cost
509
510
510
Legal Considerations—Americans With Disabilities Act 510
Design Trade-Offs
511
Store Design 512
Layouts 512
Signage and Graphics
xxx
Feature Areas
518
504
504
505
506
Location of Merchandise Categories and
Design Elements 522
Location of Merchandise within a Category:
The Use of Planograms 525
Visual Merchandising
Fixtures 527
527
Presentation Techniques 528
516
500
Space Management 521
Space Allocated to Merchandise Categories
508
Influence Customer Buying Behavior
499
501
Discussion Questions and Problems
CHAPTER 18 STORE LAYOUT, DESIGN, AND VISUAL MERCHANDISING
Flexibility
499
Organized and High-Tech Retail Theft
Reducing Employee Theft
Evaluating Store Employees and
Providing Feedback 490
Who Should Do the Evaluation? 490
Store Design Objectives 508
Store Design and Retail Strategy
498
498
Detecting and Preventing Shoplifting
487
How Often Should Evaluations Be Done?
495
496
Controlling Costs 496
Labor Scheduling 497
Orientation and Training Programs for
New Store Employees 482
Orientation Programs 482
Setting Goals or Quotas
494
Designing the Compensation Program
Legal Considerations in Selecting and
Hiring Store Employees 481
492
493
Compensation Programs
480
Motivating Employees
491
492
Compensate and Reward Store Employees
Extrinsic Rewards 493
478
Locating Prospective Employees
Evaluation Errors
Atmospherics 530
Lighting 530
521
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Prioritize
Music
531
Type of Layout
Scent
531
Checkout
How Exciting Should a Store Be?
532
Web Site Design 532
Simplicity Matters 532
Getting Around
533
Let Them See It
533
533
533
534
Summary
535
Key Terms
535
Get Out and Do It!
535
Discussion Questions and
Problems 536
Blend the Web Site with the Store
CHAPTER 19 CUSTOMER SERVICE
Suggested Readings
533
537
538
Strategic Advantage Through Customer Service
Customer Service Strategies 541
Customer Evaluations of Service Quality
540
543
558
Providing a Fair Solution
The Gaps Model for Improving Retail Service
Quality 546
Knowing What Customers Want:
The Knowledge Gap 547
Setting Service Standards: The Standards Gap
Service Recovery 557
Listening to Customers
558
Resolving Problems Quickly
Summary
559
Key Terms
559
Get Out and Do It!
549
559
560
Discussion Questions and Problems
Meeting and Exceeding Service Standards:
The Delivery Gap 552
Suggested Readings
560
561
Communicating the Service Promise:
The Communications Gap 556
APPENDIX A STARTING YOUR OWN RETAIL BUSINESS
APPENDIX B STARTING A FRANCHISE BUSINESS
562
570
SECTION V CASES
Overview Grid
575
22 Selling Pens to Wal-Mart
1 Tractor Supply Company—Targeting the Hobby
Farmer 576
2 Rainforest Café: A Wild Place to Shop and Eat
24 Promoting a Sale
577
3 Providing a Retail Experience: Build-A-Bear
Workshop 578
579
580
10 Save-A-Lot
27 Enterprise Builds on People
30 Sephora
582
583
584
610
31 A Stockout at Discmart: Will Substitution Lead
to Salvation? 612
11 Royal Ahold: The Biggest Supermarket Retailer You
Have Never Heard Of 587
33 Lindy’s Bridal Shoppe
12 The Competitive Environment in the 18- to 22-YearOld Apparel Market 588
35 Starbucks Coffee Company
13 Tiffany’s and Blue Nile: Comparing Financial
Performance 589
14 Stephanie’s Boutique: Selecting a Store Location 591
592
16 Home Depot Changes Directions
17 Avon Embraces Diversity
597
598
18 Nordstrom Revamps Its Loyalty Program
599
19 Nolan’s Finest Foods: Category Management
20 Developing a Buying Plan for Hughe’s
611
611
32 Customer Service and Relationship Management
at Nordstrom 613
586
15 Hutch: Locating a New Store
606
609
29 Fresh Ideas in Grocery Store Layout
8 Retailing in India: The Impact of Hypermarkets
9 Diamonds: From Mine to Market
25 Macy’s: A National Department Store Brand
28 Diamond in the Rough
6 Mall Anchors Away! The Franklins Discover
Online Shopping 581
7 The Sanchez Family Buys Bicycles
605
606
26 Discount Dining Draws a Crowd: Restaurant Weeks
in Major Cities 608
4 Wal-Mart and Corporate Social Responsibility
5 Should Retailers Use Blogs?
604
23 How Much for a Good Smell?
600
602
21 McFadden’s Department Store: Preparation of a
Merchandise Budget Plan 603
614
34 Is Apple America’s Best Retailer?
616
618
36 New Product Development at Yankee Candle
Company 621
37 PetSmart: Where Pets Are Family
623
38 Interviewing for a Management Trainee Position
625
Glossary 629
Indexes
Name 677
Company 683
Subject 687
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