CHAPTER 1 • An Introduction to Retailing
a distribution channel aimed at the final consumer, and
they are major customers for suppliers. Channel relations
are smoothest with exclusive distribution; they are most
volatile with intensive distribution. Selective distribution
is a way to balance sales goals and channel cooperation.
Retailing has several special characteristics. The average sales transaction is small, consumers make many
unplanned purchases, and most customers visit a store
location.
2. To introduce the concept of strategic planning and
apply it. A retail strategy is the overall plan guiding the
firm. It has six basic steps: defining the business, setting objectives, defining the customer market, developing an overall plan, enacting an integrated strategy, and
evaluating performance and making modifications. For
example, Home Depot’s strategy has been particularly
well designed and enacted, even though it has been
affected by the tough economy in recent years.
3. To show why the retailing concept is the foundation of a
successful business, with an emphasis on the total retail
experience, customer service, and relationship retailing.
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The retailing concept should be understood and used by
all retailers. It requires a firm to have a customer orientation, use a coordinated effort, and be value driven and goal
oriented. Despite its straightforward nature, many firms do
not adhere to one or more elements of the retailing concept.
The total retail experience consists of all elements in a
retail offering that encourage or inhibit consumers during
their contact with a retailer. Some elements are controllable by the retailer; others are not. Customer service
includes identifiable, but sometimes intangible, activities undertaken by a retailer in association with the basic
goods and services sold. It has an effect on the total retail
experience. In relationship retailing, a firm seeks longterm bonds with customers rather than acting as if each
sales transaction is a totally new encounter with them.
4. To indicate the focus and format of the text. Retailing may be studied by using an institutional approach,
a functional approach, and/or a strategic approach.
Although all three approaches are covered in this textbook, our focus is on the strategic approach. The underlying principle is that a retail firm needs to plan for and
adapt to a complex, changing environment.
Key Terms
retailing (p. 23)
channel of distribution (p. 27)
sorting process (p. 27)
omnichannel retailing (p. 27)
exclusive distribution (p. 29)
intensive distribution (p. 29)
selective distribution (p. 29)
retail strategy (p. 30)
retailing concept (p. 34)
total retail experience (p. 35)
customer service (p. 36)
relationship retailing (p. 36)
Copyright © 2017. Pearson Education, Limited. All rights reserved.
Questions for Discussion
1. What is the average amount that you spend in a retail
store per transaction? What factors are likely to influence your supermarket transaction spend compared to
other retailing spending?
2. Why might a supplier opt for exclusive channel distribution with retailers?
3. Why might a new manufacturer want their products to
be sold in the maximum number of retail outlets? Is this
a good idea?
4. One retailer wants to be part of a selective distribution
channel. Another wants to be part of an exclusive distribution channel. What might be the reasons for these choices?
5. Describe how the special characteristics of retailing offer
unique opportunities and problems for local gift shops.
6. What is the purpose of developing a formal retail strategy?
How could a strategic plan be used by a restaurant chain?
7. What are the six key steps of strategic planning that
should be used by a retailer?
8. Explain the retailing concept. Apply it to your school’s
bookstore.
9. Define the term total retail experience. Then describe a
recent retail situation in which your expectations were
surpassed, and state why.
10. Do you believe that customer service in retailing is
improving or declining? Why?
11. How could a small Web-only retailer engage in relationship retailing?
12. What checklist item(s) in Figure 1-11 do you think would
be most difficult for Home Depot, the global home
improvement retailer, to address? Why?
Web-Based Exercise
Visit the website of Global Retailing (http://globalretailmag
.com/). Describe the elements of the site and give several
examples of what you could learn there.
Berman, Barry, et al. Retail Management, Global Edition, Pearson Education, Limited, 2017. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/curtin/detail.action?docID=5187815.
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