ISSUES ABOUT ETHICS IN RETAILING
WHAT IS ETHICS?
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This is a set of rules for human moral
behavior. For retailers they can have
explicit code of ethics or implicit code of
ethics.
Explicit code of ethics: Written policy that
specifies what is ethical and unethical
behavior.
Implicit: Unwritten but well understood set
of rules/standards of moral responsibilities.
DISCUSSION ON ETHICS IN
RETAILING
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Misuse of Company Assets
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Confidential codes
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Employee Theft
LEGAL & ETHICAL BEHAVIOR IN
RETAILING
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In view of the competitive nature and
dynamic environment within which retail
operates, it is important to monitor the legal
and ethical constraints affecting the sector
(Dunne and Lusch, 1999, pp.176).
LEGAL & ETHICAL BEHAVIOR IN
RETAILING
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Major Federal Laws
Pricing constraints
Promotional constraints
Product constraints
Channel constraints
(see Dunne and Lusch, 1999, pp.177).
LEGAL AND ETHICAL BEHAVIOR
IN RETAILING
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Other Federal Laws
Mergers/Acquisitions
Trade Agreements
Human Resources
Taxes and SEC (Securities & Exchange
Commission) regulations
Americans with Disabilities
LEGAL AND ETHICAL BEHAVIOR
IN RETAILING
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State and Local Laws
Zoning
Unfair Trade Practices
Building Codes
Blue Laws
Franchise Laws
Green River Ordinances
State Licences
LEGAL AND ETHICAL BEHAVIOR
IN RETAILING
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Ethical Behavior
Buying Merchandise
Selling Merchandise
Retailer Employee – Relationship
PRICING CONSTRAINTS
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Horizontal price fixing
This occurs when a group of competing
retailers (or other channel members, i.e.
within the horizontal or vertical distribution
levels) establishes a fixed price at which to
sell certain offerings.
PRICING CONSTRAINTS
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Vertical price fixing
This occurs when a retailer collaborates
with the manufacturer or wholesaler to
resell an item at an agreed-on price.
PRICING CONSTRAINTS
Deceptive pricing
 This occurs when a misleading price is used
(usually through direct marketing etc.) to
lure customers into the store.
Usually there are hidden charges or even an
item may not be available.
 Mr. Edward Heath (former British PM and
the incident of winning a lottery).
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PRICING CONSTRAINTS
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Predatory pricing
This occurs when a retail chain charges
different prices in different geographic
areas (e.g. another state) to eliminate/fight
competition in that state.
The case of prices of goods in New York and
DC (e.g. Sears, Macys etc.).
PROMOTIONAL CONSTRAINTS
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Retail promotion decisions are constrained
by two major pieces of federal legislation (a)
the FTC Act and (b) the Wheeler-Lea
Amendment. These are meant to prevent
unfair trade practices.
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These refer to deceitful diversion of patronage (falsehoods
about other competitors), deceptive advertising, and
deceptive sales practices.