Welcome to MT- 303
Store Management Seminar
Dear Students,
The Seminar will start promptly at the Schedule Time.
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Dr. Nardi
Welcome to MT- 303
Store Management
………
Introduction to the World of Retailing
Unit 2- Seminar
Professor: Dr. Nardi
Seminar Ground Rules
 Start with person’s name, or Prof, or Dr. N., if
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responding to someone’s comment.
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When you have a question, ASK it.
Start your Question with // or ?? – examples: //What’s
for Lunch? Or ?? What do you mean?
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chance to answer.
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Agenda
 Review from last week
 Tonight:
 Retailing
 Distribution Channels
 Multi-Channel Retail
 Add-Value
 Career Opportunities
 Wrap Up
Review from Last Week
 The Syllabus
 Office Hours
 Expectations
 General
 Assignments & Seminars
 Q &A
Unit 1
 How did it go?
 Time management?
 Questions : Grades
 Review?
 Seminar?
Question
What is Retailing?
Retailing
Retailing encompasses the business activities
involved in selling goods and services to
consumers for their personal, family, or
household use. It includes every sale to the final
consumer.
Distribution Channel
A Retailer’s Role in a Supply Chain
 Retailers are the final business within a supply chain which
links manufacturers to consumers.
 A Supply Chain is a set of firms that make and deliver a given
set of goods and services to the ultimate consumer.
Manufacturing, Wholesaling and
Retailing
Vertical Integration – firm performs more than one set of activities in the channel
Ex: retailer invests in wholesaling or manufacturing
Backward Integration – retailer performs some distribution and manufacturing
activities
Ex: JCPenney sells Arizona jeans (Private Label)
Forward Integration – manufacturers undertake retailing activities
Ex: Ralph Lauren (New York Jones, Liz Claiborne) operates its own stores
Large retailers engage in both wholesaling and retailing
Ex: Wal-Mart, Lowe’s, Safeway, Brown Shoe Company
Question
Do Retailers add value?
Do Retailers Add Value?
Example
a box of crackers at a grocery store

costs $1 to manufacturer

sells at a price of $2
Retailers add significantly to the prices consumers face
Why not buy directly from the manufacturer?
Does that mean that grocery stores are very profitable?
Why Not Get Rid of the Middlemen?
Price to
Distributor
$1.00
$.85
$.15
Manufacturer
Distributor
Vendor
Wholesaler
Price to
Retailer
Price to
Consumer
$1.20
$2.00
$.70
Retailer
Consumer
Why Not Get Rid of the Middlemen?
Better services to
customers
More efficient
Multi-Channel Retailing
A retailer sells to consumers through multiple
retail formats:
 Web sites
 Physical stores
Brooks Brothers and
Multi-Channel Retailing
Relationship Management Among
Retailers and Suppliers
 Disagreements may occur in the following areas:
control over channel
profit allocation
number of competing retailers
product displays
promotional support
payment terms
operating flexibility
Distribution Types
 Exclusive: suppliers make agreements with one or few
retailers, designating such retailers as the only ones to carry
certain brands or products within a specified geographic area
 Intensive: suppliers sell through as many retailers as possible
 Selective: suppliers sell through a moderate number of retailers
Figure 1-7: Comparing Distribution Types
How Retailers Add Value
■ Provide Assortment
Buy other products at the
same time
■ Break Bulk
Buy it in quantities
customers want
■ Hold Inventory
Buy it at a convenient
place when you want it
■ Offer Services
See it before you buy; get
credit; layaway
Ryan McVay/Getty Images
How Retailers Add Value
The value of the product and service
increases as the retailer performs functions.
Bicycle can be
bought on credit or
put on layaway
Bicycle is featured
on floor display
Bicycle is offered in
convenient locations
in quantities of one
Bicycle is
developed in
several styles
Bicycle is developed
at1-23
manufacturer
Examples: How Retailers Add Values
 BagBorrowerSteal.com
 jewelry and bag rental; Get (not buy, but borrow) exactly what you want
 Home Depot
 DIYer (Do-it-yourselfer); Learn how to do it yourself with in-store clinics and online
workshops
Social and Economic Significance of
Retailing
 Retail Sales:
 Over $4.1 trillion in annual U.S.
sales in 2005
 Employment:
 Employs over 24 million people in
2005
 One of the largest sectors for job
growth in US
 Social responsibility
 Global player
Social responsibility
 Corporate social responsibility
 The voluntary actions taken by a company to
address the ethical, social, and environmental
impacts of its business operations, in addition
to the concerns of its stakeholders
 Examples: Edun - a fair-trade fashion brand by
the U2 lead singer Bono
 Starbucks: pays its farmers 42% more than the
commodity price of Arabica coffee beans
 Target: community giving programs (5% of
income, $3 million a week)
 Retail companies give away 1.7% of their profits,
compared with about 0.9% for companies in
other industries
Question
Are retail operations the same everywhere?
Structure of Retailing and Distribution Channels around the
World: The United States
The United States
The nature of retailing and distribution
channels in the U.S. is unique.
 Has the greatest retail density
 Has the greatest concentration of large
retail firms
 Large enough to operate their own
warehouses, eliminating the need for
wholesaling.
 The combination of large stores and large
firms result in a very efficient
distribution system.
CHINA
Comparison of Distribution Channels
around the World
What have created these differences
in distribution systems?
Social &
Political
Objectives
 China, India: To reduce unemployment by
protecting small businesses
 EU: To protect small retailers
To preserve green spaces/town centers
Geography
Much lower population density in the US than in India,
China, and EU (where less low-cost real estate are
available for building large stores)
Market size
 Large retail markets in US, India, China
 Countries in EU – distribution channels and retail
chains operate in a single country (no economy of scales
to be achieved; trade barriers still exist)
Any Questions?
Careers in Retailing
Opportunities in Retailing:
Management opportunities
■ People with a wide range of skills and interests needed because retailers’
functions include
 Finance
 Purchase
 Accounting
 Management information system (MIS)
 Supply management including warehouse and distribution
management
 Design and new product development
■ Financially rewarding
 5-year salary of buyers: $50,000 - $60,000
 5-year salary of store managers: $120,000 - $160,000
Opportunities in Retailing:
Entrepreneurial opportunities
Wal-Mart: Sam Walton
■ Retailing provides opportunities for people
who want to start their own business
■ Some of the world’s richest people are
retailing entrepreneurs
■ Examples of retailing entrepreneurs
Sam Walton (Wal-Mart)
Jeff Bezos (Amazon.com)
Ingvar Kamprad (IKEA)
Anita Roddick (the Body Shop)
IKEA: Ingvar Kamprad
Career Opportunities in Retailing
Start Your Own Business
List of Retail Entrepreneurs on Forbes 400 Richest Americans
 Walton Family (Wal-Mart)
 Fisher (The Gap)
 Wexner (The Limited)
 Menard (Menard’s)
 Marcus (The Home Depot)
 Kellogg (Kohl’s)
 Schulze (Best Buy)
 Levine (Family Dollar)
 Gold (99Cent Only)
Careers in Retailing
 Career Opportunities
 Store Management
 Merchandise Management
 Corporate Staff
Any Questions?
Retailers are a Business Like
Manufacturers
Real Estate
Finance
Store Design
Promotion/Advertising
MIS
Loss Prevention
Operations
Human Resources
The McGraw-Hill Companies,
Inc./Andrew Resek, photographer
Figure 1-8: Special Characteristics
Affecting Retailers
Small
Average
Sale
Impulse
Purchase
Retailer’s
Strategy
Popularity
of
Stores
Retail Management Decision Process
Strategic Vs Tactical Decisions
Doing the Right Thing (direction) vs.
Doing Things Right (execution)
■ Strategic Decisions Are:
 Made Infrequently
 Long-term
 Require significant investment
 Not easily reversed
■
■
Location, Organization Design, Information and Distribution
Systems, Customer Service
Retail Strategy
■ Need to identify the competition
 intratype competition
(e.g., Dillard’s vs. JCPenney)
 intertype competition
(e.g., Dillard’s vs. Wal-Mart)
■ Identifying customers
 What are the significant demographic
and life-style trends
 Who are your target customers
Retail Strategy
An overall plan for guiding a retail firm
Influences the firm’s business activities
Influences firm’s response to market forces
Retail Strategy
■ A retail strategy should identify
 the target market
 the product and service mix
 a long-term comparative advantage
Six Steps in Strategic Planning
1.
2.
3.
4.
5.
6.
Define the type of business
Set long-run and short-run objectives
Determine the customer market
Devise an overall, long-run plan
Implement an integrated strategy
Evaluate and correct
JC Penney’s Strategic Evolution(1)
 Main Street (small town) private label, soft
goods (apparel, home furnishings),
decentralized retailer
 Changes in environment -- increased
disposable income, growth of suburbs,
interstate highway program
 Emulate Sears in moving to enclosed
suburban malls
 Add hard goods (appliances,
automotive)
 Diversify – drug stores, insurance,
specialty stores
 Develop catalog channel
JC Penney’s Strategic Evolution(2)
 Focus on department store format and soft

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
goods develop electronic retail channel
Mid-market, mall based department store,
between Wal-Mart/Target and
Macy’s/Dillards
Competition from Target, Kohl’s
Centralization to reduce cost, increase
responsiveness - centralized buying,
warehouse delivery
Off the mall stores to increase customer
convenience
Improving store atmospherics
Upgrading merchandise offering (e.g.,
Sephora, American Living by Polo Ralph
Lauren)
Wal-Mart’s Strategic Evolution
 Small Town - Discount Store selling hard goods and soft goods
 limited service, efficient distribution
 Enter suburban markets
 Warehouse Clubs (Sam’s)
 Supercenters
 International Expansion
 Supermarkets, neighborhood markets
Sears’ Strategic Evolution
 Large number of merchandise categories -appliances, hardware, apparel
 Malls evolved into places for buying soft goods,
hard goods sold at category killers
 The Softer Side of Sears
 Refocused on value -- Testing carts in stores
 Acquired Lands’ End
 Acquired by Kmart
Any Questions?
Macy’s Retail Mix
Customer Service
Location
Merchandise
Store Design
and Display
Retail Strategy
Communication Mix
Assortment
Pricing
Macy’s Retail Mix
Location Strategy
Enclosed Malls
Customer Service
Store Display
Merchandise
And Design
Assortment
Communication Mix
Pricing
Macy’s Retail Mix
Assortment Strategy
Customer Service
Location
Many Items in Apparel
Store Design
and Display
and Soft Home
Communication Mix
Pricing
Macy’s Retail Mix
Location
Pricing Strategy
Customer Service
Merchandise Assortment
Store Design
and Display
Communication Mix
Moderate with
Frequent Sales
Macy’s Retail Mix
Customer Service
Communication Mix
Location
Store Design
And Display
Merchandise Assortment
Pricing
TV, Newspaper Ads and
Special Events
Macy’s Retail Mix
Store Design and Display
Customer Service
Racetrack with Displays
Location
Merchandise Assortments
Communication Mix
Pricing
Macy’s Retail Mix
Customer Service
Modest
Location
Merchandise Assortment
Store Design and Display
Pricing
Communication Mix
Figure 1-10: Applying the Retailing
Concept
Customer Orientation
Coordinated Effort
Retailing
Concept
Value-driven
Goal Orientation
Retail
Strategy
Target’s Retail Mix
Customer Service
Location
Merchandise
Store Design
and Display
Retail Strategy
Communication Mix
Assortment
Pricing
Target’s Retail Mix
Location Strategy
Free-standing Stores
Customer Service
Store Display
Merchandise
And Design
Assortment
Communication Mix
Pricing
Target’s Retail Mix
Assortment Strategy
Customer Service
Location
Large Number of Categories
Store Design
and Display
Private Labels
Few Items in Each Category
Communication Mix
Pricing
Target’s Retail Mix
Location
Pricing Strategy
Customer Service
Merchandise Assortment
Store Design
and Display
Communication Mix
Low to Modest
Target’s Retail Mix
Communication Mix
TV and Newspaper
Insert Ads
Target’s Retail Mix
Store Design and Display
Customer Service
Location
Colorful, wide aisles displays
Merchandise Assortments
for products with a grid layout
Communication Mix
Pricing
Target’s Retail Mix
Customer Service
Limited
Location
Merchandise Assortment
Store Design and Display
Pricing
Communication Mix
Aspects of Target’s Strategy
 Growth objectives
 Employee relations
 Appeal to a prime
 Innovation
market
 Distinctive image
 Focus
 Customer service
 Multiple points of
contact
 Commitment to
technology
 Community involvement
 Monitoring
performance
Any Questions?
Ethical Situations for a Retail
Manager
 Should a retailer sell merchandise that they suspect utilized child labor?
 Should it advertise that its prices are the lowest in an area even though some
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

items are not?
Should a buyer accept an expensive gift from a vendor?
Should salespeople use high-pressure sales when they know the product is
not the best for the customer’s needs?
Should a retailer give preference to minorities when making a promotion
decision?
Should a retailer treat some customers better than others?
Checklist for Making Ethical
Decisions
You are Faced with an Ethical Decision:
What Can You Do?
 Ignore your personal values and do what your company asks you
to do – you will probably feel dissatisfied with your job .
 Take a stand and tell your employer what you think. Work to
change the policies.
 Refuse to compromise your principles – you could lose your job!
Any Questions?
The Build-A-Bear Experience: Never
Boring
1-72
Customer Service
 Activities undertaken by a retailer in conjunction with
the basic goods and services it sells. This includes:
Store hours
Parking
Shopper-friendliness
Credit acceptance
Salespeople
Figure 1-12: A Customer
Respect Checklist
Do we trust our customers?
Do we stand behind what we sell?
Is keeping commitments to customers important to our
company?
Do we value customer time?
Do we communicate with customers respectfully?
Do we treat all customers with respect?
Do we thank customers for their business?
Do we respect employees?
Relationship Retailing
 Retailers seek to establish and maintain long-term
bonds with customers, rather than act as if each sales
transaction is a completely new encounter
 Concentrate on the total retail experience
 Monitor satisfaction
 Stay in touch with customers
Effective Relationship Retailing
 Use a “win-win” approach
 It is easier to keep existing customers happy than to gain new ones
 Develop a customer database
 Ongoing customer contact is improved with information on
people’s attributes and shopping behaviors
Approaches to the Study of Retailing
Institutional
Functional
Strategic
Parts of Retail Management: A
Strategic Approach
Building relationships and strategic planning
Retailing institutions
Consumer behavior and information gathering
Elements of retailing strategy
Integrating, analyzing, and improving retail strategy
Any Questions?
Retail Discussion:
Myths about Careers in Retail
Misconceptions About Careers in
Retailing
■ College not needed
■ Low pay
■ Long hours
■ Boring
■ Dead-end job
■ No benefits
■ Everyone is part-time
The McGraw-Hill Companies, Inc./Andrew Resek, photographer
■ Unstable environment
■ No opportunity for women and minorities
Why You Should Consider Retailing
■ Entry level management positions:
Department manager or assistant buyer/planner
■ Manage and have P&L responsibility on your first job
■ Starting pay average with great benefits
■ Some retailers pay graduate school
■ No two days are alike
■ Buying and planning for financially analytically oriented
■ Management for people-people
Types of Jobs in Retailing
Most entry level jobs are in
store management or buying, but there’s…
-accounting and finance
-real estate
-human resource management
-supply chain management
-advertising
-public affairs
-information systems
-loss prevention
-visual merchandising
Any Questions?
Wrap Up
 Discussion:
 Remember – Minimum requirements:


1 Answer AND 2 Peer to Peer Comments per Question.
Post on 3 separate days and the primary response post by Saturday.
 Answer all Sub-questions & cover all Points in the Question
 Remember you have assignments due this week.
 Due on Tuesday by 11:59 PM E.T.
Next Seminar
 Types of Retailers
 For the next seminar think about:
 What are the characteristics of retailers?
 Identify some similarities and some differences.
Any Questions?
You can contact me:
1) through my email: nnardi@kaplan.edu ,
2) through AOL Instant Messaging
my AOL IM name is nknardi,
(put me on your buddy list)
3) through Second Life (email me to request my
user name if you use SL)
4) through the Live Chat Post in the Classroom
5) or through the “Instructor’s Office” link under
the Course Home page
My “Office Hours” for this term are as follow:
__________________________
THANK YOU
FOR
ATTENDING
SEE YOU IN THE DISCUSSION
THREAD QUESTIONS
AND IN NEXT WEEK’S
SEMINAR
Any Questions?
Thank you for attending!
See you next week!
Wrap Up
Key Points
Key Terms
 klj
 kjl