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Chapter 1
Introduction to the World of Retailing
McGraw-Hill/Irwin
Retailing Management, 6/e
Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
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The World of Retailing
Introduction to Retailing
Types of Retailers
Multi-Channel Retailing
Customer Buying
Behavior
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What is Retailing?
• Retailing – a set of business activities that
adds value to the products and services
sold to consumers for their personal or
family use.
A retailer is a business that
sells products and/or services
to consumers for personal or
family use.
James Darell/Getty Images
Centro de Comercio Detallsita
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www.gda.itesm.mx/ccd
ADMINISTRACIÓN DE MERCANCÍAS / PRECIOS: Aprenderás el manejo de compras,
resurtidos e inventarios que realizan las empresas de comercio al detalle.
Analizarás la tecnología que está revolucionando el retail y estudiarás la
administración y el establecimiento de precios, así como el desarrollo y
presentación de líneas de producto, dando especial atención a las relaciones
comprador-proveedor.
INTERNSHIP I Y II: Aplicarás tus conocimientos dentro de una empresa detallista.
en el verano trabajarás 7hrs. diarias por 5 semanas en una empresa de comercio al
detalle, en donde conocerás las diferentes áreas de la empresa y tendrás la
oportunidad de resolver algún problema o realizar un proyecto específico.
ADMINISTRACIÓN DE LA TIENDA Y SERVICIO AL CLIENTE: Analizarás los
procesos en el manejo y administración de una tienda. Aprenderás temas
relacionados con sistemas de información, recursos humanos, imagen y diseño de
la tienda (visual merchandising), servicio al cliente y CRM (Customer Relationship
Management), entre otros.
ESTRATEGIA DE COMERCIO DETALLISTA MULTICANAL: Conocerás las
estrategias que siguen los principales detallistas y su implicación en las ventas.
Comprenderás la metodología para la ubicación de puntos de venta. Aplicarás las
estrategias de publicidad y promoción que se utilizan en el comercio detallista.
Además, aprenderás la nueva tendencia en el retail de administración por
categorías.
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The Distribution Channel
PPT 1-4
Distribution Channel
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Examples of Retailers
Retailers:
Kohl’s, Macy’s, Wendy’s,
Amazon.com, Jiffy Lube, AMC
Theaters, American Eagle
Outfitter, Kroger
Firms that are retailers and
wholesalers that sell to other
business as well as
consumers:
Office Depot, The Home Depot,
United Airlines, Bank of America,
Costco
The McGraw-Hill
Companies, Inc./John
Flournoy, photographer
The McGraw-Hill Companies,
Inc./Andrew Resek,
photographer
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Manufacturing, Wholesaling and Retailing
Vertical Integration – firm performs more than one set of
activities
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 operates its own stores
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How Retailers Add Value
• Break Bulk
-Buy it in quantities customers want
• Hold Inventory
-Buy it at a convenient place when you
want it
• Provide Assortment
-Buy other products at the same time
• Offer Services
-See it before you buy, get credit,
layaway
Ryan McVay/Getty Images
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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
at manufacturer
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World’s Largest Retailers
Social and Economic
Significance of Retailing
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• Community Support
• Over $3.4 trillion in annual U.S. sales
greater than medical care, housing, recreation
combined
• Employs 27 million people
21% of non-agricultural US workforce
• Management training opportunities
• Entrepreneurial opportunities
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Retailing is Big Part of Economy
Manufacturing (11.2%)
Retail (21.8%)
Government
(16.6%)
Services (45.8%)
Other 5.6%
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Retailers are a Business Like
Manufacturers
Accounting
Finance
Marketing
MIS
Operations
The McGraw-Hill Companies,
Inc./Andrew Resek, photographer
Human Resources
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Nature of Retail Industry is Changing
To Today’s Retailer
Mom and Pop Store
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Retailing is a High Tech Industry
• Selling Merchandise over
the Internet
• Using Internet to manage
supply chains
• Analyze POS data to tailor
assortments to stores
• Computer systems for
merchandise planning
Ryan McVay/Getty Images
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Globalization of Retailing
Source Merchandise From Around the World
Wal-Mart Operates in U.S., China, Mexico, UK,
Germany
Carrefour has Stores in 25 Countries
Don Farrall/Getty Images
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Comparison of Distribution Channels
Across the Globe
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Retail Management Decision Process
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JCPenney’s Strategic Evolution
• Main Street private label soft goods retailer
• Changes in environment -- increased
disposable income, growth of suburbs,
interstate highway program
• Emulate Sears in enclosed suburban malls
• Focus on soft goods -- drop automotive,
sporting goods, hardware
• Develop catalog, develop electronic retailing
• Stand alone stores
• Centralized checkout
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Sears Holdings’ 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
• Reviewed training program for new managers
• New growth with Kmart
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Whole Foods Implementation
Organic and natural foods supermarket chain
Assortment beyond organic/natural foods
– Private labels - Whole Food™, 360 Day Value™
– Love, trust, and employee empowerment
– Always innovation:
Candy Island
Lamar Street Greens
Fifth Street Seafood
In-store Massage Therapist
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Claire’s Retail Mix
Customer Service
Location
Merchandise
Store Design
and Display
Retail Strategy
Communication Mix
Assortment
Pricing
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Claire’s Retail Mix
Location Strategy
Enclosed malls
Customer Service
Store Display
Merchandise
And Design
Assortment
Communication Mix
Pricing
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Claire’s Retail Mix
Assortment Strategy
Customer Service
Location
Jewelry, accessories and
cosmetics for tweens and
teens
Store Design
and Display
Communication Mix
Pricing
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Claire’s Retail Mix
Location
Pricing Strategy
Customer Service
Merchandise Assortment
Store Design
and Display
Communication Mix
Modest with Sales
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Claire’s Retail Mix
Customer Service
Communication Mix
Location
Store Design
And Display
Merchandise Assortment
Pricing
TV and Magazine Ads
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Claire’s Retail Mix
Store Design and Display
Customer Service
Bright, fashionable and fun
Location
Merchandise Assortments
boutique layout
Communication Mix
Pricing
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Claire’s Retail Mix
Customer Service
Modest
Location
Merchandise Assortment
Store Design and Display
Pricing
Communication Mix
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Macy’s Retail Mix
Customer Service
Location
Merchandise
Store Design
and Display
Retail Strategy
Communication Mix
Assortment
Pricing
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Macy’s Retail Mix
Location Strategy
Enclosed Malls
Customer Service
Store Display
Merchandise
And Design
Assortment
Communication Mix
Pricing
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Macy’s Retail Mix
Assortment Strategy
Customer Service
Location
Many Items in Apparel
Store Design
and Display
and Soft Home
Communication Mix
Pricing
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Macy’s Retail Mix
Location
Pricing Strategy
Customer Service
Merchandise Assortment
Store Design
and Display
Communication Mix
Moderate with
Frequent Sales
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Macy’s Retail Mix
Customer Service
Communication Mix
Location
Store Design
And Display
Merchandise Assortment
Pricing
TV, Newspaper Ads and
Special Events
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Macy’s Retail Mix
Store Design and Display
Customer Service
Racetrack with Displays
Location
Merchandise Assortments
Communication Mix
Pricing
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Macy’s Retail Mix
Customer Service
Modest
Location
Merchandise Assortment
Store Design and Display
Pricing
Communication Mix
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Target’s Retail Mix
Customer Service
Location
Merchandise
Store Design
and Display
Retail Strategy
Communication Mix
Assortment
Pricing
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Target’s Retail Mix
Location Strategy
Free-standing Stores
Customer Service
Store Display
Merchandise
And Design
Assortment
Communication Mix
Pricing
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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
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Target’s Retail Mix
Location
Pricing Strategy
Customer Service
Merchandise Assortment
Store Design
and Display
Communication Mix
Low to Modest
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Target’s Retail Mix
Communication Mix
TV and Newspaper
Insert Ads
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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
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Target’s Retail Mix
Customer Service
Limited
Location
Merchandise Assortment
Store Design and Display
Pricing
Communication Mix
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Ethical Situations for a Retail Manager
• Should a retailer sell merchandise that is suspects was made
using child labor?
• Should it advertise that its prices are lowest in area even
though some 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?
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Checklist for Making Ethical Decisions
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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!
Career Opportunities in Retailing
Start Your Own Business
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List of Retail Entrepreneurs on Forbes 400 Richest Americans
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Walton Family (Wal-Mart)
Fisher (The Gap)
Wexner (limited)
Menard (Menard’s)
Marcus, Blank (The Home Depot)
Kellogg (Kohl’s)
Schulze (Best Buy)
Levine (Family Dollar)
Gold (99Cent Only)
Misconceptions About Careers in
Retailing
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Don’t need college
Low pay
Long hours
Boring
Dead-end job
No benefits
Everyone is part-time
Unstable environment
No opportunity for women and minorities
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The McGraw-Hill Companies, Inc./Andrew Resek, photographer
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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
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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