Introduction to the
World of Retailing
WHAT IS RETAILING?
- Is the set of business
G activities that adds value to
I N
I L the products and services
TA
RE sold to consumers for their
personal or family use.
The Retailer’s Role in
Supply Chain
RETAILER :
▸ is a business that sells products
ROLE OF
RETAILER IN and/or services to consumers for
SUPPLY their personal or family use
CHAIN
▸ are a key component in a supply
chain that links manufacturers to
consumers
Supply Chain :
▸ is a set of firms that make and
ROLE OF deliver goods and services to
RETAILER IN
SUPPLY consumers.
CHAIN
ROLE OF
RETAILER IN
SUPPLY
CHAIN
8
Retailers Create
Value
The value-creating activities
undertaken by retailers include:
(1) providing an assortment of
products and services,
(2) breaking bulk,
(3) holding inventory,
(4) providing services.
1 Providing Assortments
- Offering an assortment enables
customers to choose from a wide
selection of products, brands,
sizes, and prices at one location.
2 Breaking Bulk
- To reduce transportation costs,
manufacturers and wholesalers typically
ship cases of frozen dinners or cartons of
blouses to retailers.
- Retailers then offer the products in smaller
quantities tailored to
individual consumers’ and households’
consumption patterns
3 Holding Inventory
A major value-providing activity performed
by retailers is holding inventory so that
products will be available when
consumers want them
4 Providing Services
- Retailers provide services that make it
easier for customers to buy and use
products.
- For example, retailers offer credit so that
consumers can have a product now and pay
for it later
- While the value-creating activities
undertaken by channel members provide
benefits to customers, they also increase
COST OF the cost of products and services.
CHANNEL
ACTIVITIES
Economic and Social
Significance of
Retailing
- retail sector plays a key role in developed
economies, not only because consumer
demand is an indication of a vibrant financial
system but also because retailers are large
employers
- their responsibility includes considering the
needs and objectives of all of its stakeholder
- corporate social responsibility (CSR),
THE GROWING
IMPORTANCE OF
RETAILING
AND RETAILERS
Evolution of the Retail Industry
- Fifty years ago, Sears and JCPenney were
the only retail firms that had chains of stores
- BEFORE retail industry consisted of small,
independent, local retailers competing
against other small, independent retailers in
the same community
- NOW dominated by large, national, and even
international retail firms
MANAGEMENT AND
ENTREPRENEURIAL
OPPORTUNITIES
- retailing provides personal opportunities to
work for a company in an exciting,
challenging environment or to start an
entrepreneurial venture.
- provides opportunities for people who wish
to start their own business.
1. Jeff Bezos (AMAZON)
Some
2. Sam Walton (Walmart)
Successful 3. Do Won and Jin Sook Chang
Retailers (Forever 21)
4. Ingvar Kamprad (IKEA)
5. Howard Schultz (Starbucks)
THE RETAIL
MANAGEMENT DECISION
PROCESS
(1) the macroenvironment
Critical
environmen
tal factors (2) the microenvironment.
Competitors
- retailer’s microenvironment focuses
specifically on its competitors and
customers.
- A retailer’s primary competitors are
other retailers that use the same retail
approach.
1. Intratype competition -
competition between the same
type of retailers (dept store vs dept
s of ion store)
y p e t it
T p e 2. Intertype competition - retailers
m
Co
that sell similar merchandise using
different types of retail outlets,
such as drugstores and
department stores.
Scrambled merchandising
- When retailers offer merchandise
not typically associated with their
type of store, such as clothing in a
drugstore
Customers
- The second factor in the microenvironment
is customers
- Retailers must respond to broad
demographic and lifestyle trends in our
society
- To develop and implement an effective
strategy, retailers must understand why
customers shop, how they select a store,
and how they select among that store’s
merchandise
THANKS!
Any questions?
