CHAPTER 1: AN
INTRODUCTION
TO RETAILING
Chapter Objectives
• To define retailing, consider it from different
perspectives, demonstrate its impact, and note
its special characteristics
• To introduce the concept of strategic planning
and apply it
• 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
• To indicate the focus and format of the text
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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.
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Issues in Retailing
• How can we best serve our customers while earning
a fair profit?
• How can we stand out in a highly competitive
environment where consumers have so many
choices?
• High unemployment, low consumer confidence, high
savings rates have reduced consumer spending. At
the same time retail competition has increased
through increased format blurring (sales of cameras
at office supply stores, carpeting and major
appliances at home improvement centers).
• How can we grow our business while retaining a
core of loyal customers?
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The Philosophy
Retailers can best address
these questions by fully
understanding and applying
the basic principles of
retailing, as well as the
elements in a well-
structured, systematic, and
focused retail strategy.
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Figure 1-1: Subway
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An Ideal Candidate for a
Retailing Career
• Must be a people person (more
important than technical
knowledge). Technical skills can
be taught more easily than
people skills
• Must be flexible
• Should be decisive
• Must have analytical skills
• Must have stamina
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Table 1-1: The 10 Largest Retailers in
the United States (2011)
Rank Company Main Emphasis
1 Wal-Mart Full-line discount stores, supercenters,
membership clubs
2 Kroger Supermarkets, convenience stores, jewelry stores
3 Target Full-line discount stores, supercenters
4 Walgreens Drugstores
5 Home Depot Home centers
6 Costco Membership warehouse clubs
7 CVS Caremark Pharmacies
8 Lowe’s Home centers
9 Best Buy Electronics, major appliances
10 Sears Holdings Department store, discount (Kmart)
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Figure 1-4: A Typical Channel of
Distribution
Manufacturer
Retailer
Final
Wholesaler
Consumer
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Figure 1-5: The Retailer’s Role
in the Sorting Process
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Multi-Channel Retailing
• A retailer sells to
consumers through multiple
retail formats:
• Web sites
• Physical stores
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Figure 1-6: Apple
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Figure 1-8: Special Characteristics
Affecting Retailers
Small Impulse
Average Purchase
Sale
Retailer’s
Strategy
Popularity
of
Stores
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Retail Strategy
• An overall plan for guiding a retail
firm
• Influences the firm’s business
activities
• Influences firm’s response to
market forces
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Six Steps in Strategic Planning
1. Define the type of business
(corporate mission)
2. Set long-run and short-run
objectives
3. Determine the customer market
4. Devise an overall, long-run plan
5. Implement an integrated strategy
6. Evaluate and correct (fine-tune)
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Figure 1-10: Applying the Retailing Concept
Customer Orientation
Coordinated Effort
Retailing Retail
Concept Strategy
Value-driven
Goal Orientation
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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
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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?
©2013 Pearson Education Publishing as Prentice Hall 1-18
Types of Loyalty Programs
• Additional discounts at register
• Not a real loyalty program
• 1 free with every “n” items purchased
• Easily copied, no customer database
• Rebates based on cumulative purchases
• Customer maintains records
• Targeted offerings and mailing based on purchase history
• Tesco example “Market research staff know more about my
customers than board chairperson”
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All rights reserved. No part of this
publication may be reproduced, stored
in a retrieval system, or transmitted, in
any form or by any means, electronic,
mechanical, photocopying, recording,
or otherwise, without the prior written
permission of the publisher. Printed in
the United States of America.
