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Retail Management

Session 1:
Introduction to the World of Retailing

Faculty: Rahul Hans

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The World of Retailing

Introduction to Retailing Types of Retailers

Customer Buying
Multi-Channel Retailing
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.
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The Distribution Channel

PPT 1-4
Distribution Channel
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Examples of Retailers
Retailers:
Big Bazaar
Reliance
Bharti
Spencers
Tata Croma
Macy’s
Amazon.com
American Eagle Outfitter
Kroger
Walmart
Home Depot
Carrefour
JC Penney
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Manufacturing, Wholesaling and Retailing

Vertical Integration – When a firm performs more than
one set of activities. When a company expands its
business into areas that are at different points on the
same production path. Ex: Retailer invests in
wholesaling or manufacturing

Backward Integration – Backward Integration is an

approach of a company to increase its level of control on
its inputs. vertical integration in an upstream direction i.e.
a company merging with or buying out a supplier. Ex:
Starbucks

Forward Integration – manufacturers undertake retailing

activities. Ex: ABCTC
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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 Ryan McVay/Getty Images

-See it before you buy, get credit,

layaway
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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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Social and Economic

Significance of Retailing
• In India retailing is a $ 500 billion market, growing at an annual rate of about
20% (Over $3.4 trillion in USA)

• Organized retail accounts for 8% of the total retail landscape

• The Indian retail sector accounts for 22% of the country's GDP

• 8 per cent contribution in total employment (40 Million)

• Lack of Industry Status

• Shortage of skilled manpower

• Entrepreneurial opportunities
Source: Deloitte and FICCI Sector Reports
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Retail Market in India

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Retail Market in India

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Retailers are a Business Like

Manufacturers

Accounting Finance

Marketing
MIS

Operations The McGraw-Hill Companies, Human Resources

Inc./Andrew Resek, photographer
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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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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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Macy’s Retail Mix

Customer Service Location

Store Design Merchandise

Retail Strategy Assortment
and Display

Pricing
Communication Mix
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Macy’s Retail Mix

Location Strategy

Enclosed Malls

Customer Service

Store Display
And Design Merchandise
Assortment

Communication Mix
Pricing
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Macy’s Retail Mix

Assortment Strategy

Customer Service
Location

Store Design Many Items in Apparel

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
Location

Communication Mix 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 Location

Racetrack with Displays 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

Store Design Merchandise

Retail Strategy Assortment
and Display

Communication Mix Pricing

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Target’s Retail Mix

Location Strategy

Free-standing Stores

Customer Service

Store Display
And Design Merchandise
Assortment

Communication Mix
Pricing
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Target’s Retail Mix

Assortment Strategy

Customer Service
Location

Store Design
Large Number of Categories
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!
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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 (limited)
• Menard (Menard’s)
• Marcus, Blank (The Home Depot)
• Kellogg (Kohl’s)
• Schulze (Best Buy)
• Levine (Family Dollar)
• Gold (99Cent Only)
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Misconceptions About Careers in

Retailing
• Don’t need college
• Low pay
• Long hours
• Boring
• Dead-end job
• No benefits
•
The McGraw-Hill Companies, Inc./Andrew Resek, photographer
Everyone is part-time
• Unstable environment
• No opportunity for women and minorities
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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