LESSON 1 - RETAILING

• Retailing


  A set of business activities that adds value to the products and services sold to consumers for their personal or family use
• Retailer


  A business that sells products and/or services to consumers for their personal or family use
• Functions of a Retailer

  • Sells finished goods or services in the form that customer wants
  • Buys a wide range of products from different wholesalers and offers the best products under one roof
  • Keeps the products or services within easy reach of the customer by making them available at appropriate location
• Differences between Retailers and Wholesalers

  • Social interaction and interpersonal sales techniques
  • Sell small quantities of items
  • Provide convenience in terms of location, payment and credit facilities, range of merchandise, after-sales service
  • Offer selection - an assortment of merchandise
  • Set up in business to trade with the general public
  • Normally charge higher unit prices
  • Pricing policy tends to be simpler
  • Bears a different kind of risk
• Retail management


  The various processes which help the customers to procure the desired merchandise from the retail stores for their end use
• Distribution channel


  A set of firms that facilitate the movement of products from the point of production to the point of sale to the ultimate consumer
• Supply chain


  A set of firms that make and deliver goods and services to consumers
• Logistics management


  Includes all activities involved in physically moving raw material, in-process inventory, and finished goods inventory from the point of origin to the point of use or consumption
• Marketing channel system


  • Vertical Integration - firm performs more than one set of activities in the channel; operating its own distribution centers to supply its stores
  • Backward Integration - retailer performs some distribution and manufacturing activities; operating warehouses or designing private levels
  • Forward Integration - manufacturers undertake retailing activities
  • Balance Integration - a combination of both backward and forwards integration, where a company mergers' with both a company that is before it in the supply chain, as well as one that is after
• Social and economic significance of retailing

  • Support for community
  • Retail sales
  • Employment
  • Management training opportunities
  • Entrepreneurial opportunities
• How retailers add value

  • Provide assortments - buy other products at the same time; wide selection of brands, design, sizes, colors and prices at one location
  • Break bulk - buy it in quantities the customer wants
  • Holding inventory - products will be available when consumers want them
  • Providing services - consumers can see and test the product before buying; consumers can have the product now and pay it later
• Opportunities in retailing

  • Management opportunities
  • Entrepreneurial opportunities
• Critical environment factors of retailing

  • Macroenvironment: technological/social/ethical/legal/political factors
  • Microenvironment: competitors and customers
• Retailers microenvironment


  • Competitors
  • Intratype competition - competition between the same type of retailers
  • Intertype competition - competition between retailers that sell similar merchandise using different formats
  • Variety - is the number of different merchandise categories within a store or department
  • Scrambled merchandising - the offering of merchandise not typically associated with the store type
• Misconceptions about careers in retailing

  • Don't need college
  • Low pay
  • Long hours
  • Boring
  • Dead-end job
  • No benefits
  • Everyone is part-time
  • Unstable environment
• Vertical Integration


  Firm performs more than one set of activities in the channel; operating its own distribution centers to supply its stores
• Backward Integration


  Retailer performs some distribution and manufacturing activities; operating warehouses or designing private levels
• Forward Integration


  Manufacturers undertake retailing activities
• Balance Integration


  A combination of both backward and forwards integration, where a company mergers' with both a company that is before it in the supply chain, as well as one that is after
• Intratype Competition


  Competition between the same type of retailers
• Intertype Competition


  Competition between retailers that sell similar merchandise using different formats
• Variety


  The number of different merchandise categories within a store or department.
• Scrambled Merchandising


  The offering of merchandise not typically associated with the store type.
• Competitors


  Intratype Competitors

  Intertype Competitors
• Elements in Retail Mix

  A) Location

  B) Merchandise Management

  C) Pricing

  D) Customer Service

  E) Store design and display

  F) Communication Mix