An Introduction To Retailing: Thirteenth Edition

Retail Management: A Strategic
Approach
Thirteenth Edition
Chapter 1
An Introduction to
Retailing
Copyright @ 2018, 2014, 2012 Pearson Education, Inc. All Rights Reserved
Learning Objectives
1.1 To define retailing, consider it from different perspectives,
demonstrate its impact, and note its special characteristics
1.2 To introduce the concept of strategic planning and apply it
1.3 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
1.4 To indicate the focus and format of the text
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.
• Retailing is the last stage in the distribution process from supplier to

customer
• Does retailing have to involve a store?
Reasons of Studying Retailing
• The impact of retailing on the economy
– Retail sales and employment are vital economic contributors, and retail trends
often mirror trends in a nation’s overall economy.
– Retailing is a major source of jobs.
• Retail functions in distribution

– Retailing is the last stage in a channel of distribution.
– Retailer plays a role in the sorting process.
– Retailers communicate both with customers and manufacturers/wholesalers
– Retailers complete transactions with customers.
• Relationships among retailers and their suppliers

– Exclusive distribution (one or a few retailers)
– Intensive distribution (as many retailers as possible)
– Selective (moderate number of retailers)
A Typical Channel of Distribution
The Retailer’s Role in the Sorting Process
Omnichannel Retailing
• A retailer sells to consumers through multiple retail formats:
– Web sites
– Physical stores
– Smartphone apps
– Social media
• Cross selling across channels (in-store product availability info on Web site)
• Consistent pricing in all channels (credibility)
• Can buy, and return product regardless of channel
• Role of each channel

– Store– try on, ease of return, fast availability (immediacy), compare offerings
– Web– 24/7, product information, product reviews by customers, personalization
(tailored assortment based on past purchases), most current pricing, closeout sales
– Catalog-permanency, true color
Exclusive Vs Intensive Distribution
Comparing Distribution Types
• Exclusive Distribution:
Fate of retailer is tied to
manufacturer success,
retailer has no “free-rider”
concerns, retailer has less
price competition,
manufacturer is better
assured of high levels of
customer support
• Intensive Distribution:
Manufacturer is better
assured of maximizing sales
(especially for convenience
goods), retailers face strong
competition for price and
service, intratype competition
Figure 1.8 Special Characteristics
Affecting Retailers
The Importance of Developing and Applying
A Retail Strategy
• A retail strategy is an overall plan for guiding a retail firm. It
influences the firm’s business activities and its response to market
forces i.e. competition and the economy.
• Six steps in strategic planning:
1. Define the type of business
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)
Applying the Retailing Concept
• The retailing concept means communicating with shoppers and
viewing their desires as critical to the firm’s success.
• The four principles that form the retailing concept:
1. Customer orientation
2. Coordinated effort
3. Value driven
4. Goal orientation
• Three issues that relate to a retailer’s performance in terms of the
retailing concept:
1. The total retail experience
2. Customer service
3. Relationship retailing
Applying the Retailing Concept
The Total Retailing Experience
• Price has been, and always will be, a key motivator in shopping behaviour, thus retailers
must provide an appropriate customer experience at every touchpoint with the customer
to sustain his/her continued loyalty.
• More than ever, shopping is about how to “engage” the customer and how the shopping
experience makes the customer feel.
– Driving customer engagement is new and different ways to deliver relevant
experiences that customers can share with others on social media.
• In planning strategy, retailer must be sure that all strategic elements are in place.
– For the shopper segment to which it appeals, the total retail experience must be
aimed at fulfilling that segment’s expectations.
• A big challenge for retailers is generating customer “excitement” because many people
are bored with shopping or have little time for it.
The Store of the Future
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
Figure 1.11 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?
Customer Service Lessons: Richard
Branson and Virgin Airlines
Read post here:
https://www.forbes.com/sites/carminegallo/2013/05/09/seven-customer-
service-lessons-i-learned-in-one-day-with-richard-branson-
video/?sh=422dcaf56183
Relationship Retailing
• Retailers seek to establish and maintain long-term bonds with
customers, rather than act as if each sales transaction is a completely
new encounter
– Concentrate on the total retail experience
– Monitor satisfaction
– Stay in touch with customers
Effective Relationship Retailing
• Use a “win-win” approach
– It is easier to keep existing customers happy than to gain new
ones (present value of current customers income stream– cost of
keeping existing customers content versus cost of replacing them
with new customer
• Develop a customer database (loyalty programs)
– Ongoing customer contact is improved with information on
people’s attributes and shopping behaviors
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Retail Management: A Strategic

• Retailing is the last stage in the distribution process from supplier to

• Does retailing have to involve a store?

• Retail functions in distribution

• Relationships among retailers and their suppliers

The Retailer’s Role in the Sorting Process

• Consistent pricing in all channels (credibility)

• Can buy, and return product regardless of channel

• Role of each channel

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