MKT 308 RETAILING MANAGEMENT

Module 1
Introduction to Retailing

Introduction

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 final consumer – ranging from cars to
apparel to meals at restaurants to movie tickets. Retailing is the last stage in the distribution process
from supplier to consumer.

Learning Objectives:

1. To define retailing, consider it from various perspectives, demonstrate its impact, and
note its special characteristics
2. To introduce the concept of strategic planning and apply it
3. To show why the retailing concepts is the foundation of a successful business, with an
emphasis on the total retail experiences, customer service and relationship retailing.

WHAT IS RETAILING?
Retailing comprises the business activities involved in selling of goods and services to consumers. It
includes tangible and intangible items, does not have to involve a store, and may be done by
manufacturers and others- as well as the retailers.
Retailing encompasses all the businesses and people involved in physically moving and transferring
ownership of goods and services from producer to consumers.
REASON FOR STUDYING RETAILING
Retailing is an important field to study because of its impact on the economy, its function in distribution,
and its relationship with firms selling goods and services to retailers for their resale or use.
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.
RETAIL FUNCTIONS IN DISTRIBUTION
Retailing is the last stage in channel of distribution- all of the business and people involved in the
physical movement and transfer of ownership of goods and services form producer to consumer.
Retailer often act as the contact between manufacturers, wholesalers and the consumer.
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Sorting Process – retailers collect an assortment from various sources, buy in large quantity, and sell in
small amounts.
Multi-channel Retailing – retailer sells to consumers through multiple retail formats (point of contract)

THE RELATIONSHIPS AMONG RETAILERS AND THE SUPPLIERS

Relationships among retailers and suppliers can be complex. Because retailers are part of a distribution
channel, manufacturers and wholesalers must be concerned about the caliber of displays, customer
service, store hours, and retailers’ reliability as business partners. Retailers are also major customers of
goods and services for resale, store fixtures, computers, management consulting, and insurance
Exclusive Distribution - suppliers make agreements with one or a few retailers that designate the latter
as the only ones in specified geographic areas to carry certain brands or products.
Intensive Distribution - suppliers sell through as many retailers as possible. This often maximizes
suppliers’ sales and lets retailers offer many brands and product versions.
Selective Distribution - suppliers sell through a moderate number of retailers. This combines aspects of
exclusive and intensive distribution.
THE SPECIAL CHARACTERISTICS OF RETAILING
1. The average amount of a sales transaction for retailers is much less than for manufacturers.
2. Final consumers make many unplanned or impulse purchases
3. Retail customer usually visit a store, even though mail, phone and web sales have increased

Special Characteristics Affecting Retailing

IMPORTANCE OF DEVELOPING AND APPLYING A RETAIL STRATEGY

A retail strategy is the overall plan guiding a retail firm. It influences the firm’s business activities and its
response to market forces, such as competition and the economy.

SIX STEPS IN STRATEGIC PLANNING

1. Define the type of business in terms of the goods or service category and the company’s specific
orientation (such as full service or “no frills”).
2. Set long-run and short-run objectives for sales and profit, market share, image, and so On.
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3. Determine the customer market to target on the basis of its characteristics (such as gender and
income level) and needs (such as product and brand preferences).
4. Devise an overall, long-run plan that gives general direction to the firm and its employees.
5. Implement an integrated strategy that combines such factors as store location, product assortment,
pricing, and advertising and displays to achieve objectives.
6. Regularly evaluate performance and correct weaknesses or problems when observed.

THE RETAILING CONCEPT

The retailing concept is an idea that examines the evolution of the and transformation of the retail life
cycle.

FOUR PRINCIPLES OF RETAILING CONCEPT

1. Customer orientation. The retailer determines the attributes and needs of its customers and
endeavors to satisfy these needs to the fullest.

2. Coordinated effort. The retailer integrates all plans and activities to maximize efficiency.

3. Value driven. The retailer offers good value to customers, whether it be upscale or discount.
This means having prices appropriate for the level of products and customer service.

4. Goal orientation. The retailer sets goals and then uses its strategy to attain them

Applying the Retailing Concept

CHAPTER SUMMARY:

LO1: To define retailing, consider it from various perspectives, demonstrate its impact, and note its
special characteristics.

Retailing comprises the business activities involved in selling goods and services to consumers for
personal, family, or household use. It is the last stage in the distribution process. Today, retailing is at a
complex crossroad, with many challenges ahead. Retailing encompasses all of the businesses and people
involved in physically moving and transferring ownership of goods and services from producer to
consumer. In a distribution channel, retailers perform valuable functions as the contact for
manufacturers, wholesalers, and final consumers. They collect assortments from various suppliers and
 MKT 308 RETAILING MANAGEMENT

offer them to customers. Retailers also communicate with both customers and other channel members.
They may ship, store, mark, advertise, and pre-pay for items. In addition, they complete transactions
with customers and often provide customer services. They may also offer multiple formats
(multichannel retailing) to facilitate shopping. Retailers and their suppliers have complex relationships
because retailers serve in two capacities. They are part of a distribution channel aimed at the final
consumer, and they are major customers for suppliers. Channel relations are smoothest with exclusive
distribution; they are most volatile with intensive distribution. Selective distribution is a way to balance
sales goals and channel cooperation. Retailing has several special characteristics. The average sales
transaction is small, consumers make many unplanned purchases, and most customers visit a store
location.

LO2: To introduce the concept of strategic planning and apply it.

A retail strategy is the overall plan guiding the firm. It has six basic steps: defining the business, setting
objectives, defining the customer market, developing an overall plan, enacting an integrated strategy,
and evaluating performance and making modifications. For example, Home Depot’s strategy has been
particularly well designed and enacted, even though it has been affected by the tough economy in
recent years.

LO3: 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.

The retailing concept should be understood and used by all retailers. It requires a firm to have a
customer orientation, use a coordinated effort, and be value driven and goal oriented. Despite its
straightforward nature, many firms do not adhere to one or more elements of the retailing concept. The
total retail experience consists of all elements in a retail offering that encourage or inhibit consumers
during their contact with a retailer. Some elements are controllable by the retailer; others are not.
Customer service includes identifiable, but sometimes intangible, activities undertaken by a retailer in
association with the basic goods and services sold. It has an effect on the total retail experience. In
relationship retailing, a firm seeks longterm bonds with customers rather than acting as if each sales
transaction is a totally new encounter with them.

Reference:
Barry Berman., Joel R. Evans, Retail Management: A Strategic Approach 12 th & 13th Edition, Pearson