Retail Management

Module 1: Introduction to Retailing

Retailing
Understanding Retailing
Retail: sale of goods and services to the public for consumption, covering a
huge range of customer needs

Designed to create contact efficiency

Retailers define target buyer segments, identify service outputs, and match
offerings to provide value to each target

Structural differences among retailers that influence strategies and results

94.5% of retail companies only have one location, and more than one
million have fewer than 100 employees
Understanding Retailing (cont.)
• Department Stores: wide variety of merchandise
• Chain Stores: substantially lowered cost vs. single unit
• Supermarkets: large, self-service stores
• Discount Retailers: only most popular items, colors, sizes
• Warehouse Retailers: Costco
• Franchises: Jimmy John’s, Subway, Supercuts
• Malls and Shopping Centers: wide product assortment
• Online Retailing: Amazon, Geico, Nordstrom.com
• Catalog Retailing: Sears, Lands End, J.C. Penney
• Nonstore Retailing: vending machines and kiosks
Supply Chains
Supply chain: system of organizations, people, activities, information,
and resources that involve transformation in an efficient, nimble, and
seamless way

Supplier: person providing service (domestic or international)

Factory: supplier has raw materials made into products
Distribution Center: finished product goes here after leaving factory
Regional Distribution Center: local to area with many advantages
Challenges in Retailing
1. Inventory: having too much or too little can affect reputation of retailer
and perception of consumer
2. Mobile Experience and Engagement: 90% of customers use
smartphones while shopping
3. Digital Disruption: 5 stages (need recognition, information search,
evaluating alternatives, purchase decision, post-purchase evaluation)
Evolution of Retail
Historical Changes in Retail
Pre-1800s: retail was made up of local merchants who provided full
service to customers (credit, repairs, etc.)

First department store was developed in 1800s, by the 1950s over 4,000
department stores operated, and by 1970s department stores closed and
replaced with malls

1990s: Internet impacted retail industry, online shopping became widely

popular and still is to this day
Information Systems in Retail
Frequently utilized information systems in retail:
• Inventory management software: tracks inventory levels, orders,
sales, and deliveries
• Customer Relationship Management: looks at data about current and
future customers in hopes of retaining and building relationships
(personal profile/details, sales history, communication, feedback)
• Accounting Information Systems: system of collecting, storing, and
processing data used by decision makers
Adaptation in Retail
Examples that failed to adapt and why:
• Blockbuster Video: late fees led to its demise, and they were too
slow to adapt to changes
• Borders Bookstore: filed for bankruptcy in 2011 because they
struggled to fill stores with products consumers wanted
• Toys R Us: had to lay off over 30,000 employees and sold 15% of
toy market, needing to make up for lost sales
Ways to adapt: keep up with customer’s preferences, stay in regular
customer contact, integrate online, mobile, and brick and mortar
experiences, personalize experience
Careers in Retail
Key Roles in a Retail Business
• Industry offers diverse and unique career paths, and main goal
includes intersecting with marketing, finance, technology, etc. fields
• Entry level positions don’t require worker to supervise other workers
t same level
• Next level is intermediate management (HR, production, strategic,
marketing, financial)
• Management comprises of planning, organizing, staffing, etc.
Understanding Key Roles in a Retail
Business
Basic Functions:
• Planning: what needs to happen in the future
• Organizing: implementing pattern of relationships
• Staffing: job analysis, recruitment, hiring people
• Leading/directing: what needs to be done in a situation
• Controlling/monitoring: making adjustments when needed
• Motivating
Depending on size, there will be different positions (first, middle, top
levels)
Why Working Retail Is Tough
• Inventory levels and assortment: must have right amount of product
available at right times in right places
• Mobile engagement and experience: 90% of consumers use
smartphones while shopping, mobile revenue expected to be $420 in
2021
• Digital disruption: need recognition, information search, evaluating
alternatives, decision to purchase, post-purchase evaluation
• Socially conscious consumer: eco-friendly or “green” products
among millennials
Retail Management Requirements
Middle managers: excellent interpersonal skills relating to
communication, motivation, and mentoring

Front Line Management

• Focus on controlling and directing specific employees
Skill Sets
• Effective at communicating, observing/actively listening,
giving/receiving feedback, prioritizing
Responsibilities
• Expertise required, tasked with hiring, assessing performance,
providing feedback, aligning teams, etc.
Retail Management Requirements (cont.)
Functional Management: authority
over organizational unit within
business, ongoing responsibilities

General Management: focuses on

entire business as a whole,
formating policies, managing daily
operations, planning, managing
cost revenue
Retail Management Requirements (cont. II)
Mintzberg’s Management Roles Defining Agendas
• Interpersonal: • Business application
• figurehead, leader, liaison • know what will be discussed
• Informational: in meetings
• mentor, disseminator, • Keeping minutes
spokesman • verbatim record of what was
• Decisional: discussed and made available
• entrepreneur, disturbance to public
handler, resource allocator, • Relevance to management
negotiator • distributing in timely fashion,
communication, organization
skills
Skills of a Retail Manager
Technical Skills:
• Learned capacity in any given field of work, study, & play
• Management and communication skills
• Programming, website maintenance, typing, writing, giving
presentations
Conceptual Skills:
• Most relevant in upper-level thinking and broad strategic situations
• Ability to formulate ideas, generate values, policies, mission
statements, ethics
• Abilities to communicate critical concepts
Skills of a Retail Manager (cont.)
Interpersonal Skills:
• Leadership, manager vs. leader
• Communication and interpersonal skills lie at center of
considerations
Experiential Learning:
• The process is cyclical with no required starting point or end
• Learning through reflection, focus on learning process for individual
Strategic Planning in Retail
Management
Microenvironment vs. Macroenvironment
Business management: art, science, and craft of formulating,
implementing, and evaluating decisions that will enable an organization
to achieve its long-term objectives

Strategic planning: organization’s process of defining strategy and

making decisions to pursue this strategy

Business environment: refers to factors and forces that affect firm’s

ability to build and maintain successful customer relationships
Microenvironment vs. Macroenvironment
(cont.)
Micro: small forces within company that affect ability to serve its
customers
• Anything in immediate environment (suppliers, customers,
competitors, stakeholders
Macro: larger societal forces that affect the microenvironment
• Outside of retailer’s control and of an economic and industry
viewpoint
Microenvironment vs. Macroenvironment
(cont. II)
Strategic Planning in Retail
Move from general goal to specific steps to reach that goal

Four key elements: strengths and weaknesses & personal values of key
implementers (internal), industry opportunities/threats & broader
societal expectations (external)

Steps in strategic retail planning process

• define business mission, conduct situation audit, identify strategic
opportunities, evaluate strategic alternatives, establish specific
objectives, develop retail mix, evaluate performance
The Retail Mix
Price: what is strategy for marketing?
Promotion: what tools will you use to influence consumers purchase
decision
Place: what are hours of operation, how many employees are needed?
Product: what type do you intend to carry, what is depth that you will
carry in assortment?
Presentation: will there be a free-standing location?
Store Image: what is layout, graphics?
The Retailing Concept
Idea that examines the evolution of the transformation of retail life
cycle, suggesting new retailers will begin with low-cost and low-margin
operations

Barnes & Noble example:

• Stage 1: began with variety of books in one location at low cost
• Stage 2: expanded to various locations, increasing sales, brand
image, value, and profit
• Stage 3: established, opened new stores, greater profits
• Stage 4: Amazon entered market, allowing customers to browse
books online and have them delivered
Quick Review
• Key challenge in retail: inventory
• Adequate inventory levels imperative to retailer success
• Too much leads to unproductive sales and lost margin
due to markdowns
• If it doesn’t support customer demand, lost sales and
negative image of retailer
• Supply chain is effective within retail chain
• Technology has transformed industry in many ways