Chapter 1

Introduction to
Retailing

Earvin John J. Medina, MBA

Definition
 Top 5 Retail Companies in the
Philippines
– Puregold Price Club Inc.
– SM Retail Inc.
– Robinsons Retail Holdings, Inc.
– Metro Retail Stores Group Inc. (MRSGI) (Gaisano Group)
– Mercury Drug Corporation
The Typical Channel of Distribution
Retailers are responsible for the sorting
process in the distribution channel
 Merchandising

– “Planning involved in marketing right merchandise, at right place at right time in

the right quantities at the right price”
– “Planning, Buying, Assorting, Promoting Placing, Setting and Replenishing the
Goods”
The 2 Objectives of Merchandising

1. Buy and store the inventory or product that is expected or needed by the
people.
2. Achieve the objective of the business i.e., Growth, profit etc., that is possible
when inventory is sold. It means store or buy that product that be sold is the basic
philosophy of merchandising, which benefits both the customer and also the
businessmen. That is customer is pleased as he gets product of his desire and
retailer gets profit as merchandise is sold.
 Types of Merchandise

1. Staple:
– These are necessaries of life that are used everyday. E.g. – Food, Clothing,
Stationery, Cosmetics, toiletries etc.
– They have regular and stable demand. Fluctuation in demand supply and price
is minimum.
 Types of Merchandise

2. Fashion:
– Consumption of these goods is dependent on current fashion. Demand lasts
until its fashion. Depending on nature of goods, fashion may be for seasons or
years. Retailer has to stocks the product until the fashion lasts. If the stock
remains unsold as goods become out of fashion, has he has to adopt marketing
strategy like discount, ‘buy one get one offer’ to clear stock.
 Types of Merchandise

3. Fads:
– Goods that are in demand for a very short period of time. It can be said as
fashion which lasts for a very short period of time. It is risky to store such goods
in bulk quantity as there is no guarantee regarding duration of demand.
 Types of Merchandise

4. Seasonal:
– Goods that are demand in particular seasons. Based on weather features, we
can classify seasons as Monsoon, Summer, Winter accordingly specific products
like, Umbrella, Sweaters, Cool Goggles, soft drinks, Ice creams etc., are
demanded accordingly the product is to be stored. Similarly season of festivals,
marriage have its own demand for sweets, Jewellery, Clothing, etc.
 Merchandise Management

– Merchandise management is the process through which each retailer decides

what items to carry, how much to have on hand to meet the needs of
customers, where they should be displayed in the store to maximize sales, and
how they should be priced to sell the best and maximize profits. It is concerned
with providing the variety of the products to their ultimate customers.
 Functions of Merchandise
Management
(1) Merchandise planning what to buy.
(2) Acquisition – from whom to buy – source of supply
(3) Handling – Placing merchandise in store.
(4) Monitoring the stock levels and inventory and merchandise movement.
Significance of Merchandise
Management
i. Identify segment of customer to be served and category of product to be served to them
ii. Studying the demand, taste fashion that has impact on stock levels.
– Based on that study make adequate planning as to what to buy and how to promote its
sale.
– Ensuring optimum investment in each category of product without allowing for either-
(1) Shortage of stock that will harm sales and reduce, returns.
(2) Excess of stock that may force a firm to undertake acts like discount, bargain sale that
will have impact on profitability.
 Types of Retailers

Beyond the distinctions in the products they provide, there are structural
differences among retailers that influence their strategies and results. One of the
reasons the retail industry is so large and powerful is its diversity. For
example, stores vary in size, in the kinds of services that are provided, in the
assortment of merchandise they carry, and in their ownership and management
structures.
 Department Stores

Department stores are characterized by their very wide product mixes. That is, they
carry many different types of merchandise, which may include hardware, clothing, and
appliances. Each type of merchandise is typically displayed in a different section or
department within the store. The depth of the product mix depends on the store, but
department stores' primary distinction is the ability to provide a wide range of products
within a single store. For example, people shopping at Macy's can buy clothing for a
woman, a man, and children, as well as house wares such as dishes and luggage.
-Shopwise
-Novo
-TH Cagayan
 Chain Stores

– A chain store is defined as a retail outlet of a larger firm that sells the same or
comparable goods as other retail outlets of the same company. All chain stores
of a parent company or brand have a central management system as well as a
standardized store layout, product offerings, and signage.
– Nowadays, chain stores are often found in malls and shopping centers. You
might be familiar with some popular and large chain stores such as GAP, Forever
21, H&M, Sephora, and Macy’s. The name of the world’s largest retail chain
store is Walmart. Some chain stores come in the form of franchise such as 7-
Eleven, Jollibee, and McDonalds.
 Supermarkets

– A supermarket is a self-service shop offering a wide variety of food, beverages

and household products, organized into sections. This kind of store is larger and
has a wider selection than earlier grocery stores, but is smaller and more
limited in the range of merchandise than a hypermarket or big-box market.
– A supermarket is A large retail business unit, selling mainly food and grocery
items on the basis of low margin appeal, wide variety and assortments, self-
service, and heavy emphasis on merchandise appeal. and A Departmental Store
deals with a large number of goods in a large variety.
 Discount Retailers

– Discount retailers are characterized by a focus on price as their main sales

appeal. Merchandise assortments are generally broad and include both hard
and soft goods, but assortments are typically limited to the most popular items,
colors, and sizes. Traditional stores are usually large, self-service operations with
long hours, free parking, and relatively simple fixtures.
Franchises

– The franchise approach brings together national chains and local ownership. An
owner purchases a franchise which gives her the right to use the firm's business
model and brand for a set period of time. Often, the franchise agreement
includes well-defined guidance for the owner, training, and on-going support.
The owner, or franchisee, builds and manages the local business.

– Example: 7-Eleven Philippines, McDonalds, and Jollibee

 Malls and Shopping Centers

– Malls and shopping centers are successful because they provide customers with
a wide assortment of products across many stores. If you want to buy a suit or a
dress, a mall provides many alternatives in one location. Malls are larger centers
that typically have one or more department stores as major tenants. 
Online Retailing

– Online retailing is unquestionably a dominant force in the retail industry, but

today it accounts for only a small percentage of total retail sales. Companies like
Amazon and Geico complete all or most of their sales online. Many other online
sales result from online sales from traditional retailers.
 Nonstore Retailing

– Beyond those mentioned in the categories above, there's a wide range of traditional
and innovative retailing approaches. Although the Avon lady largely disappeared at
the end of the last century, there are still in-home sales from Arbonne facial products,
cabi women's clothing, WineShop at Home, and others. Many of these models are
based on the idea of a woman using her personal network to sell products to her
friends and their friends, often in a party setting.

Vending machines and point-of-sale kiosks have long been a popular retail device.
Today they are becoming more targeted, such as companies selling easily forgotten
items—such as small electronics devices and makeup items—to travelers in airports.
 Multi-Channel Retailing

– Multi-channel retailing refers to the retailing of products through more than one
channel. These channels can be catalogs, physical stores, e-commerce platform or
an online marketplace such as Amazon and eBay. The more channels being
utilized by a company, the higher its conversion will be.
– A good blend of multi-channel retailing comprises of at least one physical location
and one online presence. When the product will be made available through both
physical and online modes, the rate of conversion and profits both will increase.
 How It Functions

– In its true essence, a multi-channel strategy includes purchasing from a store,

purchasing through a website, interactive television, mail orders, telephone
ordering, and comparison shopping websites. The aim of a multi-channel
retailing strategy is to increase the loyalty level of customers as well as
profitability by offering customer convenience choice.
Types of Multi-Channel Retailing

Store Channels
– In this approach, companies sell their products from a physical outlet. The
customers can interact with the product physically. In this multi-channel form,
payments are made through cash transactions or through card/mobile
payments. The risk of purchasing the wrong product is none and the customers
have confidence in the product quality.
Types of Multi-Channel Retailing

Catalogue Channels
– In this approach, catalogs are printed and delivered to potential buyers who can
place their orders anytime.  These sales catalogs include all details related to
offers and its prices. Catalogs can be dispatched through postal mails or emails.
Catalog is important in enhancing business exposure as well as brand building.
 This type of channel communicate your brand information through visual
means and ease your customers’ decision-making process.
Types of Multi-Channel Retailing

Internet Channels (Amazon, eBay)

– Internet sales channels like Amazon and eBay are those online marketplaces
where products are displayed for online audiences so as to enhance their
purchasing decision. As a matter of fact, online availability is very important and
companies should be very competitive in this aspect. 
Types of Multi-Channel Retailing

– Social Media (Facebook, Instagram)

Some businesses have developed their business around social media platforms
through utilizing advertisement channels, for instance, Twitter, Facebook
Instagram. Now online shopping has become very convenient for customers to buy
products without leaving the social media website.
Thank you for listening!