CHAPTER1 CHAPTER2

TypesofRetailers
RetailersUseDifferentRetailMixes merchandise:variety (breadth)/ merchandise: variety (breadth) / assortment (depth) services storedesign,visualmerchandising location pricing InfiniteVariations Infinite Variations Somecombinationofretailmixes satisfytheneedsofsignificant y g segmentsandpersistovertime.

Chapter 2 CHAPTER2

Review

Retailing Management 8e

2-1 Copyright 2012 by The The McGraw-Hill Companies, All rights reserved.McGraw-Hill Companies, Inc. All rights reserved.

RetailerCharacteristics

Chapter 2 CHAPTER2

TypesofMerchandiseRetailers

Chapter 2 CHAPTER2

Variety(breadth) numberofmerchandisecategoriesa retaileroffers.Widevs.narrow retailer offers Wide vs narrow Assortment(depth) numberofdifferentitemsina merchandisecategory.Deepvs.shallow merchandise category Deep vs shallow SKU smallestunitforkeepinginventorycontrol Servicesoffered g p Pricesandthecostofofferingbreathanddepthof merchandiseandservices
Stockingadeepandbroadassortmentiscostlyforretailers. BecausetheretailermusthavebackupstockforeachSKUin additiontoholdingtheinventory

Food Retailers

General Merchandise Retailers

MomandPopStores ConvenienceStores Convenience Stores Supermarkets Supercenters

DepartmentStores SpecialtyStores DiscountStores CategorySpecialists OffPriceRetailers WarehouseClubs ValueRetailers V l R il

StagesintheBuyingProcess

Chapter 4 CHAPTER2

SourcesofCompetitiveAdvantage

Chapter 5 CHAPTER2

MoreSustainable Location Customerloyalty Customerservice Exclusivemerchandise Lowcostsupplychain management Informationsystems Buyingpowerwithvendors Committedemployees
5

LessSustainable Bettercomputers Moreemployees Moremerchandise Greaterassortments Lowerprices Moreadvertising Morepromotions Cleanerstores

6

GrowthStrategies

Chapter 5 CHAPTER2

KeytoSuccessinGlobalRetailing

Chapter 5 CHAPTER2

Globallysustainablecompetitiveadvantage Low cost efficient operations Wal Mart Carrefour Lowcost,efficientoperations WalMart,Carrefour Strongprivatelabelbrands:Starbucks,KFC Fashionreputation TheGap,Zara,H&M g y y, , y Categorydominance BestBuy,IKEA,ToysRUs Adaptability Global culture Globalculture Financialresources
7 8

InternationalMarketEntryStrategies

Chapter 5 CHAPTER2

WhyisStoreLocation ImportantforaRetailer? Important for a Retailer?

Locationistypicallyprime considerationincustomer s consideration in customers storechoice. Location decisions have Locationdecisionshave strategicimportancebecause theycanhelptodevelop they can help to develop sustainablecompetitive advantage. advantage Locationdecisionsarerisky: investorlease? i l ?

Chapter 7 CHAPTER2

DirectInvestment Direct Investment JointVentures Strategic Alliances StrategicAlliances Franchising

F. S h F Schussler/PhotoLink/Getty Images l /Ph t Li k/G tt I

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ShoppingBehaviorofConsumers inRetailer sTargetMarket in Retailers Target Market

Chapter 7 CHAPTER2

EvaluatingSpecificAreasforLocations

Chapter 8 CHAPTER2

Factorsaffectingthelocationchoice consumer shoppingsituations: pp g Convenienceshopping Minimizethecustomers efforttogettheproductorservicebylocatingstore g p y g closetowherecustomersarelocated p pp g g p Comparisonshopping generalideaaboutproduct orservicewantedbutnostrongpreferences. p y pp g y Specialtyshopping customerknowswhattheywant andwillnotacceptsubstitute.

11

12

HowManyStorestoOpeninanArea?
Economies of Scale
One O promotional costs for all stores ti l t f ll t

Chapter 8 CHAPTER2

SupplyChainManagement
Efficientandeffective integrationofsuppliers, integration of suppliers, manufacturers, warehouses,stores,and transportation intermediariesintoa seamlessvaluechain. Merchandiseisproduced anddistributedintheright quantities;totheright locations;andattheright time.

Chapter 10 CHAPTER2

vs.

Cannibalization
open stores as long as t l profits increase

Justifies cost of distribution center

Increases sales per store

Target needs of regional market

Management has control of market

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StrategicImportanceof SupplyChainManagement Supply Chain Management

Chapter 10 CHAPTER2

ImprovedProductAvailability
Benefitsofefficientsupply chainmanagementto chain management to customers:
Reduced stockouts Reducedstockouts merchandisewillbe availablewhenthecustomer available when the customer wantsthem Tailoringassortments the g rightmerchandiseis availableattherightstore

Chapter 10 CHAPTER2

Efficientsupplychainmanagementisimportantto retailersbecauseitprovidesastrategicadvantagethat retailers because it provides a strategic advantage that increases: Product availability Productavailability Inventoryturnoverthatproducesahigherreturnon assets. Inventoryturnovermeasureshoweffectivelyretailers utilizetheirinvestmentininventory.

Thesebenefitstranslateinto greatersales,lowercosts, higherinventoryturnover, higher inventory turnover andlowermarkdownsfor retailers

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InformationandMerchandiseFlows

Chapter 10 CHAPTER2

MerchandiseManagement

Chapter 12 CHAPTER2

1 2

Processbywhicharetaileroffersthecorrectquantityof therightmerchandiseintherightplaceattherighttime the right merchandise in the right place at the right time andmeetsthecompanysfinancialgoals. Sensemarkettrends Analyzesalesdata pp p j Makeappropriateadjustments inpricesandinventorylevels
c) image100/PunchStock

3 4 5 6

7
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CategoryManagement

Chapter 12 CHAPTER2

EvaluatingMerchandiseManagement Performance Performance GMROI

Merchandisemanagershavecontrolover
Themerchandisetheybuy y y Thepriceatwhichthemerchandiseissold Thecostofthemerchandise

Chapter 12 CHAPTER2

Merchandisecategoryisanassortmentofitemsthat customersseeassubstitutesforoneanother. customers see as substitutes for one another Theprocessofmanagingaretailbusinesswiththe objectiveofmaximizingthesalesandprofitsofa objective of maximizing the sales and profits of a category Obj i i Objectiveistomaximizethesalesandprofitsofthe i i h l d fi f h entirecategory,notjustaparticularbrand
Breakfastcerealcategoryvs.KelloggCornFlakes Mensknittedshirtsvs.Poloshirts Diaryproductcategoryvs.Carnationmilkproducts Diary product category vs Carnation milk products
19

Merchandisemanagersdonothavecontrolover
Operatingexpenses Humanresources H Realestate Supplychainmanagement Supply chain management Informationsystems

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MerchandiseManagementProcess
1. Forecastingsales 2. Developinganassortmentplan 2 Developing an assortment plan 3. Determiningtheappropriateinventorylevel

Chapter 12 CHAPTER2

TypesofMerchandiseManagement PlanningProcesses Planning Processes

Chapter 12 CHAPTER2

Twodistincttypesofmerchandisemanagementsystemsformanaging Staple(Basic)MerchandiseCategories Continuousdemandoveranextendedtimeperiod Limitednumberofnewproductintroductions H i Hosiery,basiccasualapparel b i l l Easytoforecastdemand Continuous replenishment Continuousreplenishment FashionMerchandiseCategories Indemandforarelativelyshortperiodoftime Continuousintroductionsofnewproducts,makingexistingproducts obsolete Athletic shoes laptop computers womens apparel Athleticshoes,laptopcomputers,women sapparel
21 22

CategoriesofPrivateBrands

Chapter 13 CHAPTER2

National(Manufacturer)Labels
Advantages
Help retailers build their Helpretailersbuildtheir imageandtrafficflow Reduces selling and Reducessellingand promotionalexpenses y Moredesiredbycustomers Customerspatronize retailerssellingthe brandedmerchandise Pushsomeofthefinancial riskontothevendor

Chapter 13 CHAPTER2

Premium Copycat ExclusiveBrands GenericBrands Generic Brands

Comparableto,evensuperiorto,manufacturers brandquality,withmodestpricesavings q y, p g

Disadvantages
Lower margins Lowermargins Vulnerabletocompetitive pressures pressures Limitretailersflexibility

Imitatethemanufacturersbrandinappearanceand packaging,perceivedaslowerquality,offered atalowerprice

Developedbyanationalbrandvendorandsoldexclusively bytheretailer

Targetapricesensitivesegmentbyofferinganofrills productatadiscountprice product at a discount price

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The McGraw-Hill Companies, Inc./Lars Niki, photographer

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PrivateLabels
Advantages
Unique merchandise not Uniquemerchandisenot availableatcompetitive outlets Exclusivityboostsstore loyalty Difficultforcustomers tocomparepricewith competitors Highermargins

Chapter 13 CHAPTER2

CHAPTER1 CHAPTER2

Disadvantages
Require significant Requiresignificant investmentsindesign,global manufacturingsourcing g g Needtodevelopexpertisein developingandpromoting brand Unabletosellexcess merchandise Typicallylessdesirablefor customers t
25

Your exam

Retailing Management 8e

2 - 26 Copyright 2012 by The The McGraw-Hill Companies, All rights reserved.McGraw-Hill Companies, Inc. All rights reserved.

ExamPaper

CHAPTER2

EXAM

Friendlyreminders
Youcanbringthefollowing:

CHAPTER2

EXAM

Pleasenotereviewslidesarejustasummaryoftopic areastohelpyoufocusonspecificchapters. areas to help you focus on specific chapters YouMUSTgobackandreadupontherelevantchapters andlecturenotestoprepareforthesetopics. and lecture notes to prepare for these topics Exampaper(2parts): CaseStudyonTesco(distributedbeforeexam) yq Select2essayquestionsoutofachoiceof4. Time:3Hours,09:30 12:30,14April(Saturday) Check your schedule for venue as there are three Checkyourscheduleforvenueastherearethree rooms.
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Lecturenotes Lecture notes Academicjournalpapers Handoutsfromclass Handouts from class Retailtextbook nophotocopies(infullorsections) Casestudy(youmustbringthisandhandinattheendofthe Case study (you must bring this and hand in at the end of the examtogetherwithyouranswerscript)

No electronic devices including iPad computers smart NoelectronicdevicesincludingiPad,computers,smart phones,calculators,electronicdictionariesetcallowed (keeptheminsideyourbag). (keep them inside your bag)
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Friendlyreminders

CHAPTER2

EXAM

Pleaserefertopage3ofyourcourseoutlineforexam assessmentcriteria. assessment criteria Althoughthisisopenbook,excessivecopyingis classifiedasplagiarism. classified as plagiarism Useexampleswherepossibletoshowyourabilityto applyknowledge. l k l d
Thinkaboutthevariousbrandswehaveseeninthe presentationse.g.Berluti,RayBan,YellowTail,ChateauD i B l i R B Y ll T il Ch D Yquem,Chanel,Swarovski,Belle,TaoTi,Absolut,IKEA,Coach, Samsonite,Casio,Pilot,Taylor. Samsonite Casio Pilot Taylor
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