Chapter 1

Introduction to the World

of Retailing

McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 5/e Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

What is Retailing?

• Retailing – a set of business activities that

adds value to the products and services sold to
consumers for their personal or family use.

• A retailer is a business that sells products

and/or services to consumers for personal or
family use.

• The retailer is the final business in a distribution

channel that links manufacturers with consumers.

Value Added by Retailers

• Providing Assortment - Enables customer to choose from a wide

selection of brands, designs, sizes, colors, and prices in one location.

• Breaking Bulk - Buy in large quantities then offer to consumer in

smaller quantities.

• Holding Inventory - Keep inventory so that products will be

available when consumers want them.

• Offering Services - Provide services that make it easier to buy and

use products.
TM 1-3
Distribution Channel

Vertical Integration

Manufacturing Wholesaler Consumer

Retailer

Examples: Wal-Mart, Kmart, Office Depot, The Gap, Victoria’s Secret

Decision Variables for Retailers

Customer Service

Store Design Merchandise

and Display Assortment
Retail
Strategy
Pricing Location

Communication
Mix

Economic Significance of Retailing

• Over $2.5 trillion in annual U.S. sales

-greater than medical care, housing, recreation combine

• Employs 17% of population

-about the same as manufacturing and growing

• Management training opportunities

• Entrepreneurial opportunities
 Retailing is a High Tech Industry

- Selling Merchandise over the Internet

- Using Internet to manage supply chains

- Analyze POS data to tailor assortments to stores

- Computer systems for merchandise planning

Globalization of Retailing

Source Merchandise From Around the World

Wal-Mart Operates in U.S., China, Mexico, UK, Germany

Carrefour has Stores in 25 Countries

Retail Management Decision Process

 The Retailing Concept

A management orientation that focuses a

retailer on two key points:

• Determining its target market’s needs

• Satisfying those needs more effectively and

efficiently than its competitors

Developing a Retail Strategy

How the firm plans to focus its resources and

accomplish its objectives!

• Identifies its primary Target Market.

• Determines the nature of the merchandise and services the

retailer will offer to satisfy needs of the target market.

• Determines how it will build a long-term competitive advantage

over competitors

Implementing the Retail Strategy

Management develops a Retail Mix that

satisfies the needs of its Target Market better
than its competitors.
 Elements of the Retail Mix

Customer Service Location

Store Design Merchandise

Retail Strategy Assortment
And Display

Communication Pricing
Mix

Why You Should Consider Retailing

• Entry level management positions

-Department manager or assistant buyer/planner
-Manage and have P&L responsibility on your first job
• Starting pay average with great benefits
- Some retailers pay graduate school
• No two days are alike
• Buying for financially oriented people
• Management for people people

Types of Jobs in Retailing

Most entry level jobs are in

store management or buying, but…

retailers also have staff specialists:

--accounting and finance
--real estate
--human resource management
--supply chain management
--advertising
--public affairs