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Learning Objectives
Learning Objective 1-1 Identify retailing activities.
Learning Objective 1-2 Realize the importance of retailing
in the U.S. and world economies.
Learning Objective 1-3 Analyze the changing retail
industry.
Learning Objective 1-4 Recognize the opportunities for
you in retailing.
Learning Objective 1-5 Understand the strategic retail
management decision process.
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What is Retailing? 1 of 7
Learning Objective 1-1 Identify retailing activities.
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EXHIBIT 1–1 Example of a Supply Chain
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What is Retailing? 2 of 7
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EXHIBIT 1–2 Costs of Value-Added Activities in
the Distribution Channel for a T-Shirt
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What is Retailing? 5 of 7
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What is Retailing? 6 of 7
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What is Retailing? 7 of 7
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EXHIBIT 1–3 Comparison of Retailing and
Distribution across the World
United Northern
States Europe India China
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Economic and Social Significance of
Retailing 2 of 5
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Economic and Social Significance of
Retailing 3 of 5
Role in Society
• Stakeholders
• prospective customers
• supply chain partners
• employees
• shareholders
• government agencies
• members of the firm’s communities
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Economic and Social Significance of
Retailing 4 of 5
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Economic and Social Significance of
Retailing 5 of 5
Examples of social
responsibility
• TOMS provides free shoes
to residents of poor nations.
• Walmart issues standards
for farms that supply it with
livestock products.
• Whole Foods’ motto, “Whole
Foods, Whole People,
Whole Planet,” emphasizes
its goals of supporting the
health and well-being of
people and the planet.
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EXHIBIT 1–4 The 20 Largest Retailers in the World 2 of 2
Rank Name Headquarters Number of Stores Retail revenue Primary format
countries in U.S. ($ millions)
11 Target U.S. 1 Yes $72,618 Discount Department
Corporation Store
12 Amazon.com Inc. U.S. 14 Yes $70,080 Nonstore
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The Growing Importance of Retailing and
Retailers 3 of 3
Management Opportunities
• People with a wide range of skills and interests
needed because retailers’ functions include
• Finance
• Purchase
• Accounting
• Management information system (MIS)
• Supply management including warehouse and distribution
management
• Design and new product development
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Management and Entrepreneurial
Opportunities 2 of 4
Management Opportunities continued
• Financially rewarding
• Management trainees make $35,000-$65,000
• Senior buyers and store managers make $120,000 -
$160,000
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Management and Entrepreneurial
Opportunities 3 of 4
Entrepreneurial Opportunities
• Retailing entrepreneurs
• Sam Walton
• Started at JCPenney, became
America’s wealthiest person
• Do Won and Jin Sook Chang
(Forever 21)
• Emigrated from South Korea
and became American citizens
• Operate more than 600 stores
worldwide
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EXHIBIT 1–5 Retail Management Decision
Process
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EXHIBIT 1–6 The Retail Mix
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The Retail Management Decision Process 2 of 5
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The Retail Management Decision Process 4 of 5
Developing a Retail Strategy—Section II continued
• Strategic decision areas
• Defining the target market
• Analyzing the environment/firm’s strengths and weaknesses
• Financial objectives
• Return on investment, inventory turnover, and profit margin
• Development of critical assets
• Location, human resource, information and supply chain
systems, supply chain organization, and customer loyalty
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The Retail Management Decision Process 5 of 5
Implementing the Retail Strategy—Sections III
and IV
• Retail mix
• Types of merchandise and services, merchandise pricing,
advertising and promotional programs, store design,
merchandise display, assistance to customers provided by
salespeople, and convenience of the store’s location
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Key Terms 1 of 5
backward integration – a form of vertical integration in
which a retailer owns some or all of its suppliers
base of the pyramid – the 25% of the world’s population at
the lowest end of the global income distribution, with
combined spending power of approximately US$5 trillion.
Also known as the bottom of the pyramid.
breaking bulk - a function performed by retailers or
wholesalers in which they receive large quantities of
merchandise and sell them in smaller quantities.
conscious marketing – entails a sense of purpose for the
firm higher than simply making a profit by selling products
and services
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Key Terms 2 of 5
corporate social responsibility (CSR) – voluntary actions
taken by a company to address the ethical, social, and
environmental impacts of its business operations and the
concerns of its stakeholders.
ethics – a system or code of conduct based on universal
moral duties and obligations that indicate how one should
behave.
forward integration – a form of vertical integration in
which a manufacturer owns wholesalers or retailers.
holding inventory – a major value-providing activity
performed by retailers whereby products will be available
when consumers want them.
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Key Terms 3 of 5
intertype competition - competition between retailers that
sell similar merchandise using different formats, such as
discount and department stores.
intratype competition - competition between the same
type of retailers (e.g., Kroger versus Safeway).
retailer – a business that sells products and services to
consumers for their personal of family use.
retailing – a set of business activities that adds value to
the products or services sold to consumers for their
personal or family use.
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Key Terms 4 of 5
retail mix – The combination of factors used by a retailer to
satisfy customers needs and influence their purchase
decisions.
retail strategy – a statement that indicates 1) the target
market toward which a retailer plans to commit its
resources, 2) the nature of the retail offering that the retailer
plans to use to satisfy the needs of the target market, and
3) the bases on which the retailer will attempt to build a
sustainable competitive advantage over competitors.
scrambled merchandising – an offering of merchandise
not typically associated with the store type, such as clothing
in a drugstore.
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Key Terms 5 of 5
stakeholders – the broad set of people who might be
affected by a firm’s actions, from current and prospective
customers, top supply chain partners, to employees, to
shareholders, to government agencies, to members of the
communities in which the firm operates, to a general view
of society.
supply chain – a set of firms that make and deliver a given
set of goods and services to the ultimate consumers.
vertical integration – an example of diversification by
retailers involving investments by retailers in wholesaling or
manufacturing merchandise.
wholesaler – firms that buy products from manufacturers
and resell them to retailers.
©McGraw-Hill Education.
Appendix of Image Long
Descriptions
Appendix 1 EXHIBIT 1–2 Costs of Value-Added
Activities in the Distribution Channel for a T-Shirt
In this example, it costs the T-shirt manufacturer $10.00
to make and market the T-shirt. The manufacturer sells
the T-shirt to the wholesaler for $11.00 and makes $1.00
profit. The wholesaler incurs $2.00 in costs to handle and
store the T-shirt and transport it to the retailers. The
wholesaler sells the T-shirt to the retailers for $14.00,
making a $1.00 profit. The retailer incurs costs of $4.00
and sells the shirt to a customer for $19.95, making a
profit of $1.95.
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Appendix 2 EXHIBIT 1–5 Retail Management Decision Process
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