Chapter 1 - Intro to World of Retailing - SV.pdf

GV: Đường Võ Hùng: Retailing Management/C1: Introduction to world of retailing
Source: Mc Graw Hill Education. All Rights Reserved, 2019
CHAPTER 1:
INTRODUCTION TO
THE WORLD OF RETAILING

1.1. WHAT IS RETAILING ?
+ Defined
– A set of business activities:
 add value to both products & services sold to customers
(personnel or family).
+ The retailer’s role in Supply chain
– A business unit  sold items or services;
– A key components  connect manufacturer to customers

+ Retailer create value
– Providing an assortment products/services: offer a lot of
different items for customers choosing (brand, size, colour,
price,…)
– Breaking bulk to customers requests: reduce
manufacturers/wholesalers lot size (reduce transportation
cost/unit)  ship merchandise effectively;

+ Retailer create value
– Holding inventory products/services: keep items available
 customers reduce their stored items (inventory level),
reduce storage space (small refrigerator, small
department,…)
– Providing service to customers: easier for customers to
buy (credit); see & test items before buying; website
services;

+ Costs of Channel activities
– To provide items to customers, the channel members
increase the cost of products/services (their operational
costs)

+ Costs of Channel activities
Manufacturer
$1
$11
Wholesaler
$11
$2
$1
$14
$14
Retailer
$4
$1.95
$19.95
Profit
Manufacturer
price
wholesaler
price
Profit
Profit
Operational
cost
$10
Operational cost
Operational cost

+ Retailers perform wholesaling & production activities
– Performing the production, wholesaling, and retail
business activities.
– Some manufacturers as both retailers & wholesalers

+ Vertical integrating: perform more than one set of
activities in the channel (manufacturing, wholesaling, retailing,…)
+ Backward integrating: retailers perform wholesaling &
manufacturing activities (warehouse, private-label merchandise)
+ Forward integrating: manufacturers perform retailing &
wholesaling activities (own retail stores)

Manufacturers Wholesalers Retailers Customers
Wholesaling
activities
Wholesaling
activities
Retailing
activities

Wholesaling
activities
Wholesaling
activities
Retailing
activities
Wholesalers Retailers Customers
Vertical integrating

Wholesaling
activities
Wholesaling
activities
Retailing
activities
Retailers
Stores
Customers
Backward integrating

Wholesaling
activities
Wholesaling
activities
Retailing
activities
Retailers
Stores
Customers
Forward integrating

+ Differences in Distribution channels around the world
+ Critical differences among retailing & distribution systems
[US, Euro, China, India,.. ]
US: retail industry with greatest retail density, large retail
firms with large stores  economic of scale;
India: small stores, small firms, but large independent
wholesale industry, small retailers
China: small & medium stores, firms, [# India]  the world’s
faster-growing retail market

1.2. ECONOMIC & SOCIAL SIGNIFICANCE
OF RETAILING?
+ Role in developed economies
+ Customer spending: critical role in the economies [US,
other developed countries,.. ]
The retail sector: key role in developed economies [GDP &
labour forces];

+ Role in developing economies: the bottom of the
Pyramid
+ Retailer: focus on opportunities available [low income,
large areas, rural.. ]
Retailing activities: challenging market, more operational
cost [transportation cost]  high costs & prices
OF RETAILING?

+ Role in Society
+ Retailer: considering stakeholders’ needs & objectives
[shareholder: high profit, employees: high wages; society:
sustainable, green  corporate social responsibility - CSR]
1. Recognition of the Retailing firm’s greater purpose: the
retailers’ purpose over its making profits  the actions are
changed
OF RETAILING?

+ Role in Society
2. Consideration of stakeholder & their interdependence:
the retailers serve as many stakeholders as possible  avoid
inflicting severe damage on any others
OF RETAILING?

+ Role in Society
3. The presence of conscious leadership, creating a
corporate culture: the firm leaders are dedicated proposition
of being conscious at all levels of the business
OF RETAILING?

+ Role in Society
4. The understanding that decisions are ethically based:
concern with distinguishing between right vs wrong actions
[business setting, well-established moral principles]
OF RETAILING?

1.3. THE GROWING IMPORTANCE OF
RETAILING & RETAILERS
+ Evolution of the retail industry
+ Retailer: local businesses [traditional]
 Using internet/mobile device/apps: making purchase
In the pass: considered of small, independent, local retailers
competing against other small, independent, local retailers;
Recent decades: dominated by large, national & international
retail firms
Development Information systems: large retail firms 
dominated by small local retailers to large multinational chains

+ Role of information systems:
Retailer: the thousands of transactions daily,  convert the
raw data into information to managers  better decisions
 Using customers data to identify best customers
 Using purchase data to determine how to place items
 etting up the essential promotions;
1.3. THE GROWING IMPORTANCE OF
RETAILING & RETAILERS

1.4. MANAGEMENT AND ENTREPRENEURIAL
OPPORTUNITIES
+ Management opportunities:
Exploit new technology & systems  advantage in high
competitive and challenging environment
+ Entrepreneurial opportunities:
Retailing: opportunities for people/investor to start their own
business

1.5. THE RETAIL MANAGEMENT DECISION
PROCESS
+ Section 1: Understanding the world of retailing
Retailing Environment, how to operate & implement effectives
strategies
Critical environment factors:
(1) macro-environment: technological, social, ethical, legal,
political factors;
(2) micro-environment: competitors, customers;

micro-environment: competitors, customers;
Intra-type competition: the same retail approach, the same
type of retailers [variety of merchandise offering]
Inter-type competition: the similar merchandise offering,
scrambled merchandises [drugstore, department store];
PROCESS

micro-environment: competitors, customers;
customers: the lifestyle trends in society consideration
[behavior]  how to select stores, how to select merchandises
PROCESS

+ Section 2: Developing a retail strategy:
Retail strategy: identifies:
(1) target market or market;
(2) The nature of the merchandise & services;
(3) How to develop unique assets  achieve long-term
advantages;
PROCESS

+ Section 2: Developing a retail strategy:
Strategic decision areas: the key strategies
(1) Target market;
(2) Financial objectives;
 Retailers market strategy must be consistent with firm’s
financial objectives;
 Based on the environment & firm’s strength & weakness
 Retail information & SCM  significant opportunities 
strategic advantage!
PROCESS

+ Section 3: Implementing the retail strategy:
Retailer: develop retail mix  satisfy target market better than
competitors
Manager: decides how much (lot size) & what types of
merchandises to buy; how to promote & when; how to display
& when,…;
PROCESS

THE WORLD OF RETAILING
1. Introduction to the world of retailing
2. Types of retailers
3. Multi-channel & Omni-channel retailing
4. Customer buying behavior
RETAILING STATEGY
5. Retail marketing strategy
6. Financial strategy
7. Retail locations
8. Retail site location
9. Information systems & SCM
10. Customer relationship management
MERCHANDIS MANAGEMENT
11. Managing the merchandise planning
process
12. Buying merchandise
13. Retail pricing
14. Retail communication mix
HUMAN RESOURCES & STORE
MANAGEMENT
15. Human resources & managing the store
16 Store layout, design & visual
merchandise;
17. Customer service
PROCESS

Key Terms
Vertical integrating
Backward integrating
Forward integrating
Retail strategy
Inter – type competition
Extra – type competition
Breaking bulk
Corporate social responsibility – CSR

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