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
