Chapter One: An Introduction to Retailing
Chapter Objectives
To define retailing, consider it from different perspectives, demonstrate its impact, and note its special characteristics
To introduce the foundations of “experiential retailing”
To introduce the concept of strategic planning To show why the retailing concept is the
foundation of a successful business, with an emphasis on the total retail experience, customer service, and relationship retailing
To illustrate some of the career opportunities in retailing
Retailing encompasses the business activities involved in selling goods and services to consumers for their personal, family, or household use. It includes every sale to the final consumer.
• Definition and Sales Tax Issues*
• Retailers in Rhode Island*
• Retail Channels
Table 1-1:
The 10 Largest Retailers in the US
Rank Company Main Emphasis
1 Wal-Mart Full-line discount stores, supercenters, membership clubs
2 Home Depot
Home centers, design centers
3 Kroger Supermarkets, convenience stores, jewelry stores
4 Target Full-line discount stores, supercenters
5 Costco Membership clubs
6 Albertson’s Supermarkets, drugstores
7 Walgreens Drugstores
8 Lowe’s Home centers
9 Sears Department stores, specialty stores
10 Safeway Supermarkets
New Retail Paradigms
Relationship Management Among Retailers and Suppliers
Disagreements may occur:-control over channel
-profit allocation
-number of competing retailers
-product displays
-promotional support
-payment terms
-operating flexibility
Manufacturer Retailer
WholesalerFinal
Consumer
Special Characteristics Affecting Retailers (Modified from Fig. 1.8)
Small Average
Sale
Impulse Purchase
Popularityof
Stores
ConsumptiveExperience*
Retailer’sStrategy
“Think” “Feel”
High Involvement“Informative,” e.g., TV, Washer/
Dryer, Life Insurance “Affective,” e.g., Ground Coffee,
Sports Car, Perfume
Low Involvement“Habit-Formation,” e.g., Shampoo,
Paper Towels, Insecticide“Self-Satisfaction,” e.g., Pizza,
Imported Beer, Cigarette
The purchase of products and services are essentially extensions of individual’s values, and the benefits of those purchases may be functional, meeting utilitarian needs, symbolic, meeting psychological needs, and experiential, meeting stimulation needs.
Consumption may be viewed, then, as a process that entails some combination of thinking and feeling with the goal of providing the individual with products and services that meet functional, symbolic, and experiential needs consistent with one’s values, etc.
For retailers, this typically reduces to providing utilitarian and hedonic offerings, i.e., to not only offer products and services that provide benefits, but the shopping experience itself as contributing to satisfaction. Consumptive Experience is both product and shopping experience.
Foote, Cone, and Belding (FCB) Grid
[Vaugh, 1980; Ratchford, 1987; Kim et al 2007]
Derived loosely from Maslow
From Hebb, 1955
Build-a-Bear Experience Build-a-Bear Steps
Liberty of London
Focus on Consumptive Experience, i.e., Experiential Retailing
Relationship Retailing
Seek to establish and maintain long-term bonds with customers, rather than act as if each sales transaction is a completely new encounter
Concentrate on the total retail experience
Monitor satisfaction
Stay in touch with customers
Retail Strategy
• An overall plan for guiding a retail firm• Influences the firm’s business activities• Influences the firm’s response to market forces
Six Steps in Strategic Planning
1. Define the type of business
2. Set long-run and short-run objectives
3. Determine the customer market
4. Devise an overall, long-run plan
5. Implement an integrated strategy
6. Evaluate and correct
Applying the Retailing Concept
Customer Orientation
Coordinated Effort
Value Driven
Goal Orientation
RetailingConcept
RetailStrategy
Figure 1-10
Build-a-Bear Strategy
Careers in RetailingSee Appendix A and Retail Careers
Screenshot shown in Figure 1-2
NRF/Careers Website
Chapter 1 Discussion Questions: 5, 9