CHAPTER 1: AN

INTRODUCTION
TO RETAILING
Presented by
Dr. Alphonse Aklamanu
GIMPA BUSINESS SCHOOL
Email : aaklamanu@gimpa.edu.gh
Tel: 0262517704
Office : D Block 24
 Required Text
Berman, B. & Evans, J. (2013) Retail Management:
A strategic Approach, 12th ed. Prentice Hall.

Patrick M. Dunne, Robert F. Lusch & James R.

Carver (2014) Retailing International Edition 8th
Edition, Cengage Learning

©2013 Pearson Education 1-2

 Grading Policy
Grades
• Attendance 5
• Assignment/group work/quizzes 15
• Mid semester examination 20%
• Final examination 60%

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 Chapter Objectives
• To define retailing, consider it from different
perspectives, demonstrate its impact, and note
its special characteristics
• To introduce the concept of strategic planning
and apply it
• 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 indicate the focus and format of the text

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 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.

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 Issues in Retailing
• How can we best serve our customers while earning
a fair profit?
• How can we stand out in a highly competitive
environment where consumers have so many
choices?
• High unemployment, low consumer confidence, high
savings rates have reduced consumer spending. At
the same time retail competition has increased
through increased format blurring (sales of cameras
at office supply stores, carpeting and major
appliances at home improvement centers).
• How can we grow our business while retaining a
core of loyal customers?
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 The Philosophy
Retailers can best address
these questions by fully
understanding and applying
the basic principles of
retailing, as well as the
elements in a well-
structured, systematic, and
focused retail strategy.

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 Why Study Retailing?
 The Impact retailing on the economy
 Retail sales and employment are major economic
contributors

 Vast career opportunities and source of jobs

 Retail function in distribution
 The last stage in the distribution channel
 Communicating with customers, manufacturers and
wholesalers
 Providing assistance to small suppliers

 The relationship among retailers and their suppliers

 Relationships among retailers and suppliers can be complex
 Control over the distribution channel, profit allocation, number of
competing retailers, product displays, promotion support, payment
terms, operational flexibility

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Exhibit 1.5 - Retailing’s Two Career
Paths

LO 3
 Examples of Retailers in Ghana: PALACE, Game, and SHOPRITE

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 Examples of Retailers

UK US

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 An Ideal Candidate for a
Retailing Career
• Must be a people person (more
important than technical knowledge).
Technical skills can be taught more
easily than people skills
• Must be flexible
• Should be decisive
• Must have analytical skills
• Must have stamina

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 Top 10 Retailers Worldwide, 2013
Top Name of Country 2013 Retail 2013 2013 2013 # % of retail
250 company of origin revenue Retail Net Return countries revenue
rank growth (US revenue profit on of from
$mil) growth margin assets operation foreign
operations
1 Wal-Mart Stores , U.S. 476,294 1.5% 3.5% 8.2% 28 29.9%
Inc.
2 Costco Wholesale U.S. 105,156 6.1% 2.0% 6.8% 9 28.2%
Corporation
3 Carrefour .S. France 98,688 -2.4% 1.8% 3.1% 33 52.7%

4 Schwarz Germany 98,662* 9.5% n/a n/a 26 58.2

Untermehmens
Treuhand KG
5 Tesco PLC U.K. 98,631 -2.0% 1.5% 1.9% 13 32.3%

6 The Kroger Co. U.S. 98.375 1.7% 1.6% 5.2 1 0.0%

7 Metro Ag Germany 86.393 -2.5% 0.7% 1.4% 32 62.3%

8 Aldi Einkauf GmbH Germany 81.090 4.7% n/a n/a 17 59.2%

& Co. oHG
9 The Home Depot, U.S. 78.812 5.4 6.8% 13.3% 4 10.8%
Inc.
10 Target Corporation U.S. 72.596 0.9% 2.7% 4.4% 2 1.8%

Source: Deloitte (2015) Global Powers of Retailing

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 Region Top 250 Name of company Country of 2013 Retail 2013 Retail
rank rank origin revenue revenue
growth (US growth
$mil)

Top 10 European retailers, 2013

1 3 Carrefour .S.A. France $98,688 -2.4%

2 4 Schwarz Untermehmens Germany $98,662* 9.5%

Treuhand KG
3 5 Tesco PLC U.K. $98,631 -2.0%

4 7 Metro Ag Germany $86.393 -2.5%

5 8 Aldi Einkauf GmbH & Co. Germany $81.090 4.7%

oHG
6 13 Casino Guichard- Perrachon France $63,468 15.1%
S.A.
7 14 Groupe Auchan S.A. France $62.444 2.4%

8 16 Edeka Zentrale AG & co. KG Germany $59,704 3.3

9 21 Rewe Combine Germany $51,109 1.0%

10 23 Centres Distributeurs France $47,671 4.1%

Source: Deloitte (2015) Global Powers of Retailing

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 Region Top Name of company Country 2013 Retail 2013
rank 250 of origin revenue Retail
rank growth (US revenue
$mil) growth
Top 10 North American retailers, 2013

1 1 Wal-Mart Stores , Inc. U.S. $476,294 1.5%

2 2 Costco Wholesale U.S. $105,156 6.1%

Corporation
3 6 The Kroger Co. U.S. $98.375 1.7%

4 9 The Home Depot, Inc. U.S. $78.812 5.4%

5 10 Target Corporation U.S. $72.596 0.9%

6 11 Walgreen Co. U.S. $72,217 0.8%

7 12 CVS Caremark U.S. $65,618 3.1%

Corporation
8 15 Amazon.com Inc. U.S. $60,903 17.7%

9 20 Lowe’s Companies, U.S. $53,417 5.7%

U.S. Inc.
10 25 Best Buy Co. Inc. U.S. $42,410 -14.5%

Source: Deloitte (2015) Global Powers of Retailing

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 Regio Top Name of Country 2013 Retail 2013
n rank 250 company of origin revenue Retail
rank growth (US revenue
$mil) growth
Top 10 Africa/Middle East
retailers, 2013
1 107 Shoprite Holdings S. Africa $9,869 10.2%
Ltd.
2 128 Stainhoff S. Africa $8,217 21.6%
International
Holdings Ltd.
3 148 Pick n Pay Stores S. Africa $6, Africa 6.5%
Ltd.
4 151 BIM Birlesik Turkey $6,242 19.6%
Magazalar A.S.
5 174 The SPAR Group S. Africa $5,175 9.7%
Ltd.
6 183 Emke Group/Lulu UAE $5,000 9.6%
Group
International
7 239 Woolworths S. Africa $3,834 12.7%
Holdings Ltd.

Source: Deloitte (2015) Global Powers of Retailing

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 Figure 1-4: A Typical Channel of
Distribution

Final
Manufacturer Wholesaler Consumer
Retailer

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 Figure 1-5: The Retailer’s Role
in the Sorting Process

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 Multi-Channel Retailing

• A retailer sells to
consumers through multiple
retail formats:
• Web sites

• Physical stores

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 Multi-Channel Retailing
• Cross selling across channels (in-store product
availability info on Web site)
• Consistent pricing in all channels (credibility)
• Can buy, and return product regardless on channel
• Role of each channel
o Store– try on, ease of return, fast availability

(immediacy), compare offerings

o Web– 24/7, product information, product reviews by

customers, personalization (tailored assortment

based on past purchases), most current pricing,
closeout sales
o Catalog-permanency, true color

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 Figure 1-6: Apple

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 Distribution Types
• Exclusive: suppliers make agreements
with one or few retailers, designating such
retailers as the only ones to carry certain
brands or products within a specified
geographic area
• Intensive: suppliers sell through as
many retailers as possible
• Selective: suppliers sell through a
moderate number of retailers

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 Exclusive vs Intensive Distribution
• Exclusive Distribution– Fate of retailer is
tied to manufacturer success, retailer has
no “free-rider” concerns, retailer has less
price competition, manufacturer is better
assured of high levels of customer support
• Intensive Distribution- Manufacturer is
better assured of maximizing sales
(especially for convenience goods),
retailers face strong competition for price
and service, intratype competition

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 Figure 1-7: Comparing
Distribution Types

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 Figure 1-8: Special Characteristics
Affecting Retailers
Small Impulse
Average Purchase
Sale

Retailer’s
Strategy

Popularity
of
Stores

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 Retail Strategy

• An overall plan for guiding a retail

firm
• Influences the firm’s business
activities
• Influences firm’s response to
market forces – competition and
the economy

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 Six Steps in Strategic Planning
1. Define the type of business
(corporate mission)
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 (fine-tune)

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 Figure 1-9: “Expect More. Pay
Less” at Target

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 Aspects of Target’s Strategy
• Growth • Employee
objectives relations
• Appeal to a • Innovation
prime market • Commitment
• Distinctive image to technology
• Focus • Community
involvement
• Customer service
• Monitoring
• Multiple points of performance
contact
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 Figure 1-10: Applying the Retailing Concept

Customer Orientation

Coordinated Effort
Retailing Retail
Concept Strategy
Value-driven

Goal Orientation

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 Customer Service
• Activities undertaken by a retailer
in conjunction with the basic
goods and services it sells. This
includes:
• Store hours

• Parking

• Shopper-friendliness

• Credit acceptance

• Salespeople

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 Figure 1-12:
A Customer Respect Checklist
Do we trust our customers?
Do we stand behind what we sell?
Is keeping commitments to customers
important to our company?
Do we value customer time?
Do we communicate with customers
respectfully?
Do we treat all customers with respect?
Do we thank customers for their business?
Do we respect employees?

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 Relationship Retailing
• Retailers 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
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 Effective Relationship Retailing
• Use a “win-win” approach
• It is easier to keep existing customers happy
than to gain new ones (present value of
current customers income stream– cost of
keeping existing customers content versus
cost of replacing them with new customer
• Develop a customer database (loyalty
programs)
• Ongoing customer contact is improved with
information on people’s attributes and
shopping behaviors
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 Types of Loyalty Programs
• Additional discounts at register
• Not a real loyalty program

• 1 free with every “n” items purchased

• Easily copied, no customer database

• Rebates based on cumulative purchases

• Customer maintains records

• Can develop “heavy half” programs like Hilton

• Targeted offerings and mailing based on purchase

history
• Tesco example “Market research staff know more
about my customers than board chairperson”

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 Relationship Management Among Retailers
and Suppliers

• Disagreements may occur in the following areas (channel conflict):

• control over channel (private label)

• profit allocation (resale price control)

• number of competing retailers (exclusive, selective or intensive

distribution)
• product displays

• promotional support (cooperative advertising funds and

restrictions)
• payment terms (payment on time)

• operating flexibility

• gray market sales

• markdown monies, chargebacks by dominant retailers

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 Approaches to the
Study of Retailing

Institutional
Functional

Strategic

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 Parts of Retail Management:
A Strategic Approach
• Building relationships and strategic
planning
• Retailing institutions
• Consumer behavior and information
gathering
• Elements of retailing strategy
• Integrating, analyzing, and improving
retail strategy

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