Chapter 6 Distribution and Retailing Group 11

Distribution and Retailing
Group 11
Member
Malabanan Marlou A.
Maluping Jhonas P.
Pedernal Aejimver C.
Objective of this topic
• Summarize the history of retailing
• Identify the various types of retail stores
• Identify the various types of nonstories retailers
• Identify the factors to be considered in retail store design
• Identify the factors important to the success of retailers
• Explain the role of inventory in retail operations
• Describe the role of wholesalers and distribution centers
Introduction
• Supply Chain
 Is concerned with the flow of goods and services from the point of
origination to the point of use, usually from manufacturers to
consumers.
• Role of e-commerce
 is to provide consumers with a wider selection of items than could
be displayed at a retail store and with sufficient product
description to enable consumers to make a decision. While the
lead times to obtain the goods are longer, the price may be lower
and the selections wider than found in a retail store.
Retail Function
• Traditional Retail store
 is the contact point for most consumers. It has a physical presence in a
specific location and is referred to as a brick and mortar retailer.
History of Retailed
The composition of retail store has changed over the year;
• Door to Door Sale People
The composition of retail store has changed over the
year;
• General store
The composition of retail store has changed over
the year;
• Department Store
the year;
• Multi- Story Full Line Department Store
the year;
• Shopping Malls
the year;
• Specialty Stores
Characteristic of the industry
Characteristic of the industry
Customer and market
• Customers have unique buying preferences. For a long time, businesses
treated this collection of individuals as a homogenous group, or a mass
market.
• Businesses now classify customers by target markets and view them in
terms of age, geographic location, income level, occupation, areas of interest,
and a host of other ways in order to decide how best to provide them with
their desired goods and services.
• businesses segment markets in more detail, providing customized products
and services to the individual consumer will become more commonplace. This
practice fits well with the idea of customer relationship management (CRM)
in which businesses think of the individual consumer as a lifelong customer,
instead of considering them only as an individual transaction/sale.
Output
• The outputs for retailers are both products and services.
• Product segments fit the intended market, that is, grocery
stores sell food products and department stores sell
clothing items.
• Services are becoming more important and are
increasingly included as part of the product/service
package.
• In terms of outputs, retailers must offer an increasing
variety of products and services.
Input
• Inputs can either be things/materials or people. In most
businesses, both kinds of input are present.
• Viewing people as inputs has led retailers to recognize
they must be more aware of and responsive to the
differences in consumers.
Transformation Process
• The transformation process is the step during which the
inputs are converted to outputs.
Kotler also stresses that businesses must first perform the
strategic four Ps
• Probing: Analyzing the marketplace, commonly called
market research.
• Partitioning: Segmentation of markets into clusters
• Prioritizing: Ranking the segments on which to
concentrate
• Positioning: Pinpointing the competitive options in each
segment to target
The activates at most retailer combine marketing and
operation management task.
• Selling –is a marketing function
• Inventorying Management- is an operations
management function.
• The Checkout Process at a Point of Sale ( POS)-is a
combination of both selling and inventory management so
the employee is performing a combination function.
Designing the Retail Process
Strategic Orientation
• Plans
 Represents an orientation toward the minimal allocation of resources to the transformation process,
while a service orientation requires a more generous allocation of resources to the transformation
process.
• Price Orientation
 Involves little direct customer contact, perhaps only a hello from a salesperson, who is busy
stocking or rearranging merchandise as the customer enters the door.
• Service Orientation
 May involve a warmer and more committed offer of assistance by a salesperson that drops
whatever task they were doing to be completely available to the incoming customer for as long as
the customer is in the store.
• Price-Oriented Business
 the product assortment will focus on fast-moving items.
• Service-Oriented Businesses
 employees will be more knowledgeable, because of better training and a company culture that
emphasizes excellent service, than in price-oriented businesses.
Critical Design Point: Key to Success
These design consideration include the following :
• Customer interface-One of the most important design considerations is
the customer interface, or the point at which the customer first comes in
contact with the business.
• Type and size of facility-If the retail business operates without the need
for the customer to visit a store, such as through Internet or catalog
selling, the design of the store is immaterial.
• Location-Retail stores are located near their market.
• Layout-Some retail stores, such as grocery stores or building supply
stores, have straight aisles with large signs at the end of each aisle to
identify the type of merchandise in the aisle.
• Inventory management-The business of a retailer is to sell merchandise.
These design consideration include the following :
• Supply chain-The retailer is at the end of the supply chain and
is dependent on a number of businesses and suppliers to have
the correct merchandise available when needed for the
customer.
• Use of technology-Technology is sweeping across retail
organizations with a swiftness that is almost overwhelming.
• bricks and click mode-Large chains have automated DCs.
Design departments use computer-aided design (CAD)
systems to design new products, from furniture to clothing.
• Technology is here to stay-The dilemma for retailers is what
technology to use.
Additional Factors to Consider in Retail Store Design
• Multidiscipline Project-All the major functions in a business have a role to

play in designing the retail store. The marketing staff wants the store to be
attractive to the customer and the merchandise to be readily available.
• Continuing Need to Readjust or Redesign-No matter how well the store is
designed, it will need to be updated and modified over time. Just as there are
product life cycles, there are store and location life cycles.
• E-Commerce Considerations (Direct vs. Indirect Selling)-E-commerce is
introducing new decision areas for the traditional brick-and-mortar retailers.
• Strategic or Long-Term Considerations-Investment in a physical store is a
major, and long-term, investment for a business. Management should consider
all of the factors described earlier in order to make this decision pay off for the
company. Failed locations, even if the retail chain itself is successful in other
locations, still represent unnecessary negative cash flows to the company.
Managing a Retail Business
Generally, the steps involved in operating a
successful retail business include the following:
• Determine the expected demand.
• Plan the capacity needed to meet the demand.
• Implement the plan by applying the resources.
• Measure the results.
• Preplan for the next period.
Implement the Operating Plan
The key steps in implementing the operating plan include the
following:
• Apply resources where needed.
• Assure quality of the product and service.
• Measure customer response.
• Measure store performance.
• Assure employee quality and productivity.
• Utilize resources efficiently.
• Continue to develop improved performance measures.
• Replan for the next period.
• Continue to refine management capability
Retail and Inventory Management
• Value-Products must have value to entice the customer to buy.
• Availability-Retail store sales depend on availability, or actually having
the product in stock when the customer arrives.
• Variety-Customers may need variety, in the form of different sizes of
clothing.
• Presentation-Even when the products are available in a wide variety of
choices, they must be displayed in a way that makes it convenient for
customers to find and choose them.
• Service-the product sells itself with its appearance and the customer’s
knowledge. However, in many cases, the sale may need an assist from
an experienced customer service representative.
• Response Time-Despite the best efforts of retailers, their actual sales
often differ from their forecasts, especially in the product mix sold.
Role of Wholesalers and Distribution Centers.
• Ordering
• Receiving
• Stocking
• Picking
• Loading the Trucks
• Transporting to Stores
• Unloading and Display at Stores
Summary
• Retailing is one of the oldest businesses. Far from being staid and
slow, it is one of the most rapidly changing areas of business. It is
also becoming the most powerful member of many supply chains.
Up until the latter quarter of the twentieth century, manufacturers
were generally dominant and used distributors and retailers to
move their products to the consumer.
• The distribution function is the link between manufacturers and
retailers. It has the primary responsibility to move and store
merchandise to balance supply and demand. It also performs a
number of functions to transform the output from the manufacturer
to a form usable by the retailer.

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Distribution and Retailing

• Multidiscipline Project-All the major functions in a business have a role to

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