Retail Management

Lesson 1
Dr. Maria Lutgarda Manuela B. Punay
 Define Retailing

Outline Key Issues to Resolve

Objectives Make Use of the 3 Important Things to

Succeed in Retailing

Identify Retailers’ Role in Supply Chain

Design Creation of Value as Retailer

What is Retailing?
• Retailing is the set of business
activities that adds value to
products and services sold to
consumers for their personal or
family use.
• Often, people think of retailing
only as the sale of products in
stores but retailing also involves
the sale of services such as
overnight lodging in a motel, a
doctor’s exam, a haircut, or a
home-delivered pizza.

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 What is Retailing?
• Not all retailing is done in
stores.
• Examples of nonstore
retailing include ordering a
T-shirt on your mobile phone
app, buying cosmetics from
an Avon salesperson,
ordering hiking boots from
an L.L.Bean catalog, and
streaming a movie through
Amazon Prime.

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What is 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—ranging from
cars to apparel to meals at
restaurants to movie tickets.
• Retailing is the last stage in
the distribution process from
supplier to consumer.

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 Key issues that retailers must resolve:
1. How can we better serve our
customers while earning a fair
profit?
2. How can we stand out in a highly
competitive environment where
consumers have so many choices?
3. How can we better coordinate our
merchandising, pricing, and
service strategy across all our
channels when costs, profit
margins, and target segments differ
across the channels?
4. How can we grow our business
while retaining a core of loyal
customers?

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3 Things that Successful Retailers
Doo Well:
1. the retailer must identify its
target market segment
offerings, preferably in those
segments with growing demand
2. retailers must design and
develop an effective retail
format.
3. the retailer must establish a
sustainable competitive
advantage

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 Note:
• Research indicates that
competitive positions built
on virtues like brand, style,
reliability, or availability
result in better financial
performance than positions
built on lower price.

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 Retailer’s Role in a Supply
Chain
• A retailer is a business that
sells products and/or
services to consumers for
their personal or family use.
• Retailers are a key
component in a supply
chain that links
manufacturers to
consumers.

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 Retailer’s Role in a
Supply Chain

• A supply chain is a set of

firms that make and
deliver goods and
services to consumers.

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 Retailer’s Role in a Supply Chain

• Retailers typically buy products from wholesalers

and/or manufacturers and resell them to consumers.
• Why are retailers needed? Wouldn’t it be easier and
cheaper for consumers to cut out the intermediaries
(i.e., wholesalers and retailers) and buy directly from
manufacturers?
• The answer, generally, is no because retailers add
value and are more efficient at adding this value
than manufacturers or wholesalers.

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 Retailers Create Value

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 The value-creating
activities undertaken by
retailers include:
1. Providing Assortments -
Conventional supermarkets
typically carry about 30,000
different items made by more
than 500 companies. Offering
an assortment enables
customers to choose from a
wide selection of products,
brands, sizes, and prices at
one location.

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 The value-creating
activities undertaken by
retailers include:
2. Breaking Bulk - To reduce
transportation costs,
manufacturers and
wholesalers typically ship
cases of frozen dinners or
cartons of blouses to retailers.
Retailers then offer the
products in smaller quantities
tailored to individual
consumers’ and households’
consumption patterns—an
activity called breaking bulk.
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 The value-creating activities
undertaken by retailers
include:
3. Holding Inventory - A major value-
providing activity performed by
retailers is holding inventory so that
products will be available when
consumers want them. Thus,
consumers can keep a smaller
inventory of products at home
because they know local retailers will
have the products available when
they need more. This activity is
particularly important to consumers
with limited storage space, such as
families living in small apartments.

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 The value-creating activities
undertaken by retailers
include:
4. Providing Services - Retailers
provide services that make it easier
for customers to buy and use
products. For example, retailers offer
credit so that consumers can have a
product now and pay for it later. They
display products so that consumers
can see and test them before buying.
Some retailers employ salespeople
in stores or maintain websites to
answer questions and provide
additional information about the
products they sell.

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 Reasons for Studying
Retailing

1. THE IMPACT OF RETAILING

ON THE ECONOMY -
Retailing is a major part of
U.S. and world commerce.
Retail sales and employment
are vital economic
contributors, and retail
trends often mirror trends in
a nation’s overall economy.

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• Retailing is the largest
private-sector employer in
the United States. According
to the National Retail
Federation, anyone whose
employment results in a
consumer product—from
those who supply raw
materials to manufacturers to
truck drivers who deliver
goods—counts on retail for
their livelihood.

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 Reasons for Studying Retailing
2. RETAIL FUNCTIONS IN
DISTRIBUTION - Retailing is the
last stage in a channel of
distribution—all the businesses
and people involved in the
physical movement and transfer
of ownership of goods and
services from producer to
consumer. Retailers often act as
the contact between
manufacturers, wholesalers, and
the consumer.
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 • Retailers collect an assortment from various
sources, buy in large quantity, and sell in small
amounts. This is the sorting process.

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 • Another job for retailers is communicating both with
customers and with manufacturers and wholesalers.
• Shoppers learn about the availability and
characteristics of goods and services, store hours,
sales, and so on from retailer ads, salespeople, and
displays.
• Manufacturers and wholesalers are informed by their
retailers with regard to sales forecasts, delivery
delays, customer complaints, defective items,
inventory turnover, and more.
• Many goods and services have been modified due to
retailer feedback.
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• For small suppliers, retailers can
provide assistance by transporting,
storing, marking, advertising, and
pre-paying for products.
• Small retailers may need the same
type of help from their suppliers.
• The tasks performed by retailers
affect the percentage of each sales
peso they need to cover costs and
profits.

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• Retailers also complete
transactions with customers.
• This means having convenient
locations, filling orders promptly
and accurately, and processing
credit purchases.
• Some retailers also provide
customer services such as gift
wrapping, delivery, and installation.
• To make themselves even more
appealing, many firms now engage
in omnichannel retailing, whereby
a retailer sells to consumers
through multiple retail formats
(points of contact).

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• Most large retailers operate both
physical stores and Web sites to
make shopping easier and to
accommodate consumer desires.
• Some firms provide information
and sell to customers through
multiple touch points: retail
stores, mail order, Web sites,
tablets, smartphones, and a toll-
free phone number. 

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 Reasons for Studying Retailing
3. THE RELATIONSHIPS AMONG
RETAILERS AND THEIR SUPPLIERS -
Relationships among retailers and
suppliers can be complex. Because
retailers are part of a distribution
channel, manufacturers
and wholesalers must be concerned
about the caliber of displays, customer
service, store hours, and retailers’
reliability as business partners.
Retailers are also major customers of
goods and services for resale, store
fixtures, computers, management
consulting, and insurance.

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• Channel relations tend to be smoothest
with exclusive distribution, whereby
suppliers make agreements with one or a
few retailers that designate the latter as
the only ones in specified geographic
areas to carry certain brands or products.
• This stimulates both parties to work
together to maintain an image, assign
shelf space, allot profits and costs, and
advertise.
• It also usually requires that retailers limit
their brand selection in the specified
product lines; they might have to decline
to handle other suppliers’ brands.
• From the manufacturers’ perspective,
exclusive distribution may limit their
long-run total sales.

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• Channel relations tend to be most
volatile with intensive distribution,
whereby suppliers sell through as
many retailers as possible.
• This often maximizes suppliers’
sales and lets retailers offer many
brands and product versions.
• Competition among retailers selling
the same items is high; retailers may
use tactics not beneficial to
individual suppliers, because they
are more concerned about their own
results.
• Retailers may assign little space to
specific brands, set very high prices
on them, and not advertise them.

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• With selective distribution,
suppliers sell through a moderate
number of retailers.
• This combines aspects of exclusive
and intensive distribution.
• Suppliers have higher sales than in
exclusive distribution, and retailers
carry some competing brands.
• It encourages suppliers to provide
some marketing support and
retailers to give adequate shelf
space. 

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 Activity:
1. Choose a particular retail store
in your area. Analyze the kind of
target market of the said store.
2. Discuss the profile of the retail
store and its target market.
3. What value should the said
store create for its target market
to become more profitable?
4. What are the different services it
provides to its customers?

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