Retail Mgmt Midterm

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Author:
hayleyjo2
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141906
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Retail Mgmt Midterm
Updated:
2012-03-17 12:21:52
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retail management
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Description:
FIT's Retail Management Course (FM 262)
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  1. Retailing
    A set of business activities that adds value to the products and services sold to consumers for their personal or family use
  2. Firms that sell to businesses as well as consumers (Office Depot, Costco, etc), are both:
    Retailers and wholesalers
  3. Distribution channel
    Manufacturing -> Wholesaler -> Retailer -> Consumer
  4. Supply chain
    A set of firms that make and deliver a given set of goods and services to the ultimate consumer
  5. Vertical integration
    Firm performs more than one set of activities in the channel
  6. Backward integration
    Retailer performs some distribution and manufacturing activities (ex: private label)
  7. Forward integration
    Manufacturers undertake retailing activities (ex: Ralph Lauren operates its own stores)
  8. Why don't we eliminate the middle men and buy directly from manufacturers?
    Retailers (1) provide assortment, (2) break bulk, (3) hold inventory so you can buy it when you want it, and (4) offer services such as credit and layaway
  9. Why is retailing socially & economicly significant?
    High sales, employment & job growth in US, social responsibility, global player
  10. Corporate social responsibility
    The voluntary actions taken by a company to address the ethical, social, and environmental impacts of its business operations
  11. Intratype competition
    Among same type of retailers (ex: Dillard's vs. JC Penney)
  12. Intertype competition
    Between nearby stores that may be different types of retailers that carry the same merchandise (ex: Dillards vs. Wal-Mart)
  13. A retail strategy should identify:
    (1) the target market, (2) the product & service mix, (3) a long-term comparative advantage
  14. Ethics
    A system or code of conduct based on universal moral duties and obligations that indicate how one should behave
  15. Wholesaler
    A merchant establishment primarily engaged in buying, storing, and physically handling goods in large quantities, and reselling the goods (usually in smaller quantities) to retailers or industrial or business users
  16. Retail mix
    (1) Variety or assortment of merchandise, (2) services, (3) visual merchandising, (4) location, (5) pricing
  17. Variety
    Breadth: wide vs. shallow. The number of merchandise categories (ex: Macys)
  18. Assortment
    Depth: deep vs. shallow. The number of items in a category (SKUs) - (ex: Victoria's Secret)
  19. What is the effect of many SKUs on inventory investment cost?
    Many SKUs = more backup stock required = HIGHER investment cost
  20. How is ALDI (Germany's Wal-Mart) able to provide quality merchandise at low prices?
    By reducing its assortment in order to control store operating expenses; example of an extreme value food retailer or limited assortment supermarket
  21. What was an effect of the economic downturn on discount retailers?
    Extreme value and off-price retailers started doing exceedingly well; permanently changed consumer buying patterns
  22. Supercenters
    • -Fastest growing retail category
    • -Large stores combine supermarket with full-line discount store
    • -"One-stop shopping"
  23. Warehouse clubs keep costs low by:
    • -Offer a limited and irregular assortment of food and general merchandise
    • -Low-locations, inexpensive store design, little customer service
    • -Carrying a limited assortment of fast-selling items = low inventory holding costs
  24. Department stores
    • -Carry broad variety, generally shallow assortment
    • -Tiers: 1st (Saks), 2nd (Macy's), 3rd (JC Penney)
  25. Specialty stores
    • -Carry narrow variety, deep assortment
    • -Often located in malls (which have the highest rent as compared to street-front stores)
    • -Problems: decline in mall shopping and manufacturers opening their own stores
  26. Full-line discount stores
    Wal-Mart (focus on low price and good value) and Target (more fashionable apparel) dominate
  27. Category killers
    • -Deep and narrow assortments
    • -Low price & service
    • -Incredible growth
  28. Off-price retailers
    • -Benefitted from recession
    • -Inconsistent assortment of brand name merchandise at low prices
  29. Service retailres
    • (1) Intangibility
    • (2) Simultaneous production & delivery
    • (3) Perishability (no inventory)
    • (4) Inconsistency of the offering
    • *More about an experience than a product
  30. Types of retail ownership
    • -Independent, single-store establishments
    • -Corporate retail chains
    • -Franchises
  31. Franchising
    • -30 to 40% of US retail sales
    • -Franchisee pays fixed fee plus percent of sales
    • -Franchisee implements program, decides location
    • -Can be corporate- or privately-owned
  32. SKU
    Stock-keeping unit; the smallest unit available for keeping inventory control (usually includes a garment's size, color, and style)
  33. Benefits of stores
    • -Touching & feeling merchandise
    • -Personal service
    • -Risk reduction
    • -Immediate gratification
    • -Entertainment, social interaction
    • -Browsing
    • -Cash payment
  34. Benefits of catalogs
    • -Safety
    • -Convenience
    • -Ease of use
  35. Benefits of the Internet
    • -Safety
    • -Convenience
    • -Broad & deep assortments
    • -Extensive & timely info
    • -Personalization
  36. E-channel
    Retailers can reach out to new markets and obtain insights into customers' shopping behaviors
  37. Benefits of multichannel retailing
    • (1) Overcoming the limitations of an existing format
    • (2) Low-cost, consistent execution
    • (3) Gaining insight into consumer shopping behavior
    • (4) Expanding market presence
    • (5) Building a strategic advantage
  38. Why incorporate multiple channels?
    • -Retailers can attract more customers and satisfy existing ones better
    • -Growth of sales in stores is declining
    • -Sales through e-channel are growing
  39. disintermediation
    When a manufacturer sells directly to consumers, thus competing directly with its retailers
  40. channel migration
    When consumers' collect information about products on one company's channel and then buys the product from another competitor
  41. Why is more attention being paid to long-term strategic planning?
    • -New competitors
    • -New formats
    • -New technologies
    • -Shifts in customer needs
  42. Retail format
    The nature of the retailer's operations (its retail mix)
  43. Sustainable competitive advantage
    An advantage over the competition
  44. Criteria for selecting a target market
    • (1) Attractiveness (large, growing, little competition)
    • (2) Consistent with your competitive advantages
  45. Omnichannel retailing
    Smooth transition; transparency between channels; integration
  46. Developing a sustainable competitive advantage
    If a strategy can be easily duplicated, it is NOT a competitive advantage (ex: dropping price is NOT, while securing the best store locaition, carrying exclusive merchandise, and providing better customer service ARE)
  47. Customer loyalty
    -Customer is reluctant to patronize competitive retailers
  48. How do retailers build customer loyalty?
    • (1) Developing a strong brand for the store
    • (2) Developing clear & precise positioning strategies
    • (3) Creating an emotional attachment with customers through loyalty programs
  49. Retail branding
    Builds customer loyalty by creating an emotional tie with customers that represents a predictable level of quality
  50. Ways to build customer loyalty
    • -Brand image
    • -Positioning
    • -Unique merchandise
    • -Customer service
    • -Customer relationship management programs
  51. Human resources management
    • -Strategies for recruiting & retaining talented employees
    • -Employee branding
    • -Develop positive organizational culture
  52. By decreasing costs in distribution, more money is available to invest in...
    • -Better services
    • -Increase in breadth & depth
    • -Decrease in prices
    • *EFFICIENCY is key in distribution
  53. Growth strategies for retailers
    • (1) Market penetration
    • (2) Market expansion
    • (3) Retail format development
    • (4) Diversification (related vs. unrelated)
  54. Market penetration
    • -Attract customers from target market
    • -Get current customer to visit store more often or buy on each visit
  55. Cross selling
    Sales associate in one department sell complimentary merchandise from other departments
  56. Market expansion
    -Involves using the existing retail format in new market segments (ex: A&F opening Hollister)
  57. Retail format development
    Develops a new retail format with a different retail mix for the same target market (ex: Tesco opening Tesco Express)
  58. Diversification
    • -Introduces a new retail format toward a market segment that is not curently served by the retailer
    • -Related or unrelated diversification
    • -Vertical integration into wholesaling or manufacturing
  59. Keys to success in global retailing
    • -Globally sustainable competitive advantage (strong PL brands, reputation, low cost & efficiency)
    • -Adaptability
    • -Global culture
    • -Financial resources
  60. Factors affecting the retail market
    • (1) Market size
    • (2) Growth
    • (3) Seasonality
    • (4) Business cycles
  61. How often do retailers review their strategic plan?
    CONSTANTLY.
  62. brand image
    Set of assocations consumers have about a brand that are usually organized around some meaningful themes
  63. Positioning
    The design & implementation of a retail mix to create in the customer's mind an image of the retailer relative to its competitors

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