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hayleyjo2
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Would you be better off starting your career in retailing or manufacturing (if you eventually want to do both?)
Retailing, since it helps you to better understand what the consumers want; gain better knowledge about manufacturing
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Equation for sales
- Sales = # of transactions x average salescheck
- Sales have gone down because of combined decrease in # of transactions and avg salescheck
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History of supply/demand
- 1960-80: demand outweighed supply, easy to do business, industry flourishing
- Early 1980s: supply exceeded demand
- 1980s-Today: period of adjustment, stores closing
- Today: conditions are still difficult; not enough demand
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What has happened to the number of transactions?
Has significantly decreased due to less of and reallocating use of discretionary income
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What has happened to the average salescheck?
- Has gone down
- Prices going down due to presence of cheap retailers
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Politics and Ethics
- Aristotle
- The leader of the family, the tribe, and the organization are the most fulfilling occupations
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Organization
A group of people with a shared purpose
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Ford Study
- Opened two identical plans in England & Germany
- Germany did better because the culture there was better
- Problems in London: union workers & mgmt hated each other, worse attendance, bad morale, elitist mgmt, lazy workers
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Culture
- Determined by the team leader
- Will determine the success or failure of your team
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Horizontal team
- All senior VPs
- Make the large decisions that will affect the overall company
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Vertical specialization (teams)
- Merchandising
- Marketing
- Stores
- HR
- Operations
- Financial
- Real estate
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Merchandising team
- Overseen by CEO
- Includes VPs of merch (GMMs)
- DMMs
- Buyers
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Marketing team
- Overseen by CEO
- VP of Marketing
- Advertising
- Visual team
- Special events
- PR
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Stores team
- Overseen by CEO
- VP of stores
- Regional manager
- District manager
- Store manager
- Sales associates
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Human Resources team
- Overseen by COO
- Recruiting
- Training
- Buyer of benefits
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Merchandising (5 Rights)
- Planning using 5 R's of merchandising mix:
- (1) Right product
- (2) Right quantity
- (3) Right price
- (4) Right place
- (5) Right time
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What is the right product?
- Right silhouette
- Right colors
- Right fabric
- Right details
- Pattern/print
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What is the right price?
Depends on target customer
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Who determines the right place?
The planner
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What is the right time?
- Depends on where youf all on the fashion lifecycle
- People with money tend to buy earlier (upper-level stores)
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3 Plans looking towards the future
- (1) Investment plan
- (2) Classification plan
- (3) Assortment plan
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Investment plan
- Plan stock, budget (OTB)
- Predict sales
- This plan is bottom-up (developed by buying team, approved by DMM -> GMM -> CEO
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How do we predict sales?
- Look at past sales
- The economy -- consumer debt and discretionary spending power
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Qualities of an effective organization
- Dynamic
- Flexible
- Team
- No boundaries
- Bottom up / top down
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J.C. Penney's new merchandising strategy to use everyday low pricing - was it a good idea?
Probably not, based on history with Sears and Stern's Super Sale (made similar move = bad for company)
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What is important to take into consideration when it comes to pricing strategies?
The psychology of the consumer
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Classification plan
- Developed by buying team
- Team decides what they want to focus on
- Ex: sweater buyer decides how much to invest in cardigans vs. v-necks
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Assortment plan
- (1) Incoming fashion - NEW trends
- (2) Dominant fashion - KEY items (*highest % of $ here)
- (3) Classics
- Amount of merchandise alloted to each category depends on your store and its location in the fashion cycle
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Marketing
- The broadest area
- The distribution (movement, sales) of goods & services from the time they are created until the timet hey reach the ultimate consumer
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Advertising team
- Part of marketing
- Headed by ad director
- Media expert > media team
- Production team > graphics, copy writing, layout
- Psychology (in-house or outsourced)
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Industrial psychologists
Try to figure out how to get the consumer to spend money
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Unresolved Infantile Repression Theory
Uses subliminal messages to bring forth your repressed memories, thoughts, hardships...
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PR team
- Want to promote favorable brand image
- Issue press releases
- Must turn complaints into positive stories
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Special events team
- Creates exposure
- Ex: Macy's Thanksgiving Day Parade
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Visual team
Responsible for store design
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Who invented samples and gift with purchase?
Estée Lauder
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Xi Jinping
Soon to be China's president
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Operations team
- Overseen by COO
- Senior VP of operations
- IT director
- Security
- Logistics
- Distribution center
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Financial team
- Overseen by COO
- Chief Financial Officer (CFO)
- Legal team
- Credit team
- Accounting (payable and receivable)
- Inventory control team
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Real estate team
- Negotiates leases
- Decides store locations
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Department stores
- Oldest model (comes from general store)
- Dominated until 1970s when discount stores took over; consumer can't afford dept stores anymore
- Basic idea: give customer everything under one roof
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Specialty stores
- Private label stores (ex: The Gap)
- Nordstroms is actually a specialty store
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Discounters
- Started just after WWII
- Corvette's = first discount store
- K-mart = one of the earliest
- Walmart came later, which worked to their advantage
- Basic idea: small markup, low expenses, high turnover
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Corvette's discount store
- Eugene Furkoff won money gambling on the ship back from the war
- Worked at his dad's luggage store
- Had the idea to discount murch in order to sell more to increase profits
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Warehouse clubs
- Costco, Sam's Club, BJ's
- Appeals to entry-level customers but also attracts wealthier customers
- Can keep expenses low, offer discounted merchandise but also expensive name brands
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Outlets
Started by real estate developers - idea to start shopping malls far from other stores
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Off-pricers
- Store wins
- Customer wins
- Manufacturer loses - more profitable for them to have their own outlet store than to sell to off-priced retailers
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Pagination
Placement and design of a catalog page
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Float
- Payment terms
- Delay between shipping and payment (manufacturer must wait for payment)
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Radical organization chart
- Receptionist on top
- CEO on bottom
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Leadership
The ability to get people to follow you (even from behind the scenes)
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Leadership skills
- Teamwork and family
- Listen to employees
- Empower employees
- Tolerance for diversity
- Likeability
- Willingness to train and teach
- Consistent - especially on company policies
- Reward creativity
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Great leaders
- Sam Walton
- Howard Schultz
- Winston Churchill
- Martin Luther King Jr.
- John F. Kennedy
- Franklin Roosevelt
- Gandhi
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Leadership by teamwork
More effective than leadership by terror
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Starbucks
- Schultz turned a coffee shop into a lifestyle, not just a brand
- Employees are first, customers second
- Mistakes are encouraged
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Correcting employee weaknesses
- Begin with a positive
- Don't cover more than two weaknesses in one meeting
- Follow-up reviews
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Management
The ability to get things done
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Management skills
- Time management
- Training and teaching
- Evaluating and praising employee strengths
- Evaluating and correcting employee weaknesses
- The ability to deleate
- Encouraging risk-taking
- Celebrating (not condemning) employee mistakes
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Sam Walton
- Radical leader
- Developed inverted org chart
- Empower employees
- Maintain equality between employees and higher mgmt in order to avoid wasting any of the company's money
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Organizational culture
The shared values of management and employees that influence the way they act
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Strong culture
- Widely shared
- Consistent messages about what's important
- Employees know company's heroes
- Employees strongly endore
- Strong connection between values and behavior
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Weak culture
- Values limited to top management
- Mixed messages on what's important
- Employees have little knowledge of history and heroes
- Little connection between values and behavior
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Understanding the diversity of America
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Tweens
- Age 8-14
- 30 million
- Important market
- Hard to target: insecure, unsure of identity, will not buy anything their peers/group has rejected
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Types of lifestyles
- Traditional
- Updated
- Advanced
- Regressive
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