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MKT 5640
STRATEGIC RETAIL MANAGEMENT
Lecture 1 :
An I ntroduction :
The World of Retailing
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Lecture Learning Outcomes
Describe what Retailing is and
different forms of Retailing
Explain functions performed by
retailers
Explain four principles of retailing
concepts
Apply marketing concepts to
Retailing


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What Retailing is ?




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Definition of 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.

A retailer is a business that sells
products and/or services to
consumers for the personal or
family use.
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Types of Retailers
Store Retailing : Non-store retailing
Retailing done in stores, Retailing can be done out
of a store
e.g. Department stores

e.g.Internet
- Supermarket

- Mobile or telephone

- Specialty store

- Direct mail
- Discount store

- TV
- Factory outlet

- Catalogs

1. Store Retailing vs. Non-store Retailing
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Types of Retailers
2. Product Retailing vs. Services Retailing
Retailers can sell products and/or services
Characteristics of services retailers
Intangibility : Can not see, touch or feel them
Variability (Heterogeneity) : quality depends on
many uncontrollable factors, such as employees
performance
Inseparability (Simultaneous Production and
Consumption) : Create and deliver the services as
the customer consuming it
Perishability : Cant be saved, stored or resold
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Types of Retailers
Nowadays, more are Multi-channel Retailing
Composed of different channels of
communication and sales channels, such as
physical stores, telephone, fax orders, internet,
and etc.
Pizza Hut (Store + Telephone + Take-away)
Reasons for becoming a Multi-channel Retailer
Expanding market presence
Overcoming limitations of existing retail format
Leveraging existing assets
Collect information on customer shopping behavior
Increasing sales

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Special Characteristics
of Retailing
1. Average amount of a sales transaction for
retailers is much less than for manufacturers

2. Final consumers make many unplanned or
impulse purchases

3. Retail customers usually visit a store even
though mail, phone, and Web sales have
increased.
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Roles and Functions
Performed by Retailers




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Distribution Channel
Retailing is the last stage in a channel of distribution
and so
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Functions Performed by Retailers
Sorting process
offering variety and assortment to
customers
Communicating
between customers and
manufacturers/ wholesalers
Holding inventory
Offering advertising or promotion
support
Offering customer services
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Economic Significance of Retailing
(in US)
Nearly $5 Trillion (one-third of total economy) in
Annual U.S. Sales
Employs at least 25 million of people (one sixth
of
total labour force)

(source : http://www.bermanevansretail.com)
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Economic Significance of Retailing (HK)
(source : http://www.censtatd.gov.hk)

Contribute more than 4.1% of HK GDP
(2013)
Employs more than 269,000 employees
in the 1
st
quarter of 2014
Have more than 65,000 establishments
so offer entrepreneurial opportunities
+ many job opportunities

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Four Principles of
Retailing Concepts




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Key Issues in Retailing
How can we best serve our customers
while earning a fair profit?
High rental and labor cost and so low
profit margin
How can we stand out in a highly
competitive environment where
consumers have too many choices?
How can we grow our business, while
retaining a core of loyal customers?
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Figure 1.3 The High Costs and
Low Profits of Retailing
$71.86 $23.14 $1.90 $3.10
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Four Retailing Principles
Retailers can best address these questions by :
Customer orientation
Determine the needs and attributes of customers and
strives to satisfy them
Offer total retail experience to customers
Coordinated effort
Integrates all plans and activities to maximize
efficiency
Value driven
Offers good value to customers
Goal orientation
Set goals and then uses its strategy to attain them
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Total Retail Experience
Total retail experience includes all the elements
in a retail offering that encourage or inhibit
consumers during their contact with a customer.
If some part of the total retail experience is
unsatisfactory, consumers may not make a
purchase.
Thus, retailers need to identify the customer
touch points and make sure that they are
perfect to their customers.
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Apply Marketing Concepts
to Retailing
Retailer
Strategy

Target
Market

Retail Store
Positioning
Retailer
Marketing Mix (6 Ps)

People and customer
service
Place (Location)
Physical evidence
(Store layout and atmosphere)
Product and service
assortment
Price
Promotion
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Reading :

Textbook :
12
th
ed : Chapter 1 (p. 32 to p. 48),
Chapter 2 (p. 67 p.72)
11
th
ed : Chapter 1 (p. 1 to p. 21),
Chapter 2 (p. 41 p. 43)