Perspectives on Retailing
In this chapter, we acquaint you with the nature and scope of retailing. We present retailing as a major economic force in the United States and as a significant area for career opportunities. Finally, we introduce the approach to be used throughout this text as you study and learn about the operation of retail firms.
After reading this chapter, you should be able to:
1.Explain what retailing is.
2.Explain why retailing is undergoing so much change today. 3.Describe five methods used to categorize retailers.
4.Understand what is involved in a retail career and be able to list the prerequisites necessary for success in retailing. 5.Be able to explain the different methods for the study and practice of retailing.
I.What Is Retailing?
A.Retailing - consists of the final activities and steps needed to place a product in the hands of the consumer or to provide services to the consumer. B.Can be performed by any firm that sells a product or provides a service to the final consumer.
II.The Nature of Change In Retailing – Retailing, which accounts for 20 percent of the worldwide labor force and includes every living individual as a customer, is the largest single industry in most nations and is currently undergoing many exciting changes. A.E-tailing – The great unknown for retail managers is what the ultimate role of the Internet will be. 1.It is still unclear if online shopping will reach its projections for “every day” needs. 2.A dramatic change created by e-tailing is a shift in power between retailers and consumers. The information dissemination capabilities of the Internet are making consumers better informed and thus increasing their power when transacting and negotiating with retailers. B.Price Competition - Americans are price conscious, whether shopping at brick & mortar stores or on-line, and retailers that are able to cut costs in order to provide lower prices will be the winners. C.Demographic Shifts - Other significant changes in retailing over the past decade have resulted from changing demographic factors, such as: the fluctuating birth rate, the increasing number of immigrants, the growing importance of the 70 million Generation Y consumers, and the fact that Generation Xers are now middle-aged and baby boomers are now reaching retirement. 1.Profit growth must come by either increasing same store sales at the expense of the competition's market share (Same store sales is a retailing term that compares an individual store's sales to its sales for the same month in the previous year. Market share refers to a retailer's sales as a percentage of total market sales for the product line or service category under consideration.) or by reducing expenses without reducing services to the point of losing customers. 2.As a result, today's retail firms are run by professionals who can look at the changing environment and see opportunities, exert enormous buying power over manufacturers, and anticipate future changes before they impact the market, rather than just react to these changes after they occur. D.Store Size - The size of retail stores has increased in recent years because of: 1.The phenomenon referred to as scrambled merchandising, whereby stores handle many different unrelated items, and; 2.The growth of category killer stores. These retailers got their name from their marketing strategy: carry such a large amount of merchandise in a single category at such good prices that it makes it impossible for the customer to walk-out without purchasing what they needed; thus "killing" the competition.
III.Categorizing Retailers - There are five popular schemes for categorizing retailers. A.Census Bureau...