INTRODUCTION TO THE

WORLD OF RETAILING

Questions:
What

is retailing?
What do retailers do?
What career and entrepreneurial
opportunities does retailing offer?
What types of decisions do retail
managers make?

Retail Institutions: An Evolution

Started

at prehistoric times.
Record shows that the caveman
would trade goods for other
goods that would provide the
basic necessities of a very
primitive lifestyle.

Retail Institutions: An Evolution

References

to retail trade and the

many business transactions
involved have been found in the
numerous writings of the ancient
Egyptians, about 3000 B.C.

Retail Institutions: An Evolution

During

the Middle Ages

populations expanded and
provided more opportunities to
sell goods.
The skilled worker organized
business in a small dwelling and
began producing goods by hand
and manufacturing them to order.
This worker was called a
handcraft manufacturer.

Retail Institutions: An Evolution

Business

Expansion continued
through what is often referred to as
the Age of Exploration (1295-1620).
The Florentines, the Spaniards and
the Portuguese turned their attention
to exploration.
New trade routes to India, Africa and
the America were discovered.
Population continued to expand, and
more goods were in demand.

Retailing: Definition and Distinguishing Characteristics

Retailing

is the summation of all

activities involved in the sale of goods
or services directly to ultimate
consumer for personal, non business
use.
Retailer is a merchant whose primary
business is selling goods or services
directly to the ultimate consumer.
Retail institution or store is the place
where the actual sales activity or
exchange takes place.

A Retailers Role in Supply Chain

Retailers

are the final business in

a supply chain that links
manufacturers to consumers.
A supply chain is a set of firms
that make and deliver a given set
of goods and services to the
ultimate consumer

Retailers Create Value

Provide

functions that increase

the value of the products and
services for the manufacturers
that produce them.

The Role of Retailing in the Marketing

System

1. Retailer brings retailers (sellers) and

customers (buyers) together.
2. Retailing gives the product or
service place utility
3. Retailing provides feedback
4. Retailing breaks bulk
5. Retailing assumes storage function
6. Retailing assumes risk

Retailers Characteristics
1. Retailers sell in small quantities
2. Retailers sell to the general
public in a convenient location
3. Retailers charge a higher price
per unit of merchandise
4. Retailers use a one price policy
5. Retailers rely on the general
public to visit the store

Retailers Characteristics
Provide

an assortment of
products and services
Breaking Bulk
Holding Inventory
Providing services

Provide an assortment of products and services

Supermarkets

typically carry
20,000-30,000 different items by
more than 500 companies
For example,

Frito-lay makes snacks

Dannon makes dairy products
Skippy makes peanut butter
Heinz makes ketchup

Breaking Bulk
It

provides cost efficiencies for

manufacturers that can package
and ship merchandise in larger,
rather than smaller, quantities

It

gives consumers the chance to

purchase merchandise in the
smaller, more manageable
quantities they prefer.

Holding Inventory
Keep

inventory that has been

broken into user friendly sizes
Consumers will have the
products available when they
need more

Providing services
Make

it easier for customers to

buy and use products.
Offer credit so consumers can
have a product and pay for it
later.
Display products so consumers
can see and test them before
buying
Employ salespeople
Maintain website

Social and Economic Significance

of Retailing
Social

Responsibility

Retailers are socially responsible

business.
CSR describes the voluntary actions
taken by a company to address the
ethical, social and environmental
impacts of its business operations
and concerns of its stakeholders.

Social and Economic Significance

of Retailing
Social

Responsibility

Designing biodegradable or
environmentally sensitive
merchandise
Bono the lead singer of U2 and
global activist, has introduced Edun,
a fair trade fashion brand.
Starbucks pay its farmers 42 percent
more than the going commodity
price of Arabica coffee beans.

Social and Economic Significance

of Retailing
Employment

Retail industry expects to add million

jobs, making it one of the largest
sectors for job growth in the US and
Philippines

Social and Economic Significance

of Retailing
Entrepreneurial

Opportunities

Some of the worlds richest people

are retailing entrepreneurs

Social and Economic Significance

of Retailing
Entrepreneurial

Opportunities

Jeff Bezos (Amazon.com)

Named after the river that carries the
greatest amount of water, symbolizing
Bezos objective of achieving the greatest
volume of Internet sales
Amazon.com has become more than a
bookstore

Social and Economic Significance

of Retailing
Entrepreneurial

Opportunities

Anita Roddick (The Body Shop)

Recycled bottles to save money, which
became the foundation for TBS core
values
Initially sold 15 product lines now sells
more than 300 products in over 2,000
outlets
Endorses only environmentally friendly
products and stands against animal
testing
Products contain materials bough from
farming communities

Social and Economic Significance

of Retailing
Entrepreneurial

Opportunities

Ingvar Kamprad (IKEA)

Founder of Swedish-based home
furnishing retailer chain IKEA
First business was selling matches to
neighbours from his bicycle
Was known for his frugality.

The Retail Management Decision

Process