Retail & Manufacturing Logistics
BHT 4017
Topic 1: An Introduction to Retailing
Dr. Fahham Hasan Qaiser Ph.D., M.Sc., B.Eng., Pg.Cert. (HE), MCIPS, FHEA Senior Lecturer (Supply Chain and Analytics) Course Leader – MSc. Business Intelligence & Analytics; Logistics & Supply Chain management; Project & Operations Management Huddersfield Business School f.h.qaiser@hud.ac.uk
Outline
• Define retailing • Introduce the concept of strategic
planning • Define distribution types • Show the emphasis on the retail
experince and relationship retailing
Intended Learning Outcomes
To understand: • Retailing • Issues in retailing • Impact of retailing on Economy • Retail strategy • Customer experience • Relationship retailing
Session Plan
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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.
3 Chapter 1: An Introduction to Retailing in Berman, B., Joel, R.E. and Chatterjee, P. (2018), Operations Management, Retail Management. Pearson Education Limited (13th Edition)
Issues in Retailing
• How can we best serve our customers while earning a fair profit?
• How can we stand out in a highly competitive environment where consumers have so many choices?
• How can we better coordinate our merchandising, pricing, and service strategy across all our channels when costs, profit margins, and target segments differ across the channels?
• How can we grow our business while retaining a core of loyal customers?
4 Chapter 1: An Introduction to Retailing in Berman, B., Joel, R.E. and Chatterjee, P. (2018), Operations Management, Retail Management. Pearson Education Limited (13th Edition)
Solution for Issues in Retailing
• Retailers can best address these questions by fully understanding and applying the basic principles of retailing, as well as the elements in a well-structured, systematic, and focused retail strategy.
5 Chapter 1: An Introduction to Retailing in Berman, B., Joel, R.E. and Chatterjee, P. (2018), Operations Management, Retail Management. Pearson Education Limited (13th Edition)
Question
• Can retailers flourish in today’s tough marketplace?
• Just look at your favorite restaurant, gift shop, and food store
This Photo by Unknown Author is licensed under CC BY- NC
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Willingness to Adapt changes
• A desire to please the customer and a strong market niche. • To prosper in the long term • They all need a strategic plan and a willingness to adapt
FIGURE 1-1
7 Chapter 1: An Introduction to Retailing in Berman, B., Joel, R.E. and Chatterjee, P. (2018), Operations Management, Retail Management. Pearson Education Limited (13th Edition)
Reasons for Studying Retailing
Retailing is an important field to study because of its impact on the economy, its functions in distribution, and its relationship with firms selling goods and services to retailers for their resale or use.
8 Chapter 1: An Introduction to Retailing in Berman, B., Joel, R.E. and Chatterjee, P. (2018), Operations Management, Retail Management. Pearson Education Limited (13th Edition)
Impact of Retailing on Economy
• The world’s 250 largest retailers generate more than $4.6 trillion in annual revenues. They represent 29 nations. Seventy-six of the largest 250 retailers are based in the United States, 28 in Japan, 17 in Germany, 16 in Great Britain, and 15 in France.
9 Chapter 1: An Introduction to Retailing in Berman, B., Joel, R.E. and Chatterjee, P. (2018), Operations Management, Retail Management. Pearson Education Limited (13th Edition)
Retail Function in distribution
• Retailing is the last stage in a channel of distribution • All the businesses and people involved in the physical
of goods andmovement and transfer of ownership services from producer to consumer.
• A typical distribution channel is:
10 Chapter 1: An Introduction to Retailing in Berman, B., Joel, R.E. and Chatterjee, P. (2018), Operations Management, Retail Management. Pearson Education Limited (13th Edition)
Retailer’s Role in the sorting process
• Retailers often act as the contact between manufacturers, wholesalers, and the consumer.
• Many manufacturers would like to make one basic type of item and sell their entire inventory to as few buyers as possible
• Retailers collect an assortment from various sources, buy in large quantity, and sell in small amounts. This is the sorting process
FIGURE 1-511 Chapter 1: An Introduction to Retailing in Berman, B., Joel, R.E. and Chatterjee, P. (2018), Operations Management, Retail Management. Pearson Education Limited (13th Edition)
Distribution Types • Exclusive: Suppliers make agreements with one or few retailers,
designating such retailers as the only ones to carry certain brands or products within a specified geographic area. • This stimulates both parties to work together to maintain an image,
assign shelf space, allot profits and costs, and advertise • they might have to decline to handle other suppliers’ brands
• Intensive: Suppliers sell through as many retailers as possible • Retailers may assign little space to specific brands, set very high prices
on them, and not advertise them
• Selective: Suppliers sell through a moderate number of retailers. This combines aspects of exclusive and intensive distribution • It encourages suppliers to provide some marketing support and retailers
to give adequate shelf space
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Exclusive Vs Intensive Distribution
• Exclusive Distribution: Fate of retailer is tied to manufacturer success, retailer has no “free-rider” concerns, retailer has less price competition, manufacturer is better assured of high levels of customer support
• Intensive Distribution: Manufacturer is better assured of maximizing sales (especially for convenience goods), retailers face strong competition for price and service
13 Chapter 1: An Introduction to Retailing in Berman, B., Joel, R.E. and Chatterjee, P. (2018), Operations Management, Retail Management. Pearson Education Limited (13th Edition)
Exclusive, Intensive and Selective Distribution
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Special Characteristics Affecting Retailers
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Six Steps in retail strategy
1. Define the type of business in terms of goods and services (corporate mission)
2. Set long-run and short-run objectives for sales and profit, market share, image etc.
3. Determine the customer market to target on the basis of characteristics (e.g. age, gender and income level)
4. Devise an overall, long-run plan 5. Implement an integrated strategy such as store location,
product assortment, pricing etc. 6. Evaluate performance and correct weaknesses or
problems (fine-tune)
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Case Study – Home Depot
Chapter 1 – An Introduction to Retailing Book: Retail management (p. 31-34) (Berman et al. 2018)
Read the case study before lecture Access Link
Aspects of Home Depot’s Strategy
• Growth through product authority
• Targeted appeal to multiple segments
• Distinctive image • Seamless customer
service • Multiple points of contact
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• Employee relations • Innovation • Commitment to technology • Community involvement • Adaptive to omnichannel
trends
Note: Refer to book p.31-34 for details
Retailing Concept
• Four principles form the retailing concept, which should be understood and applied by all retailers: 1. Customer orientation. The retailer determines the attributes and
needs of its customers and endeavors to satisfy these needs to the fullest.
2. Coordinated effort. The retailer integrates all plans and activities to maximize efficiency.
3. Value driven. The retailer offers good value to customers, whether it be upscale or discount. This means having prices appropriate for the level of products and customer service.
4. Goal orientation. The retailer sets goals and then uses its strategy to attain them.
19 Chapter 1: An Introduction to Retailing in Berman, B., Joel, R.E. and Chatterjee, P. (2018), Operations Management, Retail Management. Pearson Education Limited (13th Edition)
Retailing Concept
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Retail experience
Amazon Go
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Relationship Retailing
• Retailers seek to establish and maintain long-term bonds saleswith customers, rather than act as if each
transaction is a completely new encounter – Concentrate on the total retail experience – Monitor satisfaction – Stay in touch with customers
22 Chapter 1: An Introduction to Retailing in Berman, B., Joel, R.E. and Chatterjee, P. (2018), Operations Management, Retail Management. Pearson Education Limited (13th Edition)
Effective Relationship Retailing
• Use a “win-win” approach – It is easier to keep existing customers happy than to
gain new ones (present value of current customers income stream– cost of keeping existing customers content versus cost of replacing them with new customer
• Develop a customer database (loyalty programs) – Ongoing
information behaviors
customer contact is improved with on people’s attributes and shopping
23 Chapter 1: An Introduction to Retailing in Berman, B., Joel, R.E. and Chatterjee, P. (2018), Operations Management, Retail Management. Pearson Education Limited (13th Edition)
Resources for further reading
• Berman, B., Joel, R.E. and Chatterjee, P., 2018. Retail Management. Pearson Education Limited (13th Edition)
• Bowersox, D.T., Closs, D.J., Cooper, M.B. and Bowersox, J.C., 2019. Supply Chain Logistics Management. McGraw-Hill Education (5th
Edition)
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Questions
16
Thank you
