RetailManagement_01_Introduction to Retailing

Retailing is important for business students to understand for two main reasons. First, almost all product channel structures conclude with a retailer. This means that no matter where a product starts its journey, it almost always ends up at a retailer. While products may be produced by a manufacturer, pass through a wholesaler, or involve transactions with brokers or agents, retailers are the connection to the consumers. Second, retail offers an immense number of job opportunities. In 2016, there were 3,793,621 retail establishments that support 42 million jobs. Retail also contributes $2.6 trillion to the U.S. gross domestic product.

1. Retail Management Module 1: Introduction to Retailing

2. Retailing

3. Learning Outcomes: Retailing 1.1 Describe retailing, the entities involved, and the impact of decisions on a retail business 1.1.1 Define retailing 1.1.2 Describe the firms involved in a supply chain 1.1.3 Summarize the key challenges facing retailers

4. Activity Spend five minutes writing your responses to the following questions: When is the last time you went to your favorite retailer?  What store was it? Is it a clothing store, or is it a grocery store? Maybe you prefer to shop online. Why? Have you wondered about the journey those products take before making it out to the shelves?  What is your definition the word “retail.”

5. Understanding Retailing Definition of Retail: sale of goods and services to the public for consumption, covering a huge range of customer needs Design to create contact efficiency Define target buyer segments, identify service outputs, and match offerings to provide value to each target Utilize structural differences among retailers that influence strategies and results 94.5% of retail companies only have one location, and more than one million have fewer than 100 employees

6. Types of Retail The retail industry covers an enormous range of consumer needs. According to the National Retail Federation, there are sixteen major segments in the industry. This diversity in size and earnings is reflected in the range of different ownership and management structures,

7. Supply Chains A supply chain is system of organizations, people, activities, information, and resources that involve transformation in an efficient, nimble, and seamless way Supplier: person providing service (domestic or international) Factory: supplier has raw materials made into products Distribution Center: finished product goes here after leaving factory Regional Distribution Center: local to area with many advantages

8. Challenges in Retailing Inventory: having too much or too little can affect reputation of retailer and perception of consumer Mobile Experience and Engagement: 90% of customers use smartphones while shopping Digital Disruption: 5 stages (need recognition, information search, evaluating alternatives, purchase decision, post-purchase evaluation)

9. Evolution of Retail

10. Learning Outcomes: Evolution of Retail 1.2 Analyze the evolution of the retail industry 1.2.1 Describe the overall change in the structure of the retail industry over the past 60 years 1.2.2 Discuss the role information systems have played in the changing retail industry 1.2.3 Explain why a willingness to adapt is essential to a retailer's survival

11. Historical Changes in Retail Pre-1800s: retail was made up of local merchants who provided full service to customers (credit, repairs, etc.) First department store was developed in 1800s, by the 1950s over 4,000 department stores operated, and by 1970s department stores closed and replaced with malls 1990s: Internet impacted retail industry, online shopping became widely popular and still is to this day

12. Information Systems in Retail Frequently utilized information systems in retail: Inventory management software: tracks inventory levels, orders, sales, and deliveries Customer Relationship Management: looks at data about current and future customers in hopes of retaining and building relationships (personal profile/details, sales history, communication, feedback) Accounting Information Systems: system of collecting, storing, and processing data used by decision makers

13. Adaptation in Retail Examples that failed to adapt and why: Blockbuster Video: late fees led to its demise, and they were too slow to adapt to changes Borders Bookstore: filed for bankruptcy in 2011 because they struggled to fill stores with products consumers wanted Toys R Us: had to lay off over 30,000 employees and sold 15% of toy market, needing to make up for lost sales

14. Practice Question As you consider those shifts also think about how you, the consumer, has changed over time.  Do you shop differently then you used to a year ago or even a decade ago?  What have been some of your biggest influencing factors?  What has been a dramatic shift for you in retail?

15. Careers in Retail

16. Learning Outcomes: Careers in Retail 1.3 Recognize career opportunities available in the retail businesses 1.3.1 Identify key roles within retail businesses 1.3.2 List some challenges of working in the retail field 1.3.3 Categorize the general role requirements of a retail manager 1.3.4 Discuss the most valuable skills for a retail manager to possess

17. Key Roles in a Retail Business Industry offers diverse and unique career paths, and main goal includes intersecting with marketing, finance, technology, etc. fields Entry level positions don’t require worker to supervise other workers t same level Intermediate management is HR, production, strategic, marketing, and/or financial Management comprises of planning, organizing, staffing, etc.

18. Understanding Key Roles in a Retail Business Basic Functions: Planning: what needs to happen in the future Organizing: implementing pattern of relationships Staffing: job analysis, recruitment, hiring people Leading/directing: what needs to be done in a situation Controlling/monitoring: making adjustments when needed Motivating Depending on size, there will be different positions (first, middle, top levels)

19. Why Working Retail Is Tough Inventory levels and assortment: must have right amount of product available at right times in right places Mobile engagement and experience: 90% of consumers use smartphones while shopping, mobile revenue expected to be $420 in 2021 Digital disruption: need recognition, information search, evaluating alternatives, decision to purchase, post-purchase evaluation Socially conscious consumer: eco-friendly or “green” products among millennials and younger

20. Retail Management Requirements Middle managers: excellent interpersonal skills relating to communication, motivation, and mentoring Front Line Management Focus on controlling and directing specific employees Skill Sets Effective at communicating, observing/actively listening, giving/receiving feedback, prioritizing Responsibilities Expertise required, tasked with hiring, assessing performance, providing feedback, aligning teams, etc.

21. Retail Management Requirements Functional Management: authority over organizational unit within business, ongoing responsibilities General Management: focuses on entire business as a whole, formatting policies, managing daily operations, planning, managing cost revenue

22. Mintzberg’s Management Roles Interpersonal: figurehead, leader, liaison Informational: mentor, disseminator, spokesman Decisional: entrepreneur, disturbance handler, resource allocator, negotiator

23. Skills of a Retail Manager Technical Skills: Learned capacity in any given field of work, study, & play Management and communication skills Programming, website maintenance, typing, writing, giving presentations Conceptual Skills: Most relevant in upper-level thinking and broad strategic situations Ability to formulate ideas, generate values, policies, mission statements, ethics Abilities to communicate critical concepts

24. More Retail Management Requirements Defining Agendas Business application know what will be discussed in meetings Keeping minutes verbatim record of what was discussed and made available to public Relevance to management distributing in timely fashion, communication, organization skills

25. Skills of a Retail Manager (cont.) Interpersonal Skills: Leadership, manager vs. leader Communication and interpersonal skills lie at center of considerations Experiential Learning: The process is cyclical with no required starting point or end Learning through reflection, focus on learning process for individual

26. Strategic Planning in Retail Management

27. Strategic Planning in Retail Management: Learning Outcomes 1.4.1 Differentiate between macroenvironment and microenvironment considerations in strategic planning 1.4.2 Classify the general steps of strategic planning in retail 1.4.3 Explain the retail mix 1.4.4 Explain the retailing concept

28. Microenvironment vs. Macroenvironment Business management: art, science, and craft of formulating, implementing, and evaluating decisions that will enable an organization to achieve its long-term objectives Strategic planning: organization’s process of defining strategy and making decisions to pursue this strategy Business environment: refers to factors and forces that affect firm’s ability to build and maintain successful customer relationships

29. Microenvironment vs. Macroenvironment (cont.) Micro: small forces within company that affect ability to serve its customers Anything in immediate environment (suppliers, customers, competitors, stakeholders Macro: larger societal forces that affect the microenvironment Outside of retailer’s control and of an economic and industry viewpoint

30. Microenvironment vs. Macroenvironment (cont. II)

31. Strategic Planning in Retail Four key elements of strategic planning : strengths and weaknesses personal values of key implementers (internal) industry opportunities/threats & broader societal expectations (external) Steps in strategic retail planning process define business mission, conduct situation audit, identify strategic opportunities, evaluate strategic alternatives, establish specific objectives, develop retail mix, evaluate performance

32. The Retail Mix Price: What is strategy for marketing? Promotion: What tools will you use to influence consumers purchase decision Place: What are hours of operation, how many employees are needed? Product: What type do you intend to carry, what is depth that you will carry in assortment? Presentation: Will there be a free-standing location? Store Image: What is layout, graphics?

33. The Retailing Concept Idea that examines the evolution of the transformation of retail life cycle, suggesting new retailers will begin with low-cost and low-margin operations Barnes & Noble example: Stage 1: began with variety of books in one location at low cost Stage 2: expanded to various locations, increasing sales, brand image, value, and profit Stage 3: established, opened new stores, greater profits Stage 4: Amazon entered market, allowing customers to browse books online and have them delivered

34. Quick Review Key challenge in retail: Inventory Adequate inventory levels imperative to retailer success Too much inventory leads to unproductive sales and lost margin due to markdowns If it doesn’t support customer demand, lost sales and negative image of retailer The Retail Mix helps with strategic planning Technology has transformed the industry in many ways