ThirdYearStudentPresentationFromNegrosOccidental

From Negros Occidental. All Rights Reserved.

1. Ms. Liza Nismal
Retail Management

2. Retailing
ØConsists of the final activities
and steps needed to place
merchandise made elsewhere
into the hands of the consumer or
to provide services to the
consumer.
ØAny firm that sells a product or
provides a service to the final
consumer is said to be performing
the retailing function.

3. Changes in
Retailing

4. Changes in
Retailing

5. Changes in
Retailing

6. Exhibit 1.1 - External Environmental Forces
Confronting Retail Firms
LO 1

7. Categorizing
Retailers
CENSUS BUREAU
MARGIN VS. TURNOVER
SIZE
NUMBER OF OUTLETS
LOCATION

8. Categorizing
Retailers
CENSUS BUREAU
MARGIN VS. TURNOVER
SIZE
NUMBER OF OUTLETS
LOCATION

9. Census Bureau
•The U.S. Bureau of the Census, for purposes of conducting the Census
of Retail Trade, classifies all retailers using three-digit North American
Industry Classification System (NAICS) codes.
LO 2

10. NAICS Code
•Ex.
•51 – Information
•513 – Broadcasting and
telecommunications
•5133 – Telecommunications
•51332 – Wireless telecommunication carriers
•513322 – Cell phone services
•Identify competitors and
customers
•Find industry reports, ratios and
data
•Benchmark finances
•Analyze economic development
and labor trends

11. StireCategorizing
Retailers
CENSUS BUREAU
MARGIN VS. TURNOVER
SIZE
NUMBER OF OUTLETS
LOCATION
STANDARD STOCK LIST
OPTIONAL STOCK LIST
CHANNEL CAPTAIN
PRIVATE LABEL BRANDING

- STORE BRANDING
-DESIGNER LINES

12. Number of Outlets
•Retailers with several units are a stronger competitive threat because
they can:
•Spread many fixed costs over a larger number of stores.
•Achieve economies in purchasing.
•Advantages of single-unit retailers:
•They have harder-working, more motivated employees.
•They can focus and tailor their efforts and merchandise in one trade area.
LO 2

13. Number of Outlets
•Standard stock list - Merchandising method in which all stores in a
retail chain stock the same merchandise.
•Optional stock list - Merchandising method in which each store in a
retail chain is given flexibility to adjust its merchandise mix to local
tastes and demands.
LO 2

14. Number of Outlets
•Channel advisor or Channel captain - Institution in the marketing
channel who is able to plan for and get other channel institutions to
engage in activities they might not otherwise engage in.
•Examples could be manufacturer, wholesaler, broker, or retailer.
•Large store retailers are often able to perform the role of channel captain.
LO 2

15. Number of Outlets
•Private label branding - Occurs when a retailer develops its own
brand name and contracts with a manufacturer to produce the
merchandise with the retailer’s brand on it instead of the
manufacturer’s name.
•Also called store branding.
•The major shortcoming of using the number of outlets scheme for
classifying retailers is that it addresses only traditional bricks & mortar
retailers.
LO 2

16. Margins Versus Turnover
•Gross margin percentage - Gross margin divided by net sales or what
percent of each sales dollar is gross margin.
•Gross margin - Net sales minus the cost of goods sold.
•Operating expenses - Expenses the retailer incurs in running the
business other than the cost of the merchandise.
LO 2

17. StireCategorizing
Retailers
CENSUS BUREAU
MARGIN VS. TURNOVER
SIZE
NUMBER OF OUTLETS
LOCATION
•LOW-MARGIN/LOW-TURNOVER
•HIGH-MARGIN/LOW-TURNOVER
•LOW-MARGIN/HIGH-TURNOVER
•HIGH-MARGIN/HIGH-TURNOVER

18. Margins Versus Turnover
•Inventory turnover - The number of times per year, on average, that a
retailer sells its inventory.
•High-performance retailers - Produce financial results substantially
superior to the industry average.
•Low-margin/low turnover retailer - Operates on a low gross margin
percentage and a low rate of inventory turnover.
LO 2

19. Margins Versus Turnover
•Low-margin/high turnover retailer - Operates on a low gross margin
percentage and a high rate of inventory turnover.
•High-margin/low turnover retailer - Operates on a high gross margin
percentage and a low rate of inventory turnover.
•Clicks & mortar retailers - Sell both online and via physical stores.
•High-margin/high turnover retailer - Operates on a high gross margin
percentage and a high rate of inventory turnover.
LO 2

20. LowTurnover HighTurnover
High Margin
Low Margin
Excellent position
to withstand a
competitive attack
Least able to
withstand a
competitive attack
Margins Versus Turnover
LO 2

21. StireCategorizing
Retailers
CENSUS BUREAU
MARGIN VS. TURNOVER
SIZE
NUMBER OF OUTLETS
LOCATION

22. Location
•Retailers are now aware that opportunities exist in new non-
traditional retail areas.
•Retailers are reaching out for alternative retail sites, rather than
simply renovating the existing stores.
•Today, the most significant of the new nontraditional shopping
locations could be the one which combines culture with
entertainment or shopping.
LO 2

23. StireCategorizing
Retailers
CENSUS BUREAU
MARGIN VS. TURNOVER
SIZE
NUMBER OF OUTLETS
LOCATION

24. Size
•The reason for classifying by size is that the operating performance of
retailers tends to vary according to size.
•With advances in technology, using classification of size is unclear.
LO 2