5th Edition

1 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Chapter 1

Introduction to the
World of Retailing

cGraw-Hill/Irwin
2 Consumer Behavior
vy/Weitz: Retailing Management, 5/e
Ignacio J. Vázquez E. © 2007
Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
 What is Retailing?

• Retailing – a set of business activities that

adds value to the products and services sold to
consumers for their personal or family use.

• A retailer is a business that sells products

and/or services to consumers for personal or
family use.

3 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Examples of Retailers

• Retailers:
-Sears, Holiday Inn, McDonalds, [Link], Jiffy
Lube, AMC Theaters, American Eagle Outfitter, FAO
Schwartz, Kroger

• Firms that are retailers and wholesalers that

sell to other business as well as consumers:
-Office Depot, The Home Depot, United Airlines, Bank
of America, Sams Clubs

4 Consumer Behavior Ignacio J. Vázquez E. © 2007

 How Retailers Add Value

• Breaking Bulk
-Buy it in quantities customers want

• Holding Inventory
-Buy it at a convenient place when you want it

• Providing Assortment
-Buy other products at the same time

• Offering Services
-See it before you buy, get credit, layaway

5 Consumer Behavior Ignacio J. Vázquez E. © 2007

 How Retailers Add Value

The value of the product and service increases

as the retailer performs functions.

Doll can be bought

on credit or put on
layaway

Doll is featured on
floor display
Doll is offered in
convenient
locations in
Doll is developed in quantities of one
several styles
Doll is developed at
manufacturer
6 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Manufacturer’s Perspective

The Four P’s of Marketing

Retailers
Retailersare
are part
part of
of the
the
distribution channel
distribution channel
Product

Distribution Price

Promotion

7 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Distribution Channel

PPT 1 -4

8 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Retailers are a Business Like Manufacturers

Accounting Finance Marketing

Operations MIS Human Resources

9 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Decision Variables for Retailers

Customer Service

Store Design Merchandise

and Display Assortment
Retail
Strategy
Pricing Location

Communication
Mix

10 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Economic Significance of Retailing

• Over $2.5 trillion in annual U.S. sales

-greater than medical care, housing, recreation combine

• Employs 17% of population

-about the same as manufacturing and growing

• Management training opportunities

• Entrepreneurial opportunities

11 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Nature of Retail Industry is Changing

To Today’s Retailer

Mom and Pop Store

12 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Retailing is a High Tech Industry

- Selling Merchandise over the Internet

- Using Internet to manage supply chains

- Analyze POS data to tailor assortments to stores

- Computer systems for merchandise planning

13 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Globalization of Retailing

Source Merchandise From Around the World

Wal-Mart Operates in U.S., China, Mexico, UK, Germany

Carrefour has Stores in 25 Countries

14 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Retail Environment Differs Across the Globe

US Japan
Concentration High Medium

Store Size Big Small

Role of Low High

Wholesaling

Efficiency High Low

15 Consumer Behavior Ignacio J. Vázquez E. © 2007

 JC Penney’s Strategic Evolution

• Main Street private label soft goods retailer

• Changes in environment -- increased disposable
income, growth of suburbs, interstate highway
program
• Emulate Sears in enclosed suburban malls
• Focus on soft goods -- drop automotive, sporting
goods, hardware
• Develop catalog, develop electronic retailing
• Future (?)
16 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Sears’ Strategic Evolution

• Large number of merchandise categories -- appliances,

hardware, apparel
• Malls evolved into places for buying soft goods, hard
goods sold at category killers
• The Softer Side of Sears
• Refocused on value -- Testing carts in stores
• Acquired Lands’ End
• Reviewed training program for new managers

17 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Whole Foods Implementation

Strategy - organic and natural

foods supermarket chain

Assortment beyond
organic/natural foods
Private labels - Whole
Food™, 360 Day Value™
Love, trust, and employee
empowerment
Equality in compensation
18 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Hot Topic’s Retail Mix

Customer Service Location

Store Design Merchandise

Retail Strategy Assortment
And Display

Communication Pricing
Mix
19 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Hot Topic’s Retail Mix

Location Strategy

Enclosed malls

Customer
Service

Store Display Merchandise

And Design Assortment

Communication
Pricing
Mix

20 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Hot Topic’s Retail Mix

Assortment Strategy

Customer
ServiceLocation

Many Different
Store Design
and Display
Hot Band
T-shirts and
Communication
Pricing
Accessories
Mix

21 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Hot Topic’s Retail Mix

Location
Pricing Strategy
Customer
Merchandise
Service
Assortment

Store Design
and Display

Communication
Mix Modest with Sales

22 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Hot Topic’s Retail Mix

Customer
Service Location

Communication Mix Store Design

Merchandise
And Display
Assortment

Pricing

TV and
Magazine Ads

23 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Hot Topic’s Retail Mix

Store Design and Display

Customer
Service Location

Heavy Metal,
Merchandise
Gothic Look Assortments

Communication
Mix Pricing

24 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Hot Topic’s Retail Mix

Customer Service

Modest
Location

Merchandise
Assortment

Store Design
and Display Pricing

Communication
Mix

25 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Macy’s Retail Mix

Customer
Location
Service

Store Design Merchandise

And Display Retail Strategy Assortment

Pricing
Communication
Mix
26 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Macy’s Retail Mix

Location Strategy

Enclosed Malls

Customer
Service

Store Display Merchandise

And Design Assortment

Communication Pricing
Mix

27 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Macy’s Retail Mix

Assortment Strategy

Customer
Service Location

Store Design
and Display
Many Items in
Apparel and
Communication
Soft Home
Mix Pricing

28 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Macy’s Retail Mix

Location
Pricing Strategy
Customer
Merchandise
Service
Assortment

Store Design
and Display

Communication
Mix
Moderate with
Frequent Sales

29 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Macy’s Retail Mix

Customer
Service Location

Communication Mix Store Design

And Display Merchandise
Assortment

Pricing

TV, Newspaper Ads

and Special Events

30 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Macy’s Retail Mix

Store Design and Display

Customer
Service Location

Ring with Displays Merchandise

Assortments

Communication
Mix Pricing

31 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Macy’s Retail Mix

Customer Service

Modest
Location

Merchandise
Assortment

Store Design
and Display Pricing

Communication
Mix

32 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Wal-Mart’s Retail Mix

Customer Location
Service

Store Design Merchandise

And Display Retail Strategy Assortment

Communication Pricing
Mix

33 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Wal-Mart’s Retail Mix

Location Strategy

Free-standing Stores

Customer
Service

Store Display Merchandise

And Design Assortment

Communication
Mix Pricing

34 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Wal-Mart’s Retail Mix

Assortment Strategy

Customer
Service Location

Large Number
Store Design
and Display
of Categories
Few Items
Communication
Mix Pricing
in Each Category

35 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Wal-Mart’s Retail Mix

Location
Pricing Strategy
Customer
Merchandise
Service
Assortment

Store Design
and Display

Communication
Mix Low, EDLP

36 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Wal-Mart’s Retail Mix

Customer
Service Location

Communication Mix
Store Design Merchandise
and Display Assortment

Pricing

TV and Newspaper
Insert Ads

37 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Wal-Mart’s Retail Mix

Store Design and Display

Customer
Service Location

Basic, Special
Merchandise
Displays Assortments
for Products
Communication
Mix Pricing

38 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Wal-Mart’s Retail Mix

Customer Service

Limited

Location

Merchandise
Assortment

Store Design
and Display Pricing

Communication
Mix

39 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Career Opportunities in Retailing
Start Your Own Business
List of Retail Entrepreneurs on
Forbes 400 Richest Americans
• Walton Family (Wal-Mart)
• Fisher (The Gap)
• Wexner (Limited)
• Menard (Menard’s)
• Marcus, Blank (The Home Depot)
• Kellogg (Kohl’s)
• Schulze (Best Buy)
• Levine (Family Dollar)
• Gold (99Cent Only)
40 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Misconceptions About Careers in Retailing

• Don’t need college

• Low pay
• Long hours
• Boring
• Dead-end job
• No benefits
• Everyone is part-time
• Unstable environment

41 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Why You Should Consider Retailing

• Entry level management positions

-Department manager or assistant buyer/planner
-Manage and have P&L responsibility on your first job
• Starting pay average with great benefits
- Some retailers pay graduate school
• No two days are alike
• Buying for financially oriented people
• Management for people people

42 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Types of Jobs in Retailing

Most entry level jobs are in

store management or buying, but…

retailers also have staff specialists:

--accounting and finance
--real estate
--human resource management
--supply chain management
--advertising
--public affairs
43 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Centro de Comercio Detallsita

• [Link]/ccd
• ADMINISTRACIÓN DE MERCANCÍAS / PRECIOS: Aprenderás el manejo de compras,
resurtidos e inventarios que realizan las empresas de comercio al detalle.
Analizarás la tecnología que está revolucionando el retail y estudiarás la
administración y el establecimiento de precios, así como el desarrollo y
presentación de líneas de producto, dando especial atención a las relaciones
comprador-proveedor.
• INTERNSHIP I Y II: Aplicarás tus conocimientos dentro de una empresa detallista. en
el verano trabajarás 7hrs. diarias por 5 semanas en una empresa de comercio al
detalle, en donde conocerás las diferentes áreas de la empresa y tendrás la
oportunidad de resolver algún problema o realizar un proyecto específico.
• ADMINISTRACIÓN DE LA TIENDA Y SERVICIO AL CLIENTE: Analizarás los
procesos en el manejo y administración de una tienda. Aprenderás temas
relacionados con sistemas de información, recursos humanos, imagen y diseño de
la tienda (visual merchandising), servicio al cliente y CRM (Customer Relationship
Management), entre otros.
• ESTRATEGIA DE COMERCIO DETALLISTA MULTICANAL: Conocerás las estrategias
que siguen los principales detallistas y su implicación en las ventas. Comprenderás
la metodología para la ubicación de puntos de venta. Aplicarás las estrategias de
publicidad y promoción que se utilizan en el comercio detallista. Además,
aprenderás la nueva tendencia en el retail de administración por categorías.

44 Consumer Behavior Ignacio J. Vázquez E. © 2007