CHAPTER 1

INTRODUCTION TO THE WORLD OF RETAILING

ANNOTATED OUTLINE

INSTRUCTOR’S NOTES

1. Introduction to The World of Retailing

• Retailing in Canada is dynamic and always changing to reflect consumer demands for product and accessibility.
• Retailing in Canada is a vibrant industry, with total retail sales in 2014 of $ billion. The retail sector is one of the largest employers nationally, employing almost two million Canadians.
• Success in retailing is about understanding and engaging your customers. Retailers use sophisticated technologies and information systems to improve their customers’ shopping experience, reduce costs, and provide better value.
• Customers today want to interact with retailers as they seek information and buy merchandise ranging from concert tickets to a new iPod, shopping through multiple channels, such as smartphones, tablets, computers, web-enabled kiosks, telephone lines to call centres, and retail stores.
• In addition to selling merchandise, retailers use the Internet to build brand images, provide customer service, and manage their employees. Retailers such as use advanced analytical techniques and data warehousing to customize approaches to online customers, suggesting books and products that might be of interest based on previous sales.
• In this course we will explore the world of retailing and principles for effectively managing businesses in this challenging environment.
• Knowledge of retailing principles and practices will help you develop management skills you can apply in many business contexts.
• Any student interested in professional business-to-consumer (B-to-C) selling, marketing management, or finance will find this course useful.

Ask students about where they bought their textbook for the course.   One may get standard responses, such as the college bookstore or the downtown store, but some may also indicate that they bought it over the Internet or bought it used from another student. Question students on the pros and cons of each transaction.

Ask students about their shopping habits for some commonly purchased products, such as books, clothing, shoes, and food. One can engage them in a discussion of what they seek when shopping for such product categories and what types of physical store and non-store formats best satisfies their needs

Have students see the appendix to Chapter 1“Careers in Retailing” on Connect and discuss the various career options.

Retailing is a global high-tech industry. Walmart is the world’s largest corporation, with retail sales of $ billion for the fiscal year 2015 and over 11 500 stores in 28 countries worldwide. French-based Carrefour, the world’s second-largest retailer, operates 10,860 stores in 34 countries (but not in Canada or the United States). The largest retailer in Canada, Loblaws, with annual sales of $ billion, has over 2300 corporate, franchised, and associated banner stores. It offers over 8000 private label products, is Canada’s largest wholesale food distributor, and employs 192 000 full- and part-time employees

Discuss with students to link between retail principles different industries.

For example, Procter & Gamble and Hewlett-Packard brand managers need to have a thorough understanding of how retailers operate and make money so that they can get their products on retail shelves and work with retailers to sell them to consumers. Financial and health care institutions use retail principles to develop a variety of services, improve customer service, and make their offerings available at convenient locations for their customers.

• What Is Retailing?

• Retailing is the 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 or services, or both, to consumers for their personal or family use.

Ask students to give examples of retailers. Generally, they will think of traditional retailers that sell through stores.

Other examples are McDonalds, Home Shopping Network, Avon, Midas, Tim Hortons, movie theatre retailers and fitness clubs.

By this definition there certainly are many retailers who do not sell through bricks and mortar stores and sell services rather than merchandise.

Certainly they will mention clicks retailers and clicks and mortar retailers like or eBay.

68 percent. The percent of Canadians who owned a smartphone in 2015, up 13 percent from the previous year.

What about universities and colleges and travel agents? These organizations sell some services to end-users and thus are retailers, but they also sell some services to businesses and thus are channel members, but not retailers.

1. A Retailer’s Role in Distribution Channels

• Retailers attempt to satisfy consumer needs by offering:

– the right product

-at the right price

-at the right place

-in the right quantities

-at the right time.

• Retailers are the final business in a distribution channel that links manufacturers with consumers.

• A distribution channel is a set of firms that facilitate the movement of products from the point of production to the point of sale to the ultimate consumer.

• Manufacturers make products and sell them to retailers or wholesalers.   Wholesalers buy products from manufacturers and resell these products to retailers, while retailers resell products to consumers. Wholesalers satisfy retailers’ needs, while retailers direct their efforts to satisfying needs of ultimate consumers.

• Some retail chains are both retailers and wholesalers. They’re performing retailing activities when they sell to consumers and wholesaling activities when they sell to other businesses like building contractors or restaurant owners.

• In some distribution channels, manufacturing, wholesale, and retail activities are performed by independent firms.

• But most distribution channels have some vertical integration. Vertical integration means that a firm performs more than one level of activity in the channel. For example, most large retailers–such as Wal-Mart, and Staples/Business Depot –do both wholesaling and retailing activities

• Vertical Integration means that a firm performs more than one set of activities in the channel, such as investments by retailers in wholesaling or manufacturing.

• Backward integration arises when a retailer performs some distribution and manufacturing activities, such as operating warehouses or designing private-label merchandise.

• Forward integration occurs when a manufacturer undertakes retailing activities, such as Roots operating its own retail stores.

Discuss how, in some channels, consumers can perform some of the functions performed by retailers, wholesalers, and manufacturers in other channels.

For example, assembling furniture or toys is a function frequently performed by manufacturers. IKEA would be an example of a retailer that has pushed this function onto the consumer in order to offer lower prices. Consumers who buy through discount stores have to discover information about products on their own. When buying at warehouse stores, consumers might buy in large quantities and repackaged the food into smaller packages (breaking bulk and holding inventory.)      

Query students on the advantages and disadvantages of vertical integration.   Why is The Gap vertically integrated and The Bay department store is not?

Advantage:

Develop unique merchandise only sold in your stores.

Better coordination between manufacturing and retailing.

Disadvantage:

Higher costs because retailer might not be an efficient manufacturer.

1. Functions Performed by Retailers

• Retailers undertake business activities and perform functions that increase the value of the products and services they sell to consumers.

Note that retailers and distributors account for a lot of the cost of a product. A retailer’s markup of 50% adds half of the cost in making and getting the product to the consumer.

Students could be given a hypothetical issue to debate: Suppose the local grocery store markups all its products by about 50%? Is the grocery store profitable?

Some students may confuse the markup of 50% with profits. The various functions performed by retailers as noted below would help students understand the costs borne by retailers.

As an aside, standard industry average profits for grocery retailing are only in 1-3% range.

These functions are:

1. Providing Assortments

• Offering an assortment enables customers to choose from a wide selection of brands, designs, sizes, colours, and prices in one location.

• All retailers offer assortments of products, but they specialize in the assortments they offer. Many grocery stores provide assortments of food, health and beauty care (HBC), and household products; while Roots provides assortments of clothing and accessories.

• Most consumers are well aware of the product assortments retailers offer; even small children tend to know where to buy different types of products.

Ask students to describe the difference in the assortments of bicycles provided by Wal-Mart and the local bike shop. What is the difference in assortment of DVDs provided by the kiosk and Target?

New types of retailers offering unique assortments appear each year. WineStyles is a wine store that arranges wine by taste category instead of region or type of wine, and provides extensive information to reduce the complexity of buying wines. Gold Grass Home sells a wide assortment of environmentally healthy products such as housewares, furniture and decor, and building supplies.

Ask students to research “new” types of retailers with unique assortments as a class activity

1. Breaking Bulk

• To reduce transportation costs, manufacturers and wholesalers typically ship cases/cartons of products to retailers.

• Retailers then offer the products in smaller quantities tailored to individual consumers’ and households’ consumption patterns.

1. Holding Inventory  

• A major function of retailers is to keep inventory so that products will be available when consumers want them, reducing consumer’s cost of storing products.

• This function is particularly important to consumers with limited storage space and when purchasing perishable merchandise such as meat and produce.

1. Providing Services

• Retailers provide services such as credit, product displays, and sales staff to express product knowledge that will assist customers in the decision making process.

• Retailers display products so that consumers can see and test them before buying.

• Multichannel retailers offer flexibility to the customer by answering questions online and enabling buying any time, day or night.

Ask the students what kind of services retailers provide. Some services are: acceptance of credit cards, alteration of merchandise, assembling of merchandise, bridal registry, check cashing, child-care facilities, credit, delivery to home, demonstrations of merchandise, displaying merchandise, dressing rooms, gift wrapping, lay-away plan, parking, personal assistance in selecting merchandise, personal shoppers, play areas for children, presentations on how to use merchandise, provisions for customers with special needs (wheelchairs, translators), repair services ,rest rooms for checking coats and packages,   special orders and product warranties.

         5. Increasing the Value of Products and Services.

• By providing assortments, breaking bulk, holding inventory, and providing services, retailers increase the value consumers receive for their products and services.

Ask students how does a computer retail store increase the value of a computer for a consumer. Compare the service of a computer store, or a Big Box retailer like Staples or Future Shop with an on-line store like Dell.

• Social and Economic Significance of Retailing

1. Social Responsibility

• Retailers are socially responsible businesses. Corporate responsibility describes the voluntary actions taken by a company to address the ethical, social, and environmental impacts of its business operations and the concerns of its stakeholders.
• As corporate social responsibility continues to grow in popularity within the Canadian retail industry, more significance is being placed on the need for retailers to explain the impact of their business practices and to implement suitable strategies to seize the related opportunities.

• Finding consumers around the world who say they care about the environment or extreme poverty is relatively easy. But does care about issues convert to action when it comes to buying decisions?

B.Retail Sales in Canada

• Retail is a driving force of Canada’s economy and affects every facet of life. Just think of how much contact you have with retailers when you eat meals, furnish your apartment, have your car fixed, or buy clothing for a party or a job interview.

• In 2014, total retail sales in Canada amounted to $505 billion, up percent from 2013 and percent over a five-year period. Ontario (35 percent) and Quebec ( percent) contributed the largest share of retail sales, followed by Alberta ( percent) and British Columbia ( percent).

• Canada’s leading retailers tend to concentrate their operations in these four provinces as they include the country’s largest cities

• Large retail chains dominate many segments in the Canadian market place. The top 100 retail organizations still control 75 percent of the non-automotive retail sales.⁸ In 2014, there were a total of 30 organizations with at least one billion in total sales, and this Billion Dollar Club (BDC) accounted for 88 percent, or $213 billion, of non-automotive retail sales in Canada for 2014. BDC retailers controlled a network of approximately 18 322 stores and almost 420 000 square feet of retail store space. The BDC accounts for 88 percent of total Centre for the Study of Commercial Activity (CSCA) Retail 100 sales, 66 percent of total Canadian non-automotive sales, and 48 percent of total retail sales in 2014 (see Exhibits 1–3, 1–4, and 1–5). In most countries, when the market concentration percentage for a particular industry or industry sub-sector reaches 40 percent, oligopolistic behaviour becomes likely in the marketplace.

• The Canadian retail market continues to evolve and change as foreign-owned retailers continue to increase their presence within the Canadian marketplace. In 2014, Canadian-controlled conglomerates accounted for percent of the CSCA Retail sales in Canada.¹¹ American retailers account for percent of retail sales by foreign retailers in Canada (see Exhibit 1–7).¹² The American presence is significant, as Exhibit 1–6 demonstrates. Nine out of the top 20 retailers (by sales) in Canada are American, with four of these companies being among the top ten retailers operating in the country. Notable US retailers that have expanded operations into Canada include Lowe’s, Marshall’s, Nordstrom, Jimmy Choo, and Versace, among ;The increased presence of foreign, especially US-based, retailers is expected to benefit Canadian consumers by providing important advantages, such as a wider variety of products, more convenient locations and formats, and the potential for a more competitive pricing ;Exhibit 1–5 illustrates the profound impact US retailers have had on the Canadian retail landscape, as many of these retailers have captured significant market share of retail sales across many sub-sectors. Walmart and Costco cumulatively own approximately 74 percent of the general merchandise sector. Best Buy and Apple account for almost 40 percent of the electronics and appliances sector. However, as mentioned above, Canadian-based retailers still dominate the grocery (with percent among Weston Group, Empire Company, and Metro) and pharmaceutical sectors (with percent among Weston Group and Jean Coutu) of the Canadian retail industry.

• Canadian retailers have yet to experience the same level of success with expansion into the United States and abroad. With that being said, there are some great Canadian success stories, such as Couche Tard, Fruits & Passion, Aldo, Lululemon, Joe Fresh, and Aritzia. These companies have successfully expanded globally through a mix of corporate and franchise stores. Joe Fresh is a stand-out: in 2012 they signed a deal with JCPenney to open 700 shops within 1100 of its locations in the United States.¹³

• Retailing is becoming a global industry, as more and more retailers pursue growth by expanding their operations to other countries. The large retail firms are becoming increasingly international in the geographical scope of their operations. For example, Amway, Avon, Ace Hardware, and Inditex (Zara) operate in more than 20 countries. The share of the global retail market accounted for by retailers operating in more than one country is also increasing because these global retailers are growing at an even faster rate than are global retail sales. International operations account for a larger proportion of sales by these large firms, as is particularly apparent in European firms with their longer internationalization experience. The percentage of retail revenue generated from global operations for the top ten global retailers is approximately percent of the overall global retail revenue. As a group, the top ten have a much larger geographic footprint than the top 250 overall. The average revenue derived from foreign operations for the big ten is approximately percent of their overall income.  Exhibit 7–5 (in Chapter 7) lists the ten largest global retailers along with Canada’s top entries in the top 250 as published by Deloitte. (To see the entire list, go to ) These large retailers operate in countries, on average, nearly twice as many as the average for the entire group (nine countries).¹⁴ In 2011, for the first time, the share of North American top 250 retailers that remained single-country operators fell to less than half.

Have students identify actions taken by retailers to provide value to their communities and society, as well as to their customers. Retailing View Socially responsible retailers provides some domestic and global examples.

Fifty-five percent of global online consumers across 60 countries say they are willing to pay more for products and services provided by companies that are committed to positive social and environmental impact, according to a new study by Nielsen

The propensity to buy socially responsible brands is strongest in Asia-Pacific (64 percent), Latin America (63 percent) and Middle East/Africa (63 percent). The numbers for North America and Europe are 42 and 40 percent, respectively.

Some 52 percent of global respondents in Nielsen’s survey say their purchase decisions are partly dependent on the packaging—they check the labeling first before buying to ensure the brand is committed to positive social and environmental impact. Sustainable purchase considerations are most influenced by the packaging in Asia-Pacific (63 percent), Latin America (62 percent) and Middle East/Africa (62 percent) and to a lesser extent in Europe (36 percent) and North America (32 percent).

Millennials (age 21–34) appear more responsive to sustainability actions. Among global respondents in Nielsen’s survey who are responsive to sustainability actions, half are Millennials; they represent 51 percent of those who will pay extra for sustainable products and 51 percent of those who check the packaging for sustainable labeling.

Class Activity: Ask your students if they look for signs of sustainability from the retailers they choose to do buy from.

Discuss why Ontario and Quebec have experienced the highest growth in retail sales, what are the challenges?

Discuss what type of changes in the retail industry may take place in the next 10 years. How is technology affecting the changes in this industry? Will consumers still go to stores or will they buy everything using a computer in their homes? What will stores look like? How will retailers adjust to the Internet, social networking or mobile technology? Who will be the big winners/losers?

Have students look at their personal spending does technology affect their spending habits? Loyalty?

Sales in the retail sector were dominated by the motor vehicle and parts sub-sector, which totalled $ billion in sales in 2014, or percent of market share, and the food and beverage stores sub-sector, which totalled $ billion, or percent of market share. Exhibit 1–2 shows a list of total sales by retail sub-sector in Canada for ;

Exhibit 1–5 demonstrates that four of the nine retail sub-sectors have concentration ratio levels higher than 55 percent amongst the top three retailers in each sub-sector. This group of large retailers, identified by their relative dominance of Canadian retail market segments, includes Weston Group ( percent health and personal careand   percent grocery), Empire Company Limited  ( percent grocery), Walmart ( percent general merchandise), and Costco Wholesale ( percent general merchandise).¹⁰

The list of the top 50 leading retailers (Exhibit 1–6) shows that the top three retailers in Canada (Weston Group [Shoppers, The Real Canadian super Store], Walmart, and the Empire Company [Sobeys, IGA, and Safeway]) control almost 40 percent of the non-automotive retail market and have more than 4900 retail locations between ;

The acronym IKEA is made up of the initials of the founder’s name (Ingvar Kamprad) plus those of Elmtaryd, his family farm, and the nearby village of Agunnard.¹⁷

With worldwide retail revenue estimated at $ trillion, the ten largest global retailers represent a percent share of the world market.¹⁵ The average size of the top 250 global retailers in 2015, as measured by retail revenue, topped $ billion. The threshold to join the top 250 in 2013 was $ billion. Canada has nine retailers that broke that threshold: Loblaw ($ billion), Empire Company ($ billion), Metro Inc. ($ billion), Shoppers Drug Mart ($ billion), Canadian Tire Corporation ($ billion), Hudson’s Bay Company ($ billion), RONA Inc. ($ billion), LCBO ($ billion), and Overwaitea Food Group ($ billion).

Of the top global retailers, percent are headquartered in the United States, 36 percent in Europe, percent in Japan, and percent in Canada.¹⁶  Walmart remains the undisputed leader in the retail world, with sales more than three times as great as those of Costco Wholesale Corporation, the second-largest retailer, and accounting for more than 10 percent of the total top 250 retailers’ worldwide revenue.  

Opportunities in Retailing

Ask students what they think of retailing as a career. If there are many opportunities and they seem to pay well, why do most students think that retailing is not a good job to get after graduation?

Get students to check out which is a Canadian retail sector employment site and have them discuss the plethora of opportunities.

1. Management Opportunities

To cope with a highly competitive and challenging environment, retailers are hiring and promoting people with a wide range of skills and interests. Students often view retailing as part of marketing because management of distribution channels is part of a manufacturer’s marketing function. Retailers undertake most of the traditional business activities: raising capital from financial institutions; purchasing goods and services; developing accounting and management information systems to control operations; managing warehouses and distribution systems; designing and developing new products; and undertaking marketing activities such as advertising, promotions, sales force management, and market research. Thus, retailers employ people with expertise and interest in finance, accounting, human resources management, logistics, and computer systems, as well as marketing.

Retail managers often are given considerable responsibility early in their careers. Retail management is also financially rewarding. After completing a management training program in retailing, managers can increase their starting salary in three to five years if they perform well. Aspects of retail careers are discussed in Appendix 1A, available on Connect.

1. Entrepreneurial Opportunities

• Retailing provides opportunities for people wishing to start their own business. Many retail entrepreneurs are among the wealthiest people in Canada.

• The successes of Chip Wilson (LuLulemon), John Forzani (Sport Chek), John Stanton (Running Room) show how each capitalized on entrepreneurialopportunities.

What are some ideas that a retail entrepreneur might consider now?

Discuss the opportunities that entrepreneurs Chip Wilson (LuLulemon), John Forzani (Sport Chek), John Stanton (Running Room) developed into success strategies.

Retail Management Decision-MakingProcess

• The book is organized around the management decisions retailers make to provide value to their customers and develop an advantage over their competitors.

Use this to discuss the organization of the course and the book

Understanding the World of Retailing (Section I)

• Retail managers need a good understanding of their environment, especially their customers and competition, before they can develop and implement effective strategies.

• The critical environmental factors in the world of retailing are: (1) the macro-environment, and (2) the micro-environment. The impact of the macro-environment includes technological, social and ethical/legal/political factors on retailing. The retailer’s micro-environment includes the retailer’s competitors and customers.

Ask students about some changes occurring in the environment now that will affect retailing in general and specific retailers. Technology may come up as an answer and the impacts of technology (including the Internet) could be discussed in detail.

Retailing View Retail Council of Canada

RCC works with all levels of government and other stakeholders as a strong advocate for retailing in Canada to support career opportunities and employment growth in retail, to improve consumer choice and industry competiveness, and to support and sustain retail investments in Canadian communities from coast to coast.

1. Competition

• A retailer’s primary competitors are those with the same format. Thus, department stores compete against other department stores and supermarkets compete with other supermarkets. This competition between retailers with the same format is called intratype competition.

• To appeal to a broader group of consumers and provide one-stop shopping, many retailers are increasing their variety of merchandise. Variety is the number of different merchandise categories within a store or department. The offering of merchandise not typically associated with the store type, such as clothing in a drug store, is called scrambled merchandising.

• Competition between retailers that sell similar merchandise using different formats, such as discount and department stores, is called intertype competition.

• Increasing intertype competition has made it harder for retailers to identify and monitor their competition. In one sense, all retailers compete against each other for the dollars consumers spend buying goods and services.

• Since convenience of location is important in store choice, a store’s proximity to competitors is a critical factor in identifying competition.

• Management’s view of competition also can differ, depending on the manager’s position within the retail firm.

• The CEO of a retail chain may view competition from a much broader geographic perspective as compared to a specific store’s manager or a departmental sales manager within the store.

In going through this section, you might pick a specific local retailer. Ask students to identify the retailer’s customers, intratype competitors, intertype competitors, and environmental trends affecting the retailers. Exhibit Market concentration by NAICS:2010,2011 gives students a breakdown of industry sectors and the top three retailers by market share. Ask students to review the various sectors and discuss the retailers in each sector, how has the sector changed, what makes each retailer unique.

Exhibit 1-8: Top 50 Grocery Retailers and Wholesalers in North America is a great opportunity to discuss competition in the grocery sector in Canada and in North America. For instance of the market is dominated by 4 retailers in Canada (Loblaws dominating with 30%).

Ask students to give an example of intratype competition – local department store competing against another department store in the same mall

Ask students to compare the different types of merchandise offered at a Wal-Mart or Target to those offered at, say, 7-11 or McDonald’s.

Ask students to give an example of intertype competition – drug store and grocery store or department store that sell the same brand of cosmetics.

1. Customers

• Retailers are responding to broad demographic and life-style trends in our society, such as the growth in the elderly and minority segments of the Canadian population and the importance of shopping convenience to the rising number of two-income families.

• To develop and implement an effective strategy, retailers need to know why customers shop, how they select a store, and how they select among that store’s merchandise.

Query students on the specific impacts of say, an aging population or dual-income households on retailing, including retail location, store layout, etc.

1. Developing a Retail Strategy (Section II)

• An understanding of the macro- and microenvironments are needed to formulate and implement a retail strategy.

• The retail strategy indicates how the firm plans to focus its resources to accomplish its objectives. The retail strategy identifies: (1) the target market, (2) the nature of merchandise and services to be offered, and (3) how the retailer will build a long-term advantage over competitors.

1. Strategic Decision Areas

• The key strategic decision areas include the determination of :

1.market strategy

2.financial strategy

3. location strategy

4.organizational structure

5.human resource strategy

6. information systems

7.supply chain strategies

8.customer relationship management (CRM) strategies.

• When major environmental changes occur, the current strategy and the reasoning behind it are reexamined. The retailer then decides what, if any, strategy changes are needed to take advantage of new opportunities or avoid new threats in the environment.

• The retailer’s market strategy must be consistent with the firm’s financial objectives. Location decisions are important for both consumer and competitive reasons. A retailer’s organizational design and human resource management strategy are intimately related to its market strategy.   Retail information and supply chain management systems will be a significant opportunity for retailers to gain strategic advantage in the coming decade.

• Basic to any strategy is understanding the customers so as to provide them with the goods and services they want. Customer Relationship Management (CRM) is as business philosophy and set of strategies, programs, and systems that focus on identifying and building loyalty with the firm’s most valued customers.

1. Ethical and Legal Considerations

• Ethics are the principles governing the behaviour of individuals and companies to establish appropriate behaviour and indicate what is right and wrong.

• Examples of difficult situations that retailers face:

–      Merchandise made using child labour.

–      Advertising lowest prices but are not.

–      Retailers accepting expensive gifts from vendor.

–      Salespeople using high pressure sales approach.

–      Retailer giving preference to minorities for promotion

–      Preferential treatment for certain customers.

Canadian companies are becoming more transparent with their ethical policies. Discuss companies that have high ethical standards.

See about HBC – social responsibility at the Bay.

See and check out sustainability at Mountain Equipment Coop.

Discuss “The six tests of ethical action” Exhibit 1-10

1. Implementing The Retail Strategy

• To implement the retail strategy, management develops a retail mix that satisfies the needs of its target market better than its competitors.

• Elements in the retail mix include the Types of merchandise and services offered, merchandise pricing, the communication program, convenience of the store’s location and itslayout and design, people (assistance to customers provided by salespeople), HR training programs, and logistical processes. 7 P’s:

1. Product
2. Price
3. Process
4. Physical
5. People
6. Place
7. Promotion

• To be successful a retailer must develop a strategy that considers not only the internal environment of the business but carefully assesses the external environment.

• See Exhibit 1-9 displaying the diagram of the Retail Strategy in including 7 P’s , Target Market, Macro and Micro Environmental Factors and Situational Analysis.

Exhibit 1-10 – Ask students what McDonald’s needs to do to implement its strategy effectively.     Have them discuss each of the elements of the retail mix used by McDonalds. Compare the retail mix elements used by McDonalds to the retail mix elements used by a fancy restaurant in town. Why are the retail mixes of these two types of restaurants different? – [They have different target markets with different needs.]

The Retail Strategy is discussed in detail in Chapter 4.

• Summary

• Retailing provides considerable value to consumers while giving people opportunities for rewarding and challenging careers.

• The key to successful retailing is offering the right product, at the right price, in the right place, at the right time, and making a profit. To accomplish this, retailers must understand what customers want and what competitors are offering, now and in the future.

Appendix: Careers in Retailing

• Retailing offers exciting and challenging career opportunities. Few other industries grant as many responsibilities to young managers.

• Retailing offers a variety of career paths such as buying, store management, sales promotion and advertising, personnel, operations/distribution, loss prevention, and finance in several different corporate forms such as department stores, specialty stores, food stores, and discount stores.

• In addition, retailing offers almost immediate accountability for talented people to reach key management positions within a decade. Starting salaries are competitive, and the compensation of top management ranks among the highest in any industry.

Store Management

• Successful store managers must have the ability to lead and motivate employees. Store management involves all the disciplines necessary to run a successful business: sales planning and goal setting, overall store image and merchandise presentation, budgets and expense control, customer service and sales supervision, personnel administration and development, and community relations.

Merchandise Management

• Merchandise management attracts people with strong analytical capabilities, an ability to predict what merchandise will appeal to their target markets, and a skill to negotiate with vendors as well as store management to get things done. Many retailers break the merchandise/buying function into two career paths: buying and merchandise planning.

Corporate Staff

• Corporate staff opportunities include positions in computer systems, operations/distribution, promotions/advertising, loss prevention, finance/control, real estate, store design, and human resource management.

• Career opportunities for corporate staff positions are more difficult to break into.

Is Retailing For Me?

• Retailing is for people who like responsibility.

• Many opportunities for rapid advancement exist simply because of the sheer size of the retail industry.

• Retailing can be both financially and personally rewarding. Each day is different and sales associates and executives are rarely bored. After completing a management training program store managers with only a few years of experience can increase their salary significantly. Compensation packages often include a wide variety of benefits apart from salary and bonuses.

• Retailing is for those who like having exciting days, making quick decisions, and dealing with a variety of assignments, tasks, and people – often all at once.

• Retailing enables executives to change locations often or not at all.

• Many people consider retailing to be among the most racially and gender-blind industries.

Getting Ready For an Interview with a Retailer

• Some things you need to do to make a good impression in an interview with a retailer are:

• Visit the store before the interview.

• Read about the retailer.

• Find out whether the retailer is hiring primarily for store or merchandise management positions.

• Determine whether there have been recent changes in ownership or top management.

• Research the retailer’s strategy and growth potential. If a publically traded company, checking out the latest annual report is a good way to gain insight into their strategy.

• Determine whether the retailer is known for innovation.

• Find out about the retailer’s computers and distribution systems.

Great Canadian website dedicated to the retail sector is .