What have created these differences in distribution systems

1
What have created these differences in
distribution systems?
2
Opportunities in RetailingManagement
opportunities

• People with a wide range of skills and interests
  needed because retailers functions include
• Finance
• Purchase
• Accounting
• Management information system (MIS)
• Supply management including warehouse and
  distribution management
• Design and new product development
• Financially rewarding
• 5-year salary of buyers 50,000 - 60,000
• 5-year salary of store managers 120,000 -
  160,000

3
Nature of Retail Industry is Changing
To Todays Retailer
Mom and Pop Store
4
Retailers are a Business Like Manufacturers
Real Estate
Finance
Store Design
Promotion/Advertising
MIS
Loss Prevention
Operations
Human Resources
The McGraw-Hill Companies, Inc./Andrew Resek,
photographer
5
Retailing is a High Tech Industry

• Selling Merchandise through the Internet
• Using Internet to manage supply chains
• Analyze POS data to tailor assortments to stores
• Computer systems for merchandise planning and
  tracking

6
Opportunities in RetailingEntrepreneurial
opportunities
Wal-Mart Sam Walton

• Retailing provides opportunities for people who
  want to start their own business
• Some of the worlds richest people are retailing
  entrepreneurs
• Examples of retailing entrepreneurs
• Sam Walton (Wal-Mart)
• Jeff Bezos (Amazon.com)
• Ingvar Kamprad (IKEA)
• Anita Roddick (the Body Shop)

IKEA Ingvar Kamprad
7
Career Opportunities in RetailingStart Your Own
Business
List of Retail Entrepreneurs on Forbes 400
Richest Americans

• Walton Family (Wal-Mart)
• Fisher (The Gap)
• Wexner (The Limited)
• Menard (Menards)
• Marcus (The Home Depot)
• Kellogg (Kohls)
• Schulze (Best Buy)
• Levine (Family Dollar)
• Gold (99Cent Only)

8
Retail Management Decision Process
9
Strategic Vs Tactical Decisions

• Doing the Right Thing (direction) vs.
• Doing Things Right (execution)
• Strategic Decisions Are
• Made Infrequently
• Long-term
• Require significant investment
• Not easily reversed
• Location, Organization Design, Information and
  Distribution Systems, Customer Service

10
Retail Strategy

• Need to identify the competition
• intratype competition
• (e.g., Dillards vs. JCPenney)
• intertype competition
• (e.g., Dillards vs. Wal-Mart)
• Identifying customers
• What are the significant demographic and
  life-style trends
• Who are your target customers

11
Retail Strategy

• A retail strategy should identify
• the target market
• the product and service mix
• a long-term comparative advantage

12
JC Penneys Strategic Evolution(1)

• Main Street (small town) private label, soft
  goods (apparel, home furnishings), decentralized
  retailer
• Changes in environment -- increased disposable
  income, growth of suburbs, interstate highway
  program
• Emulate Sears in moving to enclosed suburban
  malls
• Add hard goods (appliances, automotive)
• Diversify drug stores, insurance, specialty
  stores
• Develop catalog channel

13
JC Penneys Strategic Evolution(2)

• Focus on department store format and soft goods
  develop electronic retail channel
• Mid-market, mall based department store, between
  Wal-Mart/Target and Macys/Dillards
• Competition from Target, Kohls
• Centralization to reduce cost, increase
  responsiveness - centralized buying, warehouse
  delivery
• Off the mall stores to increase customer
  convenience
• Improving store atmospherics
• Upgrading merchandise offering (e.g., Sephora,
  American Living by Polo Ralph Lauren)

14
Wal-Marts Strategic Evolution

• Small Town - Discount Store selling hard goods
  and soft goods
• limited service, efficient distribution
• Enter suburban markets
• Warehouse Clubs (Sams)
• Supercenters
• International Expansion
• Supermarkets, neighborhood markets

15
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
• Acquired by Kmart

16
Whole Foods Implementation
Strategy - organic and natural foods supermarket
chainAssortment beyond organic/natural
foods Private labels - Whole Food, 360 Day
Value Love, trust, and employee
empowerment Equality in compensation
17
Decision Variables for Retailers
Customer Service
Retail Strategy
Store Design and Display
MerchandiseAssortment
Location
Pricing
Communication Mix
18
Wal-Marts Retail Mix
Customer Service
Location
Retail Strategy
MerchandiseAssortment
Store DesignAnd Display
Pricing
Communication Mix
19
Wal-Marts Retail Mix
Location Strategy
Free-standing Stores
20
Wal-Marts Retail Mix
Assortment Strategy
Customer Service
Location
Large Number of Categories Few Items in Each
Category
Store Design and Display
Communication Mix
Pricing
21
Wal-Marts Retail Mix
Pricing Strategy
Low, EDLP
22
Wal-Marts Retail Mix
Communication Mix
TV and NewspaperInsert Ads
23
Wal-Marts Retail Mix
Store Design and Display
Basic, Special Displays for Products
24
Wal-Marts Retail Mix
Customer Service
Limited