Introduction

q to the
World of Retailing
 Learning Objectives
q
1 Identify retailing activities

2 Realize the importance of retailing in the country and

world economies.

3 Analyze the changing retail industry

4 Recognize the opportunities in retailing

5 Understand the strategic retail management decision

process.
Retailing
➢ is the set of business activities that adds
value to products and services sold to
consumers for their personal or family use.

Fact: The word retail is derived from the French word retailer, meaning to cut a
piece off or break bulk
Retailer
➢ is a business that sells products and/or
services to consumers for their personal or
family use. Retailers are a key component
in a supply chain that links manufacturers to
consumers.
Supply Chain
 Value-creating activities undertaken by retailers

Providing assortment Breaking Bulk Holding Inventory Providing Services

Offering an assortment Retailers offer the A major value-providing Retailers provide services
enables their customers products in smaller activity performed by that make it easier for
to choose from a wide quantities tailored to retailers is holding customers to buy and
selection of products, individual consumers’ inventory so that use products. For
brands, sizes, and prices and households’ products will be example, retailers offer
at one location. consumption patterns— available when credit so that consumers
an activity called consumers want them. can have a product now
breaking bulk. and pay for it later.
Retailers Perform Wholesaling and Production
Activities
Wholesalers
➢ buy and store merchandise in large
quantities from manufacturers and then
resell the merchandise (usually in smaller
quantities) to retailers.
Retailers Perform Wholesaling and Production
Activities
Vertical integration
➢ means that a firm performs more than one
set of activities in the channel, as occurs
when a retailer engages in wholesaling
activities by operating its own distribution
centers to supply its stores
Retailers Perform Wholesaling and Production
Activities

Backward integration
➢ arises when a retailer performs some
wholesaling and manufacturing activities,
such as operating warehouses or designing
private-label merchandise.
Retailers Perform Wholesaling and Production
Activities
Forward integration
➢ occurs when a manufacturer undertakes
retailing and wholesaling activities.
Retailers Perform Wholesaling and Production
Activities
Comparison of Retailing and
Distribution across the World
 Retailing Industry in the Philippines

Source: https://psa.gov.ph/content/2017-annual-survey-philippine-business-and-industry-aspbi-wholesale-and-retail-trade-0
 Retailing Industry in the Philippines

Source: https://psa.gov.ph/content/2017-annual-survey-philippine-business-and-industry-aspbi-wholesale-and-retail-trade-0
Corporate Social Responsibility
➢ involves an organization voluntarily
engaging in business practices that meet or
exceed the ethical and legal expectations of
its stakeholders—its employees, customers,
community, and society in general.
Role in Developing Economies—
The Bottom of the Pyramid

Base of the pyramid or Bottom of the

Pyramid (BoP)
➢ Consumers in the low income consumer
segment.
Top Retailers in the World
Fact: Walmart’s annual sales are
five times greater than the sales
of Procter & Gamble, the largest
consumer product producer.
Fact: Walmart processes more
than 100 million transactions per
hour through its POS terminals in
stores around the world.
Fact: Walmart has a data
warehouse with more than 2.5
petabytes (2,500 terrabytes) of
information—the equivalent of
167 times more than all of the
books in America’s Library of
Congress.
 Entrepreneurial Opportunities

Ingvar Howard Schulz

Jeff Bezos Do Won and Kamprad (Starbucks)
(Amazon.com) Jin Sook Chang (IKEA)
(Forever 21)
 Entrepreneurial Opportunities

Edgar Sia Joe Magsaysay

Tony Tan Socorro (Mang Inasal) (Potato Corner)
Caktiong Ramos
(Jollibee) (National
Book Store)

Source: https://business.inquirer.net/273445/eight-successful-filipino-
The Retail Management Decision Process
 The Retail Management Decision Process
Intratype of competition Intertype of competition
➢ competition between ➢ competition among
the same type of retailers that sell similar
retailers merchandise using
different types of retail
When retailers offer merchandise
not typically associated with their
outlets, such as drug
type of store, such as clothing in a and department stores.
drugstore, the result is scrambled
merchandising.
 The Retail Management Decision Process
Intratype of competition Intertype of competition

vs
 Retail Strategy

1 the target market, or markets toward which the retailer will

direct its efforts

2 the nature of the merchandise and services the retailer will

offer to satisfy the needs of the target market

3 how the retailer will develop unique assets that enable it to

achieve long term advantage over its competitors
 Retail Mix

➢It is a set of decisions

retailers make to satisfy
customer needs and
influence their purchase
decisions.
Ethical and Legal Considerations

Ethics
➢ are the principles governing individuals and
companies that establish appropriate
behavior and indicate what is right and
wrong.
Ethical and Legal Considerations

Checklist for Making Ethical Decisions

 Summary
1 Identify retailing activities

Retailing is defined as a set of business activities that add value

to the products and services sold to consumers for their personal
or family use. These value-added activities include providing
assortments, breaking bulk, holding inventory, and providing
services.
 Summary

2 Realize the importance of retailing in the country and

world economies.

Retailing plays an important role in the country’s economy.

One out of four workers in the United States works for a retailer
or for a company selling products to a retailer, and the U.S. retail
sector accounts for about the same percentage of the U.S. GDP
as the entire manufacturing sector. Retailing also plays an
important role in developing economies. Some business scholars
feel that there is need for modern retail methods to be used to
serve consumers at the bottom of the pyramid.
 Summary
3 Analyze the changing retail industry

The retail industry has changed dramatically over the last 50 years. Many
well-known national and international retailers were small startup
companies 50 years ago. Now the industry is dominated by large firms. The
development of information systems is one the forces facilitating the growth
of large retailers.
Before the availability of modern information systems, it was difficult for
retailers to lower costs through economies of scale, and larger retailers had
limited advantages over small local or regional retailers.
With these information systems, retailers are able to efficiently and
effectively manage millions of customer transactions with thousands of
stores and suppliers across the globe.
 Summary

4 Realize the importance of retailing in the country and

world economies.

Retailing offers opportunities for exciting, challenging

careers, either by working for a retail firm or starting your own
business.
 Summary

5 Understand the strategic retail management decision

process.

The retail management decision process involves developing a

strategy for creating a competitive advantage in the marketplace
and then developing a retail mix to implement that strategy. The
strategic decisions, discussed in the first section of this textbook,
involve selecting a target market; defining the nature of the
retailer’s offering; and building a competitive advantage through
locations, human resource management, information and supply
chain management systems, and customer relationship
management programs.
 Summary

5 Understand the strategic retail management decision

process.

The merchandise and store management decisions for

implementing the strategy, involve selecting a merchandise
assortment, buying merchandise, setting prices, communicating
with customers, managing the store, presenting merchandise in
stores, and providing customer service. Large retail chains use
sophisticated information systems to analyze business
opportunities and make these decisions about how to operate
their businesses in multiple countries.
References
Grewal, D., Levy, M., Weitz, B.A (2014). Retailing
Management, 9th Edition. Internal Edition. McGraw-Hill
Education

Levy, M. and Weitz, B.A. (2012). Retailing Management, 8th

Edition, International Edition. Philippines: McGraw-Hill
Education
Introduction to the
World of Retailing