Retailing

Business activities involved in selling goods

and services to consumers for their

personal, family, or

household use.

Retailer

Business that sells products

and/or services to consumers for

their personal or

family use.

Distribution Channel

The set of firms or businesses that facilitate

the movement of products

from the point of production (manufacturer)

to the point of sale (wholesaler or retailer)

to the ultimate consumer.

Vertical Integration

When a firm performs more than one set

of activities in the channel, such as

investments by retailers in wholesaling

or manufacturing.

Backward Integration

When a retailer performs some distribution

and manufacturing activities,

such as operating warehouses

or designing private label merchandise 

Forward Integration

When a manufacturer undertakes

retailing activities, such as Ralph Lauren

operating his own retail stores

Breaking Bulk

When retailers offer products in smaller

quantities

(from bulk receipts by manufacturers)

tailored to individual

consumers' and households'

consumption patterns.

Intra-

Type Competition

Competition between the same type of

retailers (i.e. department

stores vs. department stores)

Inter-

Type Competition

Competition between retailers that

sell similar merchandise

using different formats,

such as discount and department

stores.

Variety

The number of different merchandise

categories within a store

or department

Scrambled Merchandising

Offering merchandise not typically

associated with the store type

Example:  clothing in a drug store

Retail Strategy

Indicates how the firm plans to

focus its resources to accomplish its

objectives.

Retail Mix

The decision variables retailers use

to satisfy consumer needs and

influence their purchase

decisions. 

Elements include:

Location

Merchandise Assortment

Pricing

Store Design and Display

Customer Service

Ethics

The principles governing the behavior

of individuals and companies

to establish appropriate

behavior and indicate

what is right and wrong.

North American

Industry Classification

 System

Classifiction scheme to collect data

on business activity in each country

Every business is assigned

a hierarchical six-digit code

based on the type of products

and services it produces and sells.

Variety

also known as

Breadth of Merchandise

Represents the number of merchandise

categories a retailer

offers.

Assortment

also known as

Dept of Merchandise

The number of different

items in a merchandise

category

SKU

Stock

Keeping Unit

Conventional

Supermarket

Self-service food store offering

groceries, meat, and produce with

limited sales of nonfood items,

such as health and beauty aids

and general merchandise.

Carry about 30,000 SKUs

Limited Assortment

Supermarkets

 A "bare-bones," low-priced grocery store that provides very limited services and carries fewer than 2,000 items with limited-if any-perishables, e.g., Aldi and Sav-A-Lot.

Extreme Value

Food Retailers

A method of optimizing features of the supply chain in order for customers to receive efficient service, lowered prices, and expanded selections. Some of the main participants of the ECR movement were from the Consumer Package Goods (CPG, or FMCG) industry, with suppliers looking to maximise the relationship with their key customers like Wal*Mart

Power perimeter

high traffic profitable

departments that "pull"

shoppers through the store

Supercenter

A large food/drug combination store and mass merchandiser under a single roof. The supercenters offer a wide variety of food, as well as non-food merchandise. These stores average more than 170,000 square feet and typically devote as much as 40% of the space to grocery items, e.g., Wal-Mart, Kmart, Super Target.

Fastest Growing retail category

Hypermarkets

A very large food and general merchandise store with approximately 180,000 square feet of selling space. While these stores typically devote as much as 75% of the selling area to general merchandise, the food-to-general merchandise sales ratio is typically 60/40.

Not Common in the U.S.

40,000-60,000 items stocked

Warehouse

Club

A membership retail/wholesale hybrid with a varied selection and limited variety of products presented in a warehouse-type environment. These 120,000 square-foot stores have 60% to 70% GM/HBC and a grocery line dedicated to large sizes and bulk sales. Memberships include both business accounts and consumer groups, e.g., Sam's Club, Costco.

Convenience

Store

General Merchandise

Retailers

Department

Stores

stores that have separate departments for various merchandise lines (carry a broad variety and deep assortment), such as apparel, jewelry, home furnishings, and linens, each with separate cash registers and sales associates. Department stores in this industry generally do not have central customer checkout and cash register facilities and offer customer services (credit, gift wrap, display, etc.).

Full-Line

Discount

Stores

Specialty

Stores

A specialty store is a store, usually retail, that offers specific and specialized types of items. These stores focus on selling a particular brand, or a particular type of item. For example, a store that exclusively sells cell phones or video games would be considered specialized.

Even though prices might be higher at any of the above types (single location, local, no affiliation) of the specialty store, customers often prefer the expertise offered by small stores, usually opened by owners who are passionate about the products they sell. In large chain stores, assistance and product knowledge may not exhibit the same kind of quality as in smaller local stores.

Drugstores

a common American term for a type of specialty store centrally featuring a pharmacy. Drugstores sell not only medicines, but also miscellaneous items such as candy, cosmetics, and magazines, as well as light refreshments.

Category

Specialists

also

frequently called

Category

Killers

A large retail chain store that is dominant in its product category. This type of store generally offers an extensive selection of merchandise at prices so low that smaller stores cannot compete.

Basically Discount Specialty Stores

Best Buy is an example of an electronics category killer.

Home Improvement

Centers

Category specialist offering

equipment and material used by

do-it-yourselfers and

contractors to make home

improvements...Menards, Lowe's,

Home DePot are examples

Extreme

Value

Retailers

Small, full-line discount stores that

offer a limited merchandise

assortment at very low prices.

Dollar General, Family Dollar, Dollar Store

Off-Price

Retailers

retail stores offering merchandise at prices less than other retail stores. They acquire out-of-season products and distressed merchandise from other retailers, including bankruptcies, and from manufacturers having production overruns. Off-price stores can threaten retailers carrying name-brand merchandise at full retail prices.

Closeout

Retailers

Off-price retailers that sell

a broad but inconsistent assortment

of general merchandise as well as

apparel and soft home goods.

Big Lots (As the nation's largest broadline closeout retailer, Big Lots has the power to negotiate the best deals in the business)

Outlet Stores

Off-price retailers owned by manufacturers

or department or specialty store

chains...

Those owned by manufacturers are referred

to as factory outlets.

Electronic

Retailing

Retail format in which the retailers

communicate with customers

and offer products and services

for sale over the Internet

Catalog

Retailers

Nonstore retail format in which

retail offering is communicated

to a customer through a

catalog.

Direct Mail

Retailer

Retail format in which the retail offering

is communicated

with their customer using

letters and brochures.

General Merchandise

Catalog

Retailers

offer a broad variety of

merchandise in catalogs that

are periodically

mailed to their customers

Specialty

Catalog

Retailers

focus on specific

catagories of merchandise

Direct Selling

Retail format in which sales people

frequently independent businesspeople,

contact customers directly in a

convenient location, either at the

customer's home or at work

demonstrate merchandise benefits

and/or explain a service;

take an order; and deliver the merchandise

or perform the service.

Party Plan

System

Salespeople encourage customers to

act as hosts and invite friends

or coworkers to a "party" at which the

merchandise is demonstrated.

Multi level

Network

People serve as master distributers

recruiting other people to become

distributers in their network.

Pyramid

Scheme

Develops when the firm and its program

are designed to sell merchandise

and services to other

distributers rather than to end users.

Television

Home shopping

Retail format in which customers

watch a TV program that demonstrates

merchandise and then place

orders for the merchandise

by telephone

Retail

Chain

An operator of 11 or more retail stores...

company that operates multiple

retail units under common ownership

usually has centralized decision making

for defining and implementing its

strategy.

Franchising

Contractual agreement between

franchisor and franchisee

that allows the franchisee to

operate a retail outlet using a name

and format developed and

supported by the franchisor

Multichannel

Retailers

Those retailers that sell

merchandise or services through

more than one channel.

Magalogs

Catalogs with magazine-type

editorial content

“The goal is to make you, the customer, feel like part of a community and to give you the tools to act on that feeling.”

It’s like an infomercial in print.

Virtual

Communities

Networks of people who seek

information, products, and services

and communicate with one another about

specfic issues

Online

chat

Provides customers with the

opportunity to click a button at anytime

and have an instant messaging email

or voice conversation with a customer

service representative

Electronic

Agent

A computer program that locates

and selects alternatives on the basis

of some predetermined characteristics.

Share of

Wallet

Percentage of total

purchases made by a customer

from that retailer

Disintermediation

When a manufacturer sells

directly to a consumer

by-passing retailers.

Conversion Rate

The percentage of consumers

who buy the product after viewing it.

Brand

A distinguishing name or symbol, such as a

logo, that identifies the products or

services offered by a seller and

differentiates those products or services

from the offerings of competitors.

Brand

Equity

The value that a brand image

offers retailers

Strong brands can affect the

customer's decision-making process,

motivate repeat visits and purchases, and

build loyalty.

Brand

Awareness

The ability of a potential customer

to recognize or recall that the brand

name is a type of retailer or product/service.

The strength of the link between the brand

name and the type of merchandise

or service in the minds of consumers.

Aided

Recall

When consumers indicate they know

the brand when the name is presented

to them.

Top of mind

Awareness

Highest level of awareness

Occurs when consumers mention

a specific brand name first when they

are asked about the type of retailer,

merchandise category, or service.

Brand

Associations

Anything linked to or connected

with the brand name in a consumer's

memory

Brand

Image

Set of associations that are

usually organized around some

meaningful themes.

Impression in the consumers' mind of a brand's total personality (real and imaginary qualities and shortcomings). Brand image is developed over time through advertising campaigns with a consistent theme, and is authenticated through the consumers' direct experience.

Advertising

Form of paid communication

to customers using impersonal

mass media such as newspapers,

TV, radio, direct mail, and the

Internet.

Sales

Promotions

Offer extra value and incentives

to customers to visit a store

or purchase merchandise during

a specific period of time.

Communication

Objectives

Specific goals related to the retail

communication mix's effect on

the customer's decision-making process.

Marginal

Analysis

Based on the economic principle

that firms should increase communication

expenditures as long as each additional

dollar spent generates more than a

dollar of additional contribution.

Law of diminishing returns.

Buying Process

Steps consumers go through when buying a product

or service including:

Need Recognition

Information Search

Evaluation of Alternatives

Purchasing product or service

Post purchase evaluation

Utilitarian Needs

Needs motivating consumers to go

shopping to accomplish

a specific task.

Hedonic Needs

Needs motivating consumers to

go shopping for pleasure.

Cross-shopping

Pattern of buying both premium and low-priced

merchandise or patronizing

both expensive, status-oriented

retailers and price-oriented

retailers

Multiattribute

Attitude Model

Based on the notion that customers

see a retailer, a product,

or a service as a collection

of attributes or characteristics

Model is designed to predict a customer's

evaluation of a product, service, or retailer based on

(1) its performance on relevant attributes and

(2) the importance of these attributes to the

customer.

Extended

Problem Solving

Purchase decision process

in which the customers

devote considerable

time and effort to

analyzing their alternatives.

Limited

Problem Solving

Purchase decision process

involving a moderate amount

of effort and time

Habitual

Decision Making

Purchase decision process

involving little or no

conscious effort.

Brand Loyalty

Customers like and

consistently buy a specific

brand in a product category.

Store Loyalty

Customers like and

habitually visit the same

store to purchase a type of

merchandise

Retail

Market Segment

Group of customers whose needs

are satisfied by the same

retail mix because they

have similar needs.

Actionability

The definition of a segment

clearly indicates what the

retailer should do to satisfy

its needs.

Identifiability

Permits the retailer to determine

(1) the segment's size and

(2) with whom the retailer

should communicate when promoting

its retail offering

Accessibility

The ability of the retailer to

target its communications

to customers in a segment

Geographic

Segmentation

Groups customers according to

where they live

Demographic

Segmentation

Groups customers on the basis

of easily measured, objective characteristics

such as age, gender, income, and

education

Geodemographic

Segmentation

Uses both geographic

and demographic characteristics

to classify consumers

Lifestyle

Segmentation

also known as

Psychographics

Refers to how people live, how

they spend their time and money,

what activities they pursue, and

their attitudes and opinions

about the world in which they live

Buying Situation

Segmentation

Benefit

Segmentation

Group customers together who are

seeking similar benefits

Retail

Strategy

Statement identifying

(1) the retailer's target market,

(2) the format the retailer plans to

use to satisfy the target market's needs,

and, (3) the bases upon which the retailer

plans to build a sustainable competitive

advantage.

Target
Market

The market segment(s) toward

which the retailer plans to focus its

resources and retail mix.

Retail

Format

The type of retail mix

(nature of merchandise and

services offered, pricing policy,

advertising and promotion program,

approach to store design and visual

merchandising, typical location) used

by the retailer to satisfy the needs of its

target market.

Sustainable

Competitive

Advantage

An advantage over the competition

that is not easily copied

and thus can be maintained over a long

period of time

Positioning

The design and implementation

of a retail mix to create an image

of the retailer in the customer's mind relative

to its competitors

Strategic Retail

Planing

Process

The set of steps a retailer goes

through to develop a strategic

retail plan:

Define business mission

Conduct a situation audit

Identify Strategic Opportunities

Evaluate Strategic Alternatives

Establish Specific Objectives and allocate resources

Develop a Retail Mix and implement strategy

Evaluate Performance and make adjustments

Mission Statement

Broad description of a retailer's

objectives and the scope

of activities it plans to

undertake

Situation

Audit 

Analysis of the

opportunities and

threats in the retail

environment and the

strengths and weaknesses of the retail

business relative to its competitors

Barriers to

Entry

Conditions in a retail market

that make it difficult for other

firms to enter the market, such as

economies of scale, customer loyalty,

and the availability of great locations

Return on Assets

The profit return on all

the assets possessed by the

firm

Net profit Margin times

Asset Turnover

Strategic

Profit Model

Method for summarizing the factors that affect a firm's

financial performance as measured

by return on assets

Two components:  net profit margin

and asset turnover.

Net Profit

Margin

How much profit (after tax)

a firm makes divided by

its net sales

Assets

Turnover

Net sales divided by its assets.

Assesses the productivity of a firm's investment

in its assets and indicates how many

sales dollars are generated

by each dollar of assets

Net Sales

Refers to the total revenue

received by a retailer

after all refunds have been paid

to customers for returned

merchandise

Gross Margin

Net Sales minus the cost of goods

sold...It indicates how much

profit the retailer is making on

merchandise sales without considering the

expenses associated with operating the store

Operating

Expenses

Costs, other than the cost of

merchandise, incurred in the normal course

of doing business, such as salaries for associates

and managers, advertising, utilities, office supples,

and rent.

Net

Profit

Gross margin minus operating expenses

and taxes...it is a measure of overall

performance with respect to the profit

margin management path

Current

Assets

Assets that can normally

be converted to cash within a year

Cash, accounts receivable, and

merchandise inventory

Inventory Turnover

Used to evaluate how effectively

retailers utilize their investment in

inventory and reflects the cost of goods sold

from the income statement divided by

the average inventory level from the

balance sheet.

Fixed Assets

Assets that require more than

one year to convert to cash

Buildings, fixtures, and equipment are examples

Trade

Area

The geographic area encompassing most

of the customers who would patronize

a specific retail site.

Freestanding

Sites

Retail locations for an individual,

isolated store unconnected to

other retailers

Merchandise

Kiosks

Small, temporary selling spaces

typically located in the walkways

of enclosed malls, airports, train stations,

or office building lobbies

Central

Business

District

The traditional downtown

business area in a city or town

Main Street

The traditional shopping area

of smaller towns or a secondary

business district in a suburb

or within a larger city.

Inner City

A high-density urban area

consisting of apartment buildings

populated primarily by lower-income

consumers

Shopping Center

Group of retail and other

commercial establishments that

is planned, developed, owned, and

managed as a single property

Neighborhood

Centers

Attached row of stores

managed as a unit with onsite

parking usually located in the front of

the stores

"open air centers"

Typically anchored by a supermarket

or a drugstore

Community Center

Attached row of stores

managed as a unit with onsite

parking usually located in the front of

the stores

"open air centers"

Larger than neighborhood centers, these

have additional anchors such as discount

stores, off-price stores, or category specialists

Power

Center

Shopping centers that consist

primarily of collections of big-box

retail stores such as discount stores,

orr-price stores, warehouse clubs, and

category specialists

Shopping Malls

Enclosed, climate controlled,

lighted shopping centers with retail

stores on one or both sides of an enclosed

walkway

regional = less than one million square feet

super regional = more than one million sq. feet

Lifestyle

Center

Shopping centers with an open-air

configuration of upscale specialty

stores, entertainment, and restaurants

with design ambience and amenities such

as fountains and street furniture

Fashion/Specialty

Centers

Shopping centers composed mainly of

upscale apparel shops, boutiques,

and gift shops carrying selected

fashions or unique merchandise

of high quality and price.

Outlet

Centers

Shopping centers that contain

mostly manufacturers' and retailers'

outlet stores

Theme/Festival

Centers

Shopping centers that typically employ

a unifying theme carried by the individual

shops in their architectural design

and, to an extent, in their merchandise

Convenience Shopping

Consumers are primarily concerned

with minimizing their effort to get the

product or service they want

Indifferent about which brands to buy

indifferent to retailer's image

insensitive to price

Comparison Shopping

Consumers have a general idea

about the type of product or service

they want, but they do not have a strong

preference for a brand, model, or specific

retailer to patronize

Indifferent about which brands to buy or store

Purchase decisions are more important to them

Seek information and are willing to expend

considerable effort planning and making the purchase

Specialty

Shopping

Consumers know what they want and will

not accept a substitute

Brand and/or retailer loyal

Will pay a premium or spend extra effort

Understored

Condition in which an area has too

few stores to satisfy the needs of

local consumers for specific

merchandise and services

Traffic

Flow

The number of vehicles and

pedestrians that pass by the site

Accessibility

Ease with which customers

can get into and out of the site

Visibility

Customer's ability to see the store

from the street

Trade

Area

Contiguous geographic area that

accounts for teh majority of a store's

sales and customers

Primary Trading

Area

The geographic area from which the

shopping center or store site

derives 50-70 percent of its customers

Destination

Store

A store in which the merchandise, selection,

presentation, pricing, or other unique

features attract customers to the

store regardless of other neighboring

stores.

Parasite Store

A store that does not create

its own traffic and whose trade

area is determined by the dominant

retailer in the shopping center or

retail area

Examples are food court restaurants

and kiosks in the mall

Customer

Spotting

Process of locating teh residences of customers

for a store on a map and displaying

their positions relative to store location

Outparcel

A building or kiosk that sits

in the parking lot of a shopping

center but is not physically attached to

the center

Employee

Productivity

A retailer's sales or profit

divided by the number of

employees

Employee

Turnover

Defined as the number of employees

leaving their job during the year

divided by

the number of positions

Organization

Structure

Identifies the activities

to be performed by specific employees

and determines the lines of authority

and responsibility in the firm

Centralization

When authority for retailing

decisions is delegated to corporate

managers rather than to geographically

dispersed managers

Decentralization

When authority for retail decisions is assigned to

lower levels in the organization

Organization

Culture

Set of values, traditions, and customs

of a firm that guide employee behavior.

Guidelines are not written down as a set

of policies and procedures; they are traditions

passed along by experienced employees

to new employees

Empowerment

A process in which managers

share power and decision-making

authority with employees

Promotion

from within

Staffing policy that involves hiring new employees

only for positions at the lowest level in the

job hierarchy and then promoting those

experienced employees for openings

at higher levels in the hierarchy

Flextime

Job scheduling system that

enables employees to choose the times

they work

Job

Sharing

Two employees voluntarily

are responsible for a job that

was previously held by one person

Mentoring

programs

Programs that assign

higher-level managers

to help lower-level managers

learn the firm's values and meet

other senior executives

Glass

Ceiling

An invisible barrier that makes it

difficult for minorities and women

to be promoted beyond a certain level

Illegal

Discrimination

The actions of a company or its

managers that result in members of a

protected class being treated unfairly and

differently than others