Chapter 1 Term Backward Integration Breaking Bulk Definition Retailer performs some distribution and manufacturing activities Example JCPenney sells Arizona Jeans Private label A function performed by retailers or wholesalers in which they receive large quantities of merchandise and sell them in smaller quantities Reduced transportation cost for manufactures and allows consumers to purchase merchandise in smaller more useful quantities Corporate Social Responsibility Many stages Ethics Vary by person CSR voluntary actions taken by a company to address the ethical social and environmental impacts of its business operations and the concerns of its stakeholders The principles governing individuals and companies that establish appropriate behavior and indicate what is right and wrong Manufactures undertake retailing and wholesaling activities A major value providing activity performed by retailers whereby products will be available when consumers want them Competition between retailers that sell similar merchandise using different formats Ralph Lauren operating its own retail stores New York Jones Liz Claiborne operates its own stores Publix etc hold items in bulk so consumers don t need to at home Publix has the space to do so Discount and department stores Forward integration Holding inventory Intertype competition Intratype competition Competition between the same type of retailers Department store vs department store Retailer Retailing Retail mix Retail strategy Kroger vs Safeway Business that sells product and or services to consumers for personal or family use The final phase of a distribution channel that links manufactures to consumers a set of business activities that adds value to the products and services sold to consumers for their personal or family use Some companies are both retailers and wholesalers Kohl s Macy s Wendy s Amazon com Jiffy Lube AMC j Crew Office Depot The Home Depot United Airlines Bank of America Costco Sam s Set of decisions retailers make to satisfy customers needs and influence their purchase decisions Indicates how the retailer plans to focus its resources to accomplish its objectives Includes customer service location merchandise management pricing communication mix store design and display Identifies 1 target market 2 nature of the merchandise and services the retailer will offer to satisfy the needs of the target market 3 how the retailer will build a long term advantage over its competitors Clothing in a drugstore Walgreens CVS Scramble Merchandising When retailers offer merchandise not typically associated with their type of store Supply Chain a set of firms that make and deliver a given set of goods and services to the Manufacturing Wholesaling Retailers ultimate consumer Consumers firm performs more than one set of activities in the channel Retailer invest in wholesaling or manufacturing Vertical Integration Wholesalers Engage in buying taking title to often storing and physically handling goods in large quantities and then reselling the goods usually in smaller quantities to retailers or other businesses When authority for retail decisions is made at lower levels in the organization Decentralization How to Retailers Add Value Retail Entrepreneurs Strategic vs Tactical Decisions Retail Management Decision Process buy other Break Bulk buy it in quantities Provide Assortment products at the same time customers want Hold inventory convenient place when you want it get credit layaway Offer Services buy it at a see it before you buy Fisher The Gap Sam Walton Walmart Jeff Bezos Amazon com Ingvar Kamprad IKEA Anita Roddick the Body Shop Wexner Menard s Marcus The Home Depot Kellogg Kohl s Schulze Best Buy Doing the Right Thing DIRECTION vs Doing things right EXECUTION Chapter 2 NAICS Codes North American Idustry Classification System Chart below Classification of retail firms into a hierarchical set of six digit codes based on the types of products and services they produce and sell Deep vs shallow The number of SKU s within a merchandise category Assortment Depth of merchandise Many types of cell phones many types of TV s Examples Pg 33 Variety Breadth of merchandise Computer bike jewelry clothing In soft merchandise a SKU usually means a size color and style SKU Fair Trade Warehouse clubs Costco Sam s club Off price retailer TJMaxx Marshalls etc Department stores Macy s JCPenny Sears Kohl s Nordstrom Wide vs Narrow The number of merchandise categories Stock keeping unit The smallest unit available for keeping inventory control Practice of purchasing from factories that pay workers a living wage considerably more than the prevailing minimum wage and offer other benefits such as onsite medical treatment A retailer that offers a limited assortment of food and general merchandise with little service and low prices to ultimate consumers and small businesses A retailer that offers an inconsistent assortment of brand name fashion oriented soft goods at low prices Also known as close out retailers A retailer that carries a wide variety and deep assortment offers considerable customer services and is organized into separate departments for displaying merchandise Specialty retailers Victoria Secret lingerie beauty Sephora perfume cosmetics etc Category specialist Best Buy Starbucks A type of store concentrating on a limited number of complementary merchandise categories and providing a higher level of service Deep but narrow assortment Also known as Category killer A discount retailer that offers a narrow but deep assortment of merchandise in a category and thus dominates the category from the customer s perspective End of season merchandise that will not be used in the following seasons Merchandise that has minor mistakes in construction A contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a retail outlet using a name and format developed and supported by the franchisor Offering multi ways to purchase their product Sales people encourage people to act as host and invite friends or coworkers to a party at which the merchandise is Close outs Irregulars Franchising Multi Channel Party Plan Store catalog web etc Convenience store Conventional supermarket Discount store Full line discount store Direct Selling demonstrated The hose or hostess receives gift or commission for arranging the meeting A store that provides a limited variety and assortment of merchandise at a convenient location in a 2000 3000 sq ft