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Chapter 1 Term Backward Integration Breaking Bulk Definition Example Retailer performs some distribution and manufacturing activities 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 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 Ethics Vary by person Forward integration Manufactures undertake retailing and wholesaling activities Ralph Lauren operating its own retail stores New York Jones Liz Claiborne operates its own stores Holding inventory A major value providing activity performed by retailers whereby products will be available when consumers want them Publix etc hold items in bulk so consumers don t need to at home Publix has the space to do so Intertype competition Competition between retailers that sell similar merchandise using different formats Discount and department stores 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 Includes customer service location merchandise management pricing communication mix store design and display Indicates how the retailer plans to focus its resources to accomplish its objectives 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 Scramble Merchandising When retailers offer merchandise not typically associated with their type of store Clothing in a drugstore Walgreens CVS Supply Chain a set of firms that make and deliver a given set of goods and services to the ultimate consumer Manufacturing cid 224 Wholesaling cid 224 Retailers cid 224 Consumers Vertical Integration firm performs more than one set of activities in the channel Retailer invest in wholesaling or manufacturing Wholesalers Decentralization 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 How to Retailers Add Value Provide Assortment products at the same time buy other Retail Entrepreneurs buy it in quantities Break Bulk customers want Hold inventory place when you want it buy it at a convenient Offer Services get credit layaway see it before you buy Sam Walton Walmart Jeff Bezos Amazon com Ingvar Kamprad IKEA Anita Roddick the Body Shop Fisher The Gap Wexner Menard s Marcus The Home Depot Kellogg Kohl s Schulze Best Buy Strategic vs Tactical Decisions Doing the Right Thing DIRECTION vs Doing things right EXECUTION Retail Management Decision Process 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 Assortment Depth of merchandise Many types of cell phones many types of TV s Deep vs shallow The number of SKU s within a merchandise category Examples Pg 33 Variety Breadth of merchandise Computer bike jewelry clothing Wide vs Narrow The number of merchandise categories Stock keeping unit The smallest unit available for keeping inventory control In soft merchandise a SKU usually means a size color and style SKU Fair Trade 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 Warehouse clubs Costco Sam s club Off price retailer TJMaxx Marshalls etc Department stores Macy s JCPenny Sears Kohl s Nordstrom Specialty retailers A type of store concentrating on a limited number of complementary merchandise categories and providing a higher level of service Victoria Secret lingerie beauty Sephora perfume cosmetics etc Category specialist Best Buy Starbucks 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 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 Close outs Irregulars Multi Channel Offering multi ways to purchase their product Store catalog web etc Franchising Party Plan Convenience store Conventional supermarket Discount store 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 Sales people encourage people to act as host and invite friends or coworkers to a party at which the merchandise is 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 store with speedy


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FSU CTE 3806 - Chapter 1

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