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TXMI 5250: Test 1
Reasons companies internationalize |
1) Mature home market
2) Need to diversify investments
3) Expansion at home blocked by legislation
4) Possession of a unique market format
5) Intense competition at home
6) Economic downturn at home
7) First mover advantages
|
How has Walmart adopted to changing environmental trends? |
1) Walmart as the most sophisticated technology & invented Quick Response
2) provides more than 2 million jobs
3) raised consumer discretionary spending by 1% due to low prices
|
Retailing |
the final activities and steps needed to place merchandise made elsewhere into the hands of the consumer or to provide services to the consumer
ex. Uber, nail salons, travel agencies |
Current changes in retailing |
1) E-tailing
2) Price competition
3) Demographic shifts
4) Store size |
5 methods of categorizing retailers |
1) US Census Bureau
2) Number of outlets
3) Margins vs Turnover
4) Location
5) Size |
What makes the US retail industry different? (first 7) |
1) Little govt regulation
2) Importance of chains
3) Sophisticated logistics
4) Strong manufacturers
5) Discount format well established
6) Strong private labels
7) Retailers can terminate employees
|
What makes the US retailing industry different? (last 7) |
8) Retailers can terminate employees
9) Retailers hire college grads
10) Production is based on orders
12) Retailers are assemblers of line goods
13) Retail buyers are considered profit centers
14) Permanent merchandise markets
|
Retailers segment: Population trends |
- Population growth slowing worldwide
- US population expected to increase 1% in a year
- age distributions
- changing generational characteristics (baby boom, gem-x, gen-y)
|
Why has the nations overall growth rate declined in the last three decades? |
Families are having fewer children |
What will be the cause of the possible 1% increase in US population? |
immigration |
Implications for retailers due to population |
- population slows so...
- focus on taking market share away from competitors, managing gross margin, and increasing productivity in stores
- changes in the individual demand for a product
- international expansion - limited time opportunity
|
Gen-X |
- 1965-77
- 46 million
- respond to creative appeals, proficient use of technology
- attitude: pessimistic
- less impressed by titles, authority, or status than any other group
- declining percentage of the population
|
Gen-Y |
1978-1994
- 75 million
- respond to learning
- indoctrinated use of technology
- attitude: optimistic
- often referred to as millennials
- racially diverse
- use higher disposable incomes
|
Baby boomers |
1946-64
- 76 million
- respond to authority
- fearful of technology
- attitude: realistic
- saving for retirement
- not spending much on apparel anymore |
Retailers segment: Geographic trends |
- shifting geographic centers to West & South
- Urban centers/MSAs (Metropolitan Statistical Areas)
- Mobility |
Implications of geographic trends |
- micromarketing
- secondary markets & parasite stores
- stability of chain stores
- NE & Midwest = slower growth |
What is micro marketing? |
the tailoring of merchandise in each store to the preferences of its neighborhood (through use of technology) |
What are MSAs? |
- Metropolitan statistical Areas
- freestanding urban areas with populations in excess of 50000 |
What is mobility? |
- constant change of residence (caused by high divorce rates)
- farther one moves from prior residence -- more one needs to establish new retail shopping patterns |
Retailers segment: Societal trends |
- Education
- State of marriage
- Divorce
- American households (home-aloners, mingles, singles, stay-at-home moms)
- Changing nature of work
|
Retailers segment: Economic trends |
- Income growth (rich are getting richer)
- US does not reward personal savings
- Women in the labor force
- Credit cards cause consumers to spend more but then massive debt which decreases future spending
|
Implications for retailers due to economic trends
|
- dual-wage families are increasing which means less time for shopping
- looking for convenience/special sales/online shopping
- price is becoming less important
|
Strategic planning: Mission Statement |
- key to retailer success
- a basic description of the fundamental nature, rationale, and direction of the firm
- How the retailer uses or intends to use its resources?
- How the retailer expects to related to the ever-changing environment?
- Values intended to offer to serve the needs and wants of consumers
|
Components of Strategic Planning |
1) Mission statement
2) Goals & objectives
3) Strategies to get there
4) SWOT |
Societal objectives impacting retailing |
1) employment
2) taxes
3) equity
4) benefactor |
Personal objectives impacting retailing |
1) Self-gratification
2) Status & respect
3) Power & authority |
Strategic planning: Goals & objectives |
- market performance objectives
- societal objectives
- financial performance objectives
- personal objectives |
Market share formula |
Market share = Store total sales / total market sales |
Purpose of goals and objectives |
- provide specific direction and guidance to the firm in the formulation its strategy
- provide and control a mechanism by establishing a standard against which the firm can measure and evaluate its performance
|
Strategic Planning: Strategies |
1) Get customers into the store
2) Convert shoppers into customers by having them purchase merchandise
3) Complete steps 1 & 2 at the lowest possible operating cost possible that is consistent with the service your customers expect
4) Physical differentiation of product
5) After purchase satisfaction
6) Location
7) (Never be) out of stock
|
Strategic Planning: SWOT |
- Strengths
- Weaknesses
- Opportunities
- Threats |
SWOT: Strengths |
- What major competitive advantages do we have?
- What are we good at?
- What do customers perceive as our strong points? |
SWOT: Weaknesses |
- What major competitive advantages do our competition have?
- What are competitors better at than us?
- What are our major internal weaknesses? |
SWOT: Opportunities |
- What favorable environmental trends may benefit our firm?
- What is the competition doing in our market?
- What areas of business that are closely related to ours are underdeveloped? |
SWOT: Threats |
- What unfortunate environmental trends may hurt our future performance?
- What technology is on the horizon that may soon have an impact on our firm? |
Financial Objectives |
1) Space productivity (sales per sq ft)
2) Labor productivity (sales per employee)
3) Merchandise productivity (sales-to-stock ratio) |
Return on net worth (RONW) |
- net profit / net worth
- used to measure owner's performance
|
Gross margin |
- ratio of net profit to net sales
- shows how much profit a retailer makes on each dollar of sales after all expenses and taxes have been met |
Space productivity |
- net sales divided by the total sq ft of retail floor space
- states how many dollars in sales the retailer wants to generate for each square foot of store space |
Kate Spade Saturdays |
"Bringing weekend spirit to everyday of the week with good, easygoing style and a sense of spontaneity" |
High context |
(Japan, Africa) find actions to speak louder than words. Information flows freely, children learn from elders, they are typically polychronic, formal |
Low context |
(USA), what we say is what we mean - not our body language. Schedules are important, knowledge is a commodity, we express emotions with words, space is very important to us, casual. |
Polychronic |
(Mexico, Spain, China), they view there is an adequate amount of time available for everything. The emphasis is on people and building relationships, not on hours and minutes |
Monochronic |
(USA, GB, Switzerland, Germany, Canada, Australia), time is a scarce commodity. They focus on time, schedules, and tasks |
Religious beliefs |
Protestants believe in working hard, being fair and honest, and giving back to the community. Buddhists believe in treating others equally and fairly. Confucianism stresses loyalty, honesty, respect to hierarchy, and work happens faster and more efficiently because they work hard to please their boss. Islam and Hinduism have a negative impact on retail-women don’t shop a lot
|
Multicultural nations |
1) US
2) China
3) Canada
4) India
5) South Africa |
G-7 nations |
Top 7 Most Developed Countries
1) US
2) UK
3) Germany
4) Canada
5) Italy
6) France
7) Japan
|
7-Rs of merchandising |
1) Right merchandise
2) Right time
3) Right place
4) Right promotion
5) Right consumers
6) Right quantity
7) Right price |
Population trends impacting retail |
Population growth
- Age distribution
- Ethnic trends
- Geographic trends |
Marriage trends impacting retailers |
- married couples are are one of the slowest growing households worldwide
- retailers must adjust store hours to young adults
- more men living alone - direct promotions toward their needs - men focus on specific items
- increased need for larger number of smaller houses complete with furnishings
|
Divorce trends impacting retail |
- divorce rate has increased by 250%
- divorce occurs = many retail purchases required
- demand for furniture, kitchen appliances, televisions, etc
- impact way people shop
- adjust hours for working women with children
|
Countries with private label merchandise |
1) Switzerland
2) Germany
3) Great Britain
4) Spain
5) Belgium |
RFID |
Gives a fingerprint to every single item in the store. You don’t have to individually scan items anymore, stack merchandise and scan all at once
|
M-commerce |
Delivering e-commerce directly to the customers hand |
Same store sales |
compares individual store sales to its sales for the same month in the previous year |
Scrambled merchandise |
- Exists when a retailer handles many different and unrelated items
- Pressure put on retailers to increase profits by adding additional merchandise/services |
Optional stock list |
Merchandising method in which each store in a retail chain is given flexibility to adjust its merchandise mix to local tastes and demands
Ex. Walmart |
Store cannibalization |
Occurs when retailer opens a store in close proximity to an existing store, taking the existing store's customers/sales in order to create a successful new store |
NRF Trends in Retail |
1) Luxury reset
2) World class emerging markets
3) Globalization of US markets
4) Social networking
5) Rationalization of assortments
6) Increased population |
Oh-Henrys |
“High Earners Not Rich Yet” → income between $100,000-$250,000
21.6 million households
important to marketer→ this audience will grow up with these brands and develop brand loyalty |