Unformatted text preview: Chapter 1
Perspectives on Retailing Learning Objectives
1. 2. 3. 4. 5. Explain what retailing is. Explain why retailing is undergoing so much change today. Describe the five methods used to categorize retailers. Understand what is involved in a retail career and be able to list the prerequisites necessary for success in retailing. Be able to explain the different methods for the study and practice of retailing. Learning Objectives
1. Explain what retailing is. What is Retailing?
Retailing: Consists of the final activities and steps needed to place merchandise made elsewhere into the hands of the consumer or to provide services to the consumer. LO 1 Learning Objectives
2. Explain why retailing is undergoing so much change today. The Nature of Change in Retailing
ETailing Price Competition Demographic Shifts Store Size LO 2 E-tailing Unknown for retail mangers is what the ultimate roll of the Internet will be. Observers recognize the value of online shopping for travel, clothing, cosmetics, and music. It is unclear if online shopping will reach its projections for "everyday" needs. LO 2 E-tailing Etailing now accounts for about three percent of total retail sales. Etailing has caused a shift in power between retailers and consumers. LO 2 Price Competition Sam Walton forever changed the retail environment by computerizing his operations resulting in lower costs allowing him to lower prices. LO 2 Demographic Shifts Fluctuating birth rate, the increasing number of immigrants, the growing importance of Generation Y consumers, Generation X starting to reach middle age, and baby boomers retiring are all demographic shifts in the United States that shape the retailing environment. LO 2 Tweens
Are between the ages of 8 14 with a population of 29 million. Spent about $39 billion in 2007 and $150 billion in 2008 (counting the money parents spent on them). LO 2 Generation Y
Born between 1979 1994 and are a population of 60 million/ Have already spent $200 billion in their lifetime and will spend $10 trillion. Are making major purchasing decisions such as cars and homes;are also spending a lot on computers, cell phones, sneakers. LO 2 Generation X
Born between 1965 1978 and are a population of 40 million. Are involved in their careers and spending is diffuse: food, housing, transportation. Time is at a premium so they outsource: domestic help to babysitting LO 2 Baby Boomers
Born between 1946 1964 and are a population of 77 million. Have more than $1 trillion of spending power LO 2 Ethnic Markets
In 2008: Hispanics will wield more than $1.2 trillion in spending power African Americans = $921 billion Asian Americans = $526 billion LO 2 Store Size As stores increase in size they often employ a scrambled merchandising strategy. LO 2 Learning Objectives
3. Describe the five methods used to categorize retailers. Categorizing Retailers
Census Bureau Number of Outlets Margin Versus Turnover Location Size LO 3 Margin versus Turnover
Gross margin is net sales COGS Gross margin percentage is gross margin/net sales Definition: contribution to the business after paying for direct fixed and variable unit. COGS: variable & fixed costs directly tied to production (material & labor) LO 3 Margin versus Turnover Inventory Turnover is: Sales/Inventory or COGS/Average Inventory (since sales based on retail value and inventory on cost). Represents # of times inventory is replaced. LO 3 ...
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