Contents
Learning Guide
Rationale
Commerce is the trading of something of economic value such as goods, services, information or money between two or more entities. Commerce is the central mechanism which drives capitalism and other economic systems. Commercialization is the process of transforming something into a product, service or activity which may be used in commerce.
Retailing consists of the sale of goods/merchandise for personal or household consumption either from a fixed location such as a department store or kiosk, or away from a fixed location and related subordinated services.[1] In commerce, a retailer buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells individual items or small quantities to the general public or end user customers, usually in a shop, also called store. Retailers are at the end of the supply chain. Marketers see retailing as part of their overall distribution strategy.
Shops may be on residential streets, or in shopping streets with little or no houses, or in a shopping center. Shopping streets may or may not be for pedestrians only. Sometimes a shopping street has a partial or full roof to protect customers from precipitation.
Shopping is buying things, sometimes as a recreational activity. Cheap versions of the latter are window shopping (just looking, not buying) and browsing.
Learning Outcomes
Knowledge
After completing the course, student will be able to
- define retailing, consider it from various perspectives, demonstrate its impact, and note its special characteristics
- relate the marketing concept to retailing
- describe how both customer relationships and channel relationships
- discuss the impact of technology on relationships in retailing
- show the value of strategic planning for all types of retailers
- explain the steps in strategic planning for retailers
Skills
After completing the course, student will be able to
- to contribute to the strategic planning and management of his/her organisation
- prepare a strategic plan
- analyse and examine the individual controllable and uncontrollable elements of a retail strategy, and to present strategic planning as a series of integrated steps
Teaching
and Learning Resources
Click on titles
An Overview of Strategic Retail Management
Tutorials
Readings
Shops and Stores. There are three major types of retailing, two of which have buildings that the customer can visit to do business with. The first is counter-service, once the only type of shop, but now rare except for selected items (see below). The second, and now more widely used method of retail, is self-service. Quickly increasing in importance are online shops, the third type, where products and services can be ordered for physical delivery, downloading or virtual delivery.
Even though most retailing is done through self-service, many shops offer counter-service items, e.g. controlled items like medicine and liquor, and small expensive items.
Shops used to deal with just one type of article. In the nineteenth century, in France, arcades were invented, which were a street of several different shops, roofed over. From this there soon developed, still in France, the notion of a large store of one ownership with many counters, each dealing with a different kind of article was invented; it was called a department store. In cities, these were multi-story buildings which pioneered the escalator. In the mid-twentieth century in the United States there developed the mall, midway between the arcade and the department store. A mall consists of several two-storey department stores linked by arcades (many of whose shops are owned by the same firm under different names). All the stores rent their space from the mall owner.
A recent development is a very large shop called a superstore. Local shops can be known as brick and mortar stores in the United States.
Many shops are part of a chain: a number of similar shops with the same name selling the same products in different locations. The shops may be owned by one company, or there may be a franchising company that has franchising agreements with the shop owners (see also restaurant chain).
Some shops sell second-hand goods. Often the public can also sell goods to such shops. In other cases, especially in the case of a nonprofit shop, the public donates goods to the shop to be sold (see also thrift store). In give-away shops goods can be taken for free.
The term retailer is also applied where a service provider services the needs of a large number of individuals, such as with telephone or electric power.
A Department Store is a retail establishment which specializes in selling a wide range of products without a single predominant merchandise line. Department stores usually sell products including apparel, furniture, appliances, electronics, and additionally select other lines of products such as paint, hardware, toiletries, cosmetics, photographic equipment, jewelry, toys, and sporting goods. Certain department stores are further classified as discount department stores. Discount department stores commonly have central customer checkout areas, generally in the front area of the store. Department stores are usually part of a retail chain of many stores situated around a country or several countries.
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Financial Services is a term used to refer to the services provided by the finance industry. Financial services is also the term used to describe organizations that deal with the management of money. Banks, investment banks, insurance companies, credit card companies and stock brokerages, are examples of the types of firms comprising the industry, which provides a variety of money and investment related services. Financial services is the largest industry (or industry category) in the world, in terms of earnings; as of 2004, the industry represents 20% of the market capitalization of the S&P 500.[1]
In financial economics, a Financial Institution acts as an agent that provides financial services for its clients. Financial institutions generally fall under financial regulation from a government authority. Common types of financial institutions include banks, building societies, credit unions, stock brokerages, and similar businesses.
Financial institutions provide a service of moving funds from investors, those with excess funds, to companies, those in need of funds. These financial institutions make it easy and affordable for small investors to invest.
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Consumer Banking
According to investopedia.com, Retail Banking "is typical mass-market banking where individual customers use local branches of larger commercial banks. Services offered include: savings and checking accounts, mortgages, personal loans, debit cards, credit cards, and so forth."
Types of Retail Banks
- Commercial bank, is the term used for a normal bank to distinguish it from an investment bank. After the great depression, the U.S. Congress required that banks only engage in banking activities, whereas investment banks were limited to capital markets activities. Since the two no longer have to be under separate ownership, some use the term "commercial bank" to refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses.
- Community development bank are regulated banks that provide financial services and credit to underserved markets or populations.
- Private banks manage the assets of high net worth individuals.
- Offshore banks are banks located in jurisdictions with low taxation and regulation. Many offshore banks are essentially private banks.
- Savings bank accept savings deposits.
See also
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References
- Tiwari, Rajnish and Buse, Stephan (2006): The German Banking Sector: Competition, Consolidation and Contentment, Hamburg University of Technology (TU Hamburg-Harburg)
- Brunner, A., Decressin, J. / Hardy, D. / Kudela, B. (2004): Germany’s Three-Pillar Banking System – Cross-Country Perspectives in Europe, Ocassional Paper, International Monetary Fund, Washington DC 2004.
Insurance
Capital Markets
In economics, a Financial Market is a mechanism which allows people to trade money for securities or commodities such as gold or other precious metals. In general, any commodity market might be considered to be a financial market, if the usual purpose of traders is not the immediate consumption of the commodity, but rather as a means of delaying or accelerating consumption over time.
Financial markets are affected by forces of supply and demand, and allocate resources over time through a price mechanism such as the interest rate. Typically financial markets use a market making or a bid and ask process.
Both general markets, where many commodities are traded and specialised markets (where only one commodity is traded) exist. Markets work by placing many interested sellers in one "place", thus making them easier to find for prospective buyers. An economy which relies primarily on interactions between buyers and sellers to allocate resources is known as a market economy in contrast either to a command economy or to a non-market economy that is based, such as a gift economy.
In Finance, Financial markets facilitate:
They are used to match those who want capital to those who have it.
Typically a borrower issues a receipt to the lender promising to pay back the capital. These receipts are securities which may be freely bought or sold. In return for lending money to the borrower, the lender will expect some compensation in the form of interest or dividends.
A Stockbroker is a person or company who buys and sells stocks on behalf of another person or company. Stockbrokers earn their living by charging a commission on the purchase and sale of stocks.
Building Retail Strategy
Situation Analysis
Tutorials
Readings
Situation Analysis is a marketing term, and involves evaluating the situation and trends in a particular company's market. Situation analysis is often called the "three c's", which refers to the three major elements that must be studied:
- Customers
Customer base is the group of current clients and consumers that a business serves. In the most ideal situation, a large part of this group is made up of repeat customers with a high ratio of purchase over time. In many cases, the customer base is considered the business's target customer, where customer behaviors are well understood through market research or past experience. An existing product's target price would be adjusted by considering the purchase behavior of the existing customer base.
In the retail and wholesale industries, one might consider the customer base to be made up of the customers of whom are registered in the customer database (i.e. customer list), but this is true only in an ideal situation where all the best customers are registered on the list. Many times, this is not the case - most businesses may not be aware of whom their real customer base is made up of. Careful post-sales analysis is necessary to determine if the customer databas, that one has amassed over the years, is truly helpful or completely worthless.
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- Business Process Overheads
Business process overhead is the amount of resources used by an organization just to maintain existence, also known as operational costs. Overhead costs are usually measured in monetary terms, but non-monetary overhead is possible in the form of time required to accomplish tasks.
Examples of business process overhead include the payment of rent on the office space a business occupies, the electricity bill to power the lights in the office, and to some degree, the wages of the personnel working in that office.
Examples of non-overhead costs are incremental costs. These include the cost of supplies used to create the goods a business sells.
It might be questionable to assert that the cost of ten extra people on the sales force are an incremental cost or an overhead cost, since the wages for these people are both overhead and incremental. The staff needed to keep the shop operational are mostly considered as overheads.
The number of "c's" is sometimes extended to four, five, or even six, with "Collaboration", "Company", and "Competitive advantage".
Targeting Customers and Gathering Information
Tutorials
Readings
Relationship Marketing is a form of marketing that evolved from direct response marketing in the 1960s and emerged in the 1980s, in which emphasis is placed on building longer term relationships with customers rather than on individual transactions. It involves understanding the customer's needs as they go through their life cycles. It emphasizes providing a range of products or services to existing customers as they need them.
A customer is someone who makes use of or receives the products or services of an individual or organization
The word historically derives from "custom," meaning "habit";
As per the literal meaning a customer is someone whom we can get into habit of buying or receiving stuff from same place. But in today’s world it has much more meaning than the old one.
A Customer is someone who is directly or indirectly affected by the products or services of an individual or an organization.
Market Segmentation is the process in marketing of dividing a market into distinct subsets (segments) that behave in the same way or have similar needs. Because each segment is fairly homogeneous in their needs and attitudes, they are likely to respond similarly to a given marketing strategy. That is, they are likely to have similar feeling and ideas about a marketing mix comprised of a given product or service, sold at a given price, distributed in a certain way, and promoted in a certain way.
Small segments are often termed niche markets or specialty markets.
The process of segmentation is distinct from targeting (chosing which segments to address) and positioning (designing an appropriate marketing mix for each segment). The overall intent is to identify groups of similar customers and potential customers; to prioritise the groups to address; to understand their behaviour; and to respond with appropriate marketing strategies that satisfy the different preferences of each chosen segment.
In marketing, Positioning is the technique by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization. It is the 'relative competitive comparison' their product occupies in a given market as perceived by the target market.
Positioning is something (perception) that is done in the minds of the target market.
A product's position is how potential buyers see the product. Positioning is expressed relative to the position of competitors. The term was coined in 1969 by Al Ries and Jack Trout in the paper "Positioning" is a game people play in today’s me-too market place" in the publication Industrial Marketing.
Re-positioning involves changing the identity of a product, relative to the identity of competing products, in the collective minds of the target market.
De-positioning involves attempting to change the identity of competing products, relative to the identity of your own product, in the collective minds of the target market.
Demographics is a shorthand term for 'population characteristics'. Demographics include race, age, income, mobility (in terms of travel time to work or number of vehicles available), educational attainment, home ownership, employment status, and even location. Distributions of values within a demographic variable, and across households, are both of interest, as well as trends over time. Demographics are primarily used in economic and marketing research.
Consumer Behaviour is the study of how people buy, what they buy, when they buy and why they buy. It is a subcategory of marketing that blends elements from psychology, sociology, sociopsychology, anthropology and economics. It attempts to understand the buyer decision making process, both individually and in groups. It studies characteristics of individual consumers such as demographics, psychographics, and behavioural variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general.
Workshop
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Choosing a Store Location
Tutorials
Readings
Strategic Retail Location
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Getting a retail location right is worth at least $2-10 million.
That's the cost of shutting down and moving one store, depending on the type and size of outlet. The value of a good location is much more.
You have to open several stores a year. How do you get them all in the right place?
Competitive Location Evaluation and Optimization (CLEO) is a suite of retail location models that pushes the frontiers of location science, to identify the very best sites in a multi-store market. CLEO incorporates behavioral models, operations research, financial models and decision support.
See also
External links
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Further Readings
In retail, Sales per Unit Area is a standard and usually the primary measurement of store success. The unit of area is usually square metres in the metric system or square feet in U.S. customary units. Square feet are also widely used in retailing in the United Kingdom, but there are signs of a trend towards use of square metres.
A Shopping Mall (or simply mall), Shopping Center, or Shopping Arcade is a building or set of buildings that contain stores, and has interconnecting walkways enabling visitors to easily walk from store to store. The walkways may or may not be enclosed.
In the British Isles and Australia, these structures are known as "shopping centres" or "shopping arcades" and are not normally referred to as "shopping malls". In North America, the term "shopping mall" (or "mall" for short) is usually applied to enclosed retail structures, while "shopping center" refers to open-air retail complexes.
Strip malls are a recent development, corresponding to the rise of suburban living after World War II in the United States. As such, the strip mall development has been the subject of the same criticisms leveled against suburbanization and suburban sprawl in general. In the United Kingdom these are called "retail parks" or "out-of-town shopping centres".
Managing a Retail Business
Tutorials
Readings
Human Resource Management (HRM) is both an academic theory and a business practice that addresses the theoretical and practical techniques of managing a workforce. The theoretical discipline is based primarily on the assumption that employees are individuals with varying goals and needs, and as such should not be thought of as basic business resources, such as trucks and filing cabinets. The field takes a positive view of workers, assuming that virtually all wish to contribute to the enterprise productively, and that the main obstacles to their endeavors are lack of knowledge, insufficient training, and failures of process.
Larger Map
HRM is seen by practitioners in the field as a more innovative view of workplace management than the traditional approach. Its techniques force the managers of an enterprise to express their goals with specificity so that they can be understood and undertaken by the workforce, and to provide the resources needed for them to successfully accomplish their assignments. As such, HRM techniques, when properly practiced, are expressive of the goals and operating practices of the enterprise overall.
The field also encompasses the sometimes arcane details of what is traditionally referred to as personnel management. Personnel management as a term describes those activities that are necessary in the recruiting of a workforce, providing its members with payroll and benefits, and administrating their work-life needs. In many locales, these activities can require a considerable amount of regulatory knowledge and effort, and many enterprises can benefit from the recruitment and development of personnel with these specific skills.
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A Store Manager is the person ultimately responsible for the day-to-day operations (or management) of a retail store or supermarket. All employees working in the store report to the store manager. A store manager typically reports to a district or area manager, but in smaller businesses, may report directly to the store's owner. In some stores (typically big box retailers), a Store Manager may be called a General Manager or Store Director.
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External Links
Business Operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets owned by a business. Assets can be either physical or intangible. An example of value derived from a physical asset like a building is rent. An example of value derived from an intangible asset like an idea is a royalty. The effort involved in "harvesting" this value is what constitutes business operations.
Business operations encompasses three fundamental management imperatives that collectively aim to maximize value harvested from business assets (this has often been referred to as "sweating the assets"):
- Generate recurring income.
- Increase the value of the business.
- Secure the income and value of the business.
All three imperatives are mutually dependent. The following basic tenets illustrate this interdependency:
- The more recurring income an asset generates, the more valuable it becomes. For example, the products that sell at the highest volumes and prices are usually considered to be the most valuable products in a business's product portfolio.
- The more valuable a product becomes the more recurring income it generates. For example, a Mercedes Benz can be leased out at a higher rate than a Toyota Corolla.
- The intrinsic value and income-generating potential of an asset cannot be realized without a way to secure it. For example, petroleum deposits are worthless unless processes and equipment are developed and employed to extract, refine, and distribute it profitably.
Aspects of Facilities Management
Aspects of Financial Operations
Yahoo! Financial Results by U.S. Retail Category
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Employee Productivity
Security
Technology
Outsourcing
Crisis Management
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The Business Model of a business describes the means by which the three management imperatives are achieved. In this sense, business operations is the execution of the business model.
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Merchandise and Pricing
Tutorials
Readings
Merchandising
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Category Management and Retail Merchandising Software
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Retail Accounting and Inventory Valuation
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Financial Merchandising Concepts
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Retail Pricing
Building Retail Strategy
The Pricing technique used by most retailers is cost-plus pricing. This involves adding a markup amount (or percentage) to the retailers cost. Another common technique is suggested retail pricing. This simply involves charging the amount suggested by the manufacturer and usually printed on the product by the manufacturer.
In Western countries, retail prices are often so-called psychological prices or odd prices: a little less than a round number, e.g. $6.95. In Chinese societies, prices are generally either a round number or sometimes a lucky number. This creates price points.
Often prices are fixed and displayed on signs or labels. Alternatively, there can be price discrimination for a variety of reasons. The retailer charges higher prices to some customers and lower prices to others. For example, a customer may have to pay more if the seller determines that he or she is willing to. The retailer may conclude this due to the customer's wealth, carelessness, lack of knowledge, or eagerness to buy. Price discrimination can lead to a bargaining situation often called haggling - a negotiation about the price. Economists see this as determining how the transaction's total surplus will be divided into consumer and producer surplus. Neither party has a clear advantage, because the threat of no sale exists, whence the surplus vanishes for both.
Larger Map
Setting a Price Strategy
Cost-plus Pricing is a pricing method commonly used by firms. It is used primarily because it is easy to calculate and requires little information. There are several varieties, but the common thread in all of them is that you first calculate the cost of the product, then include an additional amount to represent profit. Cost-plus pricing is often used on government contracts, and has been criticized as promoting wasteful expenditures.
Communicating with the Customer
Tutorials
Readings
Retail Media is a relatively new advertising medium that reaches consumers where they shop. Retail media networks are similar to traditional forms of advertising in that they consist of audio or video commercial announcements. Most of the networks available for purchase today are narrowcast in grocery and drug stores. As consumers continue to practice ad-avoidance and advertisers increasingly search for new ways to reach their customers, retail media will continue to gain share in the advertising budget.
The largest retail media networks include those that air audio and video announcements in the largest grocery and drug chains. These networks offer many advantages to traditional radio and television advertising.
Putting It All Together
Tutorials
Readings
A Supply Chain, logistics network, or supply network is a coordinated system of organizations, people, activities, information and resources involved in moving a product or service in physical or virtual manner from supplier to customer. The entities of a supply chain typically consist of manufacturers, service providers, distributors, sales channels (e.g. retail, ecommerce) and consumers (end customers). Supply chain activities (aka value chains or life cycle processes) transform raw materials and components into a finished product that is delivered to the end customer. Supply chain links value chains.
There are a variety of supply chain models, which address both the upstream and downstream sides.
The primary objective of supply chain management is to fulfill customer demands through the most efficient use of resources, including distribution capacity, inventory and labour.
Recommended
Text
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Retail
Management, 10/E
Barry Berman, Hofstra University
Joel R. Evans, Hofstra University
Check the availability and buy your books from our Bookshop
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Retailing Management, 5/e
Michael Levy, Babson College
Barton A Weitz, University of Florida
ISBN: 0072553928
Copyright year: 2004
Check the availability and buy your books from our Bookshop |
Resources
Case Studies
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Strategy:
Analysis and Practice
John
McGee, Warwick Business School
Howard Thomas, Warwick Business School
David Wilson, Warwick Business School
Check the availability and buy your books from our Bookshop |
China Insurance (Holdings) Limited
China Insurance (Holdings) Company, formerly named China Insurance Company, is a state-owned financial and insurance group founded in 1931 in Shanghai. With the inception of the People's Insurance Company of China ("PICC") on 20th October, 1949, China Insurance was restructured into a subsidiary of PICC. From then on, China Insurance ceased its domestic insurance business, while continuing its overseas operations. In 1992, PICC established China Insurance H.K. (Holding) Co., Ltd (China Insurance Group) to control its subsidiaries in Hong Kong and Macau. In 1996, PICC was restructured into The People's Insurance Company of China (Group) to control all of its overseas operations. In 1998, with the approval of the State Council of the People's Republic of China, The People's Insurance Company of China was dissolved and its overseas operations came under the control of China Insurance. Since then, China Insurance and China Insurance H.K. (Holdings) Company Limited have operated under one management team and two company names. On 20th August 2002, with the approval of the China Insurance Regulatory Commission and the State Administration of Industry and Commerce, and with the consent of the State Council, China Insurance was renamed as China Insurance (Holdings) Company Limited. .
Presently, the total assets of China Insurance stands at approximately HK$17.7 billion. China Insurance has more than 20 subsidiaries spread over the globe in Hong Kong, Macau, Europe and Southeast Asia. In 2000, China Insurance restructured and publicly listed its reinsurance subsidiary, China International Reinsurance Company, and its reinsurance brokerage firm, Sino-Re, under the holding company China Insurance International Holdings Company Limited ("CIIH"). CIIH, the first Chinese insurance company to be publicly listed, is listed in the Hong Kong Stock Exchange. With the approval of the CIRC, Tai Ping Life Insurance Company ("TPL") and Tai Ping Insurance Company ("TPI") resumed life and non-life insurance businesses, respectively, in Mainland China in 2001. TPL is a subsidiary of CIIH, while TPI is CIIH's affiliate company. In December 2001, TPL received licenses from the CIRC to open branches in Beijing, Guangzhou and Chengdu, and commenced operations in February 2002. On 22 May 2001, the plan for resuming TPI's general insurance businesses in the PRC, establishing its headquarters in Shenzhen and the opening of three branch offices in Beijing, Shanghai and Guangzhou was approved by the CIRC with the consent of the State Council. In addition to its reinsurance and primary insurance operations, China Insurance's major businesses include investments, securities, finance and fund management.
For more than 70 years, China Insurance has served as the window to the insurance industry of China. As we continue to build and develop China Insurance's future in the new millennium, we are now at the crux of the forces and opportunities presented by globalization, the rapid development of science and technology and China's entrance into the World Trade Organization. China Insurance will be "A Company of Firsts". We will always honor our promise, to make every effort to pursue excellence in our home market and to keep a global presence. Our goal is to continually strengthen our position as a comprehensive and diversified financial and insurance group.
To create well-being and peace in the lives of our customers is our mission. Stability, creativity, sincerity and expertise are our principles and objectives. At China Insurance, we promise sincere service and diligent management. Honoring our past, building on our future, we will promote the world's financial and insurance industries by building a strong brand and a distinctive corporate profile.
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