CNSR SCI 257 Final Exam

vertical integration

a firm performs more than one set of activities in the channel

* occurs when a retailer engages in wholesaling activities by operating its own distribution centers to supply its store

supply chain

a set of firms that make and deliver goods and services to consumers

retailer’s role in a supply chain

add value t

offering assortments

enables customers to choose from a wide selection of products, brands, sizes, and prices at one lova

corporate social responsibility

an organization voluntarily engaging in business practices that meet or exceed the ethical and legal expectations of its stakeholders

* address ethical, social, and environmne

BoP market

more difficult to communicate and complete transactions with people in this market because they are more likely to lack access to mass media, the internet, mobile phones, or credit cards than more affluent markets

* most people live in rural areas

home improvement centers

the most concentrated sector of the retail industry in the US

target market

the market toward which a retailer will direct its efforts

same type of store format

a retailer’s primary competitors are other retailers that have _________

* intratype competition

scrambled merchandising

occurs when retailers offer merchandise not typically associated with their type of store

* ex. pastries and coffee sold at a bookstore

key strategic decisions made by a retailer

defining its target market and its financial objectives

intratype competition

competition between the same type of retailers

understanding the world of retailing

first step of the retail management decisions process

* managers need to know the environment in which they operate before they can develop and implement effective strategies

microenvironment

focuses specifically on a retailer’s competitors and customers

Walmart

largest sales volume retailer in the US

Deefield, IL

location of Walgreen’s headquarters

Minneapolis, MN

location of main corporate and buying offices for Target

Costco Wholesale

thrid largest sales volume retailer in the US

2014

year that Amazon first appeared in NRF’s Top 10 Retailers list

Maine

state with the highest percentage of retail GDP

20-25%

approx. the percentage of working people emplyed in the retail industry

Amazon

second largest sales volume retailer in the US

end user

a retailer sells products and services to the ________

16%

percentage of retail sales online retailing makes up in the US

Kroger

fifth largest sales volume retailer in the US

retailing

the set of business activities that adds value to the products and services sold to consumers for their personal use

stock-keeping unit (SKU)

each different item of merchandise offered by a retailer

variety

the number of different merchandise categories a retailer offers

* also known as the breadth of merchandise

warehouse club

retailers that offer a limited and irregular assortment of food and general merchandise with little service at low prices for ultimate consumers and small businesses

* ex. Costco

extreme-value food retailers

limited assortment supermarkets

close-outs

end-of-season merchandise that will not be in the manufacturer's offerings going forward

third tier department store

focus on value and price-conscious consumers

* ex. Sears, JCPenney, Kohls

category specialist

big-box stores that offer a narrow but deep assortment of merchandise

* ex. Best Buy
* called “category killers” because they offer a complete assortment in a category at low prices, “killing” a category of merchandise for other retailers
* usually have lower prices and hire employees that are experts in the area or are passionate about the product and share this enthusiastically with their customers

department store

often resemble a collection of specialty shops

* each department within the store has a specific selling space allocated, as well as sales people to assist customers
* focuses mostly on soft goods, carries both national and private brands, and has a wide breadth with a high ambiance

private-label brands

items developed and marketed by the retailer and only available in its stores

* also called store brands

second tier department store

retailers who sell more modestly priced merchandise with less customer service than first tier stores

* ex. Macy’s, Dillards

specialty stores

tailer their retail strategy toward very specific market segments by offering deep but narrow assortments and sales associate expertise

* concentrate on a limited number of complementary merchandise categories and provide a high level of service

off-price retailer

offer an inconsistent assortment of brand-name merchandise at a significant discount off the manufacturers’ suggested retail price

* ex. TJ Maxx, Burlington

full-line discount store

retailers that offer a broad variety of merchandise, limited service, and low prices

* ex. Target

biggest threat to convenience stores

supermarket chains and discount stores that also offer gasoline

co-op store

retailer that is owned and controlled by members where costs are kept low, wages are kept high, and no profits are expected

* ex. REI

discount store

retailer that carries both hard lines and soft line, with a wide breadth, shallow depth, usually freestanding store, centrally located checkouts and a low profit margin percent

free standing

a physical store that is not part of a mall or shopping center

secondhand site

ex. Poshmark, ThredUp, TheRealReal

* have become eco-friendly alternatives to the fast fashion market

most salient reason to invest in a franchise

the recognition of a well-known brand name

ways retailers distinguish themselves

* pricing strategy
* location and size of store
* ambiance
* product assortment

90 million

number of shoppers that tried reselling for the first time in 2021, compared to only 16 million in 2020

hedonic needs

shoppers desire excitement, stimulation, status and power, recreation, and adventure

internal sources of information

information in a customer’s memory, such as names, images, and past experiences with different stores

* major source is the customer’s past shopping experience

retailer loyalty

customers habitually visit the same store

extended problem solving

engaged when the purchase decision involves a lot of risk and uncertainty

point-of-purchase displays

used to encourage impulse-buying behavior

culture

the meaning, beliefs, morals, and values shared by most members of a society

reference group

includes one or more people whom a person uses as a basis of comparison for beliefs, feelings, and behaviors

retail market segment

a group of customers who are attracted to the same retail mix because they have similar needs

lifestyle / psychographics

the way people live, how they spend their time and money, what activities they pursue, and what their attitudes and opinions are about the world they live in

geodemographic segmentation

based on the principle that “birds of a feather flock together”

innovators

very active consumers, and their purchases reflect cultivated tastes for upscale, niche products and services

* image is important, not as evidence of status or power, but as an expression of their taste, independence, and personality
* possessions and recreation reflect a cultivated taste for the finer things in life

NPD

the resource that many retailers and brands will access for information about market share of product, look for opportunities, etc. through data, industry expertise, and analytics

habitual decision making

the kind of consumer decision making process that is most closely associated with store loyalty

* involves little or no effort, and has little to no importance

demographics

age, gender, income, education

Infegy

utilizes insights from social media to understand consumer buying patterns and sentiments

subculture / trickle up theory

new styles originate from lower status cultures and spread up to the larger masses and may then inspire designers

retail mix

* type of merchandise and services offered
* pricing policy
* advertising and promotion programs
* store design and visual merchandising
* typical locations
* customer services

retail market

a group of consumers with similar needs and a group of retailers that satisfy those needs using a similar retail channel and format

cross-selling

most commonly practices with the market penetration growth opportunity

market expansion

involves using the retailer’s existing retail format in new market segments

strategic alliance

a collaborative relationship between independent firms

environmental dynamics

* new technology
* economic conditions
* changes in government regulations
* social changes

asset turnover

integral part of the strategic profit model

gross margin / gross profit

indicates how much profit the retailer is making on merchandise sold, without considering the expenses associated with operating the store and corporate overhead expenses

* net sales - cost of goods sold

inventory turnover

costs of goods sold / average inventory

income statement / statement of operations

where the information used to examine the profit margin management path comes from

crowdfunding / crowdsourcing

method of entrepreneurs to raise money from various individuals to support a particular project

input measures

the resources or money allocated by a retailer to achieve outputs, or results

* inventory

increases gross margin

negotiating better prices with vendors to decrease the cost of goods sold

retail format development

format with a different retail mix to the same target market

4-5-4 calendar

financial year starts in February and ends in January

net sales

total number of dollars received by a retailer after all refunds have been paid to customers for returned merchandise

KPI

key performance indicator

* inventory turnover

target market

group of consumers with similar needs which the retailer plans to focus its resources and retail mix

earnings before interest, taxes and amortization (EBITA)

operating profit

* gross margin - operating expenses

retail strategy

identifies

* the bases upon which the retailer plans to build a sustainable competitive advantage
* the format that the retailer plans to use
* the target market

Americans with Disabilities Act

protects people with disabilities from discrimination in employment, transportation, public accommodations, telecommunications, and the activities of government

* affects store design because it calls for “reasonable access” to merchandise and services in retail stores

grid layout

has parallel aisles with merchandise on shelves on both sides of the aisles

* cash registers are located at the entrances/exits of the stores
* disadvantage: customers typically aren’t exposed to all the merchandise in the store

racetrack layout

facilitates the goal of getting customers to see the merchandise available in multiple departments and thus encourages unplanned purchasing

* common in department stores

cash wraps

places in the store where customers can purchase merchandise

* also called point-of-purchase counters or checkout areas

promotional signage

describes special offers and is found within the store or displayed in windows to entice the customer into the store

end caps

displays located at the end of an aisle in store using a grid layout

* increases product sales
* used for higher-margin, impulse, and sale merchandise
* have high visibility

sales per square foot

a measure of space productivity used by retailers

strike zone

creates the customer’s first impression of the store’s offering and is the area where retailers place their most compelling merchandise

* right after the decompression zone

face out

when an apparel item can be viewed from the front or when a book/record is displayed to see the front of it

straight rack

consists of a long pipe balanced between supports in the floor or attached to a wall

* cannot effectively feature specific styles or colors
* often found in discount and off-price apparel stores

tonnage merchandising

a display technique in which large quantities of merchandise are displayed together

* customers have come to equate this with low price
* “stock it high and let it fly”

price lining

occurs when retailers offer a limited number of predetermined price points in order to help customers easily find merchandise at the price they wish to pay

atmospherics

the design of an environment by stimulation of the five senses

task completion and recreation

the basic shopping goals of a customer that depends on a store’s environment

butt-brush factor

if merchandise is too close to other racks, or high traffic areas, people might get bumped, touched, or brushed, which can lead to a decrease of sales

boomerang factor

when shoppers start down an aisle, select something and instead of proceeding in the same direction, they turn around and retrace their steps without looking around

capture rate

how much of what is on display that is actually seen by customers