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RETAIL MANAGEMENT

Dr. Michal Carrington

Lecture 1

TODAYS SEMINAR:

Define Retailing
Introduce the Team
Subject Overview & Objectives
Evolution, Frontiers & Hot Topics in Retail
Semester Roadmap: lectures, readings, tutorials, assessments
Q&As

RETAILING IS...

Introduction to
Retail Management

A set of business activities that


sells products and services
to customers for their personal
use.

Retailers enhance
value for
consumers:

Retail is all about adding value


and distributing goods and
services....

Manufacturer

Wholesaler

Providing an
assortment of products
and services

Breaking bulk
Holding Inventory
Providing Services

Retailer

Customer
Sources: Levy & Weitz, 2009;
Varly & Rafiq, 2004.

RETAIL EXAMPLES...

Introduction to
Retail Management

Retailing is a complex product/service proposition


McGoldrick (2002), p5

IMPORTANCE OF RETAIL

Australian Retail
Sector:

$280,263.9M

total turnover for


2014
Source: Australian Bureau of Statistics

Introduction to
Retail Management
The largest retail
industry in Australia is
food retailing.

Social & Economic


Significance of Retail
Retail sales and distribution of essential
products and services
Employment

Wealth distribution: local & global, large &


small operators.
Social, economic and environmental
responsibility local and global.

Introduction to
Retail Management

So why Retail Marketing?


Traditionally, marketing texts and courses
have portrayed retailing as a relatively
passive link to the consumer...

...this branded manufacturer-centred view


has seriously understated the power, scope
and importance of the retailer and of retail
marketing.

Introduction to
Retail Management
Retail is where the
consumer moment of
truth occurs.
Retailers have taken
control of the
marketing mix in their
stores.
Marketing has become
retail centric.

The Power of Retail

Introduction to
Retail Management

Dependence of suppliers on major retailers

The shift in retail power


has been linked to:

Major grocery
retailers

Average % of
suppliers sales

% of UK retail
sales

Top 1

38.4

32.2

Top 2

56.9

46.8

Top 3

69.7

56.4

Top 4

79.1

63.3

Top 5

86.2

68.5

Source: UK Competition Commission (2000)

The ability of retailers


to set shelf prices, not
the manufacturer.

Development of
retailer own brands
brand equity & vertical
marketing systems.
Concentration of
retail trade & power
asymmetry.
Access to insight Big
Data.

The Power of Retail

Introduction to
Retail Management

The combination of:


Shifting power dynamic towards retailers
Realisation that consumers purchase decisions are most often
made in the retail environment
Retailers taking control of the marketing mix in their stores

Has resulted in:


Increased emphasis on marketing within retailers
The birth of a new marketing discipline: Shopper Marketing
Increased emphasis and sophistication of retail analytics

The Power of Retail

Introduction to
Retail Management
Supply
Chain

Product
Design

Shelf
Price

Data

Brand
Image
/ Equity

Advert
-ising

Targeted
Ranges

Shelf
Space

CRM

The Power of Retail

Introduction to
Retail Management

The Power of Retail

Introduction to
Retail Management
The Iron Law of
Responsibility:
In the long run,
those who do not
use power in a
manner that
society considers
responsible...

...will tend to lose


it.
Source: Davis and
Blomstrom (1971).
Source: ACCC

The Power of Retail

Introduction to
Retail Management
The Iron Law of
Responsibility:
In the long run,
those who do not
use power in a
manner that
society considers
responsible...

...will tend to lose


it.
Source: Davis and
Blomstrom (1971).
Source: Christine Parker, The Conversation.

INTRODUCING THE TEAM

Introduction to
Retail Management

LECTURER & SUBJECT COORDINATOR:

Availability:

Dr. Michal Carrington

By appointment

Michal.Carrington@unimelb.edu.au

INTRODUCING THE TEAM

Tutors:
Mr Scott Tetley
scott.tetley@unimelb.edu.au

Mr Peter Matheis
peter.matheis@unimelb.edu.au

Introduction to
Retail Management

SUBJECT OVERVIEW

SUBJECT OVERVIEW

Introduction to
Retail Management

The only constant in retail is change...


Retailing globally is in a
state of rapid
evolution driven by:
technological
advances

consumer trends

global market
dynamics.

SUBJECT OVERVIEW

Introduction to
Retail Management

Retail managers make complex decisions involving:


marketing strategy
retail channels
customer trends

retail locations
merchandise and services planning
training and motivating staff
pricing, presentation and promotion of merchandise
impact of operations upon people, society and the environment

SUBJECT OVERVIEW

Introduction to
Retail Management

Agility and diverse capabilities are


necessary to make these decisions
efficiently and effectively, to create an
edge in mature and crowded
marketplaces.

WE WANT YOU
TO BE RETAIL
READY!!!

SUBJECT OVERVIEW
Retail Management has a dual
focus to:
(1) introduce you to the
fundamental concepts and
principles of retail management
(2) explore the frontiers of retailing
globally

Introduction to
Retail Management

SUBJECT OVERVIEW
In a consumption driven society,
shopping has become central to
life, as have the retail outlets that
we shop in.

When you come


into work in the
morning, dont
leave yourself in
the carpark
Stuart Machin, Target MD

Introduction to
Retail Management

We all shop
and are all
customers.

SUBJECT OVERVIEW
Prahalad & Ramaswamy, 2004:

Unfortunately, most managers


seem to forget that they are also
consumers (p 37)

But to be agile, managers must...


experience and understand the
business as consumers do (p 155)

Introduction to
Retail Management

SUBJECT OVERVIEW
Retail Management challenges you
to think as customers and retail
managers simultaneously to make
agile decisions that enhance both
the customer experience and
competitive edge.
When it comes to Retail
Management, dont leave your
customer-self at the door...

Introduction to
Retail Management

SUBJECT OVERVIEW
Joined-up
Content:

Lectures

Introduction to
Retail Management
Thursday 11am 1pm:
fundamentals + frontiers

Readings
& Text

Tutorials

Assessment

Weekly Readings &


Recommended Text:
augment the lectures &
tutorials

Case Studies:
fundamentals + frontiers

Assessments:
fundamentals + frontiers

SUBJECT MATERIALS

Introduction to
Retail Management

Subject Material on LMS

All required readings (under lectures tab)


Assessments & associated resources
Tutorial Discussion Cases

No prescribed textbook

A recommended textbook is available from the Uni Co-Op


Bookshop (in addition to weekly readings on LMS)

Seminar Schedule

See Subject Guide (on LMS)

Lecture Slides

Will be uploaded a day prior to lecture

Lecture Capture

Lecture capture will be uploaded in days following lecture

SEMESTER ROADMAP

SEMESTER ROADMAP

Introduction to
Retail Management

See Subject Guide...

RETAIL EVOLUTION &


FRONTIERS

Retail Evolution
The only constant in retail is change...
Retailing globally is in a
state of rapid
evolution driven by:
technological
advances

consumer trends

global market
dynamics.

Retail Evolution & Frontiers

Introduction

1. The Power Shift


2. Formats & Channels
3. Internationalisation
4. Big Data

In the beginning...
Early Trading & Retailing
Trade flourished between 8000 and 3000
BC, driven by agricultural and transport
innovation that resulted in increased
diversity and volume of available and
tradeable goods.

At this stage, a value method beyond


bartering came about: money - beads,
cowry shells or coin.
Money became the universal medium of
exchange and the fuel behind the
shopping experience.

Retail Evolution

Retail beginnings...
The 18th and 19th Century
The inspiration and entrepreneurship of the
Industrial Revolution had a profound effect
on the retail landscape.
Industrialisation brought about the mass
production of inexpensive products, and the
creation of speciality shops, urban galleria
and department stores.
As these new, better-organised retail
formats emerged, storefronts replaced
market trading, and the concept of brand
identity was born.

Retail Evolution

19th Century Retail

Retail Evolution

1830s shops in English city centres


tended to be highly specialized
Turnover slow

Margins high
Overheads heavy
Focus on credit transactions
Prices were high with customers to
match
No price tags If you had to ask the
price, you couldnt afford it

Stead & Simpson, Great Yarmouth, early 19th


Century

19th Century Retail

Retail Evolution

Retail was
inaccessible to the
masses
Majority of
consumers could
not afford to attend
these
establishments.
Peddlers, visiting
fairs and other
travelling
salespeople
provided goods

19th Century Retail

Retail Evolution

Early Victorian City


Centre (early 19th
century)
Emergence of
high street

Galleria
Arcades
Proto shopping
malls

19th Century Retail


Expansion of early proto department
stores developed with the emerging
middle class
Took the fear out of shopping:
Clearly marked prices enabled
budgeting
Remove dread of showing
moderate circumstance and
unrefined taste
New shopping experience
First use of sales techniques
Cash sales

Retail Evolution

19th Century Retail

Retail Evolution
Stores catered to a
new important
consumer
women
Your home away
from home

First public toilets


Considered guests
not customers

Modern Retail
Second half of the 20th Century saw
significant growth in retail
Grocery stores to supermarkets to
hypermarkets
Department store to shopping centre /
mall
1951 First UK supermarket (2,250 sq feet)
with three checkout lanes
1950 70s Strip malls in suburbs, USA
1980s
Credit Cards accepted by most
supermarket operators
Consolidation and rise of large chain stores

Retail Evolution

Modern Retail

Retail Evolution
The rise of the Internet
1994:
Online Banking
First Online
Store Pizza
Hut

1995:
Amazon
launches

1996:
Ebay
Wal-mart
launches online
store

Modern Retail
Turn of the century until internet
retailing success
2001 First Apple stores
2009 NYC Apple store generating
sales of 1m+ a day
2010 233.3 million people walked
through the doors of an Apple
Retail Store
2003 Amazon makes its first profit

Nine years after launch


2007 Launch of iPhone
Accessibility and information at
the consumers fingertips

Retail Evolution

Modern Retail

Retail Evolution

Shopping behaviour and locations


have radically changed over the
past decade.

these changes are being driven by the ever


evolving customer & technology advances.

Retail Life Cycle

Retail Evolution

we will be re-visiting the Retail Life


Cycle during the semester.

Modern Retail

Retail Evolution

Shopping behaviour and locations


have radically changed over the
past decade.
Customers are
seeking a joinedup, seamless
shopping
experience across
online and offline
formats.

HOT TOPIC IN RETAIL: we will be exploring


multi-channel retailing next week.

Retail Evolution & Frontiers

Introduction

1. The Power Shift


2. Formats & Channels
3. Internationalisation
4. Big Data

INTERNATIONAL RETAILING:
COMPETING ON A GLOBAL STAGE

International Retailing
Globalisation in the Retail industry is a
strategy to unlock sales opportunities in
new markets by:
standardise: exporting best practice
adaptation: modifying existing models
to meet local needs

Competing on a
Global Stage

Increased
international retailing
& competition is
being driven by a
number of factors:
slow local market
growth
local market
maturity, low
profitability
stock market
growth expectations
Source: IGD Retail Analysis 2012

High

GLOBAL
Orientation

Low

BENEFITS FROM INTEGRATION

International Retailing

Markets similar to
domestic market
are sought
Maximise scale
Minimise
adaptation

DOMESTIC
MARKET
Orientation

Retail concept from


home market is
directly transferred
to other markets.
No adaptation

Low

GLOCAL
Orientation

Think global, act


local
Moderate
adaptation
Maximise scale &
efficiencies

MULTINATIONAL
Orientation

Substantial
modification for
heterogeneous
markets.

High

LOCAL RESPONSIVENESS

STRATEGIC
ORIENTATIONS

Four basic options to


approach
standardisation vs.
adaptation of offer:
GLOBAL
GLOCAL

DOMESTIC MARKET
MULTINATIONAL
The choice of
orientation determines
the market selection &
timing, mode of entry,
& the marketing mix
Source: Zentes, Morschett, & Schramm-Klein 2007

International Retailing
GLOBAL
Orientation

E.G. Starbucks

Markets similar to
domestic market
are sought
Maximise scale
Minimise
adaptation

DOMESTIC
MARKET
Orientation

Retail concept from


home market is
directly transferred
to other markets.
No adaptation

GLOCAL
Orientation

STRATEGIC
ORIENTATIONS

Think global, act


local
Moderate
adaptation
Maximise scale &
efficiencies

MULTINATIONAL
Orientation

Substantial
modification for
heterogeneous
markets.

Retail Evolution & Frontiers

Introduction

1. The Power Shift


2. Formats & Channels
3. Internationalisation
4. Big Data

Future of Retail

Retail Evolution

Shopping behaviour and


technology have radically changed
over the past decade.

...and we can now track, profile and


understand the customer/shopper
like never before!
http://youtu.be/52uXjCz0fxQ

HOT TOPIC in RETAIL:


we will be re-visiting Big Data
during the semester.

RETAIL MANAGEMENT
ASSESSMENTS

Assessments
Assessment
1. In Class Tutorial Case Study Analysis

Retail Management

Weighting
10%

(5 x 2%)

2. Individual Project

15%

5. Group Project

25%

5. Exam

50%

Assessments

Retail Management

1. In Class Tutorial Case Study Analysis (10%)

There are 5 tutorial case studies in total (max. 2% each),


each designed to facilitate and consolidate your learning of
specific topics.

Individually assessed, but you may work in groups in the class


Case Studies: now available on LMS, please read before
tutorial.

Questions: made available in the tutorial


All work to be completed in the tutorial, facilitated by your
tutor.

Each student must submit their own responses at the end of


the tutorial (hand in hard copy or email soft copy)
1-2 pages in length, be concise, bullet-points are acceptable.
Cases start week 6

Assessments

Retail Management

2. Individual Project (15%)


Choose 2 retailers from the same market, where one retailer is
thriving and the other is declining (e.g. Bunnings vs. Masters).
1. Conduct a situational analysis to identify the factors
underpinning the contrasting performance of these two
competitors.
2. Develop a range of retail strategies to turn the poor
performing business around from decline to growth.
1500 words max.
Due 5pm, Friday 17th April.

Assessments

Retail Management

3. Group Project (25%)


More details to be provided in week 5 lecture (Brief
will be uploaded to LMS prior to this)

3,000 word report + 5 minute comms.


Due 5pm Friday of Wk 10
Groups of 3-5 will be allocated in tutorials

4. Exam (50%)
More details Week 11
Will cover all topics

Q&A

NEXT WEEK:

Lecture: Retail Channels


Tutorials - Introduction