Retail and management (9th edition) part 2

www.downloadslide.net SEC TIO N III CHAPTER TWELVE Managing the Merchandise Planning Process Merchandise Management CHAPTER THIRTEEN Buying Merchandise CHAPTER FOURTEEN Retail Pricing CHAPTER FIFTEEN Retail Communication Mix Section II reviewed the strategic decisions made by retailers—the development of their retail market strategy, their financial strategy associated with the market strategy, their store location n of opportunities and factors affecting the selection Section II ea specific site, their development of human reSection I w sources, the systems they use to control the flow Retailing Introduction Strategy pof information and merchandise, and the apto the World of Retailing h proaches they take to manage relationships with etheir customers These decisions are more strateting gic than tactical because they involve committing t significant resources to develop long-term advantages Section III Section IV over the competition in a target retail market segment Merchandise Store Management Management This section, Section III, examines the more tactical mer-nt chandise management decisions undertaken to implement the retail strategy Chapter 12 provides an overview of how retailers manage their merchandise inventory—how they organize the merchandise planning process, evaluate their performance, forecast sales, establish an assortment plan, determine the appropriate service levels, allocate merchandise to stores, and monitor the performance of the merchandise inventory control activities Chapter 13 explores how retailers buy merchandise from vendors—their branding options, negotiating processes, and vendor relationship-building activities Chapter 14 addresses the question of how retailers set and adjust prices for the merchandise and services they offer Chapter 15 looks at the approaches that retailers take to build their brand image and communicate with their customers The next section, Section IV, focuses on store management decisions www.downloadslide.net Managing the Merchandise Planning Process EXECUTIVE BRIEFING Moussa Coulibaly, Senior Vice President, Planning and Allocation, DICK’S Sporting Goods, Inc I’m a numbers guy; I have always been one I purchased one of the first IBM PCs while studying finance and accounting at Duquesne University and used it early in my career to analyze margin and inventory turnover What I was doing back then didn’t have a name, but today it’s known as retail analytics Currently, I serve as the senior vice president of planning and allocation at DICK’S Sporting Goods However, I began my career in merchandising at Horne’s Department Store corporate headquarters in Pittsburgh, PA This role was unique, as Horne’s corporate headquarters was located in the same building as its downtown flagship store As a result, all merchandising associates were required to work the floor every day during high-traffic lunch hours to interact with customers Looking back, it was this hands-on experience that was one of the most valuable aspects in my career as it gave me unique insight into providing superior customer service On my own time, I analyzed the productivity of jewelry showcases at Horne’s for different vendors Using my IBM PC, I determined the margin and inventory turnover for each vendor’s merchandise When vendors would meet with our buyers to present their new merchandise, our buyers would use my data to show them how the performance of their jewelry compared with other vendors The vendors with low productivity would work to identify ways to increase their productivity, ensuring they did not lose space in the display cases Eventually, Horne’s was merged into Lazarus department store (Macy’s predecessor), and I accepted a merchandising role at Kaufmann’s During my tenure there, I held a variety of merchandising-related positions working with buyers to track inventory, place re-orders and set discounts In addition, I also worked to develop reports to identify and address slow-moving items I spent eight years at Kaufmann’s, and served as the director of financial planning www.downloadslide.net CHAPTER 12 LEARNING OBJECTIVES LO1 Explain the merchandise management organization and performance measures LO5 Illustrate how to determine the appropriate inventory levels LO2 Contrast the merchandise management processes for staple and fashion merchandise LO6 Analyze merchandise control systems LO3 Describe how to predict sales for merchandise categories LO4 Summarize the trade-offs for developing merchandise assortments when the headquarters closed in 2002 When this occurred I joined DICK’S Sporting Goods Retailing offers many different career paths and opportunities for people with a wide variety of skills and interests I joined DICK’S in 2002 as the director of planning, and in 2003, I was promoted to vice president, planning and allocation After several years, I assumed the role of treasurer and vice president of strategic planning where I was involved in a M LO7 Describe how multistore retailers allocate merchandise to stores LO8 Review how retailers evaluate the performance of their merchandise management decisions broad spectrum of responsibilities, from analyzing potential acquisitions and mergers to securing a revolving credit facility In 2012, I was promoted to my current role, senior vice president of planning and allocation, where I am responsible for both hard and soft lines As my experience illustrates, a successful career can begin with experimenting on your personal computer and eventually lead to a leadership role within a great company erchandise management activities are undertaken primarily by buyers and their superiors, divisional merchandise managers (DMMs), and general merchandise managers (GMMs) Many people view these jobs as very exciting and glamorous They think that buyers spend most of their time trying to identify the latest fashions and trends, attending designer shows replete with celebrities in Paris and Milan, and going to rock concerts and other glamorous events to see what the trendsetters are wearing But, in reality, the activities of retail buyers are more like those of Wall Street investment analysts than globetrotting trend spotters Investment analysts manage a portfolio of stocks They buy stocks in companies they think will increase in value and sell stocks in companies they believe not have a promising future They continuously monitor the performance of the stocks they own to see which are increasing in value and which are decreasing www.downloadslide.net 318 SECTION III Retail inventory management is similar to managing an investment portfolio Merchandise Management Sometimes, they make mistakes and invest in companies that not per­ form well So they sell their stock in these companies and lose money, but they use the money from the sold stocks to buy more attractive stocks Other times, the stocks they buy in­ crease dramatically in price, and they wish they had bought more shares Rather than managing a portfolio of stocks, retail buyers manage a port­ folio of merchandise inventory They buy merchandise they think will be popular with their customers Like ­investment analysts, they use an in­ formation system to monitor the ­performance of their merchandise portfolio—to see what is selling and what is not Retail buyers also make mistakes When the merchandise they bought is not selling well, they get rid of it by putting it on sale so that they can use the money to buy better-selling merchandise However, they also might take a chance and buy a lot of a new merchandise item and be rewarded when it sells well, while competitors, who were more conservative, don’t have enough of the product Chris Manning, a former swimwear buyer at Macy’s, draws an analogy between surfing and buying merchandise: My job is like surfing Sometimes you catch a big wave (trend) and it’s exhilarating, and sometimes you think you’ve caught a good wave and brown turns out not to be the color this season But the real fun is getting the most out of the wave you can Let me give you an example of how I worked a big wave Vendors started to show tankinis— women’s bathing suits with bikini bottoms and tank tops My customers were women in their 40s that had a couple of kids I thought they would really go for this new style because it had the advantages of a two-piece bathing suit, but wasn’t much more re­ vealing than a one-piece suit I bought a wide color assortment—bright reds, yellows, pink, and black—and put them in our fashion-forward stores in January for a test The initial sales were good, but our customers thought they were a little too skimpy Then I started to work the wave I went back to the vendor and got them to recut the top so that the suit was less revealing, and I placed a big order for the colors that were selling best Sales were so good that the other Macy’s divisions picked up on it, but we rode the wave the longest and had the best swimwear sales of all of the divisions.1 Merchandise management is the process by which a retailer attempts to offer the appropriate quantity of the right merchandise, in the right place and at the right time, so that it can meet the company’s financial goals Buyers need to be in touch with and anticipate what customers will want to buy, but this ability to sense market trends is just one skill needed to manage merchandise inventory effec­ tively Perhaps an even more important skill is the ability to analyze sales data continually and make appropriate adjustments in prices and inventory levels The first part of this chapter provides the background needed to understand the merchandise management process In this introduction, we discuss how the process is organized, who makes the merchandise decisions, and how merchandise manage­ ment performance is evaluated The last part of the chapter examines the steps in the merchandise management process—forecasting sales, formulating an assort­ ment plan, determining the appropriate inventory level, developing a merchandise management plan, allocating merchandise to stores, and monitoring performance The appendix to this chapter provides a more detailed discussion of the steps used to develop a merchandise budget plan The other activities involved in merchan­ dise management reviewed in subsequent chapters are buying merchandise (Chap­ ter 13) and pricing (Chapter 14) www.downloadslide.net Managing the Merchandise Planning Process CHAPTER 12 319 MERCHANDISE MANAGEMENT OVERVIEW This section provides an overview of the merchandise management process, including the organization of a retailer’s merchandise management activities and the objectives and measures used to evaluate merchandise management performance In the following section, we review the differences in the process for managing fashion and seasonal merchandise versus basic merchandise and each of the steps in the merchandise management process LO1 Explain the merchandise management organization and performance measures The Buying Organization Every retailer has its own system for grouping categories of merchandise, but the basic structure of the buying organization is similar for most retailers Exhibit 12–1 illustrates this basic structure by depicting the organization of the merchandise division for a department store chain such as Macy’s, Belk, or Dillard’s Exhibit 12–1 shows the organization of buyers in the merchandise division A similar structure for planners parallels the structure for buyers The highest classification level is the merchandise group The organization chart shown in Exhibit 12–1 has four merchandise groups: (1) women’s apparel; (2) men’s, children’s, and intimate apparel; (3) cosmetics, shoes, jewelry, and accessories; and (4) home and kitchen Each of the four merchandise groups is managed Illustration of Merchandise Classifications and Organization EXHIBIT 12–1 Chairperson Merchandise-oriented partner MERCHANDISE GROUP Sr VP, general merch mgr.: women’s apparel Sr VP, general merch mgr.: men’s, children’s, intimate apparel Div merch mgr.: men’s sportswear Div merch mgr.: young men’s apparel Sr VP, general merch mgr.: cosmetics, shoes, jewelry, accessories PLANNING GROUP Sr VP, general merch mgr.: home, kitchen VP planning Div merch mgr.: intimate apparel Div dir planning DEPARTMENT Div merch mgr.: men’s dress apparel Div merch mgr.: children’s apparel CLASSIFICATION Buyer Preteen accessories Buyer Girls’ size 7–14 Buyer Girls’ size 4–6 Buyer Toddlers Buyer Infants CATEGORY Sportswear SKU Girls’ Levi jeans, size 5, rinsed wash blue, straight leg Dresses Swimwear Outerwear Buyer Little boys Mgr planning www.downloadslide.net 320 SECTION III Merchandise Management by a general merchandise manager (GMM), who is often a senior vice president in the firm Each of the GMMs is responsible for several departments For example, the GMM for men’s, children’s, and intimate apparel makes decisions about how the merchandise inventory is managed in five departments: men’s dress apparel, men’s sportswear, young men’s apparel, children’s apparel, and intimate apparel The second level in the merchandise classification scheme is the department Departments are managed by divisional merchandise managers (DMMs) For example, the DMM highlighted in Exhibit 12–1 manages the buyers responsible for six children’s apparel merchandise departments The classification is the third level for categorizing merchandise and organizing merchandise management activities A classification is a group of items targeting the same customer type, such as girls’ sizes to Categories are the next lower level in the classification scheme Each buyer manages several merchandise categories For example, the girls’ sizes to buyer manages the sportswear, dresses, swimwear, and outerwear categories for girls who wear sizes to A stock-keeping unit (SKU) is the smallest unit available for inventory control In soft-goods merchandise, for instance, a SKU usually means a particular brand, size, color, and style—for example, a pair of size 5, rinsed wash, blue, straight-legged Levi jeans is a SKU Merchandise Category—The Planning Unit The merchandise category is the basic unit of analysis for making merchandising management decisions A merchandise category is an assortment of items that customers see as substitutes for one another For example, a department store might offer a wide variety of girls’ dresses sizes to in different colors, styles, and brand names A mother buying a dress for her daughter might consider the entire set of dresses when making her purchase decision Lowering the price on one dress may increase the sales of that dress but also decrease the sales of other dresses Thus, the buyers’ decisions about pricing and promoting specific SKUs in the category will affect the sales of other SKUs in the same category Typically, a buyer manages several categories of merchandise Some retailers may define categories in terms of brands For example, Tommy Hilfiger and Polo/Ralph Lauren each might be categories because the retailer feels that the brands are not substitutes for each other A “Tommy” customer buys Tommy and not Ralph Also, it is easier for one buyer to purchase merchandise and coordinate distribution and promotions for the merchandise offered by a national-brand vendor Category Management While retailers, in general, manage merchandise at the category level, many supermarkets organize their merchandise management around brands or vendors For instance, a supermarket chain might have three different buyers for breakfast cereals—one each for Kellogg’s, General Mills, and General Foods Managing merchandise within a brand category can lead to inefficiencies because it fails to consider the  interdependencies among SKUs in the category For example, the three breakfast cereal buyers for a supermarket chain, one for each major brand, might each decide to stock a new product line of gluten-free breakfast cereals offered by Kellogg, General Mills, and General Foods However, if the brand-organized buyers had taken a category-level perspective, they would have realized that the market for gluten-free cereals was limited and the supermarket would generate more sales by stocking one brand of gluten-free cereals and using the space set aside for the other gluten-free cereal brands to stock a locally produced cereal that has a strong following among some of its other customers The chilled drink department consists of several categories www.downloadslide.net Managing the Merchandise Planning Process The category management approach to managing merchandise assigns one buyer or category manager to oversee all merchandising activities for the entire category Managing by category can help ensure that the store’s assortment includes the “best” combination of sizes and vendors—the one that will get the most profit from the allocated space.2 Category Captain Some retailers select a vendor, such as General Mills or Kellogg’s, to help them manage a particular category The vendor, known as the category captain, works with the retailer to develop a better understanding of consumer shopping behaviors, create assortments that satisfy consumer needs, and improve the profitability of the merchandise category Selecting vendors as category captains has several advantages for retailers It makes merchandise management tasks easier and can increase profits Vendors are often in a better position to manage a category than are retailers because they have superior information about a category The vendor’s entire focus is on a specific category, while buyers are typically responsible for several categories In addition, the insights that vendors acquire from managing the category for other retailers can be applied to a current problem A potential problem with establishing a vendor as a category captain is that the vendor could take advantage of its position It is somewhat like “letting the fox into the henhouse.” Suppose, for example, that Frito-Lay chose to maximize its own sales, rather than the retailer’s sales, in managing the salty snack category It could suggest an assortment plan that included most of its SKUs and exclude SKUs that are more profitable to the retailer, such as high-margin, private-label SKUs Thus, retailers are becoming increasingly reluctant to turn over these important decisions to their vendors They have found that working with their vendors and carefully evaluating their suggestions is a much more prudent approach There are also antitrust considerations The vendor category captain could collude with the retailer to fix prices It could also block other brands, particularly smaller ones, from access to shelf space.3 Evaluating Merchandise Management Performance As we discussed in Chapter 6, a good performance measure for evaluating a retail firm is ROA Return on assets is composed of two components, asset turnover and net profit margin percentage But ROA is not a good measure for evaluating the performance of merchandise managers because they not have control over all of the retailer’s assets or all the expenses that the retailer incurs Merchandise managers have control only over what merchandise they buy (the retailer’s merchandise inventory), the price at which the merchandise is sold, and the cost of the merchandise Thus, buyers generally have control over the gross margin but not operating expenses, such as store operations, human resources, real estate, and logistics and information systems GMROI A financial ratio that assesses a buyer’s contribution to ROA is gross margin return on inventory investment (GMROI, typically pronounced “jim-roy”) It measures how many gross margin dollars are earned on every dollar of inventory investment made by the buyer GMROI combines gross margin percentage and the sales-to-stock ratio, which is related to inventory turnover GMROI Gross margin percentage Sales-to-stock ratio Gross margin Net sales Net sales Average inventory at cost Gross margin Average inventory at cost The reason we use the sales-to-stock ratio to calculate GMROI (instead of inventory turnover) is that GMROI is a type of return on investment measure, so the investment in inventory is expressed at cost Inventory turnover and sales-to-stock ratios are very similar in concept, but they are calculated slightly differently CHAPTER 12 321 www.downloadslide.net 322 SECTION III Merchandise Management EXHIBIT 12–2 Illustration of GMROI Sales Gross margin Average inventory Fresh Bakery Bread Gourmet Canned Food $1,000,000 200,000 100,000 200,000 100,000 50,000 GMROI Gross margin Net sales Net sales Average inventory Gross margin Average inventory Fresh Bakery Bread GMROI 200,000 1,000,000 1,000,000 100,000 200,000 100,000 20% 10 200% Gourmet Canned Food GMROI 100,000 200,000 200,000 50,000 100,000 50,000 50% 200% The difference between the sales-to-stock ratio and inventory turnover is the numerator of the equation When you are calculating the sales-to-stock ratio, the numerator is net sales When you are calculating inventory turnover, the numerator is the cost of goods sold To convert the sales-to-stock ratio to inventory turnover, simply multiply the sales-to-stock ratio by (1 Gross margin percentage) Thus, if the sales-to-stock ratio is 9.0 and the gross margin percentage is 0.40, the inventory turnover for the category is 5.4: Inventory turnover (1 Gross margin percentage) Sales-to-stock 5.4 (1 0.4) 9.0 Buyers have control over both components of GMROI The gross margin component is affected by the prices they set and the prices they negotiate with vendors when buying merchandise The sales-to-stock ratio is affected by the popularity of the merchandise they buy If they buy merchandise that customers want, it sells quickly and the sales-to-stock ratio is high Like the profit and asset management paths to assess ROA, there are two paths to achieving high GMROI: gross margin and inventory turnover (sales-tostock ratio) For instance, within a supermarket, some categories (e.g., wine) are high-margin–low-turnover, while other categories (e.g., milk) are low-margin– high-turnover If the wine category’s performance were compared with that of milk using inventory turnover alone, the contribution of wine to the supermarket’s performance would be undervalued In contrast, if only gross margin were used, wine’s contribution would be overvalued Consider the situation in Exhibit 12–2, in which a supermarket wants to evaluate the performance of two categories: fresh bakery bread and gourmet canned food If evaluated on gross margin percentage or sales alone, gourmet canned food is certainly the winner, with a 50 percent gross margin and sales of $300,000, compared with fresh bakery bread’s gross margin of 1.33 percent and sales of $150,000 Yet gourmet canned food’s sales-to-stock ratio is only 4, whereas fresh bakery bread has a sales-to-stock ratio of 150 Using GMROI, both categories achieve a GMROI of 200 percent and so are equal performers from an ROA perspective The bakery department in a supermarket typically has a high sales-to-stock ratio and a low gross margin Measuring Sales-to-Stock Ratio Retailers normally express inventory turnover (sales-to-stock) ratios www.downloadslide.net Managing the Merchandise Planning Process on an annual basis rather than for part of a year If the sales-to-stock ratio for a threemonth season equals 2.3, the annual sales-to-stock ratio will be four times that number (9.2) Thus, to convert a sales-to-stock ratio based on part of a year to an annual figure, multiply it by the number of such time periods in the year The most accurate way to measure average inventory is to measure the inventory level at the end of each day and divide the sum by 365 Most retailers can use their information systems to get accurate average inventory estimates by collecting and averaging the inventory in stores and distribution centers at the end of each day Another method is to take the end-of-month (EOM) inventories for several months and divide by the number of months For example, Month January February March Total Average (Total/3) End-of-Month Inventory $22,000 35,000 38,000 $93,000 $31,000 Improving GMROI There are two paths that buyers can take to increase GMROI: (1) improve inventory turnover (sales-to-stock ratio) or (2) increase gross margin Improve Inventory Turnover (Sales-to-Stock Ratio) To improve the inventory turnover (sales-to-stock ratio), buyers can either reduce the level of inventory or increase sales One approach that buyers take to increase inventory turnover is to reduce the number of SKUs within a category Buyers need to provide backup stock for each SKU so that the products will be available in the sizes and colors that customers are seeking Fewer SKUs means that less backup stock is needed However, reducing the number of SKUs could reduce sales because customers will be less likely to find what they want Even worse, if they continually can’t find the brand or product line at all, customers might start shopping at a competitor and also urge their friends to the same.4 A second approach for reducing the level of inventory is to keep the same number of SKUs but reduce the backup stock for each SKU This approach has the same problem as reducing the number of SKUs Less backup stock increases the chances that customers will not find the size and color they want when visiting a store or website A third approach for increasing inventory turnover is to buy merchandise more often but in smaller quantities because this reduces average inventory without reducing sales But buying smaller quantities decreases the gross margin because buyers can’t take advantage of quantity discounts and transportation economies of scale It also requires the buying staff to spend more time placing orders and monitoring deliveries A fourth approach is to increase sales and not increase inventory proportionally For example, buyers could increase sales by reducing prices While inventory turnover would increase in this situation, gross margin would also decrease, which could have a negative impact on GMROI Increasing inventory turnover can have positive impacts on sales by attracting more customer visits, improving sales associate morale, and providing more resources to take advantage of new buying opportunities Higher inventory turnover increases sales because new merchandise is continually available to customers New merchandise attracts customers to visit the store more frequently because they know they will be seeing different merchandise each time they visit the store When inventory turnover is low, the merchandise begins to look shopworn— slightly damaged from being displayed and handled by customers for a long time CHAPTER 12 323 www.downloadslide.net 324 SECTION III Merchandise Management Salespeople are excited about and more motivated to sell the new merchandise, and thus sales increase, increasing inventory turnover even further Finally, when inventory turnover increases, more money is available to buy new merchandise Having money available to buy merchandise late in a fashion season can open up profit opportunities For instance, buyers can take advantage of special prices offered by vendors that have too much inventory left over at the end of the season Increase Gross Margin Three approaches to increasing the gross margins are increasing prices, reducing the cost of goods sold, or reducing customer discounts Increasing prices increases gross margin, but it can also decrease sales and inventory turnover, because price-sensitive customers buy less Buyers usually attempt to lower the cost of goods sold by negotiating for better prices from vendors, though they also might increase the percentage of private-label merchandise in a category’s assortment, because private-label merchandise is generally less costly than similar merchandise made by national brand vendors (see Chapter 13) Finally, buyers can increase gross margins by reducing the customer discounts needed to sell unwanted merchandise or merchandise left over at the end of the season To minimize these discounts, buyers need to a better job of buying products that customers want and accurately forecasting sales In summary, when attempting to increase GMROI, buyers need to strike a balance to determine appropriate levels of inventory turnover and gross margins Some approaches for improving inventory turnover have secondary effects that can lower GMROI by lowering sales volume or reducing gross margins As we discussed in Chapter 10, several steps can be taken to improve supply chain efficiency, such as improved vendor relationships, VMI, and CPFR, which increase inventory turnover without negative side effects EXHIBIT 12–3 MERCHANDISE PLANNING PROCESSES LO2 Contrast the merchandise management processes for staple and fashion merchandise As shown in Exhibit 12–3, the merchandise management process involves buyers forecasting category sales, developing an assortment plan for merchandise in the category, and determining the amount of inventory needed to support the forecasted sales and resulting assortment plan Then buyers develop a plan outlining the sales expected for each month, the inventory needed to support the sales, and the money that can be spent on replenishing sold merchandise and buying new merchandise Along with developing the plan, the buyers or planners decide what type and how much merchandise should be allocated to each store Having developed the plan, the buyer negotiates with vendors and buys the merchandise Merchandise buying activities are reviewed in Chapter 13 Finally, buyers continually monitor the sales of merchandise in the category and make adjustments For example, if category sales are less than forecasted in the plan and the projected GMROI for the category falls below the buyer’s goal, the buyer may decide to dispose of some merchandise by putting it on sale and then use the money generated to buy merchandise with greater sales potential Merchandise Planning Process Forecast category sales (Chapter 12) Develop an assortment plan (Chapter 12) Determine appropriate inventory level and product availability (Chapter 12) Develop a plan for managing inventory (Chapter 12) Allocate merchandise for stores (Chapter 12) Buy merchandise (Chapter 13) Monitor and evaluate performance and make adjustments (Chapters 12, 14) www.downloadslide.net 656 Name Index Quelch, John A., 385 Rachman-Moore, D., 153 Radulovich, Lori, 65 Raghubir, Priya, 513 Rahmanand, Mohammad S., 87 Ralph, Don, 264–265 Raman, Ananth, 31, 289 Ranjan, Jayanthi, 300 Rapp, Adam, 449 Ratchford, Brian, 117 Reard, Louis, 118 Reda, Susan, 110, 404 Reibstein, David, 181 Reinartz, Werner, 313 Repass, Randy, 285 Reutterer, Thomas, 233 Reynolds, Jonathan, 153 Reynolds, Kristy E., 117 Rhee, Edward, 576 Rhim, Helen, 140 Rice, Dan, 557 Richie, Lionel, Richie, Nicole, 247 Roberts, Bob, 254 Roberts, Bryan, 31, 65 Robertson, Jane, 415 Roggio, Armando, 530 Rohm, Andrew, 539 Rosenberg, David, 310 Rosenbloom, Stephanie, 268, 342, 367 Roslin, Rosmimah, 205 Rosnan, Mohd Herwina, 205 Ross, Karen, 600 Ross, Stephen, 181 Rothaermel, Frank T., 153 Rothstein, Mark, 481 Roy, Rachel, 360 Rubin, Courtney, 593 Runyan, Rodney, 205 Ruoh-Nan, Yan, 205 Russo, Angelo, 181 Rust, Roland, 306 Ryan, Rosemary, 286 Ryan, Tom, 110, 375, 552 Rydin, Craig, 597 Salman, Fabiola, 140 Sand, Jan Yngve, 385 Sandberg, Suzy, 392 Sandblom, C L., 531 Sands, Sean, 575 Santosa, Yolanda, 62 Santos-Peñate, Dolores R., 233 Sari, Kazim, 289 Schewel, Laura B., 205 Schipper, Lee J., 205 Schlager, Tobias, 263 Schneider, Benjamin, 263 Schoenherr, T., 285 Schmidt, Charles E., Sr., 550 Schonhardt, Sara, 142 Schramm-Klein, Hanna, 87, 153, 181 Schrøder, Peter Winther, 181 Schroeder, Carol L., 547 Schuller, Gerfried, 553 Schultz, Howard, 19, 20, 62, 236, 250, 251, 563 Schulz, Cecelia, 601 Schulz, E J., 406 Schwarz, Audrey, 356–357 Schweitzer, Linda, 481 Sebra, Matthew, 433 Seiders, Kathleen, 539 Sernovitz, Andy, 449 Sethuraman, Raj, 153 Severin, Linda, 361 Shader, Maggie, 40 Shahg, Denish, 349 Shankar, V., 87 Sherry, John F., Jr., 65 Simon, David, 190 Simon, Fred, 190 Simon, Herbert, 190 Simon, Melvin, 190 Singer, Natasha, 110 Siomkos, George J., 513 Sivonen, Hanna, 289 Skiera, Bernd, 415 Skillings, Pamela, 547 Smaros, Johanna, 289 Smith, David, 368 Smith, Ray A., 412 Smith, Ron, 449 Smith, Sandy, 552 Smith, Stephen A., 349 Solo, Hope, 105–106 Solomon, Michael, 117 Sorensen, Herb, 117, 513 Spann, Martin, 415 Sparks, Leigh, 289 Spector, Robert, 65, 539 Spelling, Tori, 359, 360, 429 Sponder, Marshall, 449 St John, Oliver, 586 Stallone, Jennifer, 359, 360 Staughton, Roy, 385 Steenburgh, Thomas J., 87 Steenkamp, Jan-Benedict E M., 233, 385 Stefani, Gwen, 360, 581–582 Steinmann, Sascha, 87 Stephan, Ludwig, 449 Stern, Neil, 472 Stevenson, Seth, 270 Stewart, James B., 485 Stewart, Martha, 359, 360 Stillitoe, Ben, 426 Sting, 69 Stoll, John D., 95 Strom, Stephanie, 47 Stuart, Ken, 575–576 Suárez-Vega, Rafael, 233 Sugden, David R., 385 Suri, Rajneesh, 415 Swanepoel, Albertuse, 581–582 Swanson, R David, 289 Swigler, Carolyn, 368–373 Sze, Cecilia, 328 Talley, Karen, 160, 168 Tam, Pui-Wing, 106 Tan, Keah-Choon, 285 Tardiu, Axel, 558 Tassin, Christian, 540 Taylor, Chris, 587, 588 Taylor, Jack, 588, 589 Teller, Christoph, 233 Tencati, Antonio, 181 Ternus, Kate, 513 Thain, Greg, 65 Thakor, Mrugank V., 415 Thayer, Warren, 334 Theotokis, Aris, 415 Thomas, Jacquelyn, 300 Thomassen, Lars, 385 Thompson, Arthur A., Jr., 153 Thompson, Steven R., 135 Thompson, Sylvie, 586 Tiffany, Charles Lewis, 565 Todd, Deryane, 60 Tode, Chantal, 40, 392 Toktay, L Berl, 349 Ton, Zeynep, 164 Topping, Ted, 547 Townsend, Matt, 395 Trachtenberg, Jeffrey A., 40 Trajano, Luiza Helena, 66–67 Troy, Mike, 565 Trump, Donald, 359 Tsiros, Michael, 415 Tufft, Caroline, 139 Tummala, V.M.R., 285 Tuttle, Brad, 40, 395 Twittel, Ed, 427 Tyler, Elizabeth, 491 Tyman, Jeff, 233 Ullman, Myron, III, 584, 585 Underhill, Paco, 117, 513 Unser, Don, 88–89 Ury, William L., 384 Vaidyanathan, Ramnath, 349 Valenti, Catherine, 328 Valenzuela, Ana, 513 Vance, Charles M., 263 Vats, Rachit, 560 Vega, Tanzina, 106 Velasco, Schuyler, 149 Venkatesan, Rajkumar, 313 Verhoef, Peter, 313 Vincent, Roger, 187 Visseyrias, Mathilde, 558 Von Furstenberg, Diane, 582 Vrechopoulos, Adam P., 513 Vurro, Clodia, 181 Wagner, Gerhard, 87 Waller, Matthew A., 289 Walsh, Paul, 328 Walton, Sam, 18–20, 236, 254, 255, 540 Wang, Helen H., 563 Wang, Jiechen, 233 www.downloadslide.net Name Index Wang, Vera, 581 Wang, Yong Jian, 513 Warner, Fara, 100 Waters, Alice, 105 Weaver, Jason, 449 Wei, Jie, 513 Weiler, Virginia, 586 Weitz, Barton, 87, 551, 557, 573, 589 Welch, David, 395 Werdigier, Julia, 252 Wesley, Scarlett, 31 West, Diane, 438–440 Westerfield, Randolph, 181 Wetzels, Martin, 449, 539 Wheatley, Jonathan, 71 Whitaker, Jan., 65 White, Martha C., 406 Wickstrom, Elise, 576–577 Widing, Robert E., II, 481 Wildgen, Michelle, 310 Williams, Brent D., 289 Williams, Serena, 4, 360 Wilson, Elizabeth J., 598 Wilson, John P., 263 Wilson, Matt, 257 Wilson, Stephanie, 566–567 Winer, Russell, 153 Winston, Andrew, 268 Wise, Bethany, 563 Wisner, Joel, 285 Wohl, Jessica, 582 Wolfle, Ralf, 556 Won, Do, 19–20 Wong, Belinda, 562 Wong, Christina, 513 Wood, Steve, 233 Woodworth, Kate, 565 Wozniacki, Caroline, 105–106 Wozniak, Steve, 594 Wu, Jason, 582 Xu, Sys, 205 Yen, Ju Rebecca Hsiu, 87 Yip, Joanne, 513 Yiu, C Y., 205 Young, Angelo, 560 Young, Scott A., 263 Zahay, Debra, 313 Zale, Joseph, 415 Zeithaml, Valarie, 306, 539 Zentes, Joachim, 153, 181 Zhang, Jie, 87 Zhang, Qian Forrest, 139 Ziettlow, Amy, 310 Zimmerman, Ann, 477 Zinn, Walter, 349 657 www.downloadslide.net SUBJECT INDEX 658 ABC analysis, 344–345 Accessibility, 213 Accountability, performance, 176 Accounting, careers in, 33 Accounts receivable, 163 Acid-test ratio, 174 Actionable, 108–109 Adaptability, global retailing and, 142–143 Add-on selling, 309, 310 Adjacent tenants, 215 Adventure, hedonic needs and, 92 Advertising See also Communication programs careers in, 32 co-op (cooperative), 371, 438 direct mail, 420 explanation of, 419 in integrated marketing communication program, 419–420 magazine, 420 newspaper, 419–420 planning and evaluation process for, 442–444 radio, 420 television, 420 Affordable budgeting method, 441 Age Discrimination in Employment Act, 459 Aided recall, 433–434 Airline industry, yield management in, 395 Airports, retailing in, 198 Á la carte plans, 465–466 Alternatives, evaluating See Multiattribute model Americans with Disabilities Act (ADA), 459, 487–488 Analog approach, to predict sales, 224–225 Anchor stores, 189 Apparel industry See also Fashion environmental effects of production and, 13 fast fashion and, 270 perceptual map of, 128–129 Apps, 79–80 Artificial barriers, 213 Asset management path See also Strategic profit model analysis of, 167 application of, 171–172 combining profit margin management path and, 167–169 components of, 165–167 Assets current, 165 explanation of, 165 fixed, 167 intangible, 167 Asset turnover, 158, 167 Associations, brand, 435 Assortment explanation of, 8, 37 methods to increase, 360–361 method to determine, 331–333 in specific merchandise categories, 38 Assortment plan development of, 331–333 evaluation of, 344–345 explanation of, 302, 331 Assurance, 522 Atmospherics, 507 See also Store atmosphere Authentication, 273 Authorization, 273 Autocratic leaders, 469–470 Automated continuous replenishment, 338 Automated retailing, 72 Automatic conveyer systems, 275, 276 Backup stock, 337–338 Backward integration, Bait-and-switch tactics, 411 Bargaining power, of vendors, 148 Barriers to entry, 147, 148 Base stock, 336 Basic merchandise See Staple merchandise Beginning-of-month (BOM) stock, 353 Behavioral interviews, 458 Benchmarks, for retailer performance, 178 Benefits, adding new, 100–101 Benefit segmentation, 114 Big-box retailers, opposition to, 201 Biometrics, 296 Black market, 379 Blended training programs, 461 Block group, 218 Blogs building relationships with, 417 as communication tool, 429–430, 536 microblogs, 430–431 Bonuses, employee, 252–253 Boutique layout, 493 Brand associations, 435 Brand awareness explanation of, 433–434 methods to build, 434–435 top-of-mind, 434 Brand equity activities to build, 432–433 explanation of, 431–432 Brand image across channels, 82, 83 associations and, 435 explanation of, 128, 431 value of, 431–432 Brand loyalty, 103 Brands See also specific types of brands copycat, 359–360 exclusive, 49, 359, 360 explanation of, 431 generic, 360 national, 358, 360–364 store, 130, 358–362 subbrands, 358 umbrella/family brand, 358 Brazil direct retailing in, 71 retail opportunities in, 141 Breadth of merchandise, 37 Break-even analysis, 399–400 Break-even point quantity, 399, 400 Breaking bulk, Breaking sizes, 332 Break pack area, 275 Bribery, commercial, 380 Browsing, benefits of, 73 Budgets See Communication budget; Merchandise budget plans Building codes, 202 Bulk fixture, 505 Bullwhip effect, 282–283 Business plans environmental analysis for, 542–544 retail concept for, 544 structure and function of, 542 Buybacks, 380 Buyers corporate social responsibility and, 381–382 legal and ethical issues for, 377–381 in national retail chains, 243, 244 negotiation issues between vendors and, 368–371 negotiation tips for, 371–373 refusal to deal by, 381 in single-store retailers, 242 store visits by, 248 Buying process See Customer buying process Buying situation segmentation, 114 Call-to-action signage, 494 Cannibalization, 211–212 Capacity fixture, 505 Car-buying process, 95 Career development, 258 Careers See Retail careers Cash flow analysis, 173–174 Cash flow statement, 174 Cash payment, 73–74 Cash wraps, 497 Catalog channel benefits of, 74–75 customer analysis in, 299 explanation of, 69–70 organization of, 245 supply chain and, 281 Catalogs, Christmas, 423–424 Category captain, 321 www.downloadslide.net Subject Index Category killers, 51 Category management, 320–321 Category signage, 494 Category specialists comparison shopping in, 199 competition among, 51–52 explanation of, 50 Cause-related marketing, 424 Census, U.S., 218 Census blocks, 218 Central business districts (CBDs), 185–186, 188 Centralization example of, 247 explanation of, 245–246 Channel activities, costs of, 8–9 Chargeback fee, 161–162 Chargebacks, 380 Charitable contributions in frequent-shopper programs, 304 unsold merchandise as, 402 Checkout areas, 497, 531 Checkout options, 520 Cherry pickers, 408 Chief financial officer (CFO), 244 Chief marketing officer (CMO), 244 Child-labor laws, 366 Children, role in buying decisions, 105 China apparel cities in, 365 distribution system in, 11 outlet center in, 195 retail opportunities in, 141 wet markets in, 139 Christmas catalogs, 423–424 Civil Rights Act, Title VII, 459 Classification, merchandise, 320 Clearance markdowns, 400, 405 Click-through rate (CTR), 446 Closeouts, 55 CLV See Customer lifetime value (CLV) Collaborative planning, forecasting, and replenishment (CPFR), 284, 337 Color, in store atmosphere, 507–508 Color presentation, 506 Commercial bribery, 380 Commission, 469, 252 Commitment, in strategic relationships, 376–377 Common area maintenance (CAM), 184, 228 Common area maintenance (CAM) clauses, 230 Communication budget affordable budgeting method to develop, 441 allocation of, 442 competitive parity method to develop, 441–442 function of, 438 marginal analysis to develop, 438–440 objective-and-task method to develop, 440 percentage-of-sales method to develop, 441 rule-of-thumb method to develop, 440 Communication objectives, 436–438 Communication programs See also Advertising; Public relations (PR) brand image and, 431–435 budget allocation for, 442 budget development for, 438–441 customer loyalty and, 431, 432 elements of integrated, 418 establishing objectives for, 436–438 examples of, 442–447 in-store marketing/design elements in, 422–423 mass media advertising and, 419–420 mobile, 425–426 online media in, 425–431 personal selling in, 423 public relations in, 423–424 sales promotions in, 421–422 in strategic relationships, 376 Communications gap, 525, 535–536 Communities big-box retailers in local, 201 philanthropy in, 12 Community-building, on websites, 425 Community shopping centers, 190–191 Comparable-store sales growth, 177 Comparison shopping, 199, 216 Compatibility, 119 Compensation plans See Employee compensation plans Competition among category specialists, 51–52 in business plan, 543–544 factors related to, 147–148 intertype, 22 intratype, 21 management’s view of, 22 pricing and, 394, 395 retail location and, 209 within trade areas, 221 Competitive advantage See also Sustainable competitive advantage growth strategies and, 137 internal operations efficiency and, 133 location and, 133–134 nature of, 127 supplier relationships and, 132–133 Competitive analysis, of potential sites, 226 Competitive parity method, 441–442 Competitive rivalry, 148 Competitors performance comparisons with, 178 in retail management, 21–22 use of price data from, 394 Complaints, customer, 528 Complementary merchandise, 216, 332 Complexity, 119 Composite segmentation, 114–115 Conflicting needs, 93 Congestion, traffic, 215 Consideration set, 99 Consignment stores, 53 Consumer direct fulfillment, 280–281 Contests employee, 466 to learn customer opinions, 527 Continuous replenishment, automated, 338 Contracts with factories, 16–17 tying, 380–381 Control system to manage inventory of fashion merchandise, 339–340 to manage inventory of staple merchandise, 336–339 Convenience shopping, retail location and, 199 Convenience shopping centers, 190–191 Convenience stores, 46–47 Conventional supermarkets, 42 Conversion rate, 94 Conveyer systems, 275, 276 Cookies, 297 Co-op (cooperative) advertising, 371, 438 Copycat brands, 359–360 Copyright, 378 Corporate level, performance measures at, 177 Corporate social responsibility (CSR) in buying process, 381–382 explanation of, 12–13 stages of, 13–14 Corporate staff careers, 32–33 Cost control inventory shrinkage and, 473–474 labor scheduling and, 471, 473 shoplifting and, 474–478 store design and, 486–487 store maintenance and, 473 Cost of goods sold (COGS), 161, 166, 170 Costs of channel activities, 8–9 fixed, 399 of global sourcing decisions, 366 price setting based on, 396–398 variable, 399 Cotenancy clauses, 229 Counterfeit merchandise, 378 CPFR See Collaborative planning, forecasting, and replenishment (CPFR) Credible commitments, 376–377 CRM See Customer relationship management (CRM) Cross-docking, 275 Cross-selling, 136 Cross-shopping, 93, 195 Cultural differences See also Organization culture buying decisions and, 106–107 global retailing and, 143 659 www.downloadslide.net 660 Subject Index Cumulative attraction, 215 Current ratio, 174 Customer buying decisions extended problem solving and, 102 habitual decision making and, 103–104 limited problem solving and, 102–103 Customer buying process assortment size and, 332–333 culture and, 106–107 economy and, 104 evaluation of alternatives and, 97–101 explanation of, 91 extended problem solving and, 102 family role and, 104–105 fashion and, 117–119 habitual, 103–104 information search and, 93–97 limited problem solving and, 102–103 multiattribute model and, 97–101 need recognition and, 92–93 postpurchase evaluation and, 101–102 purchase decision and, 101 reference groups and, 105–106 scenario illustrating, 90–91 social factors influencing, 104–107 Customer data/database analysis of, 298–302 elements of, 293–295 example using, 294 explanation of, 293 to identify best customers, 298–299 identifying information in, 295–296 privacy issues and, 296–298 Customer lifetime value (CLV) explanation of, 298–299 measures of, 299–300, 302 method to treat high, 303–304 Customer loyalty See also Customer relationship management (CRM); Loyalty brand image and, 128 to brands, 431–435 customer relationship management and, 131, 292 customer service and, 130–131 development of, 292–293 explanation of, 127–128, 292–293 merchandise uniqueness and, 129–130 positioning and, 128–129 social media and, 131–132 Customer pyramid explanation of, 305–306 limitations of, 307 segments in, 306–307 Customer relationship management (CRM) customer conversion and, 309 customer database construction and, 293–295 customer identification and, 298–299 customer loyalty and, 131, 292 customer pyramid and, 305–307 customer retention and, 307–309 explanation of, 292 frequent-shopper programs and, 296, 302–304 identifying information in, 295–296 privacy issues and, 296–298 process of, 292–293 retail analytics and, 299, 301–302 unprofitable customers and, 310–311 Customer retention personalization and, 307–308 retail brand community and, 308–309 Customer rewards, in frequent-shopper programs, 303–304 Customers cherry-picker, 408 collecting information about, 525–528 converting good customers to best, 309 expectations of, 523–525, 535–536 identifying information for, 295–296 listening to, 536–537 observation of, 527–528 privacy protections for, 297–298 sense of community among, 208–209 unprofitable, 310–311 value of, 298–299 videotapes of, 502–503 Customer service approaches to, 519–521 customer expectations of, 523–525, 535–536 customer loyalty and, 130–131 customer perceptions of, 516, 522–523 explanation of, 516 gaps model to improve, 525–536 recovery from problems with, 536–537 service recovery and, 536–537 setting standards for, 528–531 strategic advantage through, 516–518 technology to improve, 534–535 Twitter and, 430–431 Customer spotting, 218 Customer surveys, 527 Cycle stock, 336 Data mining, 299 Data warehouses, 272, 273 Debt-to-equity ratio, 174 Decentralization example of, 247 explanation of, 245, 246 Deceptive reference prices, 412 Decision making See also Customer buying decisions customer, 20–29 habitual, 103–104 Delivery gap, 525, 532–535 Demand/destination merchandise, 498 Demand merchandise, 499 Democratic leaders, 470 Demographic information, sources of, 218 Demographics shopping malls and, 192 variable pricing and, 406–407 Demographic segmentation, 111 Departments, merchandise, 320 Department stores explanation of, 48–49 organization of, 243, 244 statistics on, 14 strategies of, 49 Depth of merchandise, 37 Design See Store design Destination stores, 199 Developing economies See also Global retailing production facilities in, 366 retailing activities in, 14 Digital signage, 494–495 Direct mail advertising, 420 Direct-response TV (DRTV) channel, 70 Direct selling in Brazil, 71 explanation of, 70–71 statistics related to, 71 types of, 72 Direct store delivery (DSD), 278–279 Disabilities explanation of, 459 store design and individuals with, 487–488 Discount retailers, full-line, 50 Discounts, quantity, 405–406 Discrimination employee, 259 explanation of, 459 Disparate impact, 459 Disparate treatment, 459 Dispatchers, 274–275 Displays freestanding, 495 point-of-purchase, 422 Distribution careers in, 32 competitive advantage and, 133 Distribution centers (DCs) catalog and Internet orders and, 281 cross-docking in, 275 direct store delivery vs., 278–279 explanation of, 266 floor-ready merchandise tasks in, 276 inbound transportation management in, 274–275 information flows to, 271 outbound transportation management in, 276–277 receiving and checking in, 275 shipment preparation in, 276 storing in, 275 Distribution channels, 10–12 Distributive fairness, 537 Distributive justice, 260–261 Diversification, 137 Diversification growth opportunity, 136–137 www.downloadslide.net Subject Index Diversity management benefits of, 257–258 explanation of, 256 legal issues and, 257 Diversity training, 258 Diverted merchandise, 379 Divisional merchandise managers (DMMs), 244, 371 Drawing account, 468 Dressing rooms, 497 Drop shipping, 280–281 Drugstore chains, 14–15, 54 Drugstores, 54 Durable goods, 48 Dynamic pricing, 404 Early adopters, fashion, 119 Earnings before interest, taxes, and depreciation (EBITDA) See Operating profit margin Economic conditions buying process and, 104 retail location and, 209 Economies of scale in China, 365 site selection and, 211 Efficiency, centralization and, 145–146 80-20 rule, 305 Electronic article surveillance (EAS), 474 Electronic data interchange (EDI) explanation of, 273 in supply chain collaboration, 283 Electronic retailing See also Internet retailing growth in, 68–69 perceived risks, 78–79 E-mail, for customer communications, 425 Emotional support, 533 Empathy, 523 Employee benefits building engagement through, 256 as extrinsic reward, 466 to help balance careers and families, 255–256 motivation and, 256 in retail careers, 33 Employee compensation plans design of, 468–469 incentive-based, 251–253, 467–468 legal issues related to, 259, 469 quota-bonus, 468 setting commission percentage in, 469 straight commission, 467 straight salary, 467 Employee evaluations errors in, 465 format for, 464–465 role of, 463 Employee motivation compensation-based incentives as, 251–253 employee engagement as, 255–256 empowerment as, 254–255 goal setting for, 462–463 organization culture as, 253–254 policies and supervision and, 251 turnover reduction and, 254 Employee promotion policy for, 258 from within, 255 Employee recruitment interviews and, 457–458 job applications and, 456 job descriptions and, 454–455 job previews and, 457 legal issues related to, 456–457, 459 locating prospective employees for, 455–456 reference and online checks and, 456 screening process and, 456, 476–477 testing and, 456–457 Employee rewards extrinsic, 465–466 intrinsic, 466–467 Employees age of, 239–240 career development for, 258 compensation-based incentives for, 251–253 diversity management for, 256–258 empowerment of, 254–255, 532–533 engagement of, 237 equal employment opportunity and, 259 feedback from, 528 locating prospective, 455–456 mentoring for, 258 methods to engage, 255–256 organizational culture and, 253–254 orientation programs for, 459–460 part-time, 239 performance measures for, 236–237 policies for, 251 privacy protection for, 260 productivity of, 237 providing incentives to, 533–534 recruiting and selecting, 249 safety and health of, 260 selective hiring of, 249–250 sexual harassment of, 260 socialization of, 459 social media use to engage, 256 status differences among, 255 support groups for, 258 Employee theft See also Shoplifting approaches to, 476 screening prospect employees to reduce, 476, 478 security policies and control systems to deter, 478 Employee training blended approach to, 461 diversity, 258 function of, 250–251 in interpersonal skills, 532 on-the-job, 461 structured, 460–461 Employee turnover efforts to reduce, 254 hiring practices to reduce, 457 rate of, 237 Employer identification number (EIN), 547 Employment branding, 249, 250 Empowerment, employee, 254–255, 532–533 Enclosed malls advantages and disadvantages of, 191–192 comparison shopping in, 199, 216 explanation of, 191–192 End caps, 496 End-of-month (EOM) stock, 353, 355 Energy-efficient lighting, 507 Engagement, employee, 237 Entertainment, in-store, 73 Entrances, 495 Entrepreneurial skills, 540–541 Entrepreneurship, 19–20 Environmental analysis competitors and, 543–544 industry size and trends and, 542–543 objectives for, 542 target customers and, 543 Environmental issues apparel production as, 13 for business plan, 542–544 in manufacturing, 367 Walmart and, 367 Environmental trends eco-friendly products and, 381–382 market attractiveness and, 148–149 store design and, 486, 487 Equal Employment Opportunity Commission (EEOC), 459, 471 Equal employment opportunity regulations, 259 ESRI Tapestry Segmentation, 220 Ethical issues See also Legal issues in global sourcing decisions, 366–367 in merchandise buying, 377–381 overview of, 28–29 in pricing, 410–412 Ethics, 28 Ethnic merchandise, 44 Europe, distribution system in, 11 European Union (EU) privacy directive, 297–298 Evaluation employee, 463–465 postpurchase, 101–102 Event sponsorships, 423, 434–435 Everyday-low-pricing (EDLP) strategy, 96, 388–390, 402 Exclusive arrangements legal issues in, 380 in vendor arrangements, 370–371 Exclusive brands examples of, 360 explanation of, 49, 359 Exclusive dealing agreements, 380 661 www.downloadslide.net 662 Subject Index Exclusive-use clauses, 230 Executive vice president of operations, 244 Expectations, customer, 523–525 Expenses, control of, 239 Extended problem solving, 102 External information sources, 94 Extreme-value retailers, 42, 54–55 Extrinsic rewards, 465–466 Facebook See also Company Index example of marketing campaign on, 444–445 as retail communication vehicle, 428 Factories, contracting with, 16–17 Factory outlets, 56 Fairness, perception of, 407 Fair trade merchandise, 101, 381 Families buying process and, 104–105 single-parent, 255–256 two-income, 255–256 Family brands, 358 Fashion development and spread of, 118–119 explanation of, 117 fast, 270 needs satisfied by, 117–118 retail markets for, 125, 126 The Fashion Center, 362–363 Fashion leaders, 118 Fashion life cycle, 118 Fashion merchandise clearance markdowns for, 405 control system to manage inventory of, 339–340 explanation of, 325 forecasting of sales of, 327, 329–330 management of, 326 merchandise budget plan for, 349–355 Fashion trend services, 330 Fast fashion, 270 Feature areas cash wraps as, 497 dressing rooms as, 497 end caps as, 496 entrances as, 495 explanation of, 495 freestanding displays as, 495 mannequins as, 496 promotional aisles as, 496 walls as, 496 windows as, 495 Feature fixture, 505 Fill rate, 338 Finance, careers in, 33, 244 Financial objectives, 156 Financial plans, 546 Financial resources global retailing and, 143 for new business venture, 545–546 Financial risk, 102 Financial risk analysis cash flow analysis and, 173–174 current ratio and, 174 debt-to-equity ratio and, 174 quick ratio and, 174 Financial statements, 546 Financial strategy asset management path and, 165–169 asset turnover management path and, 171–172 financial risk analysis and, 173–174 to improve financial performance, 169–170 for new business venture, 546 objectives and goals of, 156–158 overview of, 155–156 performance objectives measurement and, 175–179 profit margin management path and, 161–165, 167–171 strategic profit model and, 158–159, 173 First-degree price discrimination, 403–404 Fixed assets, 167 Fixed costs, 399 Fixed-rate leases, 229 Fixtures, 504–505 Flash sales, 56 Flextime, 256 Floor-ready merchandise, 276 Focus groups, 330 Food retailers characteristics of, 42 convenience stores as, 46–47 overview of, 40–42 sales and growth rate for, 41 supercenters as, 44–45 supermarkets as, 42–44 warehouse clubs as, 45–46 Foreign currency fluctuations, 366 Forward integration, Foursquare, 426 Four-way fixture, 505 France, distribution system in, 12 Franchises/franchising explanation of, 61–62 site selection and, 211–212 Free-form layout, 493 Freestanding displays, 495–496 Freestanding inserts (FSI), 419 Freestanding sites, 185 Freight forwarders, 277 Frequent-shopper programs customer loyalty and, 131 effectiveness of, 302–303 explanation of, 296, 302 methods to increase efficiency of, 303–304 Fringe, 217 Frontal presentation, 506–507 Full-line discount stores, 50 Furniture retailers, 199 Gaps model communications gap and, 525, 535–536 delivery gap and, 525, 532–535 explanation of, 525 knowledge gap and, 525–528 standards gap and, 525, 528–531 Gender See also Men; Women career opportunities and, 258 demographic segmentation and, 110, 111 variable pricing and, 407 General merchandise managers (GMMs), 244, 320 General merchandise retailers category specialists as, 51–52 characteristics of, 48 department stores as, 48–49 drugstores as, 54 extreme-value retailers as, 54–55 full-line discount stores as, 50 off-price retailers as, 55–56 specialty stores as, 52–53 Generic brands, 360 Gentrification, 186–188 Geodemographic segmentation, 111, 341 Geofencing, 410 Geographic information system (GIS) explanation of, 218–219 for site selection, 220 Geographic segmentation, 109, 111 Glass ceiling, 258 Global operations president, 245 Global retailing adaptability and, 142–143 attractiveness of opportunities and, 138–141 customer privacy and, 297–298 in developing economies, 14 distribution channels in, 10–12 entry strategies for, 144 financial resources and, 143 global culture and, 143 human resource issues in, 240 sustainable competitive advantage and, 141–142 Global sourcing decisions related to, 365, 366 ethical and legal issues related to, 366–367 managerial issues associated with, 366–367 GMROI (gross margin return on inventory investment) assortment and, 332 explanation of, 321–322 inventory turnover and, 498 merchandise budget plan and, 339–340 methods to increase, 323–324 Goals to provide motivation, 462–463 for service quality, 530, 534 for strategic relationships, 376 www.downloadslide.net Subject Index Gondola, 505 Goods durable, 48 gray-market, 379 hard, 48 soft, 48 Google AdWords campaign, 445–447 Government regulations building codes as, 202 customer privacy and, 297–298 in foreign markets, 143 market attractiveness and, 148–149 retail location selection and, 211 of vendor prices and terms, 379–380 zoning as, 201–202 GPS technology, 426 Graphics, function of, 493–494 Gray-market goods, 379 Green merchandise, 43–44 Green sheen, 382 Greenwashing, 382 Grid layout, 489–492 Gross leasable area (GLA), 184 Gross margin explanation of, 162 method to increase, 324 vendor negotiations and, 369–370 Gross margin percentage example of, 170–171 explanation of, 162–163 Gross profit See Gross margin Growth opportunities competitive advantage and, 137 diversification, 136–137 global, 138–144 market expansion, 136 market penetration, 135–136 retail format development, 136 Growth strategies competitive advantage and, 137 diversification and, 136–137 market expansion and, 136 market penetration and, 135–136 retail format development and, 136 Habitual decision making, 103–104 Halo effect, 499–500 Hard goods, 48 Health and safety laws, 260 Health insurance, as employee benefit, 466 Hedonic benefits, 484, 485 Hedonic needs, 92 High-assay principle, 442 High/low pricing, 388, 390 Hiring policy, selective, 249–250 Hispanics, buying decisions and, 107 Historical sales data, 327 Holding inventory, See also Inventory Home improvement centers, 14 Horizontal price fixing, 411 Hostile work environment, 260 House brands See Store brands Huff gravity model, 222–223 Human resource management (HRM) careers in, 33 challenges facing, 238–240, 248–249 competitive advantage and, 133 diversity management function of, 256–257 employee motivation function of, 251–256 employment marketing function of, 249 function of, 236 global issues in, 240 legal issues in, 258–261 organization structure and, 240–248 (See also Organization structure) performance measures of, 236–237 talent development function of, 249–251 Human resources triad, 238–239 Human rights violations, 366 Hypermarkets, 45 Idea-oriented presentation, 506 Identifiable, 109 Illegal discrimination, 259 Immediate gratification, 73 Importance weights change in, 100 explanation of, 98–99 Imports, parallel, 379 Impressions, 446 Impulse buying, 103 Impulse merchandise, 499 Inbound transportation, 274–275 Incentive compensation plans benefits and drawbacks of, 467–469 explanation of, 467 Income statement, 161, 546 Independent retailers, 60–61 In-depth interviews, 329 India distribution system in, 11 retail opportunities in, 140–141 Individualized pricing, 404 Individualized variable pricing, 403–404 Industry size, 542–543 Infomercials, 70 Information flows data warehouses and, 272–273 electronic data interchange and, 273 function of, 271–272 merchandise flows and, 270 supply chain management and, 283 Information search amount of, 94 explanation of, 94 function of, 93–94 information sources and, 94 Internet and, 96–97 reduction of, 94–96 Information systems competitive advantage and, 133 multichannel supply chains and, 81–82 role of, 16, 17 Initial markup, 397–398 Inner city explanation of, 186 gentrification in, 186–188 retailers in, 186 Innovators, fashion, 118 Input measures, 176 Instrumental support, 533 Intangible assets, 158, 167 Integrated marketing communications, 418 See also Communication programs Integrity, 273 Intellectual property, 378 Internal information sources, 94 International Consumer Electronics Show (CES), 363 Internet apps and, 79–80 car-buying process and, 95 consumer information searches on, 96–97 coupons on, 421, 422 interactive nature of, 77–78 liquidating unsold merchandise on, 402 live chats on, 77 trends in retailer use of, 425–431 Internet channel benefits of, 75–78 customer analysis in, 299 perceived risks in, 78–79 price decisions and, 409–410 supply chain and, 281 Internet retailing counterfeit merchandise and, 378 eco-friendly products and, 382 explanation of, 68–69 growth in, 68–69 organization of, 245 Intertype competition, 22 Interviews behavioral, 458 in-depth, 329 job, 457–458 of panels of customers, 527 Intratype competition, 21 Intrinsic rewards, 466–467 Inventory holding, perpetual, 338 as retailer asset, 166 vendor-managed, 283–284 Inventory management control systems for, 336–340 function of, 166, 177–178 Inventory management reports, 338–339 Inventory shrinkage See Shrinkage Inventory turnover function of, 166–167 in merchandise budget plan, 352 method to improve, 323–324 as productivity measure, 178 sales-to-stock ratio and, 322 space allocations and, 498 663 www.downloadslide.net 664 Subject Index Investment analysts, 317–318 Irregulars, 55 Item presentation, 506 Japan, convenience stores in, 47 Job application forms, 456 Job descriptions, 454–455 Job enrichment, 466–467 Job interviews preparation for, 457–458 screening applicants to, 456 Job sharing, 256 Just-in-time inventory policy, 402 Keystoning, 397 Knockoffs, 118–119 Knowledge gap, 525–528 Labor relations laws, 259 Labor scheduling, 471, 473 Leader pricing, 407–408 Leadership in Energy and Environmental Design (LEED) certification, 12–13 Leaders/leadership autocratic, 469–470 democratic, 470 explanation of, 469 transformational, 470 work atmosphere and, 470–471 Lead time, 337 Leases fixed-rate, 229 percentage, 228–229 terms of, 229–230 LEED-certified stores, 12–13 Legal issues customer privacy as, 297–298 in employee compensation plans, 469 in employee recruitment, 456–457 in global sourcing, 366, 367 in human resource management, 258–261 in merchandise buying, 377–381 in pricing, 410–412 in retail management, 28–29 in store design, 487–488 Licensing requirements, 202 Lifestyle, 111 Lifestyle centers, 193 Lifestyle segmentation explanation of, 111–112 limitations of, 113 VALS survey and, 112–113 Lift-outs, 380 Light-emitting diode (LED) lighting, 507 Lighting, 507 Limited-assortment supermarkets, 42 Limited problem solving, 102–103 Live chats, 77 Locations See Retail locations Locavore movement, 43–44 Logistics See also Supply chain management explanation of, 274 for merchandise flow, 273–274 outsourcing, 277–278 reverse, 279–280 Loop layout, 492–493 Loss leaders, 407–408 Loss prevention careers in, 33 methods for, 474–476 Low-income consumers extreme-value retailers for, 54–55 retailing approach for, 15 Low-price guarantee policy, 390 Loyalty See also Customer loyalty brand, 103 retailer, 103–104, 484–486 Loyalty programs, 131, 404 See also Frequent-shopper programs Macroenvironment, 21 Magazine advertising, 420 Main Street, 188 Maintained markup, 397–398 Malcolm Baldrige National Quality Awards, 529 Management information systems (MISs), careers in, 32 Management/Managers See Diversity management; Retail management; Store managers Management trainees, 460 Mannequins, 496 Manufacturers, in developing economies, 366 Manufacturer’s brands See National brands Manufacturer’s suggested retail price (MSRP), 411 Marginal analysis to determine communication budget, 438–440 explanation of, 438 Markdown money, 344, 369–370 Markdowns clearance, 400, 405 explanation of, 400 liquidating unsold merchandise following, 402–403 optimizing decisions FOR, 400–401 promotional, 400, 405 reducing amount of, 401–402 Market basket analysis, 299, 301–302 Market expansion growth opportunity, 136 Marketing careers in, 244 cause-related, 424 in-store, 422–423 search engine, 425, 445–447 Marketing campaigns, 444–445 Market penetration growth opportunity, 135–136 Market segments/segmentation benefit, 114 buying situation, 114 composite, 114–115 criteria to evaluate, 108–109 demographic, 111 geodemographic, 111 geographic, 109, 111 lifestyle, 111–113 retail, 107–108 variable pricing by, 406–407 Market weeks, 362 Markup, 397–398 Markup percentage, 396–397 Mass-market theory, 119 Mass-media advertising, 419–420 M-commerce (mobile commerce), 425–426 Media sources direct-mail, 420 e-mail, 425 magazines, 420 mobile communications, 425–426 new, 425–431 newspapers, 419–420 radio, 420 social, 427–431 (See also Social media) television, 420 traditional, 419–420 websites, 425 Medium, 67 Men, 110 See also Gender Mentoring programs, 258 Merchandise See also Products breadth of, 37 classification by type of, 36–37 complementary, 216, 332 counterfeit, 378 demand, 499 demand/destination, 498 depth of, 37 diverted, 379 ethnic, 44 fair trade, 101, 381 floor-ready, 276 fresh, 43–44 green, 43–44 impulse, 499 lighting to highlight, 507 liquidating markdown, 402–403 in multichannel retailing, 82 physical flow of, 273–274 private-label, 44 promotional, 499 purchase decision for, 101 shopworn, 323 special, 499 unique, 129–130 variety and assortment of, 37–38 Merchandise allocation amount of, 341 climate and, 269 www.downloadslide.net Subject Index customer-centric, 342 function of, 340–341 space considerations and, 497–498 timing of, 342, 343 types of, 341, 342 Merchandise budget plans beginning-of-month stock in, 353 beginning-of-month stock-to-sales ratio in, 351–353 end-of-month stock in, 353 example of, 350 explanation of, 339–340 for fashion industry, 349–355 monthly additions to stock in, 353 monthly reductions in, 351 monthly reductions percentage distribution to season in, 350–351 monthly sales in, 350 monthly sales percentage distribution to season in, 350 open-to-buy system in, 354–355 Merchandise categories See also Fashion merchandise; Staple merchandise assortment and, 331 basic, 325 category management and, 320–321 complementary, 499–500 explanation of, 320 fashion, 325 forecasting sales in, 327–331 location of, 498–503 seasonal, 325, 327 space allocated to, 497–498 staple, 325 variety of, 331 Merchandise group, 319–320 Merchandise kiosks, 198 Merchandise management assortment plans and, 331–333 buying organization and, 319–320 careers in, 32 category approach to, 320–321 coordination of, 246 explanation of, 318 inventory control and, 177–178, 336–340 merchandise category and, 320–321 model stock plan and, 333 overview of, 319–324 performance analysis and, 343–345 performance evaluation and, 321–324 planning processes and, 324–325, 327 product availability and, 335–336 sales forecasting and, 327, 329–331 store allocation and, 340–343 at Whole Foods, 25, 27 Merchandise management planning systems explanation of, 325, 327 for fashion, 325, 326 Merchandise retailers, 58–59 See also Retailers Merchandising frontal, 506–507 in national retail chains, 243–244 scrambled, 21–22 tonnage, 506 vertical, 506 visual, 504–507 Merchandising planners, 243–244 Metropolitan statistical area (MSA), 208, 211 Microblogs, 430–431, 536 Microenvironment, 21 Micropolitan statistical area (mSA), 208 Minimum wage, 259 Mission statement, 145, 146 Mixed-use developments (MXDs), 193–194 Mobile aps, price sensitivity and, 392 Mobile communications, 425–426 Mobile phone channel, 79–80, 409–410 See also Internet channel Model stock plan, 333, 334 Mood creation, 507 Morale, employee, 470–471 Motivation See Employee motivation MSA See Metropolitan statistical area (MSA) Multiattribute analysis, 345 Multiattribute model changing importance beliefs and, 99 consideration set and, 99 explanation of, 97 implications for retailers and, 99 importance weights and, 98–100 new benefit and, 100–101 performance beliefs and, 97–100 Multichannel retailers automated retailing and, 72 benefits of, 72–80 brand image and, 82, 83 catalog channels and, 69–70, 74–75 centralized vs decentralized, 82 challenges for, 80–84 channel migration and, 83–84 department stores as, 49 direct-response TV channels and, 70 direct selling channels and, 70–72 explanation of, 67 future outlook for, 84–85 information systems and, 81–82 Internet channels and, 68–69, 75–80 merchandise assortment and, 82 nonstore retail channels and, 68 pricing and, 82–83 shopping experience in, 81–82, 85 tasks performed in, 240–241 television home shopping channels and, 70 Multilevel system, 72 Multiple-unit pricing, 405–406 Music, 508 Mutual trust, 376 National brands explanation of, 358 profitability issues related to, 361–362 store brands vs., 360–362 National-brand vendors buying process with, 364 meeting with, 360–364 National retail chains, 243–245 See also Retail chains Natural barriers, 213 Need recognition, 92, 93 Needs conflicting, 93 fashion and satisfaction of, 117–118 hedonic, 93 unsatisfied, 92 utilitarian, 93 Negotiations buyer-vendor, 368–371 tips for effective, 371–373 Neighborhood shopping centers, 190–191 Net profit margin, 162, 171 Net sales, 161 New products, break-even point for, 399 Newspaper advertising, 419–420 Nonstore retailers, sales of, 68 North American Industry Classification System (NAICS), 36, 37 Objective-and-task method, 440 Objectives See also Performance objectives financial, 155–156 personal, 156–157 societal, 156 Observability, 119 Obsolescence, 119 Occupational Safety and Health Administration (OSHA), 260 Odd pricing, 408–409 Off-price retailers, 55–56 Omnicenters, 195 Omniretailing, 67 1-to-1 retailing, 307–308 On-the-job training, 461 Open-to-buy system explanation of, 340, 353 in merchandise budget plan, 353–355 Operating costs, retail location and, 210–211 Operating expenses example of, 171 explanation of, 162–164 Operating expenses percentage, 164–165 Operating income percentage, 165 Operating profit margin, 158, 162 Operations, careers in, 32, 244 Opportunities and threats analysis, 147 Opt in, 298 Opt out, 298 Order point, 339 Order quantity, 339 Organization culture, 253–254 665 www.downloadslide.net 666 Subject Index Organization structure centralization and, 245–246 coordination of merchandise and store management and, 246–248 explanation of, 240–242 of national retail chain, 243–245 of single-store retailer, 242 Outbound transportation, 276–277 Outlet centers, 194, 195 Outlet stores, 56 Outparcels, 185 Output measures, 177 Outsourcing, of logistics, 277–278 Overtime pay, 259 Own brands See Store brands Ownership See Retail ownership Pack verification, 287 Parallel imports, 379 Parking facilities, 213, 215 Partnering relationships See Strategic relationships Part-time employees, 239 Party plan system, 72 Paycheck cycle, 343 Payment options, negotiation over, 370 Percentage leases, 228–229 Percentage lease with specified maximum, 229 Percentage lease with specified minimum, 229 Percentage-of-sales method, 441 Perceptual maps, 128–129 Performance beliefs about, 97–100 compared to competitors, 178 measurement of, 530–531 over time, 178 Performance analysis, 162–165 Performance objectives accountability and, 176 benchmarks and, 178, 179 bottom-up planning and, 175–176 corporate performance and, 177 factors contributing to, 176 importance of setting, 175 merchandise measures and, 177–178 store operations measures and, 178 top-down planning and, 175, 176 types of measures for, 176–177 Perpetual inventory, 338 Personalization, 307–308 Personalized service in Internet channel, 76–79 quality and, 519 for wedding planning, 76 Personal objectives, 157–158 Personal selling, 423 Personal service, in store channel, 73 Philanthropy, community, 12 Physical risks, 102 Pick ticket, 276 Planned locations, 184 See also Retail locations Planograms, 501, 502 Point-of-purchase (POP) counters, 497 Point-of-purchase (POP) displays, 422 Point-of-sale (POS) data, 284 Point-of-sale (POS) terminals, 271 Point-of-sale signage, 494 Pop-up stores, 196–197 Positioning, 128–129 Postpurchase evaluation, 101–102 Power, hedonic needs and, 92 Power centers, 191, 199 Power perimeter, 43 Predatory pricing, 410–411 Premiums, 421–422 Premium store brands, 359 Preprint, 419 Presentation techniques, 505–507 President of direct channels, 245 Price bundling, 405 Price comparisons, Internet and social channels for, 409–410 Price discrimination first-degree, 403–404 second-degree, 405 third-degree, 406 Price elasticity, 393–394 Price experiments, 391–392 Price fixing, horizontal, 411 Price lining, 408, 506 Price scanners, 411–412 Price sensitivity explanation of, 390 price elasticity to measure, 393–394 price experiment to measure, 391–392 showrooming and mobile apps and, 392 Prices/pricing based on costs, 396–398 break-even analysis and, 399–400 competition and, 394, 395 considerations in setting, 39 customer price sensitivity and, 390–394 deceptive, 412 dynamic, 404 everyday low-pricing, 96, 388–390, 402 high/low, 388, 390 importance of, 388 to increase sales and profits, 403–410 individualized variable, 403–404 leader, 407–408 legal and ethical issues related to, 410–412 manufacturer’s suggested retail, 411 for markdowns, 400–403 by multichannel retailers, 82–83 multiple-unit, 405–406 negotiations with vendors about, 369 odd, 408–409 predatory, 410–411 pricing optimization software for, 398–399 scanned vs posted, 411–412 for services, 394–396 types of, 388–390 variable, 403–407 zone, 407 Pricing optimization software for markdowns, 401 for price setting, 398–399 Primary trading area, 217 Privacy issues in customer relationship management, 296–298 employee, 260 Private equity firms, 168 Private-label brands See Store brands Private-label president, 244–245 Problem solving, 102–103 Procedural fairness, 537 Procedural justice, 261 Product availability explanation of, 335 merchandise categories and, 335–336 Productivity, employee, 237 Productivity measures, 177, 178 Product placement, 424 Products See also Merchandise ability to touch and feel, 73 eco-friendly, 381–382 fair-trade, 101, 381 loss leader, 407–408 Profitability, of national brands vs store brands, 361–362 Profit margin management path See also Strategic profit model application of, 170–171 combined with asset management path, 167–169 components in, 161–162 implications of, 169–170 performance analysis on, 162–165 Profits, store design and, 486–487 Profit sharing, 253 Prohibited-use clauses, 229–230 Promotional aisles, 496 Promotional markdowns, 400, 405 Promotional merchandise, 499 Promotional signage, 494 Promotions, 32, 302 Protected class, 459 Psychographics, 111 Public relations (PR), 423–424 Public warehouses, 277 Pull supply chain, 278 Push supply chain, 278 Pyramid scheme, 72 Quality commitment to, 529 consistency in, 517 of counterfeit merchandise, 378 customer evaluation of, 522–525 customer expectations about, 523–525 management commitment to, 529 of services, 396 setting goals for, 530 Quantity discounts, 405–406 Quick ratio, 174 Quota-bonus plan, 468 Quotas, 468 www.downloadslide.net Subject Index Racetrack layout, 492–493 Radio advertising, 420 Radio frequency identification (RFID) explanation of, 284–285 for merchandise, 296 retailer benefits of, 285–286 vendor benefits of, 287 Radio-frequency identification (RFID) systems, 474, 475 Rain checks, 269, 411 Reachable, 109 Real estate careers, 33 Rebates, 421 Receiving, 275 Recruitment See Employee recruitment Reductions, 397 Reference groups, 105–106 Regional malls, 191 Regression analysis, 223–224 Regulations See Government regulations Related diversification growth opportunity, 137 Reliability, 522 Reorder point, 283 Resale price maintenance, 411 Resale stores, 53 Resident buying offices, 367–368 Responsiveness, 523 Retail analytics assortment planning as, 302 explanation of, 299 market basket analysis as, 299, 301–302 targeting promotions as, 302 Retail businesses business plan preparation for, 542–544 concept development for, 541 implementation plan for, 544–546 miscellaneous costs and issues related to starting, 546–547 process to determine viability of, 541 skills to start, 540–541 Retail buyers See Buyers Retail careers benefits of, 33 corporate-level, 32–33 entrepreneurial, 19–20 in management, 17–19, 32 in merchandise management, 32 in national retail chains, 243–245 overview of, 31, 32 Retail chains explanation of, 61 organization of, 243–245 store classification in, 341 Retail channels, 67, 68 Retail community, customer loyalty and, 131–132 Retailer loyalty, 103–104 Retailers See also Multichannel retailers; specific types of retailers breadth and depth of offerings by, 39 classification system for, 36, 37 collaboration between vendors and, 282–285 commitment to quality, 529 competition among, 35–36 complementary, 215 explanation of, extreme-value, 42, 54–55 food, 40–47 general merchandise, 48–56 list of largest, 15, 16 merchandise, 36–38, 58–59 objectives of, 236 off-price, 55–56 overview of, 36 ownership classifications for, 60–62 radio frequency identification and, 285–286 role in developing economies, 14 service, 56–59 services offered by, 39, 388, 517 single-store, 242 socially responsible, 381–382 supply chain and, value creation by, 7–8 wholesaling and production activities of, Retail format, 124 Retail format development growth opportunity, 136 Retail Industry Quiz, Retailing See also specific types of retailing in developed economies, 12 in developing economies, 14 entrepreneurial opportunities in, 19–20 evolution of, 14–17 explanation of, 7–8 management decisions in, 20–29 (See also Retail management) management opportunities in, 17–19 1-to-1, 307–308 overview of, 5–7 social and economic significance of, 12–14 unorganized, 140 Retail locations See also Retail sites airports as, 198 characteristics of, 184 for competitive advantage, 133–134 in convenience, neighborhood, and community shopping centers, 190 in enclosed shopping malls, 191–192 evaluation of, 208–216 in lifestyle centers, 193 merchandise kiosks as, 198 in mixed-use developments, 193–194 nontraditional, 196–198 in omnicenters, 195 in outlet centers, 194 pop-up, 196–197 in power centers, 191 retail strategy and, 133–134, 198–200 in shopping centers, 189 shopping situations and, 199–200 societal and legal considerations for, 200–202 store-within-a-store, 197–198 in theme/festival centers, 194–195 types of, 184 unplanned, 185–188 Retail management decision process in, 21–29 ethical and legal considerations in, 28–29 role of competitors in, 21–22 role of customers in, 22 strategy development in, 22–24 strategy implementation in, 24–25 Whole Food example of, 25–28 Retail market segment, 107–108 See also Market segments/segmentation Retail mix explanation of, 24–25 in strategic planning, 150 Retail ownership, 60–61 Retail prices/pricing See Prices/pricing Retail sales See Sales Retail sites characteristics of, 212–213, 215–216 evaluation of, 208–212 leases for, 228–230 potential sales estimates for, 222–225 selection steps for, 225–228 within shopping centers, 216 trade area characteristics and, 216–221 Retail strategy building advantages in, 134 for competitive advantage, 126–127, 137 for customer loyalty, 127–132 development of, 22–23 examples of, 124–125 explanation of, 124 global, 138–144 for growth, 134–137 implementation of, 24–25 internal operations and, 133 planning process for, 144–151 (See also Strategic retail planning process) retail format and, 125–126 retail location and, 133–134, 198–200 store design to implement, 484 strategic decisions in, 23–24 supplier relationships and, 132–133 target market segment and, 125–126 at Whole Foods, 24–28 Return on advertising investment (ROAI), 446–447 Return on assets (ROA) explanation of, 156 merchandise management performance and, 321 strategic profit model and, 158–159, 169, 170 supply chain efficiency and, 269 Reverse auctions, 368 Reverse logistics, 279–280 Rewards employee, 465–467 in frequent-shopper programs, 303–304 RFID See Radio frequency identification (RFID) 667 www.downloadslide.net 668 Subject Index RFM analysis explanation of, 299 illustrations of, 300, 301 Risk reduction, in store channel, 73 Risks, 102 Robinson-Patman Act (1936), 379 Rounders, 505 Rule-of-thumb methods, 440 Russia, retail opportunities in, 141 Rustbelt Retirees, 341 Salaries, in retail careers, 33 Sales break-even, 400 in direct selling, 71 estimation of potential, 222–225 store design and, 486 Sales data for fashion merchandise, 329–330 historical, 327 Sales forecasts for fashion merchandise, 327, 329–330 inventory management reports and, 339 for service retailers, 330–331 for staple merchandise, 327 Sales per linear foot, 497–498 Sales per square foot, 497 Sales promotions coupons as, 405, 406, 421 explanation of, 421 premiums as, 421–422 rebates as, 421 Sales-to-stock ratio explanation of, 321–322 measurement of, 322–323 method to improve, 323–324 Same-store sales growth, 177 Samples, 422–423 Satisfaction, following purchase, 101–102 Saturation, 119 Scale economies, 147 Scent, 508–509 Scrambled merchandising, 21–22 Search engine marketing (SEM) example of, 445–447 explanation of, 425 Search engine optimization (SEO), 425 Search engine results page (SERP), 425 Seasonal merchandise, 325, 327 Secondary trading area, 217 Second-degree price discrimination, 405 Security measures, 474 Security policy, 273 Self-checkout aisles, 520 Self-selected variable pricing, 405–406 Self-service options, 521 Selling, general, and administrative (SG&A) expenses, 162, 163 Sell-through analysis, 343–344 Senior vice president of merchandising, 243 Senior vice president of stores, 244 Sentiment analysis, 526–527 Service inconsistency of, 59 intangibility of, 58 meeting and exceeding, 532–535 perceived, 522–523 perishability of, 59 personalized, 519 standardized, 519–520 Service gap explanation of, 525 factors that contribute to, 525–536 Service recovery, 536–537 Services retailers characteristics of, 57–58 explanation of, 56 merchandise retailers vs., 58–59 pricing strategies of, 394–396 quality of, 396 retailers as, sales forecasting for, 330–331 types of, 56–57 yield management and, 395–396 Sexual harassment, 260, 471 Shanghai, 139 Share of wallet, 292 Ship verification, 287 Shopkick, 426 Shoplifting See also Employee theft personnel policies to deter, 475 prosecution policy for, 475 security measures to deter, 474 store design and, 474, 486 use of technology to deter, 475–476 Shopping center property management firms, 189, 190 Shopping centers characteristics of, 189 convenience, neighborhood, and community, 190–191 enclosed, 191–192 explanation of, 189 lifestyle, 193 locations within, 216 mixed-use, 193–194 omnicenters, 195 outlet, 194 power, 191 restrictions on tenants in, 215–216 theme/festival, 194–195 vacancies in, 197 Shopping experience in Internet channel, 78 in multichannel retailing, 81–82, 85 in supermarkets, 44 Shopworn, 323 Showrooming, 392 Shrinkage from employee theft, 476, 478 explanation of, 397, 473–474 from shoplifting, 474–477 statistics related to, 474 store design and, 486 Signage digital, 494–495 function of, 493–494 types of, 494 Signs, restrictions on, 202 Single-store retailers, 242 Site selection See Retail locations; Retail sites Size presentation, 506 SKU rationalization programs, 333, 334 SKUs See Stock-keeping units (SKUs) Sliding scale leases, 229 Slotting allowances/fees, 161, 370 Smartphones, 425–426 Social experience, in-store shopping as, 73 Social media blogs as, 429–430 building retail community with, 131–132, 427 as communication tool, 427–431 department stores and, 49, 50 employee engagement and, 256 example using, 27 Facebook as, 428–429 to learn about customer expectations and perceptions, 526–527 pricing decisions and, 409–410 relationship and loyalty development through, 416–417 as source of information on prospective employees, 456 Twitter as, 430–431 YouTube, 428 Social responsibility See Corporate social responsibility (CSR) Social risks, 102 Societal objectives, 156 Soft goods, 48 Space management merchandise category allocation and, 497–498 merchandise category location and, 498–503 store size and, 503–504 Space productivity, 497–498 Special events, 423 Specialization, in single-store retailers, 242 Specialty stores explanation of, 52 list of, 52 location and, 200 trends in, 52–53 Spending Potential Index (SPI), 221 Sponsorships, event, 423, 434–435 Sporting goods industry, 542–543 Spots, television, 420 Staffing See Employee recruitment Standardized service, 519–520 Standards gap, 525, 528–531 Staple merchandise control system to manage inventory of, 336–339 www.downloadslide.net Subject Index explanation of, 325 forecasting of sales of, 327 Statement of operations See Income statement Status, hedonic needs and, 92 Stimulation, hedonic needs and, 92 Stock-keeping unit (SKU) rationalization programs, 333, 334 Stock-keeping units (SKUs) ABC analysis and, 344–345 assortment plan and, 331–333 backup stock for, 39, 337 category captains and, 321 control systems and, 336–339 explanation of, 37–38, 320 in hypermarkets, 45 promotion of specific, 320 in specialty stores, 52 in supermarkets, 42 Stocklifts, 380 Stockouts, 269 Stock-to-sales ratio, in merchandise budget plan, 351–353 Store advocates, 106 Store atmosphere color and, 507–508 explanation of, 507 function of, 509–510 lighting and, 507 music and, 508 scent and, 408–409 taste and, 509 Store brands benefits of, 360–361 copycat, 359–360 development of, 358, 364 example of, 361 exclusive, 49, 359, 360 explanation of, 49, 130, 358 generic, 360 national brands vs., 360–362 premium, 359 responsibility for, 244–245 sourcing options for, 365–368 in supermarkets, 44 Store channel benefits of, 72–74 explanation of, 68 Store design atmospherics and, 507–510 to build loyalty, 484–486 careers in, 33 to control costs, 486–487 elements of in-store marketing, 422–423 environmental effects of, 487 environmental trends and, 486, 487 feature areas and, 495–497 to implement retail strategy, 484 to increase sales on visits, 486 layouts and, 489–493 legal issues related to, 487–488 to reduce shoplifting, 474 signage and graphics and, 493–495 space management and, 497–504 trade-offs in, 488–489 visual merchandising and, 504–507 Store layouts free-form, 493 grid, 489–492 racetrack, 492–493 standardized service delivery and, 520 Store maintenance, 473 Store managers bonuses for, 153 career opportunities for, 32 compensation programs and, 467–469 coordination of, 246 employee evaluation role of, 463–465 employee screening and, 476, 478 employee theft and, 476 employee training role of, 460–462 goal setting role of, 462–463 inventory shrinking and, 473–474 labor scheduling by, 471, 473 leadership styles of, 469–470 new employee socialization role of, 459–460 recruitment role of, 454–459 responsibilities of, 453–454 rewarding employees as role of, 465–467 sexual harassment issues and, 471 as shapers of work atmosphere, 470–471 shoplifting and, 474–477 store maintenance and, 473 at Whole Foods, 27–28 Store operations, management of, 178 Stores category allocation to, 333 feature areas in, 494–497 size of, 503–504 space management in, 497–504 Straight commission plan, 467, 468 Straight rack, 504, 505 Straight salary compensation plan, 467 Strategic advantage explanation of, 267 through customer service, 516–518 through supply chain management, 267–268 Strategic fit, retail location and, 210 Strategic profit model analyzing performance on profit margin management path in, 162–165 application of, 170–173 asset management path in, 165–167 combining profit and asset management paths in, 167–169 explanation of, 158–159 implications for performance improvement and, 169–170 profit margin management path in, 161–164 for selected retailers, 168 Strategic relationships developmental phases of, 374, 376 example of, 375 explanation of, 373–374 foundations of, 376–377 Strategic retail planning process explanation of, 144–145 mission statement and, 145–146 objectives establishment and resource allocation and, 150 opportunity evaluation and, 150 opportunity identification and, 150 performance evaluation and, 150–151 retail mix development and, 150 SWOT analysis and, 146–149, 151 Strengths and weaknesses analysis, 146–147 Strike zone, 498–499 Structured training programs, 460–461 Subbrands, 358 Subculture theory, 119 Substantial, 109 Supercenters, 44–45 Supermarkets conventional, 42 ethnic merchandise in, 44 extreme-value, 42 fresh merchandise in, 43 green merchandise in, 43–44 layout in, 490 limited-assortment, 42 private-label merchandise in, 44 shopping experience in, 44 trends in, 42–44 Super-regional malls, 191 Supply and demand, for services, 394–396 Supply chain management distribution centers and, 274–277 explanation of, 266–267 global sourcing and, 366 information flow and, 271–273 merchandise flow and, 273–274 outsourcing of, 277–278 product availability and, 269 radio frequency identification devices and, 284–287 retailer-vendor collaboration in, 282–285 return on assets and, 269 strategic advantage and, 267–268 system design issues in, 277–281 Supply chains bullwhip effect in, 281–282 for catalog and Internet orders, 281 example of “green,” 268 information systems and multichannel, 81–82 pull, 278 push, 278 retailers’ role in, ROA and efficiency in, 269 Support groups, for minority employees, 258 Surveys, customer, 527 669 www.downloadslide.net 670 Subject Index Sustainable competitive advantage customer loyalty and, 127–132 explanation of, 124 global, 141–142 internal operations efficiency and, 133 location and, 133–134 method to build, 126–127 sources of, 134 supplier relationships and, 132–133 SWOT analysis, 146–150 Symbols, employee communication using, 254 Tangibility, 523 TapestryTM Segmentation system, 111, 220–221 Target market analysis of, 147 in business plan, 543 elastic and inelastic, 393 explanation of, 124 retail format and, 125–126 shopping behavior and, 199–200 Tariffs, 366 Taste, 509 Teams for new business venture, 545 organization culture and, 253–254 Technology, to improve customer service, 534–535 Television advertising, 420 Television home shopping, 70 Temporary locations, 196–197 Tertiary trading area, 217 Tests, for prospective employees, 456–457 Theft See Employee theft; Shoplifting Theme/festival centers, 194–195 Third-degree price discrimination, 406–407 Thrift stores, 53 Ticketing and marking, 276 Tiered rewards, 303 Title VII, Civil Rights Act, 459 Tonnage merchandising, 506 Top-of-the-mind awareness, 434–435 Town locations See Urban locations Trade areas analysis of, 225–228 competition within, 221 customer spotting and, 218 estimating potential sales in, 222–225 explanation of, 184, 216, 217 information sources about, 218–221 primary, 217 secondary, 217 size of, 217–218 tertiary, 217 Trademarks, 378 Trade shows, 363 Traffic congestion, 215 Traffic flow, 212–213 Training See Employee training Transactions, database detailing customer, 293 Transformational leaders, 470 Transportation costs of, 371 inbound, 274–275 mode of, 277 outbound, 276–277 Trendsetters, 118 Trialability, 119 Trust, in strategic relationships, 376 Turnover See Employee turnover; Inventory turnover Twitter, 430–431, 537 Tying contracts, 380–381 Umbrella brands, 358 United States bankruptcies in, 173 direct selling in, 71 distribution channels in, 10–12 retailing role in, 12 Universal Product Code (UPC), 271 Unorganized retailing, 140 Unplanned retail locations See also Retail locations explanation of, 184 freestanding sites as, 185 Main Street, 188 urban locations as, 185–188 Unprofitable customers, 310–311 Unrelated diversification growth opportunity, 137 Unsatisfied needs, 92 UPC See Universal Product Code (UPC) Urban locations in central business district, 185–186 in gentrified residential areas, 186–188 in inner city, 186 on Main Street, 188 Urban sprawl, 200–201 Utilitarian benefits, 484, 485 Utilitarian needs, 92 VALS lifestyle survey, 112–113 Value creation, 7–8 Variable costs, 399 Variable pricing individualized, 403–404 by market segment, 406–407 perceptions of fairness and, 407 self-selected, 405–406 Variety, 37, 38 Vending machines, 72 Vendor-managed inventory (VMI), 283–284 Vendors avoidance of gray-marketing by, 379 bargaining power of, 148 buybacks by, 380 collaboration between retailers and, 282–285 co-op advertising with, 371 eco-friendly products and, 381–382 exclusive dealing agreements with, 380 legal and ethical issues affecting, 377–381 multiattribute analysis to evaluate, 345 negotiations issues between buyers and, 368–373 proprietary information of, 330 radio frequency identification and, 287 refusal to deal by, 381 regulation of prices and terms of, 379–380 returning unsold merchandise to, 402 role in reducing amount of markdowns, 401–402 strategic relationships with, 373–377 supplier relationships and, 132–133 tying contracts with, 380 Venture capital, 545–546 Vertical integration, 9, 137 Vertical merchandising, 506 Videotapes, of customers, 502–503 Virtual-store simulation, 501, 502 Visibility, 215 Visual merchandising explanation of, 504 fixtures and, 504–505 presentation techniques and, 505–507 Wall displays, 496 Warehouse clubs explanation of, 45–46 financial strategy of, 168 membership in, 46 Weather, sales forecasts and, 327, 328 Weblog See Blogs Websites See also Internet for communicating with customers, 425 design of, 520 Wedding planning, 76 Wholesale market centers, 362–363 Wholesale markets, 362 Wholesalers, Wholesale-sponsored voluntary cooperative groups, 60–61 Window displays, 495 Women See also Gender buying decisions and, 110 class ceiling and, 258 variable pricing and, 407 Word of mouth, 429 YouTube, 428, 429 Zone pricing, 407 Zoning laws, 201–202 ... Plan 20 30 20 25 35 25 WEEK Actual-to-Plan Actual Percentage 15 25 16 26 45 25 22 5% 21 6.6 22 0 29 Plan 20 30 20 25 35 25 Actual-to-Plan Actual Percentage 10 20 16 27 40 30 25 0% 23 3 22 0 14 20 variety... of Issues (I ) (2) Brand A (Pa ) (3) Brand B (Pb) (4) Brand C (Pc ) (5) Brand D (Pd) (6) 5 5 5 5 4 4 3 5 8 28 0 29 8 21 2 341 Vendor reputation Service Meets delivery dates Merchandise quality Markup... merchandise, 325 breaking sizes, 3 32 breadth, 331 buffer stock, 335 category captain, 321 category management, 321 classification, 320 continuous replenishment, 325 cycle stock, 336 department, 320