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Brief Contents
Preface 19
About the Authors 25
Acknowledgments 27
7
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Contents
Preface 19
About the Authors 25
Acknowledgments 27
Situation Analysis 84
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Objectives 92
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Identification of Consumer Characteristics and Needs 97
Overall Strategy 98
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Specific Activities 102
Control 103
Feedback 103
A Strategic Planning Template for Retail Management 104
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Appendix The Special Dimensions of Strategic Planning in a Global
Retailing Environment 109
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Welcome to Retail Management: A Strategic Approach. Our major goal is to present you with
the most current, comprehensive, reader-friendly book and supplements on retail management
possible. We want you to get thoroughly immersed in the subject matter, see how retail strategies
are formed, look at the activities of a wide range of actual retailers (large and small, goods and
services, domestic and global), and explore the possibility of a full-time career in retail manage-
ment. Read through this preface and see what’s available to you.
The concept of a strategic approach to retailing is the cornerstone of this book. With a strate-
gic approach, the fundamental principle is that the retailer has to plan for and adapt to a complex,
changing environment. Both opportunities and constraints must be considered. A retail strategy
is the overall plan or framework of action that guides a retailer. Ideally, it will be at least one year
in duration and outline the mission, goals, consumer market, overall and specific activities, and
control mechanisms of the retailer. Without a pre-defined and well-integrated strategy, the firm
may flounder and be unable to cope with the environment that surrounds it. Through our text,
we want you to become a good retail planner and decision maker and be able to adapt to change.
Since the first edition of Retail Management: A Strategic Approach, we have sought to be
as contemporary and forward-looking as possible. We are proactive rather than reactive in our
preparation of each edition. That is why we take this adage of Wal-Mart’s founder, the late Sam
Walton, so seriously: “Commit to your business. Believe in it more than anybody else.”
2. Chapter 2: Who is the world’s largest video game and software retailer? (see page 56)
3. Chapter 3: What percentage of all U.S. retail firms that file tax returns are sole proprietors?
(see page 88)
4. Chapter 4: Suppose you want to open your own store and you decide to become a franchi-
see for Subway. What franchise fee will you have to pay? What percentage of your sales
must you pay as an ongoing cost of doing business? (see page 138)
5. Chapter 5: What is scrambled merchandising? [Hint: It does not involve eggs or an omelet.]
Why do so many retailers engage in it? (see page 145)
6. Chapter 6: Which age group is more likely to use the Web, 18- to 29-year-olds or those 65
and older? [This is a really easy question.] (see page 179)
7. Chapter 7: According to a recent global survey of shoppers, what is the number one reason
why people shop at a specific retailer? (see page 212)
8. Chapter 8: What is the Universal Product Code? Why is it important for retailers? (see
page 236)
9. Chapter 9: What is a parasite store? [No, it is not a bug.] (see page 264)
10. Chapter 10: Where is the world’s largest shopping center (megamall)? (see page 290)
11. Chapter 11: Katherine Krill and Mary Sammons are female top executives of what two
firms? (see page 323)
12. Chapter 12: What do Borders, Filene’s Basement, and Syms all have in common? (see
page 343)
13. Chapter 13: How many credit and debit cards are in use in the United States? (see page 362)
14. Chapter 14: In terms of dollar sales, what percentage of U.S. retail revenues are contributed
by private brands such as Sears’ Kenmore appliances and J.C. Penney’s American Living
apparel? (see page 394)
15. Chapter 15: TJX (the parent company of T.J. Maxx and Marshall’s) attributes a large part of
its merchandising success to its reliance on opportunistic buying. What is this? (see page 411)
16. Chapter 16: What are the FIFO and LIFO methods of accounting in inventory management?
(see page 431)
17. Chapter 17: When manufacturers or wholesalers seek to control the retail prices of their
goods and services, it is called vertical price fixing. Is this practice legal in the United States?
(see page 457)
18. Chapter 18: Inside most supermarkets, a straight traffic flow places displays and aisles in a
rectangular pattern. What U.S. football term is also used to denote this type of traffic flow?
[This one is really easy for you sports fans.] (see page 498)
19. Chapter 19: Among these retail store types, which one spends the lowest percentage of its
sales on advertising: apparel and accessories stores, department stores, eating places, gro-
cery stores, hotels and motels, movie theaters, or shoe stores? (see page 512)
20. Chapter 20: In retail management, what is gap analysis? [Hint: It does not require a dental
procedure at your local dentist.] (see page 553)
21. Career Appendix (bonus question): True or false? “Retail is one of the largest, most
dynamic parts of the world economy. In good economic times, jobs in the retail sector
are numerous and many entry-level positions are easy to get. Even during economic
contractions, when some retailing sectors suffer, others—like groceries, drugstores, and
discounters—thrive.” (see page 571)
Part Four presents a four-step approach to location planning: trading-area analysis, choos-
ing the most desirable type of location, selecting a general locale, and deciding on a specific site.
Part Five discusses the elements involved in managing a retail business: the retail organi-
zation structure, human resource management, and operations management (both financial and
operational).
Part Six deals with merchandise management—developing and implementing merchandise
plans, the financial aspects of merchandising, and pricing.
In Part Seven, the ways to communicate with customers are analyzed, with special attention
paid to retail image, atmosphere, and promotion.
Part Eight deals with integrating and controlling a retail strategy.
At the end of the text, Appendix: Careers in Retailing, highlights career opportunities in
retailing. There is also a comprehensive Glossary.
To give you the best possible learning experience, these features are included in every
chapter:
▶ A contemporary opening vignette that highlights the emerging interplay between retailers
and social media.
▶ Chapter objectives.
▶ Chapter overview.
▶ Reader-friendly coverage of all the important topics pertaining to that chapter.
▶ A colorful design with numerous photos and figures that illustrate important points.
▶ Margin notes with links to key Web sites.
▶ Four real-world boxes on “Technology in Retailing,” “Retailing Around the World,” “Ethics
in Retailing,” and “Careers in Retailing” in each chapter. Use your phone to link to the sites,
within each box, via QR codes throughout the text!
▶ A chapter summary tied directly to the chapter goals.
▶ A list of key terms and their page references.
▶ Questions for discussion.
▶ Online exercise to stimulate thought.
▶ Chapter endnotes.
To provide extra coverage for five special topics, we also include these chapter-ending appen-
dixes: Chapter 1—“Understanding the Recent Economic Downturn in the United States and Around
the Globe,” Chapter 2—“Planning for the Unique Aspects of Service Retailing,” Chapter 3—“The
Special Dimensions of Strategic Planning in a Global Retailing Environment,” Chapter 4—“The
Dynamics of Franchising,” and Chapter 6—“Multi-Channel Retailing.”
At the end of each of the eight parts in Retail Management, there are a variety of short and
long cases. They deal with such firms as Amazon.com, eBay, Forever 21, Gap, McDonald’s,
Perfumania, and Starbucks. In all, there are 30 shorts cases and eight long cases.
and small firms, fall into this category. This is clearly the fast-growing format in retailing,
exemplified by such different firms as Best Buy (www.bestbuy.com), Costco (www.costco.
com), and Target (www.target.com).
▶ Clicks-and-mortar retailers. These are the new breed of online-only retailers that have
emerged in recent years, led by Amazon.com (www.amazon.com). Rather than utilize their
own physical store facilities, these companies promote a “virtual” shopping experience:
wide selections, low prices, and convenience. Among the firms in this category are Blue Nile
(www.bluenile.com), the jewelry retailer; Priceline.com (www.priceline.com), the discount
airfare and hotel retailer; and Zappos (www.zappos.com), the retailer of shoes, apparel, and
a whole lot more.
▶ Direct marketers with clicks-and-mortar retailing operations. These are firms that have
relied on traditional nonstore media such as print catalogs, direct selling in homes, and TV
infomercials to generate business. Almost all of them have added Web sites to enhance their
businesses. Leaders include Lands’ End (www.landsend.com) and QVC (www.qvc.com). These
direct marketers will see a dramatic increase in the proportion of sales coming from the Web.
▶ Bricks-and-mortar retailers. These are companies that rely on their physical facilities to
make sales. They do not sell online, but use the Internet for providing information, customer
service, and image building. Auto dealers typically offer product information and customer
service online, but conduct their sales transactions at retail stores. Firms in this category re-
present the smallest grouping of retailers. Many will need to rethink their approach as online
competition intensifies.
We have access to more information sources than ever before, from global trade associations
to government agencies. The information in Retail Management, Twelfth Edition, is more cur-
rent than ever because we are using the original sources themselves and not waiting for data to be
published months or a year after being compiled. We are also able to include a greater range of
real-world examples because of the information at company Web sites.
Will this help you, the reader? You bet. Our philosophy has always been to make Retail
Management as reader-friendly, up-to-date, and useful as possible. In addition, we want you to
benefit from our experiences, in this case, our E-xperiences.
E-XCITING E-FEATURES
To reflect these E-xciting times, Retail Management: A Strategic Approach, Twelfth Edition, in-
corporates a host of E-features throughout the book—and at our wide-ranging, interactive Web site
(www.pearsoninternationaleditions.com/bermanevans) and at our new blog (www.bermanevans
retail.com).
The Twelfth Edition has a very strong integration of the book with this Web site:
▶ A special section of our Web site is devoted to each chapter.
▶ In each chapter, there are multiple references to Web links regarding particular topics (such
as free online sources of secondary data).
▶ Every chapter has a number of margin notes that refer to company Web sites.
▶ Every chapter concludes with a short online exercise.
▶ At our Web site, for each chapter, there are chapter objectives, a chapter overview, a listing
of key terms, interactive study guide questions, links to relevant Web sites, and more.
▶ Our Web site contains extra math exercises for Chapters 9, 12, 16, and 17.
▶ Our Web site includes in-depth exercises that apply key course concepts through free com-
pany downloads and demonstrations. There are several for each part of the book.
▶ The Web site even includes hints for solving cases, a listing of key online secondary data
sources, and descriptions of retail job opportunities and career ladders.
▶ With regard to in-text content, each chapter includes important practical applications of the
Web within the context of that chapter.
Our new blog includes many features that are intended to enrich your understanding and ap-
preciation of retailing. The blog includes such topics as current events in retailing, examples of
good and bad retailing practices, career information, social media and retailing, and much more.
Check us out at (www.bermanevansretail.com).
PREFACE 23
But, that’s not all! Retail Management, Twelfth Edition, is packed with other E-features:
▶ The interactive online study guide provides correct answers and text page references for
more than 50 questions per chapter—about 1,100 in all!
▶ Our Web site (www.pearsoninternationaleditions.com/bermanevans) also includes:
■ More than 1,000 links.
■ A full glossary.
■ A lot of career material, including a directory of hundreds of retailers and their online
■ An interactive strategic planning template that places the retail planning process into a
series of steps that are integrated with Figure 3-1 in the book.
■ A list of major trade associations—with links to their Web sites.
■ Information from the Federal Trade Commission (useful for consumers and potential
steps: assessing yourself, acquiring job leads, writing a résumé and cover letter, and
doing well with the personal interview and post-interview activities.
● Internships. In planning a career, a well-balanced approach during college is often the
key to long-run success. What does this mean? A person should take his or her col-
lege education seriously, participate in co-curricular and extracurricular activities, and
begin to acquire meaningful work experience.
● Job Hunting Guide. The job-hunting process consists of several steps, which are
▶ The appendix presents an overview of career opportunities, complete with salary ranges for
a variety of jobs in retailing.
▶ The blog has a regular stream of current information on careers in retailing.
CONCLUDING REMARKS
We consider ourselves to be as reader-friendly as possible. Please feel free to send us feed-
back regarding any aspect of Retail Management or its package. We promise to reply to any
correspondence.
Sincerely,
Professor Barry Berman (E-mail at barry.berman@hofstra.edu),
Zarb School of Business, Hofstra University, Hempstead, NY 11549
Professor Joel R. Evans (E-mail at joel.r.evans@hofstra.edu),
Zarb School of Business, Hofstra University, Hempstead, NY, 11549
About the Authors
Barry Berman (Ph.D. in Business with majors in Marketing and Behavioral Science)
is the Walter H. “Bud” Miller Distinguished Professor of Business and Professor of
Marketing and International Business in the Zarb School of Business at Hofstra
University. He is also the director of Hofstra’s Executive MBA program. Joel R. Evans
(Ph.D. in Business with majors in Marketing and Public Policy) is the RMI Distinguished
Professor of Business and Professor of Marketing and International Business in the
Zarb School of Business at Hofstra University. He is also the coordinator for Hofstra’s
Master of Science programs in Marketing and Marketing Research. The Zarb School of
Business at Hofstra University is fully accredited by AACSB International.
While at Hofstra, each has been honored as a faculty inductee in Beta Gamma
Sigma honor society, has received multiple Dean’s Awards for service, and has been
selected as the Teacher of the Year by the Hofstra MBA Association. For several years,
Drs. Berman and Evans were co-directors of Hofstra’s Retail Management Institute and
Barry Berman
Business Research Institute. Both regularly teach undergraduate and graduate courses to
a wide range of students.
Barry Berman and Joel R. Evans have worked together in co-authoring several
best-selling texts, including Retail Management: A Strategic Approach, Twelfth
Edition. They have also consulted for a variety of clients, from “mom-and-pop” re-
tailers to Fortune 500 companies. They were co-founders of the American Marketing
Association’s Special Interest Group in Retailing and Retail Management. They
co-chaired the Academy of Marketing Science/American Collegiate Retailing
Association’s triennial conference several times and edited the conference proceed-
ings. They have been featured speakers at the annual meeting of the National Retail
Federation, the world’s largest retailing trade association. Barry has served as presi-
dent of the American Collegiate Retailing Association.
Barry and Joel are both active Web practitioners (and surfers), and they have
written and developed all of the content for the comprehensive Web site that accom-
panies Retail Management (www.pearsoninternationaleditions.com/bermanevans)
Joel R. Evans and a new blog on all things retailing (www.bermanevansretail.com). They may be
reached through the Web site, the blog, or E-mail: barry.berman@hofstra.edu and
joel.r.evans@hofstra.edu.
25
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Acknowledgments
Many people have assisted us in the preparation of this book, and to them we extend our warmest
appreciation.
We thank the following reviewers, who have reacted to this or earlier editions of the text.
Each has provided us with perceptive comments that have helped us to crystallize our thoughts
and to make Retail Management the best book possible:
M. Wayne Alexander, Morehead State Carol Kaufman-Scarborough, Rutgers
University University
Larry Audler, University of New Orleans Ruth Keyes, SUNY College of Technology
Ramon Avila, Ball State University Maryon King, Southern Illinois University
Betty V. Balevic, Skidmore College Stephen Kirk, East Carolina University
Stephen Batory, Bloomsburg University John Lanasa, Duquesne University
Leta Beard, University of Washington Dana Lanham, University of North
Joseph J. Belonax, Western Michigan Carolina at Charlotte
University J. Ford Laumer, Jr., Auburn University
Ronald Bernard, Diablo Valley College Marilyn Lavin, University of
Charles D. Bodkin, University of North Wisconsin–Whitewater
Carolina at Charlotte Dennis G. Lee, Southwest Georgia
Charlane Bomrad, Onondaga Community Technical College
College Richard C. Leventhal, Metropolitan State
John J. Buckley, Orange County College
Community College Michael Little, Virginia Commonwealth
David J. Burns, Youngstown State University
University John Lloyd, Monroe Community College
David A. Campbell, Southern Illinois Ann Lucht, Milwaukee Area Technical
University College
John W. Carpenter, Lake Land College Robert Lupton, Central Washington
Joseph A. Davidson, Cuyahoga University
Community College Vincent Magnini, Longwood University
Peter T. Doukas, Westchester Community James O. McCann, Henry Ford
College Community College
Blake Escudier, San Jose State University Frank McDaniels, Delaware County
Jack D. Eure, Jr., Southwest Texas State Community College
University Sanjay S. Mehta, Sam Houston State
Phyllis Fein, Westchester Community University
College Ronald Michman, Shippensburg University
Letty Fisher, Westchester Community Jihye Park, Iowa State University
College Howard C. Paul, Mercyhurst College
Myron Gable, Shippensburg University Roy B. Payne, Purdue University
Linda L. Golden, University of Texas at Susan Peters, California State Polytechnic
Austin University, Pomona
James Gray, Florida Atlantic University Dawn I. Pysarchik, Michigan State
Barbara Gross, California State University
University–Northridge Julian Redfearn, Kilgore College
J. Duncan Herrington, Radford University Curtis Reierson, Baylor University
Mary Higby, University of Detroit, Mercy Barry Rudin, Loras College
Terence L. Holmes, Murray State Julie Toner Schrader, North Dakota State
University University
Charles A. Ingene, University of Steven J. Shaw, University of South
Mississippi Carolina
Marvin A. Jolson, University of Maryland Ruth K. Shelton, James Madison
David C. Jones, Otterbein College University
Marilyn Jones, Bond University Gladys S. Sherdell, Bellarmine College
27
28 ACKNOWLEDGMENTS
Chapter 1 describes retailing, shows why it should be studied, and examines its special
characteristics. We note the value of strategic planning, including a detailed review of
Target Corporation (a titan of retailing). The retailing concept is presented, along with
the total retail experience, customer service, and relationship retailing. The focus and
format of the text are detailed.
Chapter 3 shows the usefulness of strategic planning for all kinds of retailers. We
focus on the planning process: situation analysis, objectives, identifying consumers,
overall strategy, specific activities,
control, and feedback. We
also look at the controllable
and uncontrollable parts of
a retail strategy. Strategic
planning is shown as a series
of interrelated steps that are
continuously reviewed. A
detailed computerized strategic
planning template,
available at our Web
site, is described.
At the end of the
chapter, there is an
appendix on the
strategic implications
of global retailing.
Today, social media affect the business and social lives of more and more of us. Facebook
alone is approaching one billion (yes, billion) users around the world. When we use the term
“social media” in this book, we are referring to “the various online technology tools that
enable people to communicate easily via the Internet and mobile devices to share information
and resources. Social media can include text, audio, video, images, podcasts, and other
multimedia communications.”
Chapter Accordingly, in Retail Management: A Strategic Approach, we begin each chapter with
Objectives a discussion of social media relevant to the retailing topics in that chapter. At www.
1. To define retailing, bermanevansretail.com, we’ve set up a dynamic retailing blog with all sorts of interesting and
consider it from current information—retailer links, career opportunities, news about the retail industry and
various perspectives, individual retailers, and more. Check it out!!
demonstrate its impact, Many different kinds of retailers, both large and small—from Aéropostale to Jiffy Lube to
and note its special 7-Eleven to Zara—are actively involved with social media to communicate with customers,
characteristics reinforce their images, introduce new locations and merchandise, sell products, run special
2. To introduce the promotions, and so much more.
concept of strategic According to Barbara Farfan of About.com: Retail Industry (www.retailindustry.about.com),
planning and apply it being successful with social media in retailing requires that companies connect properly with
3. To show why the those consumers who want a meaningful relationship and “not a pickup line.” This means
retailing concept is that retailers must interact in a way that is valued by consumers over a long time period. Thus,
the foundation of a if a given retailer is unwilling to do that, it is doing a very poor job with social media. As Farfan
successful business, notes: “Saying that marketing efforts in social spaces don’t immediately result in sales is like
with an emphasis on the saying that your U.S. blow dryer doesn’t work when you plug it into the electrical outlet in
total retail experience, Bali. Duh. It won’t work because they’re not wired the same. (Trust me, I saw the flames. It
customer service, and won’t work.)”1
relationship retailing
Source: BeTA-Artworks /
fotolia.com.
32
$)"15&3 t "/*/530%6$5*0/503&5"*-*/( 33
0WFSWJFX
Retailing encompasses the business activities involved in selling goods and services to consum-
ers for their personal, family, or household use. It includes every sale to the final consumer—
ranging from cars to apparel to meals at restaurants to movie tickets. Retailing is the last stage in
the distribution process.
Retailing today is at a complex crossroads. On the one hand, retail sales are at their highest point
in history (despite a dip during the recent “Great Recession”). Wal-Mart is the leading company in
the world in terms of sales—ahead of ExxonMobil, Toyota, and other manufacturing giants. New
technologies are improving retail productivity. There are lots of opportunities to start a new retail
business—or work for an existing one—and to become a franchisee. Global retailing possibilities
abound. On the other hand, retailers face numerous challenges. The weak economy in recent years
has had a major impact on retailers, their suppliers, and consumers around the world. Many consum-
ers are bored with shopping or do not have much time for it. Some locales have too many stores,
and retailers often spur one another into frequent price cutting (and low profit margins). Customer
service expectations are high at a time when more retailers offer self-service and automated systems.
Some retailers remain unsure what to do with the Web; they are still grappling with the emphasis to
place on image enhancement, customer information and feedback, and sales transactions. And the
emerging influence of social media has been hard for many retailers to adapt to in their strategies.
These are among the key issues that retailers must resolve:
“How can we best serve our customers while earning a fair profit?”
“How can we stand out in a highly competitive environment where consumers have so many
choices?”
“How can we grow our business while retaining a core of loyal customers?”
Our point of view: Retail decision makers can best address these questions by fully understand-
ing and applying the basic principles of retailing in a well-structured, systematic, and focused
retail strategy. That is the philosophy behind Retail Management: A Strategic Approach.
Visit Amazon.com’s Web Can retailers flourish in today’s tough marketplace? You bet! Just look at your favorite res-
site (www.amazon.com) taurant, gift shop, and food store. Look at the popularity of Costco, Subway, and Amazon.com.
and see what drives one of What do they have in common? A desire to please the customer and a strong market niche. To
the world’s “hot” retailers.
prosper in the long term, they all need a strategic plan and a willingness to adapt, both central
thrusts of this book. See Figure 1-1.
FIGURE 1-1
Boom Times for
Subway
The Subway fast-food
chain has been doing
well around the world,
largely because of its
low-fat, inexpensive hero
sandwiches. This Paris
unit is only one of the
more than 36,000 Subway
stores that are located
in about 100 different
countries.
Source: Tupungato/
Shutterstock.com. Reprinted
by permission.
34 1"35 t "/07&37*&80'453"5&(*$3&5"*-."/"(&.&/5
In Chapter 1, we look at the framework of retailing, the value of developing and applying a sound
retail strategy, and the focus and format of the text. A special appendix at the end of this chapter looks
at the impact of the recent economic downturn on retailers in the United States and around the world.
THE IMPACT OF RETAILING ON THE ECONOMY Retailing is a major part of U.S. and world com-
merce. Retail sales and employment are vital economic contributors, and retail trends often mir-
ror trends in a nation’s overall economy.
According to the Department of Commerce, annual U.S. retail store sales are nearly $5 trillion—
representing one-third of the total economy. Telephone and mail-order sales by nonstore retailers,
vending machines, direct selling, and the Web generate hundreds of billions of dollars in additional
yearly revenues. And personal consumption expenditures on financial, medical, legal, educational,
and other services account for another several hundred billion dollars in annual retail revenues.
Outside the United States, retail sales are several trillions of dollars per year.
Durable goods stores—including motor vehicles and parts dealers; furniture, home furnishings,
electronics and appliance stores; and building materials and hardware stores—make up 30 percent
of U.S. retail store sales. Nondurable goods and services stores—including general merchandise
stores; food and beverage stores; health- and personal-care stores; gasoline stations; clothing and
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— Tunnetteko tämän esineen? — sanoi Nikolai Parfenovitš ja pani
äkkiä hänen eteensä ison, paksusta paperista tehdyn, virastoissa
käytettävää kokoa olevan kirjekuoren, jossa näkyi vielä kolme
sinettiä. Itse kirjekuori oli tyhjä ja yhdestä syrjästä rikki reväisty. Mitja
tuijotti siihen.
— Ei häpeä ollut siinä, että minulla oli nuo puolitoista tuhatta, vaan
siinä, että minä olin erottanut nämä puolitoista tuhatta noista
kolmesta tuhannesta, — lausui Mitja lujasti.
— Emme käsitä.