Retailing is a high tech, global, growth industry that plays a vital economic role in society. Our objective in preparing this seventh edition is to stimulate student interest in retailing courses and careers by capturing the exciting, challenging, and rewarding opportunities facing retailers and firms that sell their products and services to retailers such as IBM and Proctor & Gamble. The textbook focuses on the strategic issues facing the retail industry and provide a current, informative, and a “good read” for students.

NEW FEATURES

In preparing the seventh edition of Retailing Management, we have revised the textbook to address five important developments in retailing: (1) the evolving role of the Internet in retailing, (2) the greater emphasize on social responsibility of retailers, (3) the increased emphasis retailers are placing on developing exclusive brands, (4) the use technology and analytical methods for decision making, and (5) the continued entrepreneurial opportunities in retailing.

Evolving Role of the Internet

Ten years ago many experts thought that the consumers would abandon the mall and shop for most products and services using the Internet. Traditional retailers would be replaced by a new breed of techno-savvy entrepreneurs. Now it is clear that the Internet is not transforming the retail industry, but facilitating the activities undertaken by traditional retailers – retailers who use multiple channels (Internet, catalog, stores, and mobile) to interact with their customers.

In the seventh edition, we have increased treatment of how these multichannel retailers provide information and sell products and services to customers. In this edition, we have gone beyond Chapter 3, which is dedicated to multichannel retailing, to discuss Internet retailing applications throughout the textbook. For example,

• The impact of social networks on buying behavior (Chapter 4)
• Use of the Internet for training (Chapters 9 and 17)
• Communicating with customers through m-commerce, social shopping, email, and websites (Chapter 16)
• Internet-based digital signage in stores (Chapter 18)
• Providing information and customer service through web-enabled kiosks and POS terminals (Chapter 19)

Social Responsibility of Retailers

Retail institutions are ­pervasive in our society and thus have a major impact on the welfare of their ­customers, suppliers, and employees. Given the importance of their societal role, both consumers and retailers are becoming more concerned about important social issues facing the world such as global warming, immigration, health care, and working condition in less developed economies. Some of these social responsibility issues, identified with a legal/ethical icon in the margin and discussed in the seventh edition, are:

• Consumer interest in green products (Chapter 4).
• Issues in sourcing merchandise globally (Chapter 14)
• Considering sustainability issues in store operation (Chapter 17) and design (Chapter 18).
• Three new cases with legal, ethical, and social responsibility issues facing retailers.

Development of Exclusive Brands

To differentiate their offering and build a strategic advantage over competitors, most retailers are devoting more resources to the development of exclusive products – either products that the retailer designs (private labels) or exclusive brands produced for the retailer by national brand manufacturers. For example, Ralph Lauren has developed American Style brand for JCPenney and Estee Lauder has developed the American Beauty cosmetic line for Kohls.

Retailers are placing more emphasis on developing their brand image, building a strong image for their private-label merchandise, and extending their image to new retail formats. These exclusive brands, as the term implies, are only available from the retailer and thus customers loyal to these brands can only find them in one store. Some examples of our extended treatment of exclusive brands in this edition are:

• Strategic importance of private labels (Chapter 5)
• Private label approaches and types. (Chapter 14).
• Process for developing and sourcing private labels (Chapter 14)
• Building a strong brand image (Chapter 16).

Entrepreneurship in Retailing

In this seventh edition, we have added two appendices that provide an overview of “How to Start Your Own Retail Business” and “How to Start a Franchise Business.” Retailing continues to offer opportunities for people to start their own business. Some of the world’s richest people are retailing entrepreneurs. Many are well known because their names appear over the stores’ door such as James Cash Penney and William H. Macy. But many other successful entrepreneurs are less well known such as Donald Fisher (The Gap), Thomas Stemberg (Staples), Les Wexner (The Limited/Victoria Secret, Maxine Clark (Build a Bear Workshop).

BASIC PHILOSOPHY

The seventh of Retailing Management maintains the basic philosophy of the previous six editions. We continue to focus on key strategic issues with an emphasis on financial considerations and implementation through merchandise and store management. These strategic and tactical issues are examined for a broad spectrum of retailers, both large and small, domestic and international, selling merchandise and services.

Strategic Focus

The entire textbook is organized around a model of strategic decision making outlined in Exhibit 1–5 in Chapter 1. Each section and chapter is related back to this overarching strategic framework. In addition, the second section of the book focuses exclusively on critical strategic decisions such as selecting target markets, developing a sustainable competitive advantage, and building an organizational structure and information and distribution systems to support the strategic direction, and building customer loyalty and managing customer relationships. The text explores in depth resources that retailers use to develop sustainable competitive advantage such as;

• Selecting store location (Chapters 7, 8),
• Developing and maintaining human resources (Chapter 9),
• Managing supply chain and information systems (Chapter 10)
• Managing customer relationship management and loyalty programs (Chapter 11)

Financial Analysis. The financial aspects of retailing are becoming increasingly important. The financial problems experienced by some of the largest retail firms like Sears Holding and COMPUSA highlight the need for a thorough understanding of the financial implications of strategic retail decisions. Financial analysis is emphasized in selected chapters, such as Chapter 6 on the overall strategy of the firm, Chapter 11 on the evaluation of customer lifetime value, and Chapter 13 on retail buying systems. Financial ­issues are also raised in the sections on negotiating leases, bargaining with suppliers, pricing merchandise, developing a communication budget, and compensating salespeople.

Implementing a Retail Strategy. While developing a retail strategy is critical to long-term financial performance, execution of the strategies is as important as the development of the strategy. Traditionally, retailers have exalted the merchant prince—the buyer who knew what the hot trends were going to be – and we provide a thorough review of merchandise management issues. However, the emphasis in retailing is shifting from merchandise management to the block and tackling of getting merchandise to the stores and customers and providing excellent customer service and an ex­citing shopping experience. Due to this shift toward store management, most students embarking on retail careers go into store management rather than merchandise buying. Thus this text devotes an entire chapter to information systems and supply chain management and an entire section to store management.

Up to Date Information

Retailing is a very dynamic industry with new ideas and formats developing and traditional retailer constantly adapting to the changing environment or suffering financially. More than half of the Retailing Views are new and all of the remaining ones have been updated. Two areas experiencing considerable change are the use of technology and the globalization of the industry.

Use of Technology in Retailing. Retailing is a high-tech industry with retailers increasingly using communications and information systems technologies and analytical models to increase operating efficiencies and improve customer service. Some of these new technology applications, identified with a technology icon in the margin and discussed in the seventh edition, are:

• Use of Web sites to sell products and services to customers (Chapter 3).
• Provide a seamless multichannel (stores, Web sites, and catalogs) interface so that customers can interact with retailers anytime, anywhere (Chapter 3).
• Store of the future using technology to provide a more rewarding shopping experience (Chapter 3).
• Application of geographic information system (GIS) technology for store location decisions (Chapter 8).
• Internet applications for effective human resource management (Chapter 9).
• Integrated supply chain management systems (Chapter 10).
• RFID (radio frequency identification) technology to improve supply chain efficiency (Chapter 10).
• Analysis of customer databases to determine customer lifetime value, target promotions toward a retailer’s best customers, and undertake market basket analyses (Chapter 11).
• Implementation of marketing programs to increase customer share of wallet (Chapter 11).
• CPFR (collaboration, planning, forecasting, and replenishment) systems for coordinating vendors and retailer activities (Chapter 12).
• Sophisticated inventory management systems (Chapter 13).
• Reverse auctions for buying merchandise (Chapter 14).
• Use of profit-optimization decision support systems for setting prices in different markets and taking markdowns (Chapter 15).
• Using M-commerce to communicate with potential customers with hand-held devices like cell phones and PDAs (Chapter 16).
• Adopting social marketing techniques to get customers involved in online product reviews (Chapter 16).
• Development of targeted promotions using customer databases (Chapter 16).
• Internet-based training for store employees (Chapter 17).
• Decision support systems for scheduling sales associates (Chapter 17).
• EAS technology to reduce shoplifting (Chapter 17).
• Creation of planograms to optimize the sales and profits from merchandise categories (Chapter 18).
• Digital signage to reduce cost and increase message flexibility (Chapter 18).
• In-store kiosks, mobile devices, and the Internet to improve customer service (Chapter 19).
• Instant chat for servicing online customers (Chapter 19)

Globalization of the Retail Industry. Retailing is a global industry. With a greater emphasis being placed on private-label merchandise, retailers are working with manufacturers located throughout the world to acquire merchandise. In ­addition, retailers are increasingly looking to international markets for growth ­opportunities. For instance, Carrefour, France’s hypermarket chain and the second-largest retailer in the world, is focusing its growth investments in 25 countries but not in France. Some of the global retailing issues, identified with an icon in the margin, examined in this edition are:

• Retail efficiencies in different economies (Chapter 1).
• Illustrations of global expansion by retailers (Chapter 2).
• Cultural impacts on customer buying behavior (Chapter 4).
• Keys to successful entry into international markets (Chapter 5).
• Evaluation of international growth opportunities (Chapter 5).
• Differences in location opportunities in global markets (Chapter 7).
• Regulations affecting customer data collection in world markets (Chapter 10).
• Employee management issues in international markets (Chapters 9 and 17).
• Global sourcing of private-label merchandise (Chapter 14).
• Cultural differences in customer service needs (Chapter 19)

Balanced Approach

The seventh edition continues to offer a balanced approach for teaching an introductory retailing course by including descriptive, how-to, and conceptual information in a highly readable format.

Descriptive Information Students can learn about the vocabulary and practice of retailing from the descriptive information throughout the text. Examples of this material are:

• Leading U.S. and international retailers (Chapter 1).
• Management decisions made by retailers (Chapter 1).
• Types of store-based and nonstore retailers (Chapter 2 and 3).
• Approaches for entering international markets (Chapter 5).
• Locations (Chapter 7).
• Lease terms (Chapter 8)
• Organization structure of typical retailers (Chapter 9).
• Flow of information and merchandise (Chapter 10).
• Branding strategies (Chapter 14).
• Methods for communicating with customers (Chapter 16).
• Store layout options and merchandise display techniques (Chapter 18).
• Career opportunities (Appendix 1A to Chapter 1).

How-to Information. Retailing Management goes beyond this descriptive information to illustrate how and why retailers, large and small, make decisions. Step-by-step procedures with examples are provided for making the following decisions:

• Comparison shopping (Appendix 2A to Chapter 2).
• Managing a multichannel outreach to customers (Chapter 3).
• Scanning the environment and developing a retail strategy (Chapter 5).
• Analyzing the financial implications of retail strategy (Chapter 6)
• Evaluating location decisions (Chapter 8).
• Developing a merchandise assortment and budget plan (Chapters 12 and 13).
• Negotiating with vendors (Chapter 14).
• Pricing merchandise (Chapter 15).
• Recruiting, selecting, training, evaluating, and compensating sales associates (Chapter 17).
• Designing the layout for a store (Chapter 18).
• Providing superior customer service (Chapter 19).

Conceptual Information. Retailing Management also includes conceptual information that enables students to understand why decisions are made as outlined in the text. As Mark Twain said, “There is nothing as practical as a good theory.” Students need to know these basic concepts so they can make effective decisions in new situations. Examples of this conceptual information in the seventh edition are:

• Customers’ decision-making process (Chapter 4).
• Market attractiveness/competitive position matrix for evaluating strategic alternatives (Appendix 5A to Chapter 5).
• The strategic profit model and approach for evaluating financial performance (Chapter 6).
• Price theory and marginal analysis (Chapters 15 and 16).
• Motivation of employees (Chapter 17).
• In-store shopping behaviors (Chapter 18)
• The Gaps model for service quality management (Chapter 19).

Student-Friendly Textbook

This seventh edition creates interest and involves students in the course and the industry by making the textbook a “good read” for students. We use Refacts (retailing factoids), Retailing Views, and retail manager profiles at the beginning of each chapter to engage students.

Refacts We have updated and added more interesting facts about retailing, called Refacts, in the margins of each chapter. Did you know that a Montgomery Ward buyer created Rudolph the Red-Nosed Reindeer as a Christmas promotion in 1939? Or that the teabag was developed by a Macy’s buyer and pantyhose was developed by a JCPenney buyer?

Retailing Views Each chapter contains either new or updated vignettes called Retailing Views to relate concepts to activities and decisions made by retailers. The vignettes look at major retailers, like Wal-Mart, Walgreens, JCPenney, Target, Kohls, Neiman Marcus, and Macy’s, that interview students on campus for management training positions. They also discuss innovative retailers like REI, Starbucks, The Container Store, Sephora, Curves, Chico’s, and Bass Pro Shops. Finally, a number of Retailing Views focus on entrepreneurial retailers competing effectively against national chains.

Profiles of Retail Managers To illustrate the challenges and opportunities in retailing, each chapter in the seventh edition begins with a brief profile in their own words from a manager or industry expert whose job or expertise is related to the material in the chapter. These profiles range from Maxine Clark, Chief Executive Bear at Build a Bear Workshop and Lori Anderson, the founder and manager of a dress shop in Tampa to Lotoya Parker, a buyer at Macy’s East and Lee Donelly, Store Manager for Walgreens in California. They include people who have extensive experience in a specific aspect of retailing like Bari Harlam, Vice President, Marketing Intelligence, CVS Caremark, Inc. and Juan del Valle, Market Development Manager, Brinker International.

The profiles illustrate how senior executives view the industry and suggest career opportunities for college ­students. They provide students with firsthand information about what people in retailing do and their rewards and challenges.

Other Unique Aspects of Levy and Weitz’s Retailing Management Textbook

Chapter on Customer Relationship Management. Chapter 11 examines how retailers are using customer databases to build repeat business and realize a greater share of wallet from key customers. These customer relationship management activities exploit the 80–20 rule—20 percent of the customers account for 80 percent of the sales and profits. In this chapter, we discuss how retailers identify their best customers and target these customers with special promotions and customer services.

Chapter on Multichannel Retailing. Chapter 3 describes the opportunities and challenges retailers face interacting with customers through multiple channels—stores, catalogs, and the Internet. While markets for Internet-only retailers have stabilized, traditional retailers are investing in using the Internet to complement their stores. This chapter discusses how multichannel retailers can and do provide more value to their customers.

SUPPLEMENTAL MATERIALS

To improve the student learning experience, the seventh edition includes new cases and videos illustrating state-of-the-art retail practices, a Web-based computer exercise package for students, and a comprehensive online instructor’s manual with additional cases and teaching suggestions.

Get Out and Do It! exercises are found at the end of each chapter. These exercises suggest projects that students can undertake by visiting local retail stores, surfing the Internet, or using the student Web site. A continuing assignment exercise is included so that students can engage in an exercise involving the same retailer throughout the course. The exercises are designed to provide a hands-on learning experience for students.

Monthly Newsletter with Short Cases These cases are based on recent retailing articles appearing in the business and trade press. Instructors can use these short cases to stimulate class discussions on current issues confronting retailers. The newsletter is e-mailed to instructors and archived on the text’s Web page.

Twelve New Cases These include cases on corporate social responsibility at Wal-Mart, Tractor Supply, Sav-a-Lot, retailing using blogs, retailing diamonds, pet retailing, Macy’s rebranding, retailing in India, Nordstrom’s loyalty program, and Macy’s store rebranding. All 38 cases in the textbook are ­either new or updated with current information. A number of the cases, such as Starbucks, Build-A-Bear, Rainforest Café, and Wal-Mart, have videos complementing the written case.

Ten New Videos Thirty-five video segments are available to illustrate issues addressed in the text. The topics addressed by the ten new videos include Domino Pizzas entry into Mexico, Starbuck’s fair trade policy with its coffee growers, Staples’ growth strategy in the copying business, Container Store’s organizational culture, Netflix’s distribution strategy, and Wal-Mart’s campaign to change its image.

Web Site for Students and Instructors (www.mhhe.com/levy7e) Just as retailers are using the Internet to help their customers, we have developed a Web site to help students and instructors use the seventh edition of this textbook effectively. Some of the features on the Web site are:

• Multiple-choice questions on the student site.
• Experiential exercises for students.
• Chapter-by-chapter Instructor Manual coverage.
• Case and video notes.
• Retailing trade publications and professional associations.
• News articles about current events in retailing.
• PowerPoint slides summarizing key issues in each chapter.
• Hot links to retailing news sites and sites associated with the Internet exercises in the textbook.
• Additional cases about retailers.

ACKNOWLEDGMENTS

Throughout the development of this text, several outstanding individuals were ­integrally involved and made substantial contributions. First, we recognize the invaluable contributions of Hope Bober Corrigan (Loyola College in Maryland) for providing constructive comments and suggestions on the revised chapters, editing the cases and video package, and providing many useful teaching ­activities found in the Instructor’s Manual. We also thank Britt Hackmann (Babson College) for her important assistance in doing research for the book, writing examples, and preparing the manuscript for publication. We also express our sincere appreci­ation to Amy Tomas (University of Vermont) for preparing the Instructor’s Manual and Hyunjoo Oh (University of Florida) for preparing the PowerPoint slides and Test Bank. Special thanks goes to Tracy Meyer (University of North Carolina Wilmington) for preparing the “Starting a Franchise Business” Appendix, to Christian Tassin (University of Florida) for preparing the appendix on “Starting Your Own Retail Business,” and to Zhen Zhu (Suffolk University) for assistance in updating chapters.

We’d like especially to acknowledge the contribution of Retail Forward, Inc. Their daily news briefing and research reports facilitated the research that has gone into this text.

We also appreciate the contributions of Margaret Jones and Betsy Trobaugh ( David F. Miller Center for Retailing Education and Research, University of Florida) and who provided invaluable assistance in preparing the manuscript.

The support, expertise, and occasional coercion from our Managing Developmental Editor, Nancy Barbour, are greatly appreciated. The book would also never have come together without the editorial and production staff at McGraw-Hill/Irwin: Doug Hughes, Harvey Yep, Lori Koetters, Carol Bielski, Cara Hawthorne, Jeremy Cheshareck, Dana Pauley, and Kerry Bowler.

Retailing Management has also benefited significantly from contributions by several leading executives and scholars in retailing and related fields. We would like to thank:

William Alcorn, JCPenney
Mark Blakeley, Oracle
Cynthia Cohen, Strategic Mindshare
John Gremer, Walgreens
Dhruv Grewal, Babson College
Linda Hyde, Retail Forward
Steve Knopik, Beall’s Inc.
Doug Koch, Famous Footwear
Bradley Macullum, ESRI
Bruce Mager, Macy’s East
Richard A. McAllister, Florida Retail Federation
Tracey Mullins, National Retail Federation
Steven Keith Platt, Platt Retail Institute
Susan Reda, Stores Magazine
Ann Rupert, Macy’s Florida
Lori Schafer, SAS Retail
John Thomas, Pinch-A-Penny
Suzanne Voorhees, The Grapevine Group

The seventh edition of Retailing Management has benefited from the reviews by ­several leading scholars and many teachers of retailing and related disciplines. ­Together, these reviewers spent hundreds of hours ­reading and critiquing the manuscript. We gratefully acknowledge.

We also thank the following reviewers for their diligence and insight in helping us prepare previous ­editions:

Mark Abel, Kirkwood Community College
Stephen J. Anderson, Austin Peay State University
Jill Attaway, Illinois State University
Mary Barry, Auburn University
Lance A. Bettencourt, Indiana University
David Blanchette, Rhode Island College
Jeff Blodgett, University of Mississippi
George W. Boulware, Lipscomb University
Willard Broucek, Northern State University
Leroy M. Buckner, Florida Atlantic University
David J. Burns, Purdue University
Lon Camomile, Colorado State University
Donald W. Caudill, Bluefield State College
James Clark, Northeastern State University
Sylvia Clark, St. John’s University
J. Joseph Cronin, Jr., Florida State University
Angela D’Auria, Stanton Radford University
Irene J. Dickey, University of Dayton
Ann DuPont, University of Texas
Chloe I. Elmgren, Mankato State University
Richard L. Entrikin, George Mason University
David Erickson, Angelo University
Kenneth R. Evans, University of Missouri–Columbia
Richard Feinberg, Purdue University
Kevin Fertig, University of Illinois
Drew Ehrlich Fulton, Montgomery Community College
David M. Georgoff, Florida Atlantic University
Peter Gordon, Southeast Missouri State University
Larry Gresham, Texas A&M University
Tom Gross, University of Wisconsin
Sally Harmon, Purdue University
Susan Harmon, Middle Tennessee State University
Michael D. Hartline, Louisiana State University
Tony L. Henthorne, University of Southern Mississippi
Kae Hineline, McLennan Community College
David Horne, California State University– Long Beach
Joshua Holt, Brigham Young University
Michael Jones, Auburn University
Eugene J. Kangas, Winona State University
Herbert Katzenstein, St. John’s University
Terrence Kroeten, North Dakota State University
Ann Lucht, Milwaukee Area Technical College
Elizabeth Mariotz, Philadelphia College of Textiles and Science
Tony Mayo, George Mason University
Harold McCoy, Virginia Commonwealth University
Michael McGinnis, University of South Alabama
Phyliss McGinnis, Boston University
Kim McKeage, University of Maine
Barbara Mihm, University of Wisconsin– Stevens Point
Robert Miller, Central Michigan University
Mary Anne Milward, University of Arizona
Cheryl O’Hara, Kings College
Dorothy M. Oppenheim, Bridgewater State University
Michael M. Pearson, Loyola University, New Orleans
Janis Petronis, Tarleton State University
Linda Pettijohn, Southern Missouri State University
John J. Porter, West Virginia University
Sue Riha, University of Texas–Austin
Nick Saratakes, Austin Community College
Laura Scroggins, California State University–Chico
Steve Solesbee, Aiken Technical College
Shirley M. Stretch, California State University–LA
William R. Swinyard, Brigham Young University
Amy Tomas, University of Vermont
Janet Wagner, University of Maryland
Gary Walk, Lima Technical College
Mary Weber, University of New Mexico
Sandy White, Greenville Tech College
Fred T. Whitman, Mary Washington College
Kathleen Debevic Witz, University of Massachusetts
Merv Yeagle, University of Maryland
Ron Zallocco, University of Toledo

We received cases from professors all over the world. Although we would like to have used more cases in the text and the Instructor’s Manual, space was limited. We would like to thank all who contributed but are especially appreciative of the following authors whose cases were used in Retailing Management or in the Instructor’s Manual:

Ronald Adams, University of North Florida
Laura Bliss, Stephens College
James Camerius, Northern Michigan University
Daphne Comfort, University of Gloucestershire
Hope Bober Corrigan, Loyola College, Maryland
Tina Brienne Curley, Loyola College, Maryland
David Ehrlich, Marymount University
Sunil Erevelles, University of North Carolina, Charlotte
Ann Fairhurst, Indiana University
Linda F. Felicetti, Clarion University
Joseph P. Grunewald, Clarion University
David Hillier, University of Glamorgan
K. Douglas Hoffman, University of North Carolina–Wilmington
Terence L. Holmes, Murray State University
Peter Jones, University of Gloucestershire
Kirthi Kalyanam, Santa Clara University
Dilip Karer, University of North Florida
Hean Tat Keh, National University, Singapore
Robert Kenny, Saint Michael’s College
Nirmalya Kumar, London Business School
Marilyn Lavin, University of Wisconsin–Whitewater
Robert Letovsky, Saint Michael’s College
Alicia Lueddemann, The Management Mind Group
Gordon H. G. McDougall, Wilfrid Laurier University
Debra Murphy, Saint Michael’s College
Todd Nicolini, Loyola College, Maryland
Jan Owens, University of Wisconsin
Kristina Pacca, University of Florida
Michael Pearce, University of Western Ontario
James Pope, Loyola College, Maryland
Catherine Porter, University of Massachusetts
Richard Rausch, Hofstra University
Dan Rice, University of Florida
David Rosage, Loyola College, Maryland
Cecelia Schulz, University of Florida
Vidya Sundari, National University, Singapore
William R. Swinyard, Brigham Young University
Stephen Vitucci, Tarleton State University
Elizabeth J. Wilson, Suffolk University
Irvin Zaenglein, Northern Michigan University