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RMG 200 Study Guide - Final Guide: Stock Keeping Unit, Merchandising, Discount Store

Retail Management
Course Code
RMG 200
Brent Bar
Study Guide

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Chapter 1: Intro to Retail 1/14/2012 1:10:00 PM
Growth strategies to confront current economic crisis:
Cut costs
Risk management
Customer experience
Human capital management
Smaller stores
Market segmentation
Re-think supply chains
You are a brand
* Key to failure trying to please everyone
Retailing: Set of business activities that adds value to the products and services sold to
consumers for their personal/family use
Retailer: Business that sells products and services to consumers for their personal or
family use
Having the right merchandise, at the right price, at the right place, in the right
quantities at the time
Distribution Channel: Set of firms that facilitate the movement of products from the point
of production to the point of sale to the ultimate consumer
Vertical Integration: Example of diversification by retailers involving investments by
retailers in wholesaling or manufacturing merchandise
Backward integration: When a retailer performs some distribution and
manufacturing activities such as operating warehousing or designing private label
Forward integration: When a manufacturer undertakes retailing activities
Functions Performed by Retailers
Providing an assortment of products and services
Breaking bulk
Holding inventory
Providing service & services
Breaking Bulk: Function performed by retailers or wholesalers in which they receive large
quantities of merchandise

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Corporate social responsibility: Voluntary actions taken by a company to address the
ethical, social, and environmental impacts of its business operations and the concerns of its
The Retail Management Decision Process
* Retail managers need to understand their environment, especially their customers and
competition before they can develop and implement effective strategies
Intratype competition: Competition between retailers of the same type
Scrambled merchandising: Offering of merchandise not typically associated with the
store type, such as clothing in a drug store
Increases intertype competition: between retailers that sell similar
merchandise using different formats, such as discount and department stores
Retail strategy: Indicates 1) the target market toward which a retailer plans to commit its
resources, 2) the nature of the retail offering that the retailer plans to use to satisfy the
needs of the target market, and 3) the bases upon which the retailer will attempt to build a
sustainable competitive advantage over competitors
Customer Relationship Management business philosophy and set of strategies,
programs, and systems that focuses on identifying and building loyalty with a retailer’s most
valued customers
Must be consistent with financial objectives, location strategy, and organization
design and HRM strategy
Give customers a more complete selection of merchandise
Increase awareness of inventory levels
Decrease inventory investment
Implementing the Retail Strategy
Product, place, value, people, communication
Six Tests of Ethical Action
Publicity Test
Moral Mentor Test
Admired Observer Test
Transparency Test
Person in the Mirror Test
Golden Rule Test

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Chapter 2: Types of Retailers 1/14/2012 1:10:00 PM
Retail industry is changing rapidly; some important changes are
Changing consumer preferences
Increasing industry concentration
Globalization of retail
Use of multiple channels to interact with customers
Increasing competition in the Canadian marketplace
Growing importance of technology to retail success
Blurring of retail channels
Retail branding
Survival of the fittest
The retail mix:
Type of merchandise sold
Level of customer service
Value is a combination of price and quality
Communicate the store’s position
Place which includes location, store layout, and design
North American Industry Classification Systems (NAICS): Classification of retail firms
into a hierarchical set of six-digit codes based on the types of products and services they
Variety: The number of different merchandise categories within a store or department
Assortment: The number of SKUs within a merchandise category. Also called depth of
SKU: (Stock Keeping Unit) The smallest unit available for keeping inventory control. In soft
goods merchandise, a SKU usually means size, colour, and style
General Merchandise Retailers
Discount Store / Mass Merchandiser: Offers a wide variety of merchandise, limited
service, and low prices
Specialty Store: Concentrates on a limited number of complementary merchandise
categories and providing a high level of service in an area typically under 744 square metres
Category Killer/Specialist: Offers a narrow but deep assortment of merchandise in a
category and thus dominates the category from the customers’ perspective
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