Retail Management Chapter 4 Reporting.ppt

7/27/2019 Retail Management Chapter 4 Reporting.ppt

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Retail Institutions by

OwnershipCERVANTES

DIODOMINGOPERLADA

SALAC


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Independent

Small stores with a single location or up tothree locations often owned by anindividual, a family or a two personpartnership.


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Advantages

Flexibility to choose format, location anddevice a strategy

Independents can easily sustainconsistency in their efforts because onlyone store is operated

Acts as specialists in a niche ofgoods/services

Independence


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Chain

Chain retailer operates multiple outletsunder common ownership.


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Advantages

Chains have bargaining power due to theirpurchase volume

Cost efficient

Efficiency is gained by sharing warehousefacilities.

Computer- reduce increase efficiency andreduces overall cost


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Disadvantages

Flexibility is limited

Consistent strategies must be maintained

Difficult to adapt to local markets Investments are higher due to multiple

lease and fixtures

Managerial control is complex


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FRANCHISING

Involves a contractual agreement betweena franchisorand a retail franchisee whichallows a franchisee to conduct a business

under an established name and accordingto a given pattern of business.


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Small businesses benefit by beingpart of a large, chain-type retail

institution.


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The franchisee operatesautonomously.

There are certain operating rules, but thefranchisee sets the:

Store Hours

Chooses Location

Determines Facilities and Display


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Business Format Franchising

More interactive relationship between thefranchisor and franchisee.

Receives assistance on site location,quality accounting systems, startuppractices, management training, andresponding to problems besides the right

to sell goods and services.


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Business Format FranchisingArrangement are common torestaurants and other food outlets,

real estate and service retailing


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Ideal Potential Franchisee:

Financial Resources

High Personal Integrity

The Ability to Manage Finances A Proven Ability to Train and Motivate

People

An Entrepreneurial Spirit and StrongDesire to Succeed


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A Willingness to Complete a DetailedTraining Program

A Willingness to Devote Full Time to

Day-to-Day Operations


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Competitive Advantages and

Disadvantages ofFranchising


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ADVANTAGES:

They own a retail enterprise with arelatively small capital investment.

They acquire well known names andgoods/service lines.

Standard operating procedures andmanagement skills may be taught to them.


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Cooperative marketing efforts (suchas national advertising) are facilitated

They obtain exclusive selling rights forspecified geographical territories

Their purchases may be less costlyper unit due to the volume of theoverall franchise.


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DISADVANTAGES:

Oversaturation could occur if too manyfranchisees are in one geographic area.

Due to overzealous selling by somefranchisors, franchisees income potential,required managerial ability, andinvestment may be incorrectly stated.


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They may be locked into contracts

requiring purchases from franchisorson certain vendors.

Cancellation clauses may givefranchisors the right to voidagreements if provisions are notsatisfied.


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In some industries, franchise

agreements are of short duration.

Royalties are often a percentage ofgross sales, regardless of franchiseeprofits


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Leased Department

Leased department are in-store locationsrented to outside parties.

A retail department that is leased to, andoperated by, a separate company. Alsoknown as a franchised department


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Advantages

Market is enlarged by providing one stopcustomer shopping

Personnel management, merchandise

displays and reordering items areundertaken by lessees.

Regular store personnel do not have to be

involved Leased department operation proceduresmay conflict with store procedures


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Disadvantages

Inflexibility

Restrictions on items sold

Lease nonrenewal Poorer results than expected


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Vertical Marketing System

Consists of all the levels of independentlyowned businesses along a channeldistribution.


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Independent System

Manufacturing

Wholesaling

Retailing

Independent Manufacturer

Independent Wholesaler

Independent Retailer


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Partially Integrated System

Manufacturing

Wholesaling

Retailing

Two channel members own

all facilities and perform all

functions.


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Integrated System

Manufacturing

Wholesaling

Retailing

All production and

distribution functions are

performed by one channel

member.


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Consumer Cooperative

A retail firm owned by itscustomer members.


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Managesoperations

Elects officers Group ofconsumerswho invest

Shares profitsor savings


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Consumer Cooperatives exist because:

Consumers think they can operates stores better than

traditional retailers.

Retailers inadequately fulfill customer needs for healthfuland environmentally safe products.

Assumes existing retailers make excessive profits and sell itas a merchandise for lower prices.

Documents

Retail Management Chapter 4 Reporting.ppt