Chapter 1 Perspectives on Retailing
In this chapter, we acquaint you with the nature and scope of retailing. We present retailing as a major economic force in the United States and as a significant area for career opportunities. Finally, we introduce the approach to be used throughout this text as you study and learn about the operation of retail firms.
After reading this chapter, you should be able to:
1. Explain what retailing is.
2. Explain why retailing is undergoing so much change today.
3. Describe five methods used to categorize retailers.
4. Understand what is involved in a retail career and be able to list the prerequisites necessary for success in retailing.
5. Be able to explain
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3. A shortcoming of using the number of outlets scheme for classifying retailers is that it addresses only traditional brick & mortar retailers, or those operating in a physical building. C. Margin vs. Turnover 1. Gross Margin Percentage - Indicates how much gross margin the retailer makes as a percentage of sales; gross margin is used to pay the retailer's operating expenses. a. Gross Margin - Net sales minus the cost of goods sold. b. Operating Expenses - Expenses the retailer incurs while running the business other than the cost of merchandise [i.e., rent, wages, utilities, depreciation, insurance]. 2. Inventory Turnover - Number of times per year, on average, that a retailer sells its inventory. 3. Classifying Retailers by Margin/Turnover a. Low-margin/Low-turnover - These retailers will not be able to generate sufficient profits to remain competitive and survive. There are no good examples of successful retailers using this approach. b. Low-margin/High-turnover - Common in the United States. Examples include the discount department stores, the warehouse clubs, and the category killers. Amazon.com is probably the best