Perspectives on Retailing Essay

2229 Words Jun 1st, 2010 9 Pages
Chapter 1 Perspectives on Retailing

Overview:

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.

Learning Objectives:

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

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