Page 83 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Retail Business Environment

Notes
Table 4.2

Factor Includes
Markets Segments, size, behaviors, trends, locations, level of service demand
Suppliers and Supply channels, availability of goods, number of alternatives, locations,
intermediaries geographic concentration, volume concentration
Competitors Concentration, volume concentration, Number, strategies, potential new
entrants, rivalry

!
Caution In the last three decades these macro environmental and micro environmental
influences have obliged most retail sectors to change their approach to selling goods and
services. As a consequence, many firms have had to reshape their stores, change the range
and type of merchandise, and alter the type and level of service they offer.

Adapting the Retail Offering

A retail offering is a bundle of benefits that the customer purchases when entering the store. The
offering consists of products and services, the image and reputation of the store and other
intangible benefits. A retail business can increase the value of the merchandise it sells by
providing extra services as part of its overall retail offering. Customers come to view the service
element, as an integral part of the retail offering and the element of service has become an
important feature that distinguishes one retailer from the next.

In the 1970s, the retailers could simply provide an adequate range of goods for their customers,
who were then enticed into stores with straight forward selling techniques. One popular method
of attracting customers was to pile the goods up high and sell them as cheap as possible. In the
1980s, it become clear to many retail firms that cut-price approach was not nearly enough to
encourage shoppers. Customers expectation has changed significantly and they require
something more than just cheap merchandise and convenient located stores. This bought fresh
challenges for retailers, who were forced to compete with each other on price, quality and
standard of service for a better share of the market.

Self Assessment

State whether the following statements are true or false.

1. In order to correctly identify opportunities and monitor threats, the company must begin
with thorough understanding of the marketing environment in which the competitors
operates.
2. The marketing environment consists of all the actors and forces outside marketing that
do not affect the marketing management’s ability to develop and maintain successful
relationships with its target customers.
3. The external environment of the Arm consists of those factors outside the retail firm that
affect the success of the retail business.
4. The micro environment comprises those factors that originate outside the retail firm, but
which the retailer can affect through its management processes.

5. A retail offering is a bundle of benefits that the customer purchases when entering the
store.

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