CHAPTER 1 - INTRODUCTION TO RETAIL PRODUCT MANAGEMENT:

SCOPE AND CONCEPTS

Teaching Notes:

Introducing students to a new subject area is usually challenging, especially when the
subject concerns business activities that are largely ‘hidden’ behind the scenes in a
commercial organisation. The purpose of chapter one is to take students’ from the
basic level of understanding of a retailer’s role and the variable nature of a ‘product’
to a higher level of understanding that appreciates the complexity of retail product
management and the various places within a retail organisation that product
management decisions are made. Students should start to be able to distinguish
between aspects of product management that are strategic in nature and those that are
operational. Although this is not easy to achieve, especially when the subject is new,
it is worth making the distinction so that students develop a critical and analytical
approach to the subject area.

The boxes, examples and the short case study at the end of the chapter provide
material for reflection, application and discussion. They provide the opportunity to
relate the broad theoretical concepts introduced in this chapter to real life retailers of
various size and type. Students are encouraged to use their own points of reference for
application in addition to those provided here.

Box 1.1 Convenience Retailing

This shows how product ranges in retail outlets can be geared towards fulfilling
specific needs of customers. It allows students to appreciate that consumer needs are
met by a blend of a suitable product range and an appropriate shopping environment,
focused on consumer lifestyles. The convenience retailer is a good example of this
type of retail formatting. The box gives an insight into the level of detail retailers
consider when planning product ranges.

The box could be used as a basis for a student exercise on a convenience store they
are familiar with.
Suggested questions / activities:
• Analyse the product categories on offer in your local convenience store. Does
the retailer offer a broad range to cover a wide range of consumer needs?
• Find evidence of your local c-store offering service products to encourage
customers to use the store regularly.
• Which product categories are offered in more depth than others? Suggest
reasons for this.
• Are there any changes that you would make to the product assortment? What
would be your justification for those changes?

Box 1.2 Cook

This example illustrates how specialty retailers can survive and thrive in the face of
competition from retail ‘giants’ (like Wal-Mart, Tesco and Carrefour). The detail
given about the business shows that in speciality stores the uniqueness of the product
range is supported by an appropriate selling environment. The use of special fixturing
and in-store communication supports the premium quality market positioning of this
retailer. This box could be used to generate a discussion on the viability of this type of
retailer.

Suggested questions / activities:

• Do students agree with the company’s view that they could expand to a
business with hundreds of stores? Organise your answer around a SWOT
(strengths / weakness / opportunities / threats) analysis.

• Identify other small niche retailers that thrive in the face of competition from
the generalist giants. What is it about the product range and shopping
experience that customers value?

• Compare the contribution that the frozen ready meals product category makes
to the strategic positioning of Cook, and the strategic positioning of a more
general retailer like Tesco, Wal-Mart or Carrefour.

Case Study: Toys R Us and Imagine.

The case study provides a contrast between two retailers who are operating in the
same product sector. It shows how smaller specialist retailers can thrive by providing
a blend of products and services that are tailored to a particular customer base. It
illustrates how retail formats evolve: the category specialist / killer offers a huge
choice (a very deep assortment) and is operated on a low-cost basis. This type of
retailer is a huge threat to a more traditional retailer that cannot compete on price or
choice. However, by tailoring the retail offer to the provision of a solution to the
‘personal process domain’ of gift organisation, a small specialist retailer becomes
highly valued by their customers. The case shows that the retail industry successfully
accommodates a variety of formats with different approaches to product assortments.

The case provides the basis for the application of the following theoretical concepts
that are introduced in chapter one:
• Retail market positioning
• Variations in product assortment strategies
• The personal process domain / lifestyle led product ranges
• Customer value
• Levels of product management (may need further research or assumptions)
• Scope of product management