[MUSIC] Welcome to this new module on Retail Strategy and Marketing Mix. Most consumers shopping in local stores don't realize that retail is a high-tech, global industry. 40 years ago, local retailers dominated the retail landscape and some of the largest retailers in the US, Walmart, Amazon were small startups or didn't even exist. Yet today, most retail sales are made by large national and international chains that buy merchandise all over the world. So, can you tell me what retailing is? It is a set of business activities that add value to the product and services sold to consumers for their personal or family use. Retailers are a key component in a supply chain that link manufacturers to consumers, but do we really need retailers? Should it be easier, faster and cheaper to buy directly from manufacturers? The answer is no. We do need them, because they are more efficient in certain activities than the manufacturers and they do increase the value of products and services for consumers. The main activities that they provide are: providing an assortment of products and services. For example, in the supermarkets, they usually carry 2,000 or 30,000 different items produced by more than 500 companies. They offer a wide selection of products, brands, sizes and prices at one location. Another activitie, breaking bulk. Manufactures ship boxes of product and retailers offer products in smaller quantities tailored to individual consumers. A third one is holding inventory. A product is available when consumers want it and providing services that make it easier for consumers to buy. For example, to offer credit or provide information. Could you tell me which was the number one retailer of the world in 2015? Take a guess. It was Walmart. For you to have an idea of how global retailers are. According to a study published yearly by Deloitte, the top 250 retailers in 2015 had 66% of foreign operations. They operated in 10.4 countries and almost one-fourth, more or less it was 23.4%, more international sales. And the European corporations are the most international retailers since they are in 16.8 countries, almost 40%. It's more or less 38.1% of their sales are international. And in this list, there are 2 Spanish retailers among the top 50 that we can highlight. Mercadona, that is a supermarket it's number 44, but it has a store only in Spain. Whereas on the other side, we have the Inditex Group. That is the group that owns the Zara brand, fashion retailing is in the position 45 and is present in 90 countries with more than 7,000 stores. So, where is retail heading? What are the main developments? We can mention five important developments. The evolving role of the internet. The globalization of the retail industry. New ways to communicate with consumers. The use of technology in retailing and the social responsibility of retailers. I will start with the evolving role of the internet. 15 years ago, many experts thought that consumers would abandon the physical shops to buy in internet. Now it is clear that internet is not replacing the traditional retail industry, but it's enhancing and complementing the activities. Internet is not only used as an additional channel, but also for selection and training of employees, to communicate with vendors, to have signage in the stores and provide, for example, information on customer service. A second big development is the globalization of the retail industry. Retailing is really a global industry. Retailers acquire merchandise all over the world and are looking for international markets for growth opportunities. And in this globalization, travel retailing has become extremely important. Over 1 billion people travel internationally each year and they spend 1 trillion in the process. It is called the sixth continent or the formula one of retail. Lengthy waits at airports provide a good atmosphere for experimentation and indulgence. Do not tell me that you have never bought in an airport. So, a third development is the new ways to communicate with customers. Retailers do so using a mix of methods. The traditional methods, like advertising, promotions have been used for decades. However, nowadays, internet-based technology has changed the way retailers utilize their budgets and communicate with customers. We can see the impact of social networks on buying behavior. Among these new ways to communicate, I can point out two trends. Faster retailing and experienced retailing. Regarding faster retailing, speed is an important trend in retailing. It includes fast fashion, the pop up establishment to quickly get products to the market, and self-service check outs and kiosks to reduce and eliminate waiting. Millennials prefer fast response and immediate gratification, and delivery times are also being reduced fairly fast. Regarding experience retailing, it is no longer just about product, but the experience. Consumers want shopping to include entertainment, education, emotion, engagement and enlightenment. Consumers want a seamless and consistent experience. There is a foretrend, that is the use of technology in retailing, the so-called innovative retailing. As I mentioned at the beginning, retailing is a high-tech industry with retailers increasingly using communication and information system technologies and analytical models to increase operating efficiencies and improve customer service. We can highlight some of them. Websites to sell products and services, seamless multichannel. The GIS or Geographic Information Systems, the RFID, Radio Frequency Identification. The CRM or Customer Relationship Management. The planograms. The digital signage. Virtual dressing rooms and so on. There are many and we shouldn't forget the mobile retailing. Almost 50% of the global population will be using a mobile phone this year and the e-commerces done through these devices are skyrocketing, and there is one final development that is the social responsibility of retailers. Retail companies have a major impact on the welfare of the consumer, suppliers and employees. And given the importance of their social role, both consumers and retailers are more concerned about the social issues. There is major interest of consumers in green products, ethical issues, insourcing merchandise and sustainability aspects in the store operation. As you can see, there is no single formula for success. Retailers are embracing technology and using it in creative ways and the speed of innovation, and the disruption will not decrease, and the demand of customers will continue to escalate. In the next class, we will learn which are the main type of retailers and who are the ones that are growing the most. See you then. [MUSIC]
