Retail marketing strategies for Central and Eastern Europe

Kristina Petljak, Ph.D.

about me

• University of Zagreb, Faculty of Economics and Business Zagreb (Croatia), Department of Trade

• web page (eng): http://www.efzg.unizg.hr/default.aspx?id=%2016902

• teaching: Retailing Management, Wholesale and Retail Business, Consumer Protection, Entrepreneurship

• research: retailing management, green supply chain management, food supply chain management, retail supply chain management, organic agriculture, fair trade, group buying

• e-mail: kpetljak@efzg.hr

about me

• guest lecturer @ CBS – Copenhagen Business School, Department of Operations Management, Copenhagen, Denmark

• guest lecturer @ LUT – Lappeenranta University of Technology, LUT School of Business, Department of Management and International Business, Lappeenranta, Finland

• Sixth EurOMA Summer School in Supply Chain Sustainability• University of Oxford, Saïd Business School, Oxford Institute of Retail

Management, Oxford, UK• International Summer School ‘Supply Chain and Logistics

Management‘, THE KLU, Hamburg, Germany• PhD Summer Academy 2010, ZLC, Zaragoza, Spain

course syllabus

DAY TOPIC

DAY 1; Monday, 4 May 201514:00-17:00, TC.3.07

Introduction to the world of retailing.

DAY 2; Wednesday, 6 May 201514:00-17:00, TC.3.08

Types of retailers and multichannel retailing.

DAY 3; Friday, 8 May 201514:00-17:00, D2.0.374

Understanding retail customers buying behaviour.

DAY 4; Monday, 11 May 201514:00-17:00, D2.0.038

Retail market strategy.

DAY 5; Wednesday, 13 May 201516:30-19:30, D4.0.019

Retail marketing strategies for Central Europe.

DAY 6; Monday, 18 May 201514:00-17:00, D1.1.074

Retail marketing strategies for Eastern Europe .

DAY 7; Wednesday, 20 May 201516:00-19:00, TC.3.06

Team presentations (course assignment).

DAY 8; Friday, 22 May 201514:00-15:30, TC 3.03

EXAM.

4 May: Introduction to the world of retailing.

Ad 1) An introduction to the world of retailing

Ad 2) Retailer's role and value creation in a supply chain management

Ad 3) Social and economic significance of retailing

Ad 4) Structure of retailing and supply chains around the world

• written assignment 1: # social and economic significance of retailing in students country

6 May: Types of retailers and multichannel retailing.

Ad 1) Category and format specific retailing (food, general merchandise, nonstore retailers)

Ad 2) Retail channels

Ad 3) Multichannel retailing

Ad 4) Shopping in the future

• written assignment 2: # describing retail structure in students country or multichannel retailing in students country

8 May: Understanding retail customers buying behaviour.

Ad 1) The buying process

Ad 2) Types of buying decisions

Ad 3) Social factors influencing the buying process

Ad 4) Market segmentation

• written assignment 3: # customer buying behaviour in students country

11 May: Retail market strategy.

Ad 1) Definition of retail market strategy

Ad 2) Building a sustainable competitive advantage

Ad 3) Growth strategies and global growth opportunities

Ad 4) Retail marketing activities (BTL, ATL, mobile, social)

Ad 5) Greening and communicating retail marketing strategy

• written assignment 4: # analysis of retail market strategy in students country

13 May: Retail marketing strategies for Central Europe.

Ad 1) Market structure in Central Europe countries

Ad 2) Major retail players in Central Europe countries

Ad 3) Marketing strategies in Central Europe countries

Ad 4) Marketing communication in Central Europe countries

• written assignment 5: # analysis of retail campaign/s in one of the Central Europe country

18 May: Retail marketing strategies for Eastern Europe.

Ad 1) Market structure in Eastern Europe countries

Ad 2) Major retail players in Eastern Europe countries

Ad 3) Marketing strategies in Eastern Europe countries

Ad 4) Marketing communication in Eastern Europe countries

• written assignment 6: # analysis of retail campaign/s in one of the Eastern Europe country

20 May: Team presentations (course assignment).

• team work (4*3 students)• task: to develop and present a presentation covering the

retail marketing strategies of selected retailers in CEE countries; retailers are chosen by students

• creativity, ability to do the secondary research• about the company, assortment, competition, target market,

marketing strategies, comparison, benchmarking• 20% of the final grade

22 May: EXAM.

• Friday, 22 May 2015; 14:00-15:30, TC 3.03• written exam• multiple choice questions• short answer questions• closed book and closed notes• 70% of the final grade• 1 – excellent, 2 – good, 3 – satisfactory, 4 – sufficient, 5

– fail

Examination methods.

• personal contribution based on in-class participation (5%), which will be graded objectively based on active participation in in-class discussions, case studies, article discussions, in-class exercises;

• written individual assignment (5%), you have to choose two individual written assignments from six offered;

• team presentation (20%), groups of students will be assigned the task of developing and presenting a presentation covering the retail marketing strategies of selected retailers in CEE countries;

• final exam (70%), final exam will consist of multiple choice questions, short answer questions. It will be closed book and closed notes.

Bibliography

• Deloitte (2014) Global Powers of Retailing 2014, http://www2.deloitte.com/content/dam/Deloitte/global/Documents/Consumer-Business/dttl-CB-GPR14STORES.pdf

• Hugos, M., Thomas, C. (2006) Supply Chain Management in the Retail Industry, John Wiley & Sons Inc Hoboken, New Jersey.

• Levy, M., Weitz, B.A. (2009) Retailing Management, McGraw-Hill/Irwin.• Mcgoldrick, P.J., Collins, N. (2007) Multichannel retailing: profiling the multichannel shopper,

The International Review of Retail, Distribution and Consumer Research, 17 (2), pp. 139-158• Perrey, J., Spillecke, D. (2013) Retail Marketing and Branding: A Definitive Guide to

Maximizing ROI, John Wiley & Sons, UK.• Sparks, L. (2010) Supply Chain Management and Retailing, Supply Chain Forum, 11 (4), pp.

4-12• Flint, D.J., Hoyt, C., Swift, N. (2014) Shopper Marketing: Profiting from the Place Where

Suppliers, Brand Manufacturers and Retailers Connect. Pearson FT Press.

questions, suggestions?

• about you• motivation• expectations• future plans

Introduction to the world of retailing.

Monday, 4 May 2015

lecture overview

I. An introduction to the world of retailing

II. Retailer's role and value creation in a supply chain management

III. Social and economic significance of retailing

IV. Structure of retailing and supply chains around the world

What is retailing?

• Retailing is a set of business activities that adds value to the products and services sold to consumers for their personal or family use.

• Sales of products, but services as well!

• Retailing can be divided into: (1) store retailing, (2) nonstore retailing.

Retailer's role in a supply chain

• Retailers are the final business in a supply chain that links manufacturers to consumers.

• A supply chain is a set of firms that make and deliver a given set of goods and services to the ultimate consumer.

• Retailer‘s position within a supply chain (focal company perspective).

Supply chain

Retailer's role in a supply chain

• Wholesalers engage in buying, storing and physically handling goods in large quantities, reselling the goods to retailers or industrial or business users.

• vertical integration – firm performs more than one set of activities in the SC

• backward integration – retailer performs some distribution and manufacturing activities

Retailer's role in a supply chain

• forward integration – manufacturer undertakes retailing activities (operating in own retail stores; e.g. Ralph Lauren)

• Large retailers engage in wholesaling and retailing activities (buy directly from manufacturers, have merchandise shipped to their warehouses for storage, distribute the merchandise to their stores).

Manufacturing supply chain

Ray (2010)

Retail supply chain

Ray (2010)

Retail supply chain

Managing the supply chain is core to a retailer's business since one of the important value additions a retailer does is

moving the product from the point of origin (Manufacturer) or other source (Supplier) to the point of consumption

(Customer).

Differences in manufacturing and retail supply chain

manufacturing supply chain retail supply chain

production category management

in process quality assortment

plant maintainance space management

WIP inventory private label

store clustering

markdown management

multichannel

warehousingtransportsourcing

incoming quality checkimport documents/clearance

customer serviceinventory management

Retailers create value

• Why we need retailers?• Retailers provide functions that increase the value of the

products and services they sell to consumers and facilitate the distribution of those products and services for the manufacturers that produce them

• value-creating functions:(1) providing assortment,(2) breaking bulk,(3) holding inventory,(4) providing services.

Providing assortment

• offering different items, depends upon retail format• manufacturing brand vs. private labels• retail specialisation in the assortment they offer (category

specialist; food, health, beauty care, household products, clothing, accessories)

Breaking bulk

• Retailers offer products in smaller quantities tailored to individual consumers‘ and households‘ consumption pattern.

• Breaking bulk is important to manufacturers and consumers because it provides cost efficiencies for manufacturers that can package and ship merchandise in larger, rather than smaller, quantities and it gives consumers the chance to purchase merchandise in the smaller, more manageable quantities they prefer.

Holding inventory

• Retailers keep inventory that has been broken into user-friendly sizes so that the products will be available when consumers want them.

• Consumers keep smaller inventory of products at home.

• Retailers reduce the cost consumers would have to pay to store products (think about storage space and perishable merchandise).

Providing services

• offering credit to consumers (buy product now and pay it later)

• product display• test products before buying• salespeople• websites• providing additional information

VALUE CREATION

• The retail and wholesale services sectors (also known as distributive trades) employ nearly 33 million people. They contributed €1,160 billion to the EU value added in 2010, which accounts for 11% of EU GDP. A part of

distributive trades, the retail sector, is key for the European economy: EU retail services contribute €454 billion to the EU value added, which accounts for 4.3% of total EU value added and employ no less than 18.6

million citizens.

III. Social and economic significance of retailing

• social responsibility• retail sales• employment• global retailers

Social responsibility

• Retailers are socially responsible businesses.

• Corporate social responsibility (ethical, social, environmental impacts of business operations).

Retail sales

• Majority of the retail sales take place within large retail chains.

• Most retailers are small business (sometimes only 1 store).• Retail structure differs from country to country.

Employment

• one of the largest industries in terms of employment• one of the largest sectors for job growth

CONTRIBUTION

Global retailers

• global industry• retailers pursue growth by expanding their operations to

other countries• international in the geographical scope of their

operations • largest global retailers

20 largest global retailers

The importance of FMCG sector

• FMCG retailers continue to dominate the Top 250; Deloitte (2015)

Leading European food retailers

Retailer Country Net retail revenue (mil USD)

No. of countries in which they operate

Carrefour S.A France 98,668 33

Schwarz UnternehmensTreuhand KG Germany 98,662 26

Tesco PLC UK 98,631 13Metro AG Germany 86,393 32Aldi Germany 81,090 17CasinoGuichard - Perrachon S.A. France 63,468 29

GroupeAuchan SA France 62,444 13

EdekaZentrale AG &Co. KG Germany 59,704 1

ReweCombine Germany 51,109 11CentresDistributeros E. Leclerc France 47,671 7

Carrefour

Carrefour

• leading food retailer in France• 10 000 shops in 33 countries • Europe, Latin America, Asia• online web shop

OUR COMMITMENTS: SUPPORT SUSTAINABLE RETAILING

1- protecting biodiversity2 - building partnerships with suppliers

3 - protecting the environment4 - protecting human rights

5 - offering safe, high-quality products6 - motivating the group‘s men and woman

7 - developing local solidarity

Schwarz Unternehmens Treuhand KG

• Lidl• Kaufland

Tesco PLC

• We are a team of over 500,000 people in 12 markets dedicated to providing the most compelling offer to our

customers.• £69.7bn Group sales• £1.4bn - Group trading profit• 500,000+colleagues worldwide• 7 817stores including franchises

Metro AG

METRO CASH & CARRY IS DRIVEN BY A DESIRE TO HELP INDEPENDENT BUSINESSPEOPLE ACHIEVE LASTING SUCCESS. THE BASIS FOR THIS ARE RELATIONSHIPS

OF TRUST AND PARTNERSHIP WITH CUSTOMERS, SUPPLIERS AND EMPLOYEES.

THE NEW METRO CASH & CARRY BRAND POSITIONING• 50YEARS / 281COUNTRIES / 1PASSION

Structure of retailing and supply chains around the world.

• Nature of retailing and distribution supply chains in various areas around the world differs.

• Differences among US, EU, China and India (pic.)• retail density & retail concentration• large stores + large firms = very efficient SC

Comparison of retailing and supply chains across the world.

UNITED STATES

EUROPEAN UNION

INDIA CHINA

concentation (% of retail sales made by large food retailers)

high high low low

retail density high medium low low

average store size high medium low low

role of wholesalers limited moderate extensive extensive

infrastructure supporting efficient SC

extensive extensive limited limited

restriction on retail locations, store size, and ownership

few considerable considerable few

Levy & Weitz (2009)

SUMMARY AND KEY TERMS

• backward integration• breaking bulk• corporate social responsibility• forward integration• retailer• retailing• supply chain• vertical integration• wholesalers

bibliography and suggested readings

• Deloitte (2015) Global Powers of Retailing: Embracing innovation [online]. Available at: http://www2.deloitte.com/content/dam/Deloitte/au/Documents/consumer-business/deloitte-au-cb-gpor-120115.pdf [4 May 2015]

• Hugos, M., Thomas, C. (2006) Supply Chain Management in the Retail Industry, John Wiley & Sons Inc Hoboken, New Jersey.

• Levy, M., Weitz, B.A. (2009) Retailing Management, McGraw-Hill/Irwin.• Ray, R. (2010) Supply Chain Management for Retailing, Tata McGraw Hill Education Private

Limited, New Delhi, India.• Retail & wholesale: Key sectors for the European economy [online]. Available at: http://

www.independentretaileurope.eu/en/component/attachments/attachments.html?task=download&id=398 [4 May 2015]

written assignment 1: # social and economic significance of retailing in students country

• retailers corporate social responsibility• contribution of retailing to the national economy• impact on the retail landscape

questions?