What is Retailing?

Retailing is defined as the timely delivery of goods and services demanded by consumers at the right price and place. Regardless of whether a firm sells to consumers in a store, through the mail, over the phone, through television shopping networks, door to door, or through vending machines, it is retailing.

Types of Retailing

Retailing takes many forms, whether it is the traditional bricks and mortar store, catalog shopping, television home shopping, or the Internet. According to the National Retail Federation (the world's largest retail association to protect and advance the interest of the retail industry), the most common types of retail establishments are as follows:

Department Store: Perhaps one of the most familiar types of retailing operations. It is a departmentalized retail institution offering a large variety of hard and soft goods, including home furnishings, household linens and dry goods, and apparel and accessories for men, women and children

Discounts/Mass Merchandiser: A self-service store displaying and selling all kinds of merchandise at lower price margins than other retailers. Their key to success is price. Such stores buy in large quantities and pass savings on to consumers.

Specialty Store: A retail store concentrating on a limited range of merchandise such as jewelry, books, men's or women's apparel, and accessories.

Warehouse Clubs/Superstore: A self-service retailer with cash-and-carry checkout operations. These retailers tend to shun advertising, credit purchases, deliveries and other amenities. The main draw is national brands at low prices. Membership may be required.

Wholesale Club: A self-service retailer which offers nationally advertised brand name goods at wholesale prices to businesses and group members only. These stores have a warehouse environment with little or no frills.

Factory Outlet: There are two types of outlet retailers; those who use a factory-type location to sell clearance merchandise received from other retailers or manufacturers, and vendors who use a factory outlet store location to sell their own goods (excess stock, seconds, and returns, etc.) at sharply discounted prices.

Catalog: A retailer that displays and sells merchandise that is produced by the retailer's main office and used universally in its retail establishments.

What is the Outlook for Retailing?

Although consumers in 2002 have been cautious in their spending, the consumer is the only bright spot in an otherwise bleak economy. Business spending and business confidence have wavered due to corporate governance concerns (such as Enron), a very sporadic and declining stock market, the continued threat of terrorism, and the chance of war with Iraq, but the consumer continues to spend.

The Positive Outlook

Projections are that the retail industry would have closed 2002 in the black, with slight increases over 2001. Successful retailers are reaching out to consumers across numerous touch points: stores, the Internet, call centers, mobile phones, kiosks, and, to a limited extent, interactive television. Although consumer wealth has declined due to the effects of a declining stock market, consumers have been buoyed by billions of extra dollars available to them because of refinancing of homes.

The Negative Outlook

The growth in retail sales has slowed. The 2002 holiday retail season, so vital to the health and success of retailers, could have been stronger. Although consumers are still spending, the retail industry has been hit by disruptions of confidence, an uncertain future, family wealth declines as stock markets lower the value of mutual fund and retirement accounts, and the almost disastrous effects of a dock strike that put billions of dollars of retail goods at risk of never reaching the stores.

Expected Growth in the Retail Industry

Sales and earnings figures offer a glimpse of how well a retailer is doing in the industry. It is also an indicator of the future economy health and prosperity of a company. The difficult economic climate of recent months has been felt prominently by the retail sector.

Top 10 U.S. Retailers in 2002

The ranking of the nation's top ten U.S. retailers changed little since 2001. The Top 10 list of retailers featured nearly the same retailers as last year, and most held their positional rank from 2001, with just a little shuffling among stores.

Wal-Mart continues to be the top retailer in the U.S. and the world. Wal-Mart heads the list for Stores' magazine July 2002 Top 100 Retailers. In 2002, the company put even more distance between itself and it nearest competition, posting a sales volume of $219.8 billion and earnings of $6.6 billion. Home Depot knocked Kroger from its second ranked position on the top 10 list, with sales volume of $53.5 billion and earnings of $3.04 billion. Kroger replaced Home Depot in the number three spot, with sales of $50.09 billion and earnings of $1.04 billion. Sears is in the fourth position with sales of $41.07 billion and earnings of $735 million. Target knocked Kmart from its fifth position in 2001, to become the fifth top retailer on the top 10 list in 2002. Target posted sales of $39.3 billion and earnings of $1.36 billion for 2002. Albertsons, in sixth place, reported sales of $37.9 billion and earnings of $501 million. Kmart fell to seventh place in 2002, with sales of $37.02 billion and an earnings loss of $244 million. Costco replaced JCPenney as the eighth top ranked retailer in 2002, and posted sales of $34.79 billion and earnings of $602 million. Safeway moved from tenth place in 2001 to ninth place in 2002, with sales of $34.3 billion and earnings of $1.28 billion. JCPenney was the tenth ranked top retailer in 2002, a noticeable drop from its eighth ranked position in 2001. The company had a sales volume of $32 billion and earnings of $98 million for 2002.

Top 10 U.S. Specialty Stores By Sales Volume And Earnings In 2002

The top 10 specialty stores on Stores' Top 100 Specialty Store list for 2002 feature nearly the same players as 2001, with some shuffling of positions. Four of the top 10 companies are apparel chains. The Top 10 list of Specialty Stores in descending order are Best Buy, the Gap, Office Depot, Toys "R" Us, Staples, TJX, the Circuit City Group, the Limited, CompUSA, and Intimate Brands.

In 2002, Best Buy and the Gap held on to their number one and two positions from 2001. Office Depot replaced Circuit City as the third top retailer. Toys "R" Us moved from fifth place in 2001 to fourth place in 2002. Staples moved from sixth place in 2001 to fifth place in 2002. TJX moved from eighth place in 2001 to sixth place in 2002. Circuit City was the seventh ranked top retailer in 2002, a noticeable change from its third ranked position in 2001. The Limited fell from seventh place in 2001 to eighth place in 2002. CompUSA retained its ninth place rank for both 2001 and 2002. Intimate Brands replaced OfficeMax as the top 10 specialty stores in 2002. In fact, OfficeMax fell from its tenth place rank in 2001 to fourteenth place in 2002.

Sales volume and earnings for the top 10 specialty stores in descending order are Best Buy ($19.59 billion and $570 million), the Gap ($13.84 billion and $7.7 million), Office Depot ($11.15 billion and $201 million), Toys "R" Us ($11.01 billion and $67 million), Staples ($10.74 billion and $264.9 million), TJX ($10.7 billion and $500.3 million), Circuit City ($9.58 billion and $190.79 million), the Limited ($9.36 billion and $518.9 million), CompUSA ($6.1 billion and earnings not available), and Intimate Brands ($5.02 billion and $393.2 million).

The Future of Retailing

The retail industry can be characterized as a sector riddled with change. There has been a slowdown in mergers and acquisitions in the retail industry but an increase in bankruptcies and closings. Maurice Ambler, (left) vice president of Human Resources, U.S. Stores at Blockbuster believes "downsizing and mergers will continue because that has been the nature of business." He further states, "mergers often result in bigger and better companies, while downsizing often creates improvements in efficiency, productivity and financial accountability. When you look at it this way, it makes sense."

Edward Howard III, (right) president of JC Penney's West Region, states, "One of the key trends in the retail industry, as in the majority of industries in the United States, is increased productivity. All retailers are searching for ways to accomplish serving the customer with reduction of expense and increased productivity. This translates to far fewer people accomplishing many additional tasks. This too relates to downsizing, as most industries are doing, and the retail industry is no different."

The retail sector is reeling from intensive competition. There are new power players in the retail industry. Dollar stores are proliferating and prospering. The projected annual growth for such stores over the next five years is 17%; while the projected earning's growth is 20%. According to AC Nielsen, the three largest dollar chains (Dollar General, Family Dollar, and the Dollar Tree) have more stores in the United States than the three leading discounters, Wal-Mart, Target, and Kmart.

Job Opportunities for African Americans in the Retail Industry

Retailing is a vocation well suited to African Americans who have a competitive personality. Edward Howard of JCPenney further states, "Retailing is a viable industry for all and definitely for African Americans, even in a sluggish economy." Susan Burns, director of College Relations and Employment Initiatives, Federated Department Stores, Inc., concurs with Howard. Maurice Ambler of Blockbuster also believes that retailing is an excellent career for African-American college students. He states, "The doors of retailing are wide open to African-American college graduates seeking management positions in all disciplines, not just sales."

Tips and Requirements for Success in Retailing

What are tips and/or requirements for success in breaking into the retail industry? Typically, retailing is an industry where very basic experience is needed. Internship, co-op programs, or part-time jobs with retailers are good ways to gain experience, as well as an understanding of the dynamics of the retail industry, according to Ambler and Burns. Not only do students gain retail experience, but they also get their foot in the door for future employment. Internship participation between the junior and senior year is crucial, but it is also very beneficial to interns between the sophomore and junior year, in the opinion of Burns.

Ambler mentions when retailers look to hire, they seek "individuals who are intelligent, business oriented, customer focused, creative, high energy, success/goal-oriented, excellent communicators, adaptable and self-motivated." According to Howard, people skills and the willingness to work times and hours that are different from the norm, such as holidays, nights, and weekends, are the most important requirements for success in retailing careers. Other requirements include organizational skills, hard work, perseverance, an aggressive attitude, and flexibility for an ever-changing environment.

Burns advises students to "look for opportunities to develop leadership and communication skills through curriculum and other campus projects, as well as through student clubs." Networking is also important. She suggests looking for alumni in companies in which you are interested for future employment. Consider doing multiple internships or short-term shadowing for limited exposure. If no internship is possible, Burns suggests finding temporary work in retail, such as a summer job, working during school breaks, etc.

Ambler maintains African-American students should "look for companies that are growing, have customer appeal, address the value propositions of quality, value, price and service, and are market leaders. Companies that focus on these important areas should have significant employment and professional growth opportunities, especially for African Americans." He further states, "Aggressive companies understand and embrace diversity both in their customer base and employee population."

Salary and Wages

Entry-level job opportunities for new college graduates in retailing are varied, as are salary ranges. Salaries are competitive and vary by job title, location, and experience. Entry-level positions in every discipline are available in field operations and in the corporate office at Blockbuster, for example. Salaries may range from $30,000 to $50,000, depending on the position and area of discipline, according to Ambler. Howard states at his company, "Trainees' starting salaries are usually in the neighborhood of $32,000 to $40,000 with a very high ceiling long-term." Burns at Federated Department Stores, Inc., indicates at her company, "Salaries and benefits offered are competitive."

One characteristic that distinguishes the retail industry from others is, regardless of your starting position or starting income, salaries rise quickly with success and success is available to those who want to achieve it.

Dr. Thelma Snuggs is an assistant professor of retailing at Purdue University.