The aim of this unit is to introduce learners to the important role that retailing plays in the UK economy; and how it is the final part of the supply chain, before products and services reach the end customer. Learners will examine the structure of the retail industry, the process of distribution, the importance of sales and service functions and how the sector responds to change.
The learning outcomes of this unit are;
- 1 Know the structure of the retail industry
- 2 Understand the role of retailing in the distribution of goods and services
- 3 Understand the sales and service functions in retailing
- 4 Know how the retail sector responds to internal and external change
The resources below should be of some use to help you complete the demands of this unit.
|P1 describe the structure and organisation of the retail sector||For P1, learners will need to define retailing from a number of perspectives and should develop an ability to synthesise information, as definitions are not necessarily exclusive. It is important that they describe the many ways and places in which retail is conducted and the changes that are taking place in the industry structure. This links to learning outcome 4 because to explain the dynamics of the industry learners firstly need to be able to clearly understand the scope of retailing. They should be able to categorise the industry using the various specified frameworks. Learners can refer to their local shopping environment, such as the high street and shopping centres, but also critically assess other environments including local shopping parades, out of town retail parks and regional centres. This criterion could be assessed by an individual or group presentation using visual materials to identify different types of store.||Sample Report Activity|
|P2 explain the process of distributing goods through different channels from the manufacturer to the customer||P2 requires learners to look at distribution channels for different types of retailers and consider their different characteristics. Learners should distinguish between channels used by large multiple retailers, that source direct from their suppliers, and smaller, independent retailers who still use wholesalers. The use of distribution channels by retailers in different sectors, such as clothing and food, should also be understood. The means of moving goods through distribution channels and the logistics function should be explored in relation to retailers’ demand for goods, with specific reference to storage locations and methods of transportation. Learners should demonstrate an ability to use information from retailers, logistics organisations and from critical observation of independent and multiple retailers. Evidence is likely to be in the form of a report on the diversity of distribution channels in the industry.||Sample Distribution Channels Task|
P3 explain how focusing on thecustomer, by providing good customer service, is essential to retailing
|For P3, learners will demonstrate how retailers relate to their customers. Customer service is highly formalised and demanding in some organisations, while others have a lower standard of service. Learners should identify organisational customer service policies and how these are applied at an operational (store) level. They should show how different organisations require different levels of service, and to meet this criterion they will need to understand the industry structure. After-sales service is significant in some retail sectors and the elements of this aspect of customer service should be identified. Similarly, a range of service and quality standards should be identified through store visits. Selling skills and the sales process can be observed and experienced in a range of stores. A suitable assessment would involve a customer service survey in a sample of retailers.|
|P4 identify the competitive factors in the retail environment a selected organisation faces.||
For P4, learners will need to understand competitive factors in the retailing environment that drive change in the industry. Learners should identify aspects of government policy concerning planning guidance for new store locations, specifically the influence of Planning Policy Statements. They should know how the Competition Commission engages with the industry and, more broadly, how retailers’ costs and ways of working may be determined by government policy. Other competitive forces should also be studied including competitors, market position, barriers to entry and new retailing concepts.
The use of ICT to drive change should be understood through studying contrasting stores and the application of ICT in marketing and stock management. Social and demographic trends can be evidenced through store-based customer surveys and/or observations. Broader economic trends can be tied into a study of the current performance of the industry as reported in the press. Competition should be explained though a study of a shopping location, such as a high street or shopping centre, in the context of the retail industry structure. Innovative products and services should be identified in one retailer and learners should explain the role of these products and services in creating a dynamic industry. Assessment could be a report based on an innovative retailer and the ways in which it adapted to its environment and how it uses change factors to drive its business.
|M1 compare the function of formats and locations in retailing||For M1, learners must move on from accurately describing different types of retailer, to explaining their purpose and the rationale for their location. Different types of format have developed rapidly: retail parks, superstores and centres, regional shopping centres, factory outlet centres characterise out-of-town retailing. These are destination, rather than convenience stores, that provide extensive product choice and services. They can also offer a wide range of leisure opportunities. With more restrictive planning guidance in the 1990s, many of these formats and characteristics have been sought in new developments and redevelopments in urban and brownfield locations. Urban locations continue to create opportunities for smaller or specialised retailers. In comparing the different formats, learners should identify why retailers prefer different locations and explain the retail functions they perform.|
|M2 compare the methods used to distribute products and services||For M2, learners must distinguish between distribution systems in different sectors. The food and clothing sectors provide good examples of different product requirements. Food retailers source largely from the UK, have short lead times and can be very responsive to customer demand. The design of the distribution chain requires a capacity for frozen, chilled and fresh foods as well as packaged products. Smaller independent and voluntary group retailers continue to use wholesalers. With clothing retailers, most products are sourced overseas, require longer lead times for delivery, are less immediately responsive to customer demand and require flat-pack or hanging facilities. Learners should demonstrate how the configuration of these distribution activities creates more effective retailers in terms of responsiveness, currency (being up to date/having fresh foods), choice and cost efficiencies.|
|M3 explain the ways in which sales techniques and customer service have developed in retail organisations.||For M3, learners must demonstrate knowledge of the key elements of effective service and selling skills. Forexample, customer expectations of luxury goods retailing are consistently high. The service dimensions canbe compared with other clothing stores. Department stores provide a good opportunity to study differencesin service, for example Harrods, John Lewis and Debenhams. These can be compared with multiple varietystores, typically Marks & Spencer and Bhs, and fashion specialists such as Topshop/Man. Customer service inthe clothing sector can be compared with other sectors where product knowledge is valued, electrical goods,and where convenience and efficiency is important, for example food.Learners must be able to define the types of changes taking place in the industry, ie whether they are short term or have longer-term implications. They will explain what causes these types of change by differentiating the key factors in the macro environment and the competitive environment. Key factors and their significance are depend partly on the industry sector: planning restrictions impact more on food, DIY and electrical retailers than clothing and toiletries and cosmetics retailers. Economic trends will impact on consumer spending and have an industry-wide effect; learners should explain that some retailers may be better able to withstand recessions and take advantage of growth opportunities. Competitive trends should be explained with reference to market concentration, power of multiple retailers, low barriers to entry, and innovative practices, including new types of store, refits and introduction of new products and services, including online provision.|
|D1 evaluate the distribution systems in delivering goods and services for a selected organisation||For D1, learners must demonstrate their comprehensive knowledge of the structure of the retail industry and make judgements about the role of distribution systems in effective retailing.|
|D2 assess the impact of different sales techniques and customer service in a selected organisation.||For D2, learners will demonstrate an ability to make judgements about the most significant elements of service and selling skills in the industry, and the ways in which they are sustained. They should think creatively about new service solutions that can realistically evolve from current practices.