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This is the chapter on Understanding Retail from the course textbook

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Video which explains the supply chain and model of distribution

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This screen-capture video lesson considers place as part of the marketing mix.

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Video which will help you understand how retail sales works

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Video which will help you understand how retail sales works

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Short video explaining what contributes to the retail sales estimates calculated by the ONS for Great Britain. It also shows the size of the sample and also how much coverage this samples gives of all sales....

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Stages of transaction in retail and customer service

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Stages of transaction in retail and customer service

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Good customer service stretches from before the customer purchases the product to after the purchase transaction has been completed. Lets look at each component

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Marketing theory which you will need to complete the work book

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management method management theory consultant consultancy firm

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ProvenModels - product market matrix - H. Igor Ansoff

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model | strategic management, innovation & risk, marketing & sales | In the late 1950's, the Russian-American engineer, Igor Ansoff, a founder of strategic management, argued that strategic planning was essential for firms operating in a complex, turbulent ...

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The Retail Forecast for 2017-18
From the Centre for Retail Research
[this note prepared on 24 January 2017] Forecasting the Economy and Retailing The inevitability of Brexit changes the purpose of this note from the Centre for Retail Research. We have provided a two-year forecast for retailers along with a rationale, but no longer discuss economic trends in general.
What does the near future look like? The UK economy, and with it the UK retail sector, has enjoyed continued growth since 2013 Growth fell from 2.6% a year in 2014 to 2.3% pa in 2015. Last year (2016) turned out better than CRR expected. Retail sales rose by around 2.1% and GDP grew by 2.2%: complete figures for 2016 will not be published for some time.

At the beginning of last year (January 2016), our view of 2017 and 2018 was that the economy would start to slow down in mid-2017, although we were in a minority. Most commentators, including the OBR, expected the recent run of 2.5%-ish growth to continue. Then came the Brexit referendum vote, wildly unpopular with most economists, turning prevailing opinion into being very negative.

Although slower growth had been predicted if the electors voted Leave, some commentators even forecasting immediate recession, the second half of 2016 was surprisingly good. Consumer confidence and consumer spending was generally high (though variable), stock prices increased, and the Bank of England and the government attempted to manage expectations so that calamity was avoided. However, the international value of sterling depreciated by around 15%, which is likely to lead to consumer prices rising by around 5% (variable) in 2017. The blow of price increases for many people will not be softened by wage increases so living standards may fall for part of the population, temporarily at least.
The CRR Forecast
Our view (this time last year) was that the economy was running out of steam, its prospects being worsened by the Chancellor's budget manipulations to achieve his objective - a budget surplus by 2020-2021. Frequent changes in Treasury policies were creating a great deal of waste. Whilst we felt that the Chancellor's new antagonism to buy-to-let was not really a surprise, we did not anticipate that his reductions in the tax advantages for this sector and his changes in the stamp duty regulations would have such a deleterious effect on the housing market - and through the housing market a negative multiplier effect in the Midlands and the North, felt particularly by retailers serving the new housing market.

Taking all these factors into account our forecast for 2016 was for a 1.9% growth in retail sales: for 2017 it was 1.7%.

Our new retail forecast for 2017 is 1.6% growth in sales and for 2018, 1.2%, a noticeable drop in outcomes compared to recent years. Our forecast for GDP growth is 1.5% (2017) and 1.0% (2018). It is difficult to be accurate about the breakdown between food and non-food, but we feel that food and grocery could do relatively well if shoppers cut back on non-food in order to ensure that food requirements are met at a high of high inflation. Strong competition in all sectors will curb price rises, as already seen in the battle between Tesco and Unilever.
The Forecast Justified
This is a very uncertain time. Everyone's forecasts are dominated by issues around Brexit. The problem is that no one is sure about what kind of Brexit we will have. We know that there will be some costs from leaving the EU, but not how large they will be. Hence even the most optimistic are reducing their medium-term forecasts.

This year (2017) looks OK. Consumer confidence (see Figure 2) is much higher than it was a couple of years ago, though it has fluctuated considerably in recent months. We do not see large-scale redundancies in the economy or companies going bankrupt at a much higher rate this year, though we do see retailers being particularly disadvantaged. Britain is still a member of the EU and will be selling goods and services to other EU members. This will be the case until some time in 2019-2020, or even later if a transitional agreement is made. Because the economy has performed so much better than expected in the final months of 2016, major forecasters now think that the prospects for 2017 have improved. The World Bank for example increased its GDP growth estimate for the UK in 2017 to 1.5%.

More about Brexit possibilities below.

Although the other EU members are being very difficult we do not see much possibility of a catastrophe issuing from that quarter (yet). We feel the global economy will continue to grow and trade, and even the major emerging or resource-dependent countries seem to be doing better. Hence, although the UK will face some difficulties in 2017 and 2018 and businesses may shed labour and curb their investment, we see that as marginally reducing growth rather than prompting a recession. The Eurozone countries (currently our major trading parties) will continue to grow slowly, thus limiting the UK's ability to develop its markets there.

We see the Trump Administration in the U.S. as adding to growth in global trade in goods and services. It is pursuing a pro-business, deregulating, expansionary policy (alongside much else). Changing the tax rules to encourage U.S. international companies to repatriate profits without paying high tax rates should create more demand and investment in the U.S. As the U.S. is already one of the drivers of global expansion with a faster-growth economy than most of its trading partners, the Trump changes can only help this further. The U.S. has plenty of spare resources and is not yet growing at its historical norm, so any expansion should not necessarily be inflationary or cause a financial crisis (at least in the medium term). We quite understand how, for some, the election of Donald Trump is amazing and scandalous. This webpage merely forecasts the impact of national and international factors, of which Trump is one, upon the UK retail industry. So in the short-medium term, the Trump effect will be expansionary. This does not mean I would want him to marry my daughter.
What can go wrong?
There are of course a range of unknowns that will affect the business outcomes for 2017 and 2018.

The three most likely are:

Fall in consumer confidence: bad news about the economy or a growing anxiety about a possible fall in living standards in the next couple of year may make consumers spend less because they fear the future. This may stop economic growth in its tracks or even cause a small recession. Higher inflation of 5% in 2017 may well make consumers restrain their spending somewhat (allowed for in our forecast), but if they overreact then the fall could be much greater.

Government action to curb credit: the growth in household spending in the last two years has not been based upon higher incomes but on debt. According to the excellent Money Charity, outstanding personal credit lending was £1,921.9 bn by November 2016 or £7,118 per household. Total household debt (including mortgages) showed that borrowings had ballooned to £1,512 billion (bn) by November 2016 (up £52 bn over 12 months). The government or consumers themselves may take action to prevent any further build up of debt. However debt levels as a proportion of GDP, and debt as a proportion of household income is far far lower than it was in 2008, so it seems unlikely that the government will act to reduce household borrowing. Nevertheless it is a straw in the wind.

Financial crisis: for those of us old enough to remember financial crises, they were caused by weak economies, adverse balances of payments (imports higher than exports) and overvalued currencies. To prevent the currency dropping in value, governments would borrow large sums that would be used to support the value of the currency. The UK now has a floating exchange rate, enabling us to go through a currency depreciation last year of 15% without any symptoms of a financial crisis. If at some future date, the currency fell and continued to drop apparently without end, the government and the IMF might well feel the urge to intervene. Our view is that they would be mad to do so. The currency is simply a price. Markets can be very useful but can exaggerate falls and rises. Trying to control the market price may take vast borrowings, and the terms of those borrowings would be real austerity for the country. Unless the UK really is a basket case, a few years of an undervalued currency should lead to faster growth and eventually currency appreciation.

Of course, the UK does have an adverse balance of payments because it imports more goods and services than it exports. The government presumably wants to wrap up its balance of payments problems along with the Brexit policy in the expectation or hope that the changes made to operate independently from the EU with an undervalued currency may well improve the balance of payments at the same time.
How Uncertain Are These Forecasts?
How likely is our forecast - or perhaps it would be better to frame it as how much uncertainty is there about these figures? The chief difficulty at the moment is the Brexit problem.

These are the Brexit problems:

Will there be an adverse effect of Brexit? Almost certainly. There are different opinions varying from one or two years of reduced growth (followed by a catch) to several years of recession, higher unemployment and lower incomes in 15-20 years' time.

When will the effect start? Some commentators thought it would start as soon as the referendum votes were counted (eg The Guardian), although the Royal Economic Society January Newsletter points out that the RES never claimed that the roof would fall in within six months. Whilst we remain members of the EU, we should be able to sell goods and services there, although there may be some fall off in, say, the last six months before we exit as companies revise their supply chains and form new relationships, whilst consumers may avoid dealing with some companies if they feel that their current legal protections over services or products may be unuseable after EU exit.

How big will the effect be? On average, the impact on services may be greater than on manufactured products. Currently services are more important to the economy than manufactured goods. Our view is that British companies will retain much of their market by creating new facilities within the EU to keep the 'passport' benefits of the single market. It all depends on what arrangement the UK makes with the EU before, or after, leaving.

What type of relationship with the EU will we have after leaving? Currently the government feels that there is no alternative to simply leaving the EU, but attempting to protect some sectors (eg cars) and some relationships (academic research, R&D, and security cooperation) as we go. This is because the EU will not start negotiations, even tentative ones, before we activate Art. 50, won't allow us to make arrangements with other countries while we are still members of the EU, and any agreement reached would have to be ratified by 27 other countries (which seems doubtful). There is an irresistible logic to all this, but it could go badly wrong.

A political and legal mess= a general election
Further problems in the pot include: the fact that a majority of members of the UK Parliament do not want to leave the EU; and the use by some opponents of Brexit of legal appeals based on constitutional law about specific government approaches to give effect to the referendum result. It is not impossible of course that the Supreme Court totally prevents certain government Brexit strategies being adopted by using human rights protections embodied in the Common Market and Single Market accession treaties. The appeals to law could go on and on for many years, preventing decisions being made both about leaving the EU and about staying in it.

If the government fails in Parliament or loses too many cases before the Supreme Court, the only option left would be a general election. Mrs May opposes calling a general election. However the 2015 Conservative government was elected to renegotiate the UK's relationship with the EU and to put this to a referendum, then to carry out the results of the referendum. Mrs May's position as PM has not been approved by an election, although there is still no such constitutional requirement in the UK (since 1945 Eden, Macmillan, Douglas-Hume, Callaghan, Major and Brown all became PM with an election being called). If Parliamentary or the legal tests and appeals get too difficult for the government, the most likely result would be a general election, probably in May or September 2017.

This would almost certainly be won by Mrs May, but it would split both the Conservative and the Labour parties because voters might well vote as they voted in the referendum rather than by party. This would imply large losses for Labour in northern Leave-majority constituencies (90% of Labour MPs voted Remain) and for the Tories a more nuanced result, where Remain-voting constituencies would reelect pro-EU MPs and Leave-voting constituencies would reelect EU-sceptics. UKIP and the Liberals would probably also benefit. Certainly it would be the most exciting and divisive general election since 1931. On the other hand, Mrs May, who is known for her caution, will remember what happened to Edward Heath when he called an election about one question, 'Who rules the country?' 'Not Heath' was the answer.

The general election would be the opportunity for the EU then to make a great offer to the UK, which would induce Britain to remain in the EU. They would not make such an offer of course, because they are not united themselves.

The CRR view is that it now looks like a hard Brexit and that all the jockeying around and appeals to the law will create a mess, force a general election, and produce the opposite result to what opponents of leaving the EU want. Rather like the start of the First World War, all the actors are marionettes playing their pre-determined roles and no one making a move to do what is best for all.
The Economic Background in 2017
Economic Growth
Figure 1 shows the change in growth (compared to the previous year). The sharp fall in the GDP caused by the 2008-2010 recession can be seen, the resumption of growth, and the double dip recession that never was in 2012. In 2014 the economy grew by its high point of 2.6%. GDP growth of 2.6%, whilst excellent in comparison to many other countries, is only our long-term average growth rate over the last 30 years: it is commendable, but not fabulous. The tailoff since 2014 with growth rates declining slightly is also shown, as well as the improvement in 2016.

Consumer confidence
Consumer confidence has risen steadily since 2013 although confidence is now below the levels of 2015 (Figure 2). The downward spikes immediately after the referendum and in autumn 2016 can be seen: confidence trends are now more variable than in previous years.

Retail spending
Figure 3 shows retail spending recovered in real terms in 2013, after which there has been strong growth on a year-by-year basis. As noted above, we feel that growth will reduce in all sectors, be flat in some sectors such as clothing, and may even fall in areas like housewares, funishing, floor covering and DIY.

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Retail Forecast for 2017-18 - Centre for Retail Research, Nottingham UK

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The Retail Forecast for 2017-18 From the Centre for Retail Research [this note prepared on 24 January 2017] Forecasting the Economy and Retailing The inevitability of Brexit changes the purpose of this note from the Centre for Retail Research. We have provided a two-year forecast for retailers along with a rationale, but no longer discuss economic trends in general.

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Video which describes how Starbucks operate their supply chain

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A Behind the Scenes Look at Starbucks Global Supply Chain

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With responsibilities that include more than 70,000 outbound deliveries a week to Starbucks retail stores, distribution channels and outlets worldwide, keeping Starbucks products flowing from suppliers to customers is, needless to say, a complex exercise -- but we're able to do so with a world-class Global Supply Chain organization that manages its activities through four functions: Plan, Source, Make and Deliver.

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You will need the information here to complete the work book

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management method management theory consultant consultancy firm

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ProvenModels - five forces - Michael E. Porter

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theory | strategic management | Michael Porter's innovative research in the 1980's changed managers' perceptions of their own industry's importance as a factor for their company's strategy. Business unit managers would now ...