Chapter 2

The Retail
Environment
1.2 RETAILING IS THE LINK BETWEEN PRODUCTION AND
CONSUMPTION

1. Answer the following questions:

a. Products are imported from another country. These products are

wanted by consumers. Because consumers are located in Kimberley, a small
town, these shops are not located in Kimberley. Consumers must travel to
Bloemfontein or Johannesburg to access such shops.

- What is the problem GAP here?

- How can it be solved?

b. Apples are grown in South Africa. They are picked and sold in shops
in the months from February to June.

- Why can we buy apples all year around?

- What is the problem with this?
- How is the problem fixed?
3
c. You want to buy a new car. You cannot afford to buy it cash.
But, you can buy it on credit. In order for you to buy a product on credit
you must sign a contract to state that you do not own the car until you
have paid it in full. Therefore, you drive the car but it does not belong
to you.

- What is the ‘problem’ with this scenario?

- How is it fixed?

d. You see a beautiful matric dance dress at Foshini. You fit it on,
but it doesn’t fit properly. There is a similar dress at a boutique – you fit
it on, but it doesn’t fit properly. The manager of the boutique can do
alterations for you for free.

- What is the problem in this scenario?

- How can it be solved?
e. You are visiting the Jeju, South Korea. You want to visit the Glass
Castle. You Googled and this was all you can find:

- What is the problem?

- How can you get more information?
• SCENARIO GAP
• A. Products found in certain cities 1. Ownership
• B. Apples 2. Time
• C. Car 3. Value
• D. Dress 4. Spatial / Space
• E. Glass Castle 5. Information
• A. 4
• B. 2
• C. 1
• D. 5
• E. 3
CHAPTER 2

THE RETAIL ENVIRONMENT

 1. NATURE OF SA RETAIL
LANDSCAPE

The Retailing scenario in South

Africa is a dynamic one as:
Retailing in South Africa is a rapidly changing scenario, with many changes
taking place in the environment that impact the potential success or
demise of retailers.
South African society is also very dynamic with political and demographic
changes happening that impact the marketplace.
The South African marketplace is characterized by a wide range of retailers
that have evolved to serve the needs of many different groups of
customers in terms of race, income, and culture.
Retailers are situated in urban, semi-urban, and rural areas, and vary from
large, sophisticated hypermarkets to the smallest and uniquely South
African spaza stores.
2, RETAIL ENVIRONMENTS
TRENDS IN RETAILING
As the environment changes, both
consumer needs and what retailers
should be offering are affected
Types of change in requirements
from consumers include:
• The choice of product in response to
income, technology and lifestyle changes
• The choice of retailer as the format of
retailers changes
• The way in which they buy as the Internet
becomes more accessible
• Shopping times as stores stay open later
and new types of convenience stores
become available.
TWO FORMS OF ENVIRONMENT
• Made up of elements close to the
business that affect it and the way in
Micro which it operates on a daily basis
Environment • Can be represented as either
strengths or weaknesses
• Examples include its customers,
competitors and suppliers

• Factors that fall out of the control of

the retailer
• Have an effect on the functioning of the
Macro
business in a positive and a negative
Environment manner
• represented as either opportunities or
threats the retailer.
 THE MACRO
ENVIRONMENT
• Demographic patterns
and trends
• Technology
• Competition
Macro • Political and legal
Environment environment
• Economics
• Social and cultural
patterns and trends
• Ethics in retail
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Macro environment

•P
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•S
•T
•L
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POLITICA
L
 2.4 POLITICAL
This is closely connected with the economic
environment.

Effect of Politics on retailing:

 The current government in power can have a
major impact on business
 Issues such as inflation, unemployment,
interest rates, and foreign competition could
be approached in different ways by different
governments
 This impacts credit and borrowing, the cost of
petrol, importing and exporting and the potential
arrival of foreign competitors and how they are
handled
Economic
s
 ECONOMICS

Retailers have to aware of current and

impending economic conditions
Can have a dramatic effect on
consumer spending patterns
Inflation, recession, interest rates
and changes in the exchange rate
Economic recession can result in
changes in consumer expenditure
Example
An economic recession can result in changes in consumer
expenditure. Consumers would probably curtail their
expenditure on luxury products, while discount stores such
as Game might experience an increase in sales.

These changes in expenditure might be temporary or in

some cases might alter the way in which an entire
generation behaves.
For example, the aging Baby Boomer generation
experienced some good economic times and were more
inclined to spend and make use of credit.

Retailers need to change their strategies in order to cater

for these changes.
Social
 2.1 Major population and
demographic trends
Demographics = statistics about the
population that can be measured and have
implications for market behaviour
Demographics include measurements relating to race,
age, gender, education, and income.
The South African population is predominantly made up
of black people, with the highest number of people living
in Gauteng.
Despite a section of the population that is earning
exceptional incomes, South Africa is characterised by one
of the largest disparities in income between the rich and
the poor, in the world.
Effect of demographics on retailers

Good retailer must understand customers and their needs to

satisfy them

Understand Demographic elements

Population size
Stores change strategies to satisfy markets
Location of the population
Where to locate stores and distribution centres
Income
If income increases, so does the spending pattern of
consumers, in particular with respect to luxury goods and
branded products.
Household structure
Number of people who live together in a domestic
arrangement
Shift in traditional household structure
Household structure

• Some households could be made up of family that are related

by blood and marriage, while others might be cohabiting for a
number of different reasons.
EXAMPLES:
• Due to divorce, aging populations and a recent trend of
couples deciding not to have children, there has been an
increase in one- and two-person households.
• This has implications for household spending.
• People who are divorced and raising children on their own,
might struggle financially and as a result will search for value
when shopping.
• On the other hand, a professional couple who have chosen not
to have children might spend more on luxury goods, famous
brand products and entertainment.
• The smaller the household, the smaller the package size of
perishable goods as well, such as breakfast cereals, washing
detergents, and so on.
Class Activity

Search the internet regarding

the latest in SA
•Population size
•Location of the population
•Income
 2.5 SOCIAL AND
CULTURAL
These changes happen as people’s needs
evolve and change as time moves on, and
new groups replace old groups.

Effect of social and cultural on retailers

Retailers have to be alert to these changes.
If the correct strategies are not put into
place to cater for these changes, customers
will move onto retailers that are seen to be
better at fulfilling their needs.
Changes include:

* women and their careers;

* the change in gender roles and the
resultant poverty of time;
* the change in the lifestyle of the elderly;
* new perspectives on the shopping
experience;
* the public’s perceptions of social
responsibility;
* conservation and green issues; and
* new awareness of the requirements for
healthy living.
 CAREER AND PROFESSIONAL WOMEN

An increasing number of women have entered the

employment sector which has implications for the retailers:

Firstly, the working woman has less time to attend to

shopping and to prepare meals for the family. Convenience
meals have become much more important and the Home
Meal Replacement (HMR) market has become a critical area
in the supermarket business.

Secondly, this has a significant impact on attitudes towards

the purchasing of clothing and leisure products, as women
have to dress for work and also have money available to
spend on themselves.

In order to accommodate the needs of working people, there

has been a trend towards longer shopping hours.
Many South African shopping centres have adjusted their
shopping hours and stay open until at least 7 p.m. and
sometimes later.
CHANGE IN GENDER ROLES
AND POVERTY OF TIME
Women don’t do all of the shopping
anymore due to more women
becoming part of the working world
Shopping often takes place on
weekends
Responsibility can fall on husbands,
couples or the only single member of
the household.
 THE ELDERLY

Worldwide increase in the number

of elderly people in the population
Improved standard of living and
better knowledge of how to remain
healthy
Cannot be ignored as they are a
profitable sector of the marketplace
EXAMPLE Vitamins, health foods
and cosmetics catering for aging
skin designed with elderly in mind
 SHOPPING EXPERIENCE
 Consumers are looking for more than just a place to purchase
goods. They are looking for a shopping experience.
Many of the major shopping centres design their space so that this
need is satisfied.
Customers see a visit to a shopping centre as an outing and often
spend a long period of time there.

 For this reason, shopping centres are designed to offer a pleasant

environment where customers can move around easily, and with
many facilities for relaxation on offer, such as cinemas, bowling
alleys, restaurants and coffee shops.
EXAMPLE: Think about Gateway shopping centre on the KwaZulu-
Natal North Coast where customers can attend a live show, watch a
movie, try out a climbing wall, surf at the wave-park and even go
skate-boarding.

 Interactive stores are also a part of the new retail environment

that offers an experience.
An interactive store is one where you can actually try out a product,
enjoy a cup of coffee, listen to music or watch a movie.
A good example would be Exclusive Books which has couches
scattered around for people to sit down and browse through a book,
Technolo
gy
 2.2 TECHNOLOGY
Technology is The application of scientific
knowledge for practical purposes

The retail industry is certainly one

where various new technologies have
become useful in streamlining
operations and improving the offering
to the customer.

However, technology can also serve to undermine

traditional business methods, creating a
situation where retailers have to change their
methods or suffer the consequences.
• Effect of TECHNOLOGY on retailers:

• Areas such as online retailing (e-retailing) have

experienced the full impact of technology as well as the
field of logistics which have many new electronic
innovations available to make operations more accurate,
speedy and efficient.
• Smartphones allow retailers to make use of location-
based advertising
• Consumers making use of multi-media, such as social
media and email
• Effect of technology: boost retail store performance and
undermine traditional way of doing business
• E-commerce – Takealot.com and NetFlorist
• EPOS (electronic point of sale) - at any point in time
retailers can access stock and sales figures
• RFID (radio frequency identification) - intelligent bar
codes.
Legal
New laws can also have requirements
that are costly for business.

For example, revised smoking laws

required many restaurateurs to spend
money on creating appropriate
smoking areas.

Retailers are also affected by labour

law, health and safety regulations, and
any other laws that are involved with
the running of a business.
 LAWS WITH A MAJOR
IMPACT ON RETAILERS

Consumer Protection Act

National Credit Act
 Customers can  Deals with the way
access credit in a fair that businesses
and non- conduct themselves
discriminatory with respect to their
manner customers
 It provided  Provides options to
regulations to put an unhappy consumers
end to the
irresponsible granting
of credit
 Had major
implications for
retailers that offer
 The National Credit Act
guarantees consumers the
following rights:
• •The right to apply for credit

• •The right not to be discriminated against when applying for credit

• •The right to be given reasons for credit being declined

• •The right to be given documents in an official language that the consumer understands

• •The right to be given documents in clearly understandable language

• •The right to be given written documentation relating to the credit transaction

• •The right to confidentiality of personal information

• •The right to access and challenge the information held by a credit bureau

• •The right to receive periodic statements. Source: The National Credit Act 2005.9
The Consumer Protection Act of
South Africa
• This Act has been brought into law to promote and advance the social and economic welfare of all consumers
and seeks to:

• •Establish a legal framework for a fair, accessible, efficient, sustainable and responsible consumer market.

• •Reduce the disadvantages of accessing goods and services when the consumer is a person in a weaker
bargaining position, such as low-income persons or communities, rural communities, the disabled, illiterate,
elderly or young.

• •Promote fair business practices.

• •Protect consumers against unfair, unreasonable, unjust or improper trade practices.

• •Protect consumers against deceptive, misleading, unfair or fraudulent conduct.

• •Improve consumer awareness and information, and encourage responsible and informed consumer choice and
behaviour.

• •Promote consumer confidence, empowerment and the development of a culture of consumer responsibility.

• •Provide a system for consensual (rather than adversarial) resolution of disputes arising from consumer
transactions.

• •Provide an accessible, consistent, harmonised, effective and efficient system of redress for consumers.

• Source: Consumer Protection Act South Africa. 2012. The SA Consumer Protection Act – How will you handle it?
10
 2.6 ETHICS IN RETAIL
Ethics: covers the principles that are
concerned with the judgement of whether
something is right or wrong.

Effect of ETHICS on retailer

 Types of issues to consider:
 Selling merchandise produced under disreputable
circumstances
 Claiming to have the best price with no proof
 Accepting gifts from suppliers
 Charging fees to suppliers for shelf space
 Pressuring a customer to purchase
 Non-disclosure of information
 Advertising a product as marked down when it is not
 Telling customers a price increase is due shortly
 Selling goods on credit at high interest rates
Environm
ent
 CONSERVATION, GREEN
ISSUES AND HEALTH
AWARENESS
 Increasing awareness of the need to preserve
our environment for future generations
 Retailers investing in programmes that
contribute towards the environment
 Customers are now better informed and
spending more on products that are hormone
free, organic, free-range and free of any
artificial additives
 Example: Nedbank Green Affinity programme,
where holders of credit cards can agree to
donate points towards ‘green’ causes.
 SOCIAL RESPONSIBILITY
 Consumers are becoming aware of how the
money they spend impacts on society
 Consumers shop at a retailer that they believe
is doing the right thing and avoid retailers
selling brands that are believed to engage in
unethical or exploitative practices
Example: retailers offer student bursary
schemes or support various causes, such as
McCarthy’s Rally to Read.
Woolworths and a number of other retailers
participate in the My School Card schemes.
Many customers will choose to shop at a
retailer that they believe is doing the right
thing.
 Retailers must take suppliers into
consideration.
 2.3 COMPETITION
As retailers evolve and change, competitive threats can
come from anywhere in the world

Effect of Competition on retailers

Retailers have to be aware of competition, where it is potentially
emanating from, and prepare for it.

 Scrambled merchandising: retailers sell goods that are

not traditionally their domain – traditional pharmacies
feel threatened by Dischem, Clicks, Checkers

 Retailers have to adjust their marketing strategies to

cope with opportunities and threats
3.•Elements of the retail mix
and their role in differentiating
one store from another
New formats of stores continue to arrive on the scene and
existing formats will need to change in order to survive in
the marketplace.
In order to understand the make-up of the various types of
retail store, it is important to understand some of the factors
that describe how one type of store differs from another.
The format or type of store varies in terms of the retail mix,
which is made up of a number of elements including
location; design and layout; merchandise; customer service;
price; and communication (which includes promotion and
personal selling).
The four elements of the retail mix that help to describe why
stores differ from one another are merchandise type;
assortment; services offered; and price.
 TYPES OF RETAIL OUTLET

1. 2. Types of retailer
Retailer
characteristics
 Food retailers
 Form of ownership
• Full service supermarkets
• Sole proprietorship
• Partnership
• Hypermarkets
• Limited liability company • Warehouse clubs
 The retail mix • Convenience stores
• Location  General merchandise
• Design and layout retailers
• Merchandise • Department stores
• Customer service • Discount retailers
• Price • Specialty stores
• Communication
• Category specialists
• Off-price retailer
FORMS OF OWNERSHIP
Sole proprietorship: business owned by
one person. All expenses, profits and
losses accrue to the owner
Partnership: made up of two or more
individuals who have a financial
interest and share all expenses, profits
and risks
Limited liability company: business set
up according to the Companies Act
OPERATIONAL STRUCTURE
 Independent stores – a store owned by an
individual, especially found in rural areas like
spazas and tuck-shops
 Multiple or chain stores – limited liability company
or an organisation with many branches, like Mass
Discounters (Game), Truworths and Pick n
Pay.
Advantages:
 Buying power
 Highly trained and specialised staff
 Established supply chains
 Franchising - one in which a franchisor (the holding
company ) grants sole rights to an individual called a
franchisee to operate the business under the holding
companies name in a specific location, like
Debonairs, Wimpy, Cash Converters and
Multiserv
 Retail
Mix
=Elements retailer
combine to satisfy
target market
Retail Marketing Mix an
d the 7 P's of the Retail
Mix (marketing91.com)
 RETAIL MIX
4X PPPP’S
Product
Location
Price
Place Design and layout
Promotion

Merchandise

Customer service

Price

Communication
ELEMENTS OF THE RETAIL MIX

1. Merchandise type:
Retailers specialise in certain product types
for example, a store might specialise in
shoes, make-up or books.
They might offer more services than
products, such as a hairdresser or a
restaurant, or
they might sell a number of different
products so that the customer can find
everything under one roof.
Retailers vary in the number of different products they offer to customers
as well as the number of variations of one type of product that is
available.
For example, a store such as Game stocks many different types of
product, whereas a store such as Froggie shoes specialises in shoes only,
but has many different styles and sizes of shoes available. These two
different scenarios are described by the terms variety and assortment.
Other words which assist in the understanding of these terms are the
terms breadth and depth.

»Variety is the term used to describe the number of different kinds of

product that the retailer has available for sale. This would be measured in
terms of breadth. For example, Game would stock a wide variety, while
Exclusive Books would stock a narrow variety.

»Assortment is the term used to describe the number of different

variations available within a group of products. This would be measured in
terms of depth. For example, Game would stock a shallow assortment of
computers, while Incredible Connection would stock a deeper assortment.

Within the group of products, another term is important. An SKU stands

for a stock-keeping unit. This word is used to describe one unit of any
different product. For example, an SKU for a shoe might mean: men’s
loafer, lace-up, brown, size 9.
Services offered
Retailers vary in terms of the services that they might offer
to their customers.
Some stores offer many services such as changing rooms,
accounts, return facilities, acceptance of credit cards, free
alterations, a bridal service, parking and delivery.
Other stores will offer a minimal number of services. This
does not mean that the store is doing a bad job.
Services cost money and if a store chooses to go the value
route and offer low prices, they will often find that they
need to cut back on services in order to keep their prices
down.
Many thrifty clothing shoppers choose to go to factory
shops and are happy to give up the services that they
might have received elsewhere.
 Price
Retailers might choose to differentiate
themselves in terms of their low prices, for
example PEP stores.
Others make the choice to position
themselves as a store that offers quality
and/or an exclusive image.
For example, Woolworths is a store that has
positioned itself in this way in comparison to
other food stores. It should also be noted
that in order to offer a large number of
services as well as a wide variety and a deep
assortment, prices will have to be higher
than average so as to accommodate this.
 Types of
retailer
1.Food retailers

2.General
merchandise retailers.
 FOOD RETAILERS
 Full-service supermarket = designed to offer a one-
stop shopping experience. The supermarket could
include a bakery, butchery and a fresh fruit and vegetable
section. Examples include Boxer, Pick n Pay, SPAR,
Shoprite, Checkers and Woolworths.
 Hypermarkets: stock a large variety of foodstuff as well
as household items like clothing, furniture e.g. Checkers
Hyper and PnP Hypermarkets
 Warehouse clubs: big-box format designed to offer
customers a low-priced, no-frills environment found in
metropolitan areas They sell a large variety of goods,
such as food, alcohol, office equipment and hardware.
Customers can be wholesale, informal traders and small-
store owners, to regular shoppers who are looking for
value. Eg Makro
 Convenience stores: quick and convenient purchases in
local location. At petrol stations and airports. shopping
which takes place more frequently at a local retailer,
rather than carrying out a major monthly shop. Usually
food orientated, open for longer hour, smaller in size and
number of products e.g. Kwikspar, Woolworths Foodstop,
Pick n Pay Express and Freshstop
 GENERAL MERCHANDISE
RETAILERS
 Department stores: large stores that offer a
large variety of merchandise e.g. Edgars
 Discount retailers: wide range of general
merchandise at value-based prices e.g. Game
 Specialty stores: limited amount of products
with high levels of customer service e.g.
American Swiss
 Category specialists: large specialty stores
e.g. Toys R Us
 Off-price retailers: stores characterised by
opportunistic buying practices e.g. JAM
• Department stores are large stores that offer a large variety of
merchandise under one roof.
The merchandise would be laid out in various departments, which is
how they were given their name.
Department stores typically offer a deep assortment of merchandise as
well high levels of service.
This ends up making prices rather high.
Most of the typical department stores in South Africa have closed down
for this reason, as their customer base has been eroded by discount
stores as well as the shopping mall, which has the same offering under
one roof supplied by a collection of stores.

Department stores that have remained, have done so in more

streamlined versions of their previous situation.
Some still have departments but have specialised in soft goods instead
of additional items such as furnishings, toys and stationery.
Stuttafords, Ackermans and The Hub are all examples of department
stores that have survived in a new format, by eliminating a number of
categories.
Edgars and Woolworths could also be described as department stores,
as they have a number of different departments, mostly in the soft-
goods categories, although Woolworths does offer food as well.
• Discount retailers offer a wide range of general
merchandise at value-based prices. They sell both well-
known brands, as well as a number of private brand
offerings in order to give the customer a good selection
from which to choose. They are usually characterised by a
lower service level, which would incorporate self-service, in
order to offer the lower prices that they do. They also often
use a model that makes use of heavy advertising and price-
based promotions. Game is an example of a discount store
that makes use of weekly specials designed to attract
shoppers to their stores.

• Speciality stores are in direct contrast to the discount store,

as they offer a limited number of products, with a number
of versions, such as colour, style, price and size, to the
customer. The customer-service level is often a lot higher
than that of the value-based stores. Examples include
American Swiss, Green Cross, Donna Claire, @Home,
Sportscene and Markham.
• Category specialists are specialist stores that are far bigger than the average
speciality stores. They offer a narrow but deep assortment, with a self-service
approach. Characterised by their size, they are able to enjoy the discounts
that come with bulk buying. Often located in cheaper areas, a little out of the
major shopping locations, they have created an enormous threat for both the
typical discount store as well as the regular speciality stores. The typical
discount stores have more expertise in their product area and a deeper
assortment, and the regular speciality stores have lower prices. Often
described as category killers by other retailers, they have earned this name
because of their buying power which enables them to ‘kill’ a category for
other retailers. Examples in South Africa include stores such as HiFi
Corporation, Toys R Us, Sportsman’s Warehouse, Dis-Chem and Mr Price
Home.

• Off-price retailers are stores that are characterised by their buying practice
which is opportunistic. They wait until all the major retailer buyers have
visited the manufacturer and then they make their move. They are prepared
to take whatever is left in terms of cancelled orders, over-runs and rejects for
a much lower price. They, in turn, give up any privileges that regular stores
might have on offer such as paying at a later date, returns, advertising and
promotional benefits. Generally, they will also agree to locate their store some
distance away from any other store that might be selling similar merchandise.
Pay a visit to Access Park in Cape Town or the Value Centre in Durban and you
will be sure to encounter a number of off-price retailers. Examples include
JAM, Easywear, Asmalls, and the Levi Factory Shop. Those owned by
manufacturers are usually known as factory shops.
 Assessment
Multiple Choice Questions – Chapter 2 – Environment.
1. Customers, competitors and suppliers are part of the………
A. Macro environment
B. External environment
C. Microenvironment
D. Economic environment
E. A and C
2. The ………… environment includes factors that fall out of the control of the
retailer.
A. Micro environment
B. Macro environment
C. Intermediate environment
D. A and B
E. None of the above
3. Factors that could potentially fall under the heading of macro
environment include:
A. Technology
B. Politics
C. Social and cultural
D. None of the above
E. All of the above
4. The Consumer Protection Act….
A. Helps consumers to access credit in a fair and non-
discriminatory manner.
B. Is intended to deal with the way that businesses conduct
themselves with respect to their customers.
C. Has been designed to contribute towards the protection
of the environment.
D. Is intended to redress previously disadvantaged
customers.
E. A and B
5. Nokukhanya is a lawyer. Her husband Simphiwe will often
pick up the children from crèche and stop at the supermarket on
his way home to purchase provisions for the evening meal if she is
required to work late. This is an example of changes in the……..
A. Technological environment
B. Legal environment
C. Social and cultural environment
D. Business environment
E. Economic environment
• 6. Which of the following are ethical issues?
• A. The acceptance of gifts from suppliers.
• B. The charging of fees to suppliers in order to ensure that they
obtain shelf-space.
• C. Pressurising a customer to purchase an item with the knowledge
that this is not the best purchase for their needs.
• D. Advertising a product as marked down, when it is not.
• E. All of the above

7. Location, merchandise mix and price are all part of ….

A. The environment
B. The retail mix
C. The merchandise mix
D. Services offered
E. None of the above
8. Checkers has a large number of stores that offer everything that their target market
would conceivably expect to find in a supermarket, such as groceries, meat and produce as well
as an assortment of non-food items. This would probably include a bakery in the store as well
as a butchery and fresh fruit and vegetable section. These stores could be described as:
• A. Full-service supermarkets
• B. Wholesalers
• C. Convenience stores
• D. Specialty stores
• E. Warehouse clubs
9. A discount store
• A. Offers a limited number of products, with a number of versions such as colour, style,
price and size to the customer.
• B. Offers a wide range of merchandise at value based prices.
• C. Enables customers to make a quick and convenient purchase without having to
make their way through a busy shopping centre or wait in a lengthy queue.
• D. Would typically offer a deep assortment of merchandise as well high levels of
service.
• E. Is characterised by its buying practice which is an opportunistic one.
10. Identify the order in which the missing words occur in the sentence below:
• A ………. agreement is one in which a …………(the holding company) grants sole rights to an
individual called a …………. .
• A. Franchisee, franchisor, franchise.
• B. Franchise, franchisee, franchisor.
• C. Franchise, franchisor, franchisee.
• D. Franchisor, franchisee, franchise.
• E. Franchisee, franchise, franchisor.
Short Questions and Answers:
1. Complete the table below by placing the following
statements in the blank spaces:
A. Your supplier has a strike.
B. Government passes new labour laws.
C. New technology becomes available to streamline the
ordering process.
D. Your competitor brings out a new line.
E. You have trained a number of staff in the past year,
increasing your skills base substantially.
F. You merge with another major retailer improving your financial
base.

• Macro environment Micro environment

True or False Questions:
a. The micro environment describes factors that
fall outside the control of the retailer.
b. It is usually easy to measure demographics.
c. A tenant in a home is part of the ‘household’.
d. The Consumer Protection Act deals with the way
that retailers respond when faced with competition.
e. The Home Meal Replacement business is
declining.
3. Match the following descriptions with the store types:
Store type: Description:
1. Department Store A.Enables customers to make a quick and
convenient purchase without having to
make your way through a busy shopping
centre or wait in a lengthy queue.
2. Convenience Store B.Large stores that offer a large variety and
a deep assortment of merchandise under one
roof. The service level is high.
3. Specialty Store C.Offer a wide range of general merchandise at
value based prices.
4. Discount store D.Offers a limited number of products,
with a number of versions such as colour, style,
price and size to the customer. The customer
service level is often a lot higher than average.