Retailing Industry

RETAILING
INDUSTRY
Contemporary
Management
Presented
by
Alaa Hamdy (Leader)
Ahmed Hashish
Ausilia Emad
Mohamed El Hennawy
Mohamed Rady Mahfouz
Nesrin Mohamed Hamdy
Omar Hassan
Radwa Marei

Retailing IndustryProjectTeamworkContemporary Management
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:Abstract
There has been a revolution during the last three decades in the Retail Industry.
The retail market has changed from a product oriented industry to a more market
oriented to the service and experience oriented, with the customer as the core of
their operations.
This customer centricity has been the outcome of the hyper competition in the
retail markets, and every retailer is doing their best to woo the customers from
other retailers.
This phenomenon has resulted in the maximization of the customer focus and the
path towards bringing in the customer delight, just not the satisfaction.
Customer relationship programs have been taken as the strategy to attract customer
for repeat purchase as well to up-sell and cross-sell to the existing customers at
lower cost than attracting the new ones.
Hence companies started to work its customer loyalty programs to keep customers
for long time while making profit through them. Working with customer care the
company hopes to create satisfied and loyal customers.
Companies are offering different kind of benefits to the customer. Gift cards,
frequent purchase program, point program, rewards, offers, schemes, value added
services, etc.
Retail industry is forever changing, with competition increasing and customers
now requiring more for their money, retail stores now need to create innovative
ways to entice customers in.
The retail street is no longer the place to shop with vast amounts of individuals
turning to online shopping, the advancements in technology are changing many
aspects of 21th
century life is being heavily impacted.

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Executive Summary:
By working closely to the retailing industry over the past decade and nowadays,
we have witnessed a dramatic transformation of the consumer-seller relationship.
Buyers have what feels like endless options at their fingertips and wield
significantly more power.
Competing on price — and even quality — is quickly becoming a losing
proposition.
Winning retailers are adapting fast, meeting the personalized demands of the “new
consumer” and creating experiences that both delight customers and incite loyalty.
At the Future Stores 2013 Conference, which brought together retail industry
leaders from some of the most well-known and respected retail brands, a key
survey was put to the senior retail executives to get their perspective on the
changing retail landscape.
Key survey findings were:
• A personalized customer experience is the #1 thing missing from their retail
stores.
• Sales increase by 25%-50% when customers are helped by a knowledgeable
retail associate.
• The best way to combat show rooming is to improve the customer experience.
• 70% of retailers' report consumers will wait 5 minutes or less before a customer
abandons a purchase and leaves the store.
• Over 83% of retail sales come from in-store purchases versus online.
• Retailers expect shopping via mobile devices to double over the next year,
opening the opportunity for in-store mobile experiences.

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Respondents included:
Demographics Retail Verticals:
Technology Store 23%
Specialty Store 23%
Sporting Goods/Outdoor 23%
Home Goods 12%
Department Stores 8%
Drug Store 4%
Grocery 4%
Fast Food 4%
Average number of stores: 936

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Our motivation of this study is to know the market potential with reference to all
retailing markets and find out a globalized customer's perception about them and
what are the customers' expectations from them.
The study is done with the help of primary data given by our team to know the
retailing industry potential and their customer preferences and a secondary data
which is collected from management retailing industry, books, journal and
website.

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Table of content:
1. Industry overview ................................................................................................................................ 9
1.1. Retail Etymology...................................................................................................................... 9
2. Retail industry evolution.................................................................................................................... 10
3. Types of Retail ................................................................................................................................... 12
3.1. Introduction .......................................................................................................................... 12
3.2. Bases of classification of retailers.......................................................................................... 14
3.3. Classification of retailers........................................................................................................ 14
3.4. Types of retailers ................................................................................................................... 16
3.4.1 General merchandise retailers ........................................................................................... 16
3.4.2 Food retailers ...................................................................................................................... 27
4. The entrepreneurship process .......................................................................................................... 31
4.1. Wal-Mart corporate case study ............................................................................................ 32
5. Corporate social responsibilities ....................................................................................................... 36
5.1. Corporate social responsibilities common action ................................................................. 37
5.2. BMW Corporate social responsibilities ................................................................................. 38
5.3. Paris Mountain program ...................................................................................................... 39
6. Corporate sustainability .................................................................................................................... 40
6.1. BMW corporate sustainability ............................................................................................. 41
7. Corporate ethics ................................................................................................................................ 47
7.1. Volkswagen corporate case study ....................................................................................... 49
8. Retail industry effect on economics ................................................................................................ 52
8.1. Impact of global economic crisis ........................................................................................... 54
9. Retail food industry in Egyptian Markets ......................................................................................... 66
9.1. Market overview ................................................................................................................... 67
9.2. Retail market characteristics ................................................................................................ 68
9.3. Retail trends and general consumer preferences ................................................................ 69
9.4. Competitive landscape ......................................................................................................... 74
9.5. Egypt's trade in consumer goods .......................................................................................... 78
9.6. Road map for market entry .................................................................................................. 79
10. Summary ........................................................................................................................................... 84
11. Conclusion ......................................................................................................................................... 86
12. References ......................................................................................................................................... 87

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1- Industry overview:
Retailing is one of the oldest businesses in the world and was practiced in
prehistoric times. Earlier it was the exchange of food and traditional weapon
which followed the emergence of traders and peddlers. The day barter has been
replaced by exchange through money (in any form) the retailing came into
existence. In fact during barter also retailing was present in a sense however that
was between two persons who were both the producers and consumers
simultaneously. With the development of concept of market and marketing
retailing started playing a vital role in growth of the economy. It is estimated that
by 3000 BC shops came into existence. During the Greek and Roman period, a
number of stores and something like specialty shops, developed in the form of
open booths, where people from various countries use to buy goods. By 14th
Century retail trade assumed great importance. Merchants have started playing a
crucial role in social, political and economic life.
A philosophy known as Mercantilism became popular in U.K. Italy’, Holland and
other European countries. Small stores, selling special line of goods though
became quite popular during 18 Century.
1.1. Retail Etymology:
Retail comes from the Old French word 'tailler', which means divide in terms of
tailoring. It was first recorded as a noun with the meaning of a "sale in small
quantities.

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2- Retail Industry Evolution:
Retail industry has changed a lot in the last decade from small shops and stores to
department stores and malls, and now we can see online retail
(E-commerce) which has created huge impact on retail industry and created new
jobs and opportunities for people to be able to sell merchandise and products to the
whole globe.
Local culture – the Corner Store: 1900s
If you start back from the 1900s, local corner stores dominated retail. There were
some catalogs, but the overwhelming shopping experience was at the corner store.
People walked to the store to get the basics. Choice was limited. In some of the
bigger cities, you could find more but you were basically limited by what you
could carry back to your home.
Mass modernization culture – Department store: 1900 – 1940
While the automobile hit the streets at scale in the 1920s, it wasn’t really until the
1940s when the automobile was main stream. With the automobile, people could
go farther and carry more. At the same time, in-home refrigeration allowed
shoppers to stock more. Retail moved from local corner stores to general
merchants and department stores.
Suburban culture – Mall: 1950s - 1970s
The population booms and the explosion of suburbia led to open air malls, strip
centers, and mass retailers. This was the time of the true mall, as well as the
heyday of the TV ads.
Consolidation culture – Big Box stores: 1970 – 1990
From the 1970s to the ‘90s, the big box player burst onto the scene. You saw an
explosion of value players, club stores, and category killers. These stores drove a
lot of the smaller local merchants out of business.
Digital culture – E-commerce: 1990 – 2013
Perhaps we should call this the (Amazon , Ebay, etc…….) era which changed the
retail industry by just clicking on one button you could purchase whatever you
want in any part of the world without barriers or limitations.

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Image of different retail stores from (1900-2008)

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3- Types of Retailers:
We will discuss this title according to the following plan:
3.1. Introduction.
3.2. Bases of classification of retailers.
3.3. Classification of retailers.
3.4. Types of retailing.
3.1. Introduction:
Town planners, urban geographers, property developers and retailers have a
particular interest in the spatial and hierarchical organization of retailing within
metropolitan areas, cities, towns and villages. Berry (1963) developed a broad
classification of retail facilities. He identified three main components namely:
• Centers
• Ribbons and
• specialized areas
Shopping centers demonstrate a hierarchical arrangement with a:
1. Low order isolated convenience store (small grocery store) and a
neighborhood centre, both offering low order and a few.
2. Higher-order facilities (variety of clothing and household stores). At
regional level the most specialized stores, as well as department stores are
represented.
Ribbon developments incorporate those retail and service functions mainly
orientated to vehicular traffic, including filling stations, fast-food restaurants,
motorcar and tire dealers, nurseries and other similar operations. These functions
serve demand created by motorcar customers. Arterial streets with the highest
traffic volumes are the most densely developed.
The intersections of two or more major arterials create higher development
intensity. Some commercial ribbon streets stretch for kilometers.
Large metropolitan areas also have specialized function areas. These are
characterized by motor car showrooms and professional office clusters (doctors,
dentists and lawyers).
Specialized function areas require good accessibility because they draw customers
from the entire metropolitan area.

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This retail classification remains the most suitable to describe the retail landscape
today, and is especially appropriate to explain the hierarchy of shopping centers.
These categories are not mutually exclusive, with many retail functions being
found in more than one location. This early model also provided a basis for a
more modern classification.
Inner city retailing has been dominated historically by the unplanned shopping
area, comprising the CBD, specialty product areas and retail clusters at major
route intersections.
Planned inner-city shopping areas are a more recent development trend.
The classification of planned suburban shopping centers is essentially
hierarchical, ranging from the neighborhood shopping centre to the regional and
super regional centre. The characteristics of each reflect a different number of
stores, store types, total area, selling area, number of parking bays, customer
profile and foot traffic volume, rental levels and different trading areas.
The retail strip can be differentiated primarily according to location. Strip
retailing has an effect on the dominance of a motor car orientated urban shopper.

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Many other classifications of urban retail types exist and the above mentioned
provide a general conceptual framework for understanding the complexity of the
retail environment.
All this confirms the dynamic nature of retail as new products, store types;
market segments, retail locations and architectural styles emerge. The structure of
retail is continuously changing, and therefore a more open approach should be
followed as far as retail development and redevelopment is concerned.
3.2. Bases of classification of retailers:
- Products or services.
- Number of outlets.
- Variety of products sold.
- No. of products lines carried.
- Level of service.
- Pricing strategy.
- Size of the shop.
- Location.
- Method of operation.
- Ownership.
- Cluster/location of facilities.
3.3 Classification of retailers:
Classification by ownership:
- Independent.
- Chain store.
- Manufacturer owned outlet.
- Franchise outlet.
Classification by variety of products sold:
- Department store.
- Specialty store.
- Variety store.
Classification by no. of product lines carried:
- General merchandise stores.
- Limited line stores.
- Single line stores.

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Classification by level of service:
- Self service store.
- Limited service retailers.
- Full service.
Classification by pricing strategy:
- Discount stores.
- Off-price shops.
- Fixed-price shops.
Classification by size of shop:
- Small shop.
- Large shop.
Classification by location:
- Fixed shop retailers.
- Mobile or itinerant retailers.
Classification by method of operation:
- Store retailers.
- Non-store retailers.

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3.4. Types of Retailers:
3.4.1. GENERAL MERCHANDISE RETAILERS:
The major types of general merchandise retailers are:
• Department stores.
• Full-line discount stores.
• Specialty stores.
• Drugstores.
• Category specialists.
• Extreme-value retailers.
• Off-price retailers.
• Outlet stores.
Department Stores:
Department stores are retailers that carry a broad variety and deep
assortment, Offer customer services, and organize their stores into distinct
departments for displaying merchandise. The largest department store
chains in the United States are Sears, Macy’s, Kohl’s, JCPenney,
Nordstrom, and Dillards.
Traditionally, department stores attracted customers by offering a pleasing
ambience, attentive service, and a wide variety of merchandise under one
roof.
They sold both soft goods (nondurable or consumable goods), which have a
shorter lifespan such as cosmetics, clothing, and bedding) and hard goods,
also known as durable goods, which are manufactured items that are
expected to last several years, such as appliances, furniture, and consumer
electronics.
But now, most department stores focus almost exclusively on soft goods.
The major departments are women’s, men’s, and children’s apparel; home
furnishings; cosmetics; kitchenware; and small appliances. Each department
within the store has a specific selling space allocated to it, as well as
salespeople to assist customers. The department store often resembles a
collection of specialty shops.
Department store chains can be categorized into three tiers. The first tier
includes upscale, high-fashion chains with exclusive designer merchandise
and excellent customer service, such as Neiman Marcus, Bloomingdale’s
(part of Macy’s Inc.), Nordstrom, and Saks Fifth Avenue (part of Saks Inc.).

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Macy’s and Dillards are in the second tier of traditional department stores,
in which retailers sell more modestly priced merchandise with less customer
service. The value oriented third tier - Sears, JCPenney, and Kohl’s - caters
to more price-conscious consumers.
Department stores account for some of retailing’s most cherished traditions
special events and parades (Macy’s Thanksgiving parade in New York
City), Santa Claus lands and holiday decorations. But many consumers
question the benefits and costs of shopping at department stores.
Department stores are not as convenient as discount stores, such as Target,
because they are located in large regional malls rather than local
neighborhoods. JCPenney and Sears thus are following Kohl’s by opening
stores in non-mall locations. Customer service has diminished in the second-
and third-tier stores because of the retailers’ desire to increase profits by
reducing labor costs.
To deal with their eroding market share, department stores are:
(1) Increasing the amount of exclusive merchandise they sell.
(2) Increasing their use of private label merchandise.
(3) Expanding their multichannel presence.
(4) Increase exclusive merchandise.
To differentiate their merchandise offerings and strengthen their image,
department stores are aggressively seeking exclusive brands in which
national brand vendors sell them merchandise that is not available
elsewhere. Jennifer Lopez has a clothing line at Kohl’s.
Ralph Lauren designed a line of casual apparel exclusively for JCPenney
called American Living. Furthermore, clothing is not the only category with
exclusive lines: Customers looking for exclusive dinnerware collections can
go to Macy’s and get the Rachel Bilson line or else find the Kardashian
collection at Sears.
Increase private-label merchandise. Department stores are placing more
emphasis on developing their own private-label brands, or store brands.
These items are developed and marketed by the retailer, available only in its
stores. Macy’s has been very successful in developing a strong image for its
brands, including Alfani (women’s fashion), Hotel Collection (luxury
fabrics), and Tools of the Trade (housewares).

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Expand multichannel and social media presence. Finally, like most retailers,
most department stores have become active participants in multichannel
retailing. At Macy’s and Nordstrom, customers can buy or reserve products
online and then pick them up at the store. Customers can also return online
purchases to stores. At Macy’s and JCPenney, sales associates can order
out-of-stock merchandise online via their point-of-sale (POS) terminals and
have it delivered directly to the customer.
Full-Line Discount Stores:
Full-line discount stores are retailers that offer a broad variety of
merchandise, limited service and low prices.
Discount stores offer both private labels and national brands. The largest
full-line discount store chains are Wal-Mart. However, these full-line
discount stores confront intense competition from category specialists that
focus on a single category of merchandise, such as Staples, Best Buy, Bed
Bath & Beyond, and Sports Authority.
In response, Wal-Mart has taken a couple of routes. First, it has converted
many of its discount stores into supercenters, which are more efficient than
traditional discount stores because of the economies of scale that result from
the high traffic generated by the food offering. Second, it is expanding into
more urban locations, using smaller storefronts that can be located in
existing buildings, and appealing to price-oriented markets.
Category Specialists:
Category specialists are big-box stores that offer a narrow but deep
assortment of merchandise.
Most category specialists predominantly use a self-service approach, but
they offer assistance to customers in some areas of the stores. For example,
Staples stores have a warehouse atmosphere, with cartons of copy paper
stacked on pallets, plus equipment in boxes on shelves. But in some
departments, such as computers and other high-tech products, it provides
salespeople in the display area to answer questions and make suggestions.
Bass Pro Shops Outdoor World is a category specialist offering merchandise
for outdoor recreational activities. The stores offer everything a person
needs for hunting and fishing from 27 cent plastic bait to boats and
recreational vehicles costing $45,000. Sales associates are knowledgeable
outdoors people. Each is hired for a particular department that matches that
person’s expertise.
All private-branded products are field-tested by Bass Pro Shops’
professional teams: the Redhead Pro Hunting Team and Tracker Pro Fishing
Team.

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By offering a complete assortment in a category, category specialists can
“kill” a category of merchandise for other retailers and thus are frequently
called category killers. Using their category dominance and buying power,
they buy products at low prices and are ensured of supply when items are
scarce.
Department stores and full-line discount stores located near category
specialists often have to reduce their offerings in the category because
consumers are drawn to the deep assortment and competitive prices at the
category killer.
Although category specialists compete with other types of retailers,
competition between them is intense. Competing category specialists such
as Lowe’s and Home Depot, or Staples and Office Depot, have difficulty
differentiating themselves on most of the elements of their retail mixes.
They all provide similar assortments because they have similar access to
national brands, and they all provide a similar level of service. Primarily
then, they compete on price and location. Some category specialists are also
experiencing intense competition from warehouse clubs like Sam’s Club
and Costco.
Therefore, many of them are attempting to differentiate themselves with
customer service. For example, Home Depot and Lowe’s hire experienced
builders as sales associates to help customers with electrical and plumbing
repairs. They also provide classes to train home owners in tiling, painting,
and other tasks to give shoppers the confidence to tackle their do-it-yourself
(DIY) projects on their own. Home Depot offers an integrated line of
Martha Stewart brand products, with different themes marked by unique
icons, such that a customer can create a professional-looking decorated
space simply by choosing products with matching icons.
Besides beefing up its sales associates’ training to help customers purchase
high-tech products like computers and printers, Staples has implemented
“Easy Tech” in its stores to help people with computer and related problems
and has installed Staples Copy and Print shops to compete with FedEx
Office.

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Below will find lists of some of the largest category specialists in the United
States:

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Specialty Stores:
Specialty stores concentrate on a limited number of complementary
merchandise categories and provide a high level of service.
Specialty stores tailor their retail strategy toward very specific market
segments by offering deep but narrow assortments and sales associate
expertise.
Victoria’s Secret is the leading specialty retailer of lingerie and beauty
products in the United States. Using a multipronged location strategy that
includes malls, lifestyle centers, and central business districts, the company
conveys its message using supermodels and world-famous runway shows.
Sephora, France’s leading perfume and cosmetic chain - a division of luxury
goods conglomerate LVMH (Louis Vuitton-Moet Hennessy) - is another
example of an innovative specialty store concept. Sephora provides a
cosmetic and perfume specialty store offering a deep assortment in a self-
service format. It also maintains separate stores-within-stores at JCPenney.
Customers are free to shop and experiment on their own. Sampling is
encouraged. Knowledgeable salespeople are available to assist customers.
The low-key environment results in customers’ spending more time
shopping.
Specialty retailers have such great appeal that they rank among the most
profitable and fastest growing firms in the world. Apple stores sell a
remarkable $5,647 per square foot on average, and its stock price jumped
more than 25 percent in 2011. Lululemon’s specialty is far less technical,
involving yoga-inspired apparel and accessories, but it keeps opening its
specialty stores at a remarkable rate of several per month. These stores earn
an average of $1,800 per square foot.46
Charming Charlie stores are not quite as well known as the preceding
brands, but the small company’s success confirms the appeal of specialty
retailers. In just seven years, the accessories and jewelry chain has grown to
178 stores, spread over 33 states. Its rapid growth is well matched by its
influence: It was one of the first retailers to group merchandise by color
instead of category. Furthermore, it works to maintain affordable prices
ranging from less than $5 to no more than $50. That is, this specialty store
specializes in helping customers update their wardrobes with new pieces,
rather than forcing them to start all over again.

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In addition, many manufacturers have opened their own specialty stores.
Consider, for instance, Levi’s (jeans and casual apparel), Godiva
(chocolate), Cole Haan (shoes and accessories), Lacoste (apparel), Coach
(purses and leather accessories), Tumi (luggage), Wolford (intimate
apparel), Lucky brand (jeans and casual apparel), Samsonite (luggage), and
Polo/Ralph Lauren (apparel and home). Tired of being at the mercy of
retailers to purchase and merchandise their products, these manufacturers
and specialty retailers can control their own destiny by operating their own
stores.
Another growing specialty store sector is the resale store. Resale stores are
retailers that sell secondhand or used merchandise. A special type of resale
store is the thrift store, where merchandise is donated and proceeds go to
charity.
Another type of resale store is the consignment shop, a store that accepts
used merchandise from people and pays them after it is sold. Resale stores
earn national revenues of more than $13 billion. They also have enjoyed
double-digit growth rates in the past few years. Although the ambiance of
resale stores traditionally was less appealing than that of other clothing or
house wares retailers, the remarkable prices for used merchandise drew in
customers.
Today, many resale stores also have increased their value by making their
shopping space more pleasant and increasing levels of service. With their
lower expenses (in that they pay a discounted price to people selling their
used apparel), resale stores are moving into storefronts in higher-end
locations that have been abandoned by traditional retailers.
Perhaps the best known and most widely expanded thrift shop is Goodwill
Industries. In addition to its retail outlets, Goodwill runs extensive job
training and placement division, such that customers shopping at these
outlets get a warm glow from knowing that their purchases help others.
Unlike most other resale stores, Goodwill accepts all goods. The old
stereotype of a cluttered, dark, odd-smelling
Goodwill store has changed. The company has revamped and updated stores
nationwide.

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Drugstores:
Drugstores are specialty stores that concentrate on health and beauty care
(HBC) products. Many drug stores have steadily increased the space
devoted to cosmetics.
Prescription pharmaceuticals often represent almost 65 percent of drugstore
sales.
Drugstores face competition from pharmacies in discount stores and from
pressure to reduce health care costs. In response, the major drugstore chains
are offering a wide assortment of merchandise, including more frequently
purchased food items, as well as new services, such as the convenience of
drive-through windows for picking up prescriptions, in-store medical
clinics, and even makeovers and spa treatments.
Customers find a vast array of offerings, such as $10 manicures, a hair salon
staffed by a dedicated beauty consultant, a juice bar, and sushi chefs, next to
typical drugstore products. Medical questions can be answered by the doctor
who works there.

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In this store, the top sellers are now sushi, fresh juice, and bananas – though
customers have not changed completely, so rounding out the top five sellers
are coffee and Marlboro cigarettes.
Although drugstores thus offer major advantages, especially in terms of
convenience, they suffer from a price comparison when it comes to their
grocery merchandise.
A recent study indicated that the same selection of goods that cost
$75.60 at a supermarket would run customers $102.94 at a nearby drug
store.
Extreme-Value Retailers:
Extreme-value retailers, also called dollar stores, are small discount stores
that offer a broad variety but shallow assortment of household goods, health
and beauty care (HBC) products, and groceries.
These stores have been expanding their assortments to include more private-
label options, food, tobacco, and impulse buys such as candy, magazines,
and gift cards.
Some extreme-value retailers are adding refrigerated coolers and expanding
their food offerings so that they can be known as the best destination store
for a greater variety of household necessities. As a result, this retail model
continues to attract significantly increasing numbers of shopper visits.
Extreme-value retailers primarily target low-income consumers. These
customers want well-known brands but cannot afford to buy the large-size
packages offered by full-line discount stores or warehouse clubs. Vendors
such as Procter &
Gamble often create special, smaller packages for extreme-value retailers.
Because these stores appeal to low-income consumers, are located where
they live, and have expanded their assortments while keeping their unit
prices low, they have cut into other retailers’ businesses, including Wal-
Mart.
Always ready for a good competitive battle, Wal-Mart is opening smaller
stores called Wal-Mart Express in urban locations and creating smaller and
less expensive packages to better compete.

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Off-Price Retailers:
Off-price retailers offer an inconsistent assortment of brand-name
merchandise at a significant discount off the manufacturers’ suggested retail
price (MSRP).
Overstock.com and Bluefly.com are the largest Internet off-price retailers.
Off-price retailers are able to sell brand-name and even designer-label
merchandise at 20 to 60 percent lower than the manufacturers suggested
retail price because of their unique buying and merchandising practices.
Much of the merchandise is bought opportunistically from manufacturers
that have overruns, canceled orders, forecasting mistakes causing excess
inventory, closeouts, and irregulars. They also buy excess inventory from
other retailers. Closeouts are end-of-season merchandise that will not be
used in following seasons. Irregulars are merchandise with minor mistakes
in construction. Off-price retailers can buy at low prices because they do not
ask suppliers for advertising allowances, return privileges, markdown
adjustments, or delayed payments.
Due to this opportunistic buying, customers cannot be confident that the
same type of merchandise will be in stock each time they visit the store.
Different bargains will be available on each visit. For many off-price
shoppers, inconsistency is exactly why they like to go there. They enjoy
hunting for hidden treasures. To improve their offerings’ consistency, some
off-price retailers complement their opportunistically bought merchandise
with merchandise purchased at regular wholesale prices.
A special type of off-price retailer is the outlet store. Outlet stores are off-
price retailers owned by manufacturers or retailers. Those owned by
manufacturers are also referred to as factory outlets. Manufacturers view
outlet stores as an opportunity to improve their revenues from irregulars,
production overruns, and merchandise returned by retailers. Others view it
as simply another channel in which to sell their merchandise.
By selling excess merchandise in outlet stores rather than at markdown
prices in their primary stores, these department and specialty store chains
can maintain an image of offering desirable merchandise at full price. For
some retailers, their outlet stores are the wave of the future.
Outlet stores can have an adverse effect on profits, however, because they
shift sales from full-price retailers to the lower-priced outlets. Additionally,
outlet stores are becoming more promotional to compete with increased
activity at other outlet stores within the same mall and with traditional off-
price stores.

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Service Retailing:
The retail firms discussed in the previous sections sell products to
consumers.
However, service retailers, or firms that primarily sell services rather than
merchandise, are a large and growing part of the retail industry.
Several trends suggest considerable future growth in service retailing. For
example, the aging population will increase demand for health care services.
Younger people are also spending more time and money on health and
fitness.
Busy parents in two-income families are willing to pay to have their homes
cleaned, lawns maintained, clothes washed and pressed, and meals prepared
so that they can spend more time with their families.
Figure below shows the wide variety of services:

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3.4.2. Food Retailers:
The food retailing landscape is changing dramatically. Twenty years ago,
consumers purchased food primarily at conventional supermarkets. Now
conventional supermarkets only account for slightly more than 60 percent of
food sales (not including restaurants). Not only do full-line discount stores
like Wal-Mart now offer a full assortment of grocery items in their
superstores, but traditional supermarkets also are carrying more nonfood
items. Many supermarkets offer pharmacies, health care clinics, banks, and
cafés.
About the size and growth rates for each of these retail sectors.
The world’s largest food retailer, Wal-Mart, attains more than $443 billion
in sales of supermarket-type merchandise. On this measure, it is followed by
Carrefour, Metro, Schwartz Group. In North America specifically, the
largest supermarket chains in order are Wal-Mart.
Despite their similarly large sizes, most of Wal-Mart’s food sales are
generated from its supercenter format, whereas Carrefour garners most of its
sales using the hypermarket format that it developed. The remaining larger
food retailers primarily sell through conventional supermarkets.
Supermarkets:
A conventional supermarket is a large, self-service retail food store offering
groceries, meat, and produce, as well as some nonfood items, such as health
and beauty aids and general merchandise. Perishables, including meat,
produce, baked goods, and dairy products, account for 30 percent of
supermarket sales and typically have higher margins than packaged goods.
Rather than carrying 20 brands of laundry detergent, limited-assortment
supermarkets offer one or two brands and sizes, one of which is a store
brand. Stores are designed to maximize efficiency and reduce costs. For
example, merchandise is shipped in cartons on crates that can serve as
displays so that no unloading is needed. Some costly services that
consumers take for granted, such as free bags and paying with credit cards,
are not provided. Stores are typically located in second- or third tier
shopping centers with low rents. By trimming costs, limited-assortment
supermarkets can offer merchandise at prices 40 percent lower than those at
conventional supermarkets. These features have supported the substantial
growth of such retailers, which appeal strongly to customers who are not
loyal to national brands and more willing to try a store brand, especially if it
means they pay lower prices.

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Supercenters:
Supercenters are large stores (160,000 to 200,000 square feet) that combine
a supermarket with a full line discount store. Wal-Mart operates more than
3,000 supercenters in the United States. Its leading Supercenters offer a vast
assortments under one roof.
By offering broad assortments of grocery and general merchandise products
under one roof, supercenters provide a one-stop shopping experience.
General merchandise (nonfood) items are often purchased on impulse when
customers’ primary reason for coming to the supercenter is to buy groceries.
General merchandise has higher margins, enabling the supercenters to price
food items more aggressively. However, supercenters are very large, so
some customers find them inconvenient because it can take a long time to
find the items they want.
Hypermarkets are also large (160,000 to 200,000 square feet), combination
food (60 to 70 percent) and general merchandise (30 to 40 percent) stores.
The world’s second-largest retailer, Carrefour, operates hypermarkets.
Hypermarkets typically stock fewer than do supercenters - between 40,000
and 60,000 items, ranging from groceries, hardware, and sports equipment
to furniture and appliances to computers and electronics.
Hypermarkets were created in France after World War II. By building large
stores on the outskirts of metropolitan areas, French retailers could attract
customers and not violate strict land-use laws. They have spread throughout
Europe and become popular in some South American countries such as
Argentina and Brazil.
Hypermarkets are not common in the United States, though they are similar
to supercenters. Both hypermarkets and supercenters are large, carry grocery
and general merchandise categories, offer self-service, and are located in
warehouse type structures with large parking facilities. However,
hypermarkets carry a larger proportion of food items than do supercenters
and have a greater emphasis on perishables - produce, meat, fish, and bakery
items. Supercenters, in contrast, have a larger percentage of nonfood items
and focus more on dry groceries, such as breakfast cereal and canned goods,
instead of fresh items.

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Both supercenters and hypermarkets face challenges in finding locations for
new big-box (large, limited-service) stores. Although Brazil and China are
promising emerging markets, many others are shrinking. In Europe and
Japan, land for building large stores is limited and expensive. New
supercenters and hypermarkets in these areas often have to be multistory,
which increases operating costs and reduces shopper convenience.
Furthermore, some countries place restrictions on the size of new retail
outlets. In the United States, there has been a backlash against large retail
stores, particularly Wal-Mart outlets. These opposing sentiments are based
on local views that big-box stores drive local retailers out of business, offer
low wages, provide nonunion jobs, have unfair labor practices, threaten
workers through their purchase of imported merchandise, and cause
excessive automobile and delivery truck traffic.
Warehouse Clubs:
Warehouse clubs are retailers that offer a limited and irregular assortment of
food and general merchandise with little service at low prices for ultimate
consumers and small businesses.
Customers are attracted to these stores because they can stock up on large
packs of basics like paper towels, large-size packaged groceries like a quart
of ketchup, best-selling books and CDs, fresh meat and produce, and an
unpredictable assortment of upscale merchandise and services at low prices.
Heavy food sampling adds to the shopping experience. Sam’s Club focuses
more on small businesses, providing services such as group health insurance
as well as products.
Warehouse clubs are large (100,000 to 150,000 square feet) and typically
located in low-rent districts. They have simple interiors and concrete floors.
Aisles are wide so that forklifts can pick up pallets of merchandise and
arrange them on the selling floor. Little service is offered. Warehouse clubs
can offer low prices because they use low-cost locations, have inexpensive
store designs, and offer little customer service; they further keep inventory
holding costs low by carrying a limited assortment of fast-selling items. In
addition, they buy merchandise opportunistically.
Most warehouse clubs have two types of members: wholesale members who
own small businesses and individual members who purchase for their own
use.
For example, many small restaurants are wholesale customers that buy their
supplies, food ingredients, and desserts from a warehouse club rather than
from food distributors. To cater to their business customers, warehouse
clubs sell food items in very large containers and packages sizes that also
appeal to larger families.

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Typically, members pay an annual fee of around $50, which amounts to
significant additional income for the chains.
Convenience Stores:
Convenience stores provide a limited variety and assortment of merchandise
at a convenient location in 3,000- to 5,000-square-foot stores with speedy
checkout.
Convenience stores enable consumers to make purchases quickly, without
having to search through a large store and wait in a long checkout line.
More than half the items bought are consumed within 30 minutes of
purchase.
Convenience stores generally charge higher prices than supermarkets for
similar products like milk, eggs, and bread. These products once represented
the majority of their sales, but now the majority of sales come from lower
profit products, such as gasoline and cigarettes, putting a strain on their
profits.
Convenience stores also face increased competition from other formats.
Supercenter and supermarket chains are attempting to appeal to customers
by offering gasoline and tying gasoline sales to their frequent shopper
programs.
For example, to get gasoline customers to spend more on other merchandise
and services, convenience stores are offering more food options that appeal
to on-the-go consumers, especially women and young adults.26 Finally,
convenience stores are adding new services, such as financial service kiosks
that give customers the opportunity to cash checks, pay bills, and buy
prepaid telephone minutes, theater tickets, and gift cards. To increase
convenience, convenience stores are opening smaller stores close to where
consumers shop and work. For example, 7-Eleven has stores in airports,
office buildings, and schools. Easy access, storefront parking, and quick in-
and-out access are key benefits offered by convenience stores. They also are
exploring the use of technology to increase shopping convenience. Sheetz, a
Pennsylvania-based convenience store chain, has touch-screen “Made-to-
Order” kiosks at which customers can order customized deli sandwiches,
wraps, salads, subs, and nachos while pumping gasoline.

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4- The entrepreneurship process:
The entrepreneurship is a risk-taking behavior that results in the creation of new
opportunities it involves several stages that occur during the business life cycle.
Birth stage: The phase were the entrepreneur struggles to get
the new venture established and survive the business model in the marketplace.
Breakthrough: business model begins to work well, growth is experienced, and
the complexity of managing the business operation expands significantly.
Maturity stage: Entrepreneur experiences the advantages
of market success and financial stability, while also facing the continuing
management challenge of remaining competitive in a changing environment.

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4.1. Wal-Mart corporate case study:
The Road to Wal-Mart:
 In 1950, the Sam Walton left Newport for Bentonville, where Sam opened
Walton’s 5&10 on the downtown square. He chose Bentonville because wanted to
take advantage of the different hunting seasons that living at the corner of four
states had to offer. Inspired by the early success of his dime store, and driven to
bring even greater opportunity and value to his customers, Sam opened the first
Wal-Mart in 1962 at the age of 44 in Rogers, Arkansas. 
Changing the Face of Retail:
Sam's competitors thought his idea that a successful business could be built around
offering lower prices and great service would never work. As it turned out, the
company's success exceeded even Sam's expectations. The company went public
in 1970, and the proceeds financed a steady expansion of the business. Sam
credited the rapid growth of Wal-Mart not just to the low costs that attracted his
customers, but also to his associates. He relied on them to give customers the great
shopping experience that would keep them coming back. Sam shared his vision for
the company with associates in a way that was nearly unheard of in the industry.
He made them partners in the success of the company, and firmly believed that
this partnership was what made Wal-Mart great. As the stores grew, so did Sam's
aspirations. In addition to bringing new approaches and technologies to retail, he
also experimented with new store formats—including Sam's Club and the Wal-
Mart Supercenter—and even made the decision to take Wal-Mart into Mexico.
Sam's fearlessness in offering lower prices and bringing Wal-Mart's value to
customers in the U.S. and beyond set a standard for the company that lives on to
this day. His strong commitment to service and to the values that help individuals,
businesses and the country succeed earned him the Presidential Medal of Freedom,
awarded by President George H. W. Bush in 1992.

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Wal-Mart effect on suppliers:
Sam Walton competitive advantage and success relied on controlling the price of
sold products and goods by helping the suppliers to reduce the manufacturing
costs of their products so that the suppliers and the retailer and the customer can
gain benefits, and we can see that the Sam Walton 10 rules for building business
include all the points that Sam Walton built his success on.
10 rules for building business:
1. Commit to your business. Believe in it more than anybody else. If you love
your work, you'll be out there every day trying to do it the best you
possibly can, and pretty soon everybody around will catch the passion from
you – like a fever.
2. Share your profits with all your associates, and treat them as partners.
In turn, they will treat you as a partner, and together you will all perform
beyond your wildest expectations.
3. Motivate your partners. Money and ownership alone aren't enough. Set
high goals, encourage competition, and then keep score. Don't become too
predictable.
4. Communicate everything you possibly can to your partners.
The more they know, the more they'll understand. The more they
understand, the more they'll care. Once they care, there's no stopping them.
5. Appreciate everything your associates do for the business.
Nothing else can quite substitute for a few well-chosen, well-timed, sincere
words of praise. They're absolutely free – and worth a fortune.
6. Celebrate your success. Don't take yourself so seriously. Loosen up, and
everybody around you will loosen up. Have fun. Show enthusiasm –
always. All of this is more important, and more fun, than you think, and it
really fools competition.
7. Listen to everyone in your company. And figure out ways to get them
talking. To push responsibility down in your organization, and to force
good ideas to bubble up within it, you must listen to what your associates
are trying to tell you.

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8. Exceed your customers’ expectations. Give them what they want — and a
little more. Make good on all your mistakes, and don't make excuses —
apologize. Stand behind everything you do.
9. Control your expenses better than your competition.
This is where you can always find the competitive advantage. You can
make a lot of different mistakes and still recover if you run an efficient
operation. Or you can be brilliant and still go out of business if you're too
inefficient.
10. Swim upstream. Go the other way. Ignore the conventional wisdom. If
everybody else is doing it one way, there's a good chance you can find
your niche by going in exactly the opposite direction.

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Conclusion:
Being an entrepreneur requires us to take more risks to find benefits in different
opportunities’. Knowledge helps us to realize opportunities it reduces uncertainty
which reduces risk, but when talking about risk I mean calculated risk which is
determined by knowledge so to start as an entrepreneur you must have decent level
of knowledge to succeed. On the other hand, learning from a great entrepreneur
such as Sam Walton makes us realize that creating and having competitive
advantage is one of the main reasons of success which he did when he helped
suppliers to reduce their cost so they would benefit in reducing production costs
and as a result Sam Walton sold products at lower prices and made huge impact on
retail industry.

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5- corporate social responsibility:
Corporate Social Responsibility (hereafter CSR) as an element to increase
customer satisfaction through the strengthening of relational variables social
responsibility actions allow to acquire a higher level of commitment with
customers and the society in general, as well as to increase customer trust of the
company, and consequently they strengthen the positive aspects of the purchase
option. On the other hand, these options help to reduce the negative aspects. That
is to say, there is an increasing number of customers who penalize the purchase
of products from retail companies whose practices are not responsible. Therefore,
the objective is to build up the company’s reputation by basing this reputation on
social values, thus increasing customer satisfaction as well as increasing
customer loyalty. consumers are receptive to messages on the social actions
carried out by companies and 59% of them would be willing to rectify their
purchase. In recent years there has been a significant increase in citizens’ and
consumers’ concern about responsible management of companies and public
institutions. Given this situation, CSR is seen as a new approach to business
management which is more respectful with all the stakeholders and particularly,
with the society in general. However, CSR is not a new concept. In 1953 it was
described by Bowen as the obligation of companies to make their own decisions
and to define their policies according to the values and objectives of society. In
this first stage, CSR was viewed as a company obligation.
specifically qualifies this social obligation in the following aspects:
(1) Economic obligation, which consists in being feasible both economically
and productively (which is a basic objective of any company), since there
is no activity without economic feasibility and consequently there will not
be any responsible actions;
(2) Ethical and legal obligations, that is to say, complying with the existing
legislation as well as with the rules and ethical internal values of the
company;
(3) Philanthropic obligation as a way to return to the society part of what it
has been given to it.
This view of CSR as an obligation gave rise in the 90s to a model of CSR as an
extended obligation to all the stakeholders with whom the company relates. Under
this approach, the obligations of CSR are extended to all the stakeholders who
affect the company activities in a direct or indirect way they are called
stakeholders as the answer to satisfy the traditional management systems whose
objective is only to satisfy shareholders. This wider view of companies obligations
towards their stakeholders was criticized by some researchers (Swanson 1995),
because the concept of obligation CSR was seen as a set of compulsory
obligations and consequently it was driven by the company’s own interest.

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According to Swanson (1995), CSR must respond to the company’s positive
commitment towards improving the society beyond an obligation. Thus, the
company will systematically foster responsible actions by promoting values such
as equality, freedom or business opportunities among its partners. Moreover, it
will have a proactive attitude in improving the society, and not only a repairing
one . However, for these actions to be correctly applied they must be developed as
part of the company management strategy That is to say, they are not specific
actions as donating or installing a water treatment plant in the company, but CSR
must go beyond and become part of the company’s strategy. Only in this way will
the objectives of CSR can be achieved. This variety of approaches to CSR can be
seen in the literature definitions. One of the first ones was developed by Bowen
(1953), who links CSR with the company’s obligation to carry out the policies,
and make the decisions and follow the lines of action according to the objectives
and values of society, while recently has maintained the concept of obligation but
by making it extensive to all the stakeholders who are related to the company.
From the marketing point of view, Alvarado’s definition should be noted ‘The
process and set of marketing activities, both proactive and strategic, which a
business company carries out and that involve its stakeholders’ social and
environmental concerns, so that the damages are minimized and the long-run
positive impact of the company on society is maximized.
social responsibility common actions:corporate15.
Common CSR actions include:
• Environmental sustainability: recycling, waste management, water
management, renewable energy, reusable materials, 'greener' supply chains,
reducing paper use and adopting Leadership in Energy and Environmental
Design (LEED) building standards.
• Community involvement: This can include raising money for local
charities, providing volunteers, sponsoring local events, employing local
workers, supporting local economic growth, engaging in fair trade practices,
etc.
• Ethical marketing: Companies that ethically market to consumers are
placing a higher value on their customers and respecting them as people
who are ends in themselves. They do not try to manipulate or falsely
advertise to potential consumers. This is important for companies that want
to be viewed as ethical.

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5.2 BMW Corporate Social Responsibility:
BMW Manufacturing, Corporate Social Responsibility means being a catalyst for
change. They set examples for those they work with, for, and around with high
standards of commitments into everything they do.
BMW Manufacturing support dozens of local and statewide organizations.
The annual BMW Charity Pro-Am presented by SYNNEX Corporation. Every
partnership is an instrument of change. Each contribution is a reflection of BMW
principle.
Corporate Giving:
Over $36 million through 2014.
• 47% to education
• 35% to the community
• 18% to the arts

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Paris Mountain Program5.3.
In 2002, a gift of $100,000 from BMW Manufacturing Co. helped convert a 1930s
bathhouse into a state-of-the-art education center at Paris Mountain State Park, one
of South Carolina’s oldest state parks.
Today, the historic stone bathhouse is home to the park’s curriculum-
based Discover Carolina program. Inside, educational facilities and exhibits
showcase the park’s extraordinary natural community. BMW’s gift was one of the
largest in the public-private partnership.
Conclusion:
Corporate social responsibility is very important in the business because it creates
a human and ethical responsibility towards the society and develops a huge
important idea that people should share knowledge and money to help others in the
society who lacks certain type of needs. So when huge companies share their
knowledge and contribute money to the society they give good examples to others
and attract more people to share and it creates a value on how working and gaining
profit is not only related to distribution of dividends or measuring how much profit
we achieved. It is about how much we took from the society and how we would
pay back for the benefit of others because if people knew their role and amount of
contribution to the society I think the world today would be totally different a lot
of negative phenomena would not exist.

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6- Corporate sustainability:
Corporate sustainability is a business approach that creates long-term
consumer and employee value by creating a "green" strategy aimed toward the
natural environment and taking into consideration every dimension of how a
business operates in the social, cultural, and economic environment. It also
formulates strategies to build a company that fosters longevity
through transparency and proper employee development.
Corporate sustainability is an evolution on more traditional phrases describing
ethical corporate practice. Phrases such as corporate social responsibility (CSR)
or corporate citizenship continue to be used but are increasingly superseded by
the broader term corporate sustainability. Unlike phrases that focus on "added-
on" policies, corporate sustainability describes business practices built around
social and environmental considerations.
The phrase is derived from two keys sources. The Brundtland Commission's
Report, Our Common Future, described sustainable development as,
"development that meets the needs of the present without compromising the
ability of future generations to meet their own needs". This desire to grow
without damaging future generations' prospects is becoming more and more
central to business philosophies. Within more academic management circles,
Ellington (1997) developed the concept of the Triple Bottom Line which
proposed that business goals were inseparable from the societies and
environments within which they operate. Whilst short-term economic gain
could be chased, a failure to account for social and environmental impacts
would make those business practices unsustainable.

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BMW Corporate Sustainability:.6.1
Environmental Partnerships
Nature Conservancy:
From Stump house Mountain to Forty-Acre Rock, The Nature Conservancy is
dedicated to preserving the plants, animals and eco-systems of the Upstate. And
BMW is dedicated to helping. As an annual corporate partner with the Nature
Conservancy, BMW is playing a key role in maintaining the raw beauty of our
region.
Palmetto Conservation Foundation:
Economic growth and quality of life are not mutually exclusive. The Palmetto
Conservation Foundation has been proving that since 1989. The group works to
allow South Carolina’s communities to grow and prosper while maintaining their
unique quality of life. Approach to growth makes sense. That’s why BMW created
the BMW Conservation Award. This award is given annually to individuals who
have made lifetime contributions to protecting South Carolina’s natural, historic
and cultural resources.
South Carolina Wildlife Federation:
BMW has teamed with the South Carolina Wildlife Federation in a variety of
ways. Corporate sponsorship of the SCWF helps develop and preserve natural
habitats throughout the state. As a member of the Wildlife and Industry Together
(W.A.I.T.) program, the BMW facility is serving as a model for on-site
conservation.

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Environmental Responsibility
Responsibility is an integral part of BMW’s corporate identity. As such, corporate
sustainability is firmly anchored in the entire manufacturing process: from clean
production processes to green recycling practices, our concept of sustainability
extends far beyond the footprint of this plant. BMW also take responsibility for
cultural and social issues and are involved in supporting educational programs
throughout South Carolina.
Environmental Statistics and Information:
From 2006 to 2015, per vehicle shipped, BMW’s South Carolina plant has
decreased:
• Water consumption by 58%
• Energy consumption by 65%
• Waste disposed of in a landfill by 86%
• Industrial wastewater by 58%

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Reduction in Water Use
With a consumption rate of about 100 gallons per minute, the Paint Shop is by far the
thirstiest department in the BMW Manufacturing Co. plant. Based on this, BMW
Manufacturing set a goal to reduce that consumption by 10%. BMW gave that target
to a team of Paint Shop engineers and members of their supplier network and they
leapt at the challenge. The team began by analyzing the two largest water users in the
Paint Shop, the Phosphate Bath and E-Coat processes.
Using flow meters, they recorded a baseline usage rate in the two processes and then
brainstormed ways to reduce it while keeping within the necessary pH and chemical
levels. The bottom line…the team succeeded, and then some. They set out to save
water usage by 10% and wound up saving 30%! That’s about 9.5 million gallons per
year. The less water used, the lower the demand on our wastewater treatment facility
and chemicals. The lower the demand, the less the environmental impact, the less the
energy demands.

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Green Manufacturing
At BMW Manufacturing Co., our commitment to environmental responsibility begins
inside the plant, one of the first in the industry to earn the coveted ISO14001
certification. From the minute manufacturing begins until the finished vehicle is
shipped to its owner, we ensure that the quality of the manufacturing never interferes
with the integrity of our environment.
Our commitment takes many forms, such as a solid waste recycling program that
reduces the need for landfills, and a water conservation initiative that helps save 9.5
million gallons of water each year.
ramsRecycling Prog

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Office recycling
A production campus as big and as busy as ours has the potential to generate a
significant amount of waste. At BMW Manufacturing, they make sure that
potential is never realized. Led in large part by our associates, we’ve adopted an
aggressive recycling program that forces us to think about everything from how
we use paper to the Styrofoam cups that hold our morning coffee. Thanks to this
employee-driven program, BMW is able to recycle about 95% of all waste
generated; both in the office and out on the plant floor. Everything from surplus
wood, plastic, and paint, to cardboard boxes, aluminum cans, and fluorescent light
tubes.
Bottles and Cans
With about 8,000 people working on site, the factory goes through a good number
of aluminum cans and plastic drinking bottles. The factory compresses and bales
these items and sells them to recycling groups. The money received for the sale of
the material is then donated to local charities.
Packing Materials
Working together, BMW and suppliers have designed returnable shipping
containers. This little innovation has allowed them reduce the cardboard, wood
and other packaging waste per vehicle. As more and more BMW suppliers sign on
to participate in the program, the environmental impact is being felt far beyond our
plant grounds.
Vehicle Recycling
BMW manufacture is thoughtfully designed to be dismantled after a lifetime of
use and the parts recycled for use in a brand new BMW. This kind of forward
thinking created BMW’s first Recycle and Dismantling Center in Landshut,
Germany in 1990, long before the concept of eco-friendly production was
fashionable. Since then, it has been implemented in the U.S. where the well-worn
components, fluids, and metal of old BMWs find new life.

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Conclusion:
One of the most serious problems that the globe would face in the future the huge
reduction of natural resources and the danger that could face future generations in
their life. I hold the conviction that when people start to realize the dangers that we
would face in the future reduction in water resources, sources of energy and the
global warming) governments will regulate laws for working companies to start to
adapt new technologies for the sake of protecting our posterity for better lives.

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7- Corporate ethics:
Ethics are the rules or standards that govern our decisions on a daily basis. Many
ethics with conscience or a simplistic sense of “right” and “wrong”. Others would
say that ethics is an internal code that governs an individual’s conduct, ingrained
into each person by family, faith, tradition, community, laws, and personal
mores. Corporations and professional organizations, particularly licensing
boards, generally will have a written “Code of Ethics” that governs standards of
professional conduct expected of all in the field. It is important to note that “law”
and “ethics” are not synonymous, nor are the “legal” and “ethical” courses of
action in a given situation necessarily the same. Statutes and regulations passed
by legislative bodies and administrative boards set forth the “law.” Slavery once
was legal in the US, but one certainly wouldn’t say forcibly enslaving humans
was an “ethical” act. Recent corporate scandals, the excessive compensation of
many managers and directors and the current financial crisis have brought to the
forefront concerns about corporate ethics. Likewise, these circumstances have
underscored the need to pay more attention to corporate governance (CG)
practices. In this sense, business ethics is a controversial topic that
unquestionably hits all organizational levels. In this context, ethics codes (ECs)
are one of the instruments most used to design and institutionalize a scheme of
ethical behavior, and are widely used at the global level. They can constitute an
important document that reflects the firm’s wish to project a sense of
responsibility, create a positive ethical climate, and anticipate and respond to
demands and external pressures stemming from shareholders and the context in
which it operates .Having a code of ethics may lead to positive effects by
decreasing the acceptability of unethical behavior with implications not only for
the actor, but also for the government (legal and environmental concerns), other
employees (fairness concerns), competitors (inappropriate competitive
advantage) and shareholders (profit considerations). Moreover, the industry in
which a firm is doing business reveals its willingness to adopt a specific Ethics
orientation to their activity sector characteristics). For example, in the credit-
insurance or banking industries, the codes include sections dedicated to prevent
the bad use or the abuse of financial products and conditions, guarantee the
confidentiality of their information to consumers and the transparency of the
management. Critical or intensely monitored industries (e.g., manufacturing,

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energy and utility industries) have greater need for disclosing not only their
strategies and performance inside and outside their organizations but also their
commitment to business ethics and sustainable growth, the guarantee of higher
levels of quality and the value of their products and services.

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7.1. Volkswagen corporate case study:
Volkswagen is said to have been caught cheating on American air pollution tests.
Volkswagen installed sophisticated software known as "defeat devices" in the
electronic control module of diesel vehicles issued between 2008 and 2015. This
software was able to sense when emissions testing was in progress based on the
position of the steering wheel, vehicle speed, the duration of the engine's operation
and barometric pressure. Once the software picked up on these inputs, it went into
a type of "test mode" when the front wheels of the car were on a
dynamometer. This allowed emissions controls to run full-tilt during official
testing, but emitted 10 to 40 times the legal amount while on the road. The
allegations were made by the U.S. Environmental Protection Agency on Sept. 18,
after independent researchers raised questions about emissions levels, prompting
government agencies to investigate further. Once regulators demanded an
explanation, the EPA said Volkswagen "admitted" their cars contained those
defeat devices.

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Volkswagen reaction:
High-ranking executives have spoken out in recent days, with CEO Martin
Winterkorn saying he was "deeply sorry" to have broken public trust and promised
VW would fully cooperate with regulators. VW called for an external
investigation and is now conducting an internal probe. During a launch event in
Brooklyn this week, VW's North America CEO, Michael Horn, made a starker
concession, saying "our company was dishonest" and that Volkswagen "totally
screwed up." Still, a press release on Sept. 21 still referred the defeat devices as
software "irregularities.""We do not and will not tolerate violations of any kind of
our internal rules or of the law," Winterkorn's statement said.
Volkwagen future penalties:
Volkswagen could face U.S. fines of $37,500 per vehicle, the EPA told reporters
last week. With around 482,000 of its diesel vehicles sold in the U.S. since 2008,
this could mean a penalty of up to $18 billion. Class-action lawsuits from
customers are still on the table, too. Reports suggest that U.S. Department of
Justice has launched a criminal probe into whether the company deliberately
cheated emissions tests. The EPA has not yet forced Volkswagen to issue a total
recall but expects to do so in the near future. Volkswagen would foot the bill for
any repairs, although the EPA claims affected diesel cars are still safe to drive.

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Conclusion:
Ethics and values are very important in the business they are the core elements if
are constructed correctly the whole business will grow safely. Ethics create and
develop the mindset of the customers towards the company products an example
when the company reputation is good and new products are released people will
trust the new products based on the company reputation and values and as a result
the company will grow and profits will increase. On the other hand, taking the
Volkswagen example the company cheated the customers and the auditing
organizations to sell more cars and gain profit, expand .But what actually
happened that the company lost its reputation and could face penalties that could
reach billion of dollars .I believe that working with ethics and values creates
profits maybe in a slower rate than misleading people and changing facts but it is
more stable process that maintains and protects the business and the company’s
reputation which is the most important factor in the business.

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8- Retail industry effect on economics:
Importance of Retail in the World Economy Retail is one of the largest sectors in
many national economies. Countries differ in how they define the industry, but
according to the ILO [International Labor Organization], “retail is universally
understood as the final step in the distribution process, in which retailers are
organized to sell merchandise in small quantities to the public.” This differs from
wholesale trade, where firms sell to other firms. The retail industry accounts for
over US$15 trillion in global revenue, and is expected to maintain strong growth.
The industry is very diverse, with small retailers still prevalent in developing
countries, but increasingly, large firms are dominating. The consultant firm
Deloitte estimates that the world’s largest 250 retailers had a sales weighted,
currency-adjusted retail revenue of US $4.3 trillion in 2011, up 5.1 percent from
2010. This means that the top 250 firms accounted for approximately 40 percent of
retail revenue in 2011. The average top retailer had revenue of $17 billion in
2011. The industry is highly globalized, with large retailers operating in almost
every country. The top 250 retailers are based in all regions (though dominated by
European and U.S. firms). While the industry has seen the largest growth in the
least developed economies, the bulk of goods are still sold in Europe and North
America. According to the ILO, 60 percent of goods are sold in these two regions
although they account for only one-fifth of the global population. While small
stores are still prominent in some regions, the industry is increasingly
concentrated, as large corporations have bought smaller companies and retail
chains have replaced small independent stores. Wal-Mart continues to dominate
the industry, with 2011 revenue almost four times greater than the second largest
firm, Carrefour. Industry analysts state that the industry will continue to
experience growth and concentration. Mergers and acquisitions continue to be an
important trend, particularly in Latin America, and the largest firms are
increasingly offering multiple formats (hypermarkets, supercenters and smaller
stores). The companies new to the Top 250 list in 2011 were primarily spin-offs
from parent companies, including Dia (a spin-off from Carrefour), and E-MART
(a South Korean spin off).

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The Top 10 Largest Retailers (2011):
Increasing industry concentration has resulted in a few companies controlling large
market share in many countries. For example, the top five retailers dominate 88
percent of food sales in Sweden, 85 percent in Denmark, and 84 percent in Finland;
the top four supermarket chains control two-thirds of grocery retail in the UK; and
the four largest discount stores control just over 86 percent of the market in Korea.
Retail employment often accounts for about 10 to 15 percent of total country
employment, on average, though this is difficult to measure in countries with large
informal sectors. Approximately 142 million people were employed in the retail
sector in 82 countries, including China and India, based on data for the most recent
year available. Retail also accounts for a significant share of GDP in many
countries, from 8 percent in the U.S., to 14 percent in India. Retail and wholesale
trade is the third largest economic sector in Germany, accounting for 9.4 percent of
total gross value added.
There are a variety of regulations that impact retail - from competition and zoning
laws, to restrictions on foreign direct investment. For example, south-east Asia was
dominated by local retailers for much of the 20th century, but as a result of the
Asian financial crisis, Indonesia agreed to liberalize their retail and consumer
policies in 1998 as a condition for IMF assistance [International Monetary Fund].
Around the same time, Malaysia and Thailand both loosened regulations regarding

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mergers and acquisitions and joint ventures. Some of these countries have since
taken steps to reregulate retail in defense of small local business, but other
countries, such as India, are still in the process of deregulation, making it easier for
foreign-owned retailers to enter the country.
8.1. Impact of Global Economic Crisis:
The industry faced a serious decline in the midst of the global economic crisis, but
began to rebound in 2010 – although this has happened unevenly across and within
countries. Retail has recovered at a modest pace in the U.S., The EU has been
experiencing a euro crisis and austerity measures for several years, alongside high
unemployment and underemployment in some countries. However, most measures
for 2011 showed modest overall growth for the industry globally and the Top 250
firms had a composite 3.8 percent net profit margin. Still, retailers are focused on
growth, and “emerging markets” are the source of the fastest revenue growth. The
average top 250 retailer has operations in nine countries, and almost a quarter of
their 2011 revenue came from foreign operations. Global expansion is particularly
important in retail, as the large established domestic markets have less room for
growth and consumers are highly price sensitive. Therefore, retailers are eager to
capture a growing middle class and young population of shoppers in Latin
America, Asia, Africa/Middle East, and Central Europe. In 2011 retail revenue
growth was only 3.4 percent in the EU and 6.3 percent in the U.S., but 29 percent
in Africa/Middle East, and 21.3 percent in Latin America. There is “somewhat
greater pricing flexibility” in these regions, allowing for above-average
profitability. Because retailers believe they cannot raise prices in many markets,
they have sought other ways to cut costs. Although there is high concentration in
the industry, the firms are highly competitive, paying close attention to prices
offered in other stores but also on-line and in emerging markets. Retailers look to
maintain profit margins over their competitors through innovative tactics and close
supervision of supply chains, inventory and employees. While manufacturers used
to play the dominant role in many supply chains, this relationship has changed as
individual retailers gained market share and power. This has allowed a large
retailer to dictate the terms of a supplier contract, in a “buyer-driven” supply chain.
The transformation has also changed the relations between different firms, and in
some countries, reduced the role of wholesalers. For example, Wal-Mart now buys
many of its products directly from small producers, including farmers. This may

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seem to come with advantages, such as potentially higher profits, but in reality, the
relationship brings many problems for suppliers. One study noted, “Direct
procurement… exposes small-scale producers to the exigencies of domestic and
international supermarket chains, such as requirements to refrigerate shipments to
minimize spoilage and commercial accounting practices which pay suppliers seven
to 45 days after delivery.” 15 Large retailers might purchase a major share of the
supplier’s products, and therefore have the power to unilaterally lower the prices
paid, as well as pass on packaging and shipping costs onto the producers. Wal-
Mart, for example, holds suppliers financially responsible for the costs of any
unsold or spoiled inventory.

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9- Retail food industry in Egyptian market:
In the last five years Egypt’s food retail market has grown at an average annual
rate of 19 percent. In 2013, due to political instability, the growth rate decreased
by 2 percent from 2012, and a record year for imports of consumer-oriented goods
which were valued at $3.4 billion. The future for consumer- oriented products is
very promising as consolidation and expansion continues in the supermarket and
hypermarket segments. The economy is projected to grow by more than 4 percent
in FY2015/16, inflation is expected to stabilize at eight percent, and growth is
being fueled, in part, by government investment in large-scale infrastructure
projects.
Egypt has traditionally been an attractive market for U.S. firms thanks to its
unique mix of demographics and commercial links to the broader world and
strategic location which allows for marketing throughout the region. In 2014, the
U.S. remained the second largest supplier of consumer-oriented products with a
value of $315 million comprised of meat and meat products representing close to
50 percent of value-added food imports, followed by dairy products with 35
percent of total imports of this category of goods from the U.S.Best prospects for
U.S. products continue to be beef livers and related beef products, skimmed milk
powder, butter, cheese, and tree nuts. Previous growth in snack foods and apple
exports has been clearly affected by the implementation of the Egypt-EU Free
Trade Agreement, whereby most EU products enter duty-free. For U.S. suppliers,
these segments would benefit from any trade arrangement that
Would lower tariffs on U.S goods to make them more competitive.

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9.1. Market overview:
The Egyptian Central Agency for Public Mobilization and Statistics (CAPMAS)
estimates Egypt’s population at 87.7 million (December 2014). About 90 percent
of the population is Muslim (mainly Sunni) and 10 percent is Christian (largely
Coptic). Egypt’s population growth rate is 1.92 percent, with a median age of 24.6
years, of which approximately 63 percent is under 30 years of age. Egypt
transitioned from a centralized planned economy to a more market-oriented
economy through structural reforms that began in the 1990s. The World Bank
defines Egypt as a lower middle income economy with a Gross National Income
(GNI) per capita of $3,140 (2013). Agriculture accounts for 29 percent of the labor
force; industry and services absorb 24 and 47 percent of the labor force
respectively. In 2013, agriculture accounted for 14.5 percent of Egypt’s gross
domestic product (GDP) of $272 billion, industry and services accounted for 37.6
and 47.6 percent, respectively.
Since the revolution in 2011, Egypt’s economic growth has averaged
two percent; its unemployment rate increased to 13.3 percent, and fiscal deficits
have been above 10 percent of GDP, which have been largely financed
domestically contributing to the relatively high level of inflation that averaged
10.1 percent annually in the same period. Political uncertainties/security concerns
have weighed on tourism and on capital flows leading to a decline in reserves
from6.8 months of imports in mid-2010 to 2.5 months of imports in December
2014.
In December 2014, the IMF completed its consultation and economic assessment of
Egypt, releasing a statement indicating that the Egyptian economy “has begun to
recover after four years of slow activity.” The IMF highlighted government
reforms undertaken in 2014― increasing rates for electricity usage and raising
fuel prices while decreasing subsidization in both instances - as a key driver of the
recovery. The measures implemented have had a significant impact on the first
quarter of fiscal year 2014/15 (FY 2014/15) and resulted in real GDP growth of
6.8 percent and a reduction in the budget deficit to 3.6 percent of GDP.
Concomitantly, the number of tourist arrivals increased by 70 percent year-on-year
to 2.8 million tourists for the same time period.

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However, considering the first half of 2015, tourist arrivals have a ways to go to
make up ground lost since activity, say in the pre-turbulent days of 2010.With
continued government reforms and a return of investor confidence, the IMF
projects that the economy will have grown between 3.5 percent to 3.8 percent
during FY 2014/15, an increase of 2.2 percent over FY 2013/14. Growth for
FY15/16 is projected at 4.3 percent. These measures, if we project forward at this
point, would bring the budget deficit to below 8 percent of GDP by 2018/19. The
reduction in the budget deficit will support the targeted inflation to 7 percent over
the medium term, and increase reserves to the equivalent of 3 months of imports in
the course of 2015/16.
Retail market characteristics:.9.2
Egypt remains the largest consumer market and most diversified economy in the
Arab world. According to the Economist Intelligence Unit, food retail sales in 2014
were estimated at $81 billion, or approximately $920 per capita. Hypermarkets
chains (i.e., western- style) account for about two percent of the establishments but
15 percent of sales. The Egyptian retail market is fragmented, but moving towards
concentration. The market, outside of a handful of large retail chains, is
dominated by smaller retailers. Most large retailers are discounters who sell to
smaller retailers. The latter remain competitive thanks to more convenient
locations and flexibility in providing informal credit to shoppers.
A constraining factor facing modern grocery retailers in the Egyptian retail market
is the pressure to reduce prices to gain market share or market entry. Other
problems associated with the retail sector include poor customer service, as well
as inventory management. Lack of store parking in highly congested urban areas
is often cited as a weakness that restrains consumers from making larger retail
food purchases and lack of space in urban centers like Cairo means new, large-
scale retail is constructed away from the older, settled city cores.

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Multinational branded products have made inroads in the larger, centralized
shopping centers with their attached supermarkets or hypermarkets. Sources
indicate that imported and domestically produced multinational branded
products have taken off since the implementation of liberal economic reforms
and Egypt’s ascension to the WTO, and are widely popular with the middle class
or Class-B consumers (monthly incomes of $2,000 to $3,000).
9.3. Retail trends and general consumer preferences:
Egypt’s retail business is still dominated by traditional grocers; however, changes
in urban lifestyles are increasingly mirroring those of the west with an increasing
demand for one-stop and top-up shopping facilities. The changes are noticeable in
the expansion of modern grocery retailers in 2014 as supermarkets and
hypermarkets saw outlet volume expansion of three percent and seven percent,
respectively, while convenience stores saw a striking 13 percent growth. In
contrast, traditional retailers saw less than one percent outlet growth in 2014 (Table
below).
The Table below shows: Grocery Retailers Outlets by Channel: % Unit Growth
2009-2014:
Unit growth in % 2013/14 2009-14 2009/14
Modern grocery retailers 2.0 2.5 13.0
Convenience stores 12.8 8.1 47.4
Discounts - - -
Forecourt retailers 0.9 1.5 7.8
Hypermarkets 6.7 14.9 100.0
Supermarkets 3.0 4.4 23.8
Traditional grocery 0.9 1.0 5.3
Specialists 0.8 1.1 5.7
Independent small
grocery
0.2 -0.6 -3.0
Other grocery retailers 1.5 1.5 7.5
Grocery retailers 0.9 1.0 5.7

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Despite the impressive growth of modern retail, traditional grocers accounted for
the bulk of sales in 2014 with a value of LE 156.5 billion ($21 billion) or 77
percent of all sales, with food/drink/tobacco specialists under this group
accounting for strongest sales with LE 82.6 billion ($10.8 billion) or 41percent of
total retail sales. Meanwhile, modern grocery retailers accounted for LE 46.3
billion ($ 6billion) with supermarket sales having the top sales with LE36.6 billion
($4.8 billion) (Table below).
The table below shows: sales in grocery retailers by channel: value 2009-2014:
2009 2010 2011 2012 2013 2014
Modern grocery retailers 25.0 29.3 32.3 36.9 41.5 46.3
Convenience stores 0.7 0.8 0.8 0.9 1.2 1.4
Discounters - - - - - -
Forecourt retailers 1.9 2.1 2.2 2.3 2.4 2.6
Hypermarkets 2.1 2.7 3.9 4.7 5.0 5.7
Supermarkets 20.4 23.5 25.4 29.0 32.8 36.6
Traditional grocery retailers 113.9 123.3 128.1 135.0 144.8 156.5
Food/drink/tobacco-
specialists
60.5 66.5 67.5 70.4 75.8 82.6
Independent small
grocers
23.4 26.0 29.2 33.0 36.9 41.1
Other grocery
retailers
30.0 30.8 31.4 31.7 32.0 32.8
Grocery retailers 138.9 152.3 160.4 171.9 186.2 202.8

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The traditional grocery retailer sector’s impressive sales are testament of their
prevalence with a remarkable 1,156,500 outlets in 2014 or 99 percent of total
retail outlets, out of which food/drink/tobacco specialists accounted for the bulk of
the outlets with 76 percent (Table below). These outlets are well-established and
benefit strongly from a loyal consumer base, as they are easily accessible in most
residential neighborhoods. Furthermore, many outlets offer short-term credit to
recognized customers, as well as meeting consumers’ immediate
food/drink/tobacco needs on a frequent basis.
The table below shows: grocery Retailers' outlets by channel: units 2009-2014:
2009 2010 2011 2012 2013 2014
Modern grocery
retailers
2.8 3.0 3.0 3.1 3.2 3.2
Convenience
stores
0.1 0.1 0.1 0.2 0.2 0.2
Discounters - - - - - -
Forecourt
retailers
2.2 2.3 2.3 2.3 2.3 2.3
Hypermarkets 0.0 0.0 0.0 0.0 0.0 0.0
Supermarkets 0.5 0.6 0.6 0.6 0.6 0.7
Traditional grocery
retailers
1,098.1 1,136.8 1,136.0 1,140.6 1,146.5 1,156.5
Food/drink/tobac
co-specialists
835.6 869.0 869.1 872.2 876.5 883.5
Independent
small grocers
88.4 87.5 85.8 85.8 85.6 85.8
Other grocery
retailers
174.1 180.2 181.1 182.6 184.4 187.2
Grocery retailers 1,101.0 1,139.8 1,139.1 1,143.6 1,149.7 1,159.7

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In 2014, Egypt’s food retail sector’s sales grew by 8 percent. Convenience stores
saw the strongest growth with a notable increase in sales of 16 percent. This was
due to the sector’s increase in number of outlets across grocery retailers,
accommodating well to the demand for top-up shopping as well as a food service
operation in quick-paced, high-density urban areas (Table below).
The hypermarket segment remains small with 16 outlets operating throughout the
entire country that account for 3 percent of total retail sales, but with the highest
annualized growth rate in retail sales with 22.2 percent from 2009-2014 (Table 6).
Sales will continue to grow, as the number of outlets doubled in 2014, however,
many Egyptians are reluctant to spend money travelling to these outlets and view
traditional grocery retailers as more affordable and convenient.
The table below shows: sales in grocery retailers by channel: % value growth
2009-2014:
% current value growth,
retail value rsp excl sales tax
2013/14 2009-14
CAGR
2009/14
Total
Modern grocery retailers 11.5 13.1 84.7
Convenience stores 15.6 16.4 113.6
Discounts - - -
Forecourt retailers 5.9 6.7 38.4
Hypermarkets 12.0 22.2 172.1
Supermarkets 11.7 12.4 79.0
Traditional grocery 8.1 6.6 37.4
Specialists 9.0 6.4 36.6
Independent small
grocery
11.3 11.9 75.6
Other grocery retailers 2.3 1.8 9.2
Grocery retailers 8.9 7.9 46.0

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Traditional Vs. Modern:
Traditional grocery operators remain the dominant players in terms of the number
of outlets and sales, accounting for close to 99 percent and 77 percent,
respectively. This is due to a number of factors, including low urbanization levels
in Egypt with only 44 percent of the population being urban in 2014. On the other
hand, the limited space in high–density urban areas is a much better fit for the
traditional small grocery outlets, as these can pop up practically anywhere due to
the lack of zoning restrictions. In contrast, the modern retail sector usually is
expanding in less dense suburban areas that require transportation, which is a
limiting factor for many inhabitants, as public transport is often unreliable, and
many consumers are reluctant to spend money on transportation when a walk to
the local shop meets their needs.
The strongest channel within food/drink/tobacco specialists is bakeries, with most
household buying unpackaged/artisanal bread fresh on a daily basis. Under the
government’s subsidy program, families are allotted up to five loaves of “baladi”
bread/member/day, so it’s a daily ritual to go to the local bakery and purchase the
day’s quota and tens of thousands of other government-supported outlets sell other
items offered on a subsidized basis such as vegetable oil, sugar, poultry, and pasta.
street vendors and market stalls are a strong sector in the retail sector, accounting
for the second largest share of outlet volume of 16 percent. Kiosks are found on
most street corners nationwide and even inside large government buildings, being
popular channels for the purchase of cigarettes and snacks. The modern grocery
retail sector has increased its market share from 18 percent in 2009 to 23 percent
in 2014.
Expectations’ that this trend will continue, but does not expect to see the modern
retail market achieve market domination in the near future.
(Figure below).

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9.4. Competitive Landscape:
Competition in the food retail market is highly fragmented, with the top five
retailers having an about10 percent market share in 2014. This is due to the
strength of the traditional sector’s number of outlets, in which sole ownership is
still the norm. It also reflects consumers' preference for grocery retailers close to
their homes. However, the top five retailers have all gained market share in the
last five years at the expense of the smaller players, increasing from 5.5 percent in
2010 to 9.9 percent in 2014 (Table below).

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