ISSUES ABOUT ETHICS IN RETAILINGWHAT IS ETHICS? • This is a set of rules for human moral behavior. For retailers they can have explicit code of ethics or implicit code of ethics. • Explicit code of ethics: Written policy that specifies what is ethical and unethical behavior. • Implicit: Unwritten but well understood set of rules/standards of moral responsibilities.
DISCUSSION ON ETHICS IN RETAILING • Misuse of Company Assets • Confidential codes • Employee Theft
LEGAL & ETHICAL BEHAVIOR IN RETAILING • In view of the competitive nature and dynamic environment within which retail operates, it is important to monitor the legal and ethical constraints affecting the sector (Dunne and Lusch, 1999, pp.176).
LEGAL & ETHICAL BEHAVIOR IN RETAILING • Major Federal Laws • Pricing constraints • Promotional constraints • Product constraints • Channel constraints (see Dunne and Lusch, 1999, pp.177).
LEGAL AND ETHICAL BEHAVIOR IN RETAILING • Other Federal Laws • Mergers/Acquisitions • Trade Agreements • Human Resources • Taxes and SEC (Securities & Exchange Commission) regulations • Americans with Disabilities
LEGAL AND ETHICAL BEHAVIOR IN RETAILING • State and Local Laws • Zoning • Unfair Trade Practices • Building Codes • Blue Laws • Franchise Laws • Green River Ordinances • State Licences
LEGAL AND ETHICAL BEHAVIOR IN RETAILING • Ethical Behavior • Buying Merchandise • Selling Merchandise • Retailer Employee – Relationship
PRICING CONSTRAINTS • Horizontal price fixing • This occurs when a group of competing retailers (or other channel members, i.e. within the horizontal or vertical distribution levels) establishes a fixed price at which to sell certain offerings.
PRICING CONSTRAINTS • Vertical price fixing • This occurs when a retailer collaborates with the manufacturer or wholesaler to resell an item at an agreed-on price.
PRICING CONSTRAINTS • Deceptive pricing • This occurs when a misleading price is used (usually through direct marketing etc.) to lure customers into the store. Usually there are hidden charges or even an item may not be available. • Mr. Edward Heath (former British PM and the incident of winning a lottery).
PRICING CONSTRAINTS • Predatory pricing • This occurs when a retail chain charges different prices in different geographic areas (e.g. another state) to eliminate/fight competition in that state. • The case of prices of goods in New York and DC (e.g. Sears, Macys etc.).
PROMOTIONAL CONSTRAINTS • Retail promotion decisions are constrained by two major pieces of federal legislation (a) the FTC Act and (b) the Wheeler-Lea Amendment. These are meant to prevent unfair trade practices. • These refer to deceitful diversion of patronage (falsehoods about other competitors), deceptive advertising, and deceptive sales practices.