Retailing & Wholesaling
Chapter 13
Top 10 Retailers in America
1
2
3
4
5
6
7
8
9
10
Wal-Mart
Kroger
Home Depot
Sears
K-Mart
Albertson’s
Target
J.C. Penny
Costco
Safeway
Sales
(in billions)
$ 193.295
$ 49.000
$ 45.738
$ 40.937
$ 37.028
$ 36.762
$ 36.362
$ 32.649
$ 32.164
$ 31.976
http://www.stores.org/archives/2001top100_1.html
Change
(00-01)
+15.9%
+8.0%
+19.0%
+3.7%
+3.1%
-1.9%
+9.5%
+0.4%
+17.1%
+10.8%
What is Retailing?
Retailing - Includes all the activities Involved in Selling
Goods or Services Directly to Final Consumers for
Their Personal, Non-business Use.
Retailing can be done in stores (store retailing) or out of
a store (nonstore retailing) such as:
Direct mail
Catalogs
Telephone
Home shopping shows
Internet
Top 10 Internet Retailers
1
2
3
4
5
6
7
8
9
10
eBay
Amazon.com
Dell
Buy.com
Egghead.com
Gateway
Quixtar
uBid
Barnes & Noble
Outpost
US Sales
$ 3.5-3.7B
$ 1.7-1.9B
$ 1.1-1.3B
$ 7-800M
$ 5-600M
$ 5-600M
$ 4-450M
$ 275-325M
$ 275-325M
$ 2-250M
http://www.stores.org/eng/archives/00top100int_1.html
Classification of Retailing
Amount of Service
Self-Service, Limited-Service and
Full-Service Retailer
Product Line
Length and Breadth of the Product
Assortment
Relative Prices
Pricing Structure that is Used
by the Retailer
Retail Organizations
Independent, Corporate, or Contractual
Ownership Organization
Classification of Retailing: Amount of Service
Self-Service Retailer
Provide Few or No
Services to Shoppers
Limited-Service Retailers
Provide Only a Limited
Number of Services to
Shoppers
Full-Service Retailers
Retailers that Provide a Full
Range of Services to
Shoppers
Classification of Retailing:Product Line (Tab.
13.1)
Store
Description
Specialty
Stores
Narrow Product Line,
Deep Assortment
Department
Stores
Wide Variety of Product
Lines i.e. Clothing, Home
Furnishings,…
Supermarkets
Wide Variety of Food,
Laundry, & Household
Products
Convenience
Stores
Limited Line of HighTurnover Convenience
Goods
Classification of Retailing:Product Line (Tab.
13.1)
Store
Superstores
Description
Large Assortment of
Routinely Purchased
Food & Nonfood
Products
Discount
Stores
Standard Merchandise at
Lower Prices
Off-Price
Retailers
Changing Collection of
Higher-Quality Goods at a
Reduced Price
Warehouse
Clubs
Limited Selection of
Brand-Name Grocery
Items, Appliances
Classification of Retailing:Relative Prices
Higher Prices and Offer Higher-Quality Goods
and Superior Customer Service
Regular Prices and Offer Normal-Quality Goods
and Average Customer Service
Low Prices and Offer Lower-Quality Goods
and Little Customer Service
Discount
Stores
“Off-Priced”
Retailers
Catalog
Showrooms
Classification of Retailing:Retail Organization
Merchandising Conglomerates
Corporate
Chain
Voluntary
Chain
Franchise Organizations
Retailer
Cooperatives
Retailer Marketing Decisions
Retailer Strategy
• Target Market
• Retail Store
Positioning
(Fig. 13.1)
Retailer
Marketing Mix
•Product and service
assortment
•Prices
•Promotion
•Place (location)
Product Assortment and Services Decisions
Product Assortment
• Width and Depth of Assortment
• Quality of Products
• Product Differentiation Strategies
Services Mix
Key Tool of Non-price Competition
for Setting One Store Apart From
Another
Store’s Atmosphere
• Physical Layout
• “Feel” That Suits the Target Market
and Moves Customers to Buy
Retailer’s Price, Promotion, & Place Decisions
Price Decisions
Target Market,
Product & Service
Assortment,
Competition
Promotion Decisions
Using Advertising, Personal
Selling, Sales Promotion,
Public Relations, & Direct
Marketing to Reach
Customers
Place Decisions
Shopping Centers, Central Business Districts, or
Power Centers, or Online Shopping
The Future of Retailing
New Retail Forms and Shortening Retail Lifecycle
Growth of Non-store Retailing
Increasing Intertype Competition
Rise of the Megaretailer
Growing Importance of Retail Technology
Global Expansion of Major Retailers
Retail Stores as “Communities” or “Hangouts”
The Wheel of Retailing
High Margin
High Price
High Status
1
3
2
1
2
3
3
4
Low Margin
Low Price
Low Status
2
1 = Discount
2 = Superstore
3 = Warehouse Club
4 = Combination Store
1
ELECTRONIC COMMERCE
DEFINITION:
Exchange of information, goods, service,
and payments by electronic means.
History of E-Commerce
E-commerce actually began in the 1970s when
larger corporations started creating private
networks to share information with business
partners and suppliers. This process is called
Electronic Data Interchange (EDI).
Prodigy was running text ads and selling
flowers in the early '80s. The first
documented Online sale in 1994 was
what?
A CD
E-Commerce Today
Some major product categories have paved the way:
travel services ($5.95 billion in 1999 sales),
computer hardware and software ($5.8 billion),
books ($1.7 billion),
gifts and flowers ($730 million),
music ($540 million), and
apparel and footwear ($460 million),
(eMarketer in Business 2.0 Jan 2000).
E-Commerce Services Today
In 1999, the online market size for business
services was estimated at $22 billion.
Primary service categories include





financial ($7.3 billion, 1999),
professional ($4.4 billion),
administrative support ($3.9 billion),
corporate travel ($5 billion), and
telecommunications ($1.5 billion).
By 2003, Forrester Research predicts that
online services will represent nearly 8 percent
of the overall sector hardly a drop in the bucket.
Future of E-Commerce
eMarketer, an Internet technology (IT) research and
reporting firm, estimates that the dollar figure for ecommerce will rise from approximately
 U.S. $18 billion in 1998 to
 U.S. $294 billion in 2002. US
 Or maybe $184 billion by 2004.
(Forrester, Business 2.0 Jan 2000)
In Europe, consumers' internet purchases will jump
from:
 US $2.9 billion in 1999 to
 US $174 billion in 2005.
Online business-to-business e-commerce is projected
to speed past $1 trillion in annual revenue by 2003
Future Trends to Watch in E-Commerce
Women take control. Women make or influence 80
percent of household sales in the United States,
according to WomanTrend, despite the fact that they
make up 51 percent of the population.
The untapped get tapped. Two highly touted
markets $509 million health and beauty, and $513
million grocery still lag behind expectations.
More "click and mortar." Traditional retailers Circuit
City, Crate and Barrel, Sears, Toys R Us, Wal-Mart, and
Federated Department Stores missed the boat in 1995
and 1996, but rest assured they "get it" now, and are
attempting re-entry, this time around with more
money and smarts. Watch out.
Still a Long Way To Go
Andersen Consulting and Forrester
Research both show shopping cart
abandonment rates of 25%.
E-commerce still accounts for less than
1% of total retail sales
Pure plays are struggling to maintain
cash flow and are either:



Folding
Cutting back
Being bought at cheap prices
Security
Issues are
Important
Discussion Connections
Online retailers provide an alternative to
shopping the old fashioned way.
Discuss the differences in shopping for books
and music at www.Amazon.com vs. Barnes &
Noble Booksellers.
Discuss the differences in shopping for
groceries at www.peapod.com vs. your local
grocery store.
Which do you prefer and why?
What is Wholesaling?
All the activities involved in selling goods and
services to those buying for resale or
business use.
Wholesaler - those firms engaged primarily
in wholesaling activity.
Wholesalers buy mostly from producers and
sell mostly to:



Retailers,
Industrial consumers, and
Other wholesalers.
Why are Wholesalers Used?
Wholesalers are Often Better at Performing One
or More of the Following Channel Functions:
Management
Services & Advice
Market
Information
Risk Bearing
Selling and
Promoting
Wholesaler
Functions
Financing
Buying and
Assortment Building
Bulk Breaking
Warehousing
Transportation
Types of Wholesalers
Merchant Wholesaler
Independently Owned
Business that Takes Title to
the Merchandise it Handles.
Manufacturers’ Sales
Branches and Offices
Wholesaling by Sellers or
Buyers Themselves Rather
Than Through Independent
Wholesalers.
Brokers/ Agents
They Don’t Take Title to
the Goods, and They
Perform Only a Few
Functions.
Wholesaler Marketing Decisions
Wholesaler
Strategy
• Target Market
• Service
Positioning
(Fig. 13.1)
Wholesaler
Marketing Mix
• Product and
service assortment
• Prices
• Promotion
• Place (location)
Trends in Wholesaling
Consolidation within the Industry is Reducing
# of Wholesalers
Distinction Between Large Retailers and
Wholesalers Blurs
Wholesalers Will Continue to Increase the
Services Provided
Wholesalers Are Beginning to Go Global