11
Retailing and Wholesaling
What is Retailing?
• Retailing includes all the activities involved
in selling products or services directly to
final consumers for their personal, nonbusiness use.
11-2
Classification of Retailing
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
Independent, Corporate, or
Contractual
Ownership Organization
11-3
Amount of Service
• Self-Service Retailers:
– Serve customers who are willing to perform
their own “locate-compare-select” process to
save money.
• Limited-Service Retailers:
– Provide more sales assistance because they
carry more shopping goods about which
customers need information.
• Full-Service Retailers:
– Usually carry more specialty goods for which
customers like to be “waited on.”
11-4
Product Line Classification
Specialty Stores:
Department Stores:
Carry a wide variety of product lines—typically
clothing, home furnishings, and household goods.
Each line is operated as a separate department
managed by specialist buyers or merchandisers.
11-5
Product Line Classification
Supermarket:
Large, low-cost, low-margin, high-volume,
self-service store that carries a wide variety of food,
laundry, and household products.
Small stores located near residential areas that
are open long hours 7 days a week and carry
a limited line of high-turnover convenience goods.
11-6
Product Line Classification
Superstores:
Much larger than regular supermarkets and
offer a large assortment of routinely purchased
food products, nonfood items, and services.
Category Killers:
Giant specialty stores that carry a very deep
assortment of a particular line and is staffed
by knowledgeable employees.
11-7
Relative Prices Classification
A retail institution that sells standard merchandise
at lower prices by accepting lower margins and
selling at higher volume.
Off-Price Retailer:
Retailer that buys at less-than-regular wholesale
prices and sells at less than retail. Examples are
factory outlets, independents, and warehouse
clubs.
11-8
Relative Prices Classification
Off-price retailing operation that is owned and
operated by a manufacturer and that normally
carries the manufacturer’s surplus, discontinued,
or irregular goods.
Independent Off-Price Retailer:
Off-price retailer that is either owned and run by
entrepreneurs or is a division of a larger retail
operation.
11-9
Relative Prices Classification
Warehouse Club:
Off-price retailer that sells a limited selection of
brand-name grocery items, appliances, clothing,
and a hodgepodge of other goods at deep
discounts to members who pay annual
membership fees.
11-10
Organizational Classification
Chain Stores:
Two or more outlets that are owned and controlled,
have central buying and merchandising, and sell
similar lines of merchandise.
Voluntary Chain:
A wholesaler-sponsored group of independent
retailers that engages in bulk buying and common
merchandising.
11-11
Organizational Classification
Retailer Cooperative:
A group of independent retailers that bands
together to set up a jointly owned, central
wholesale operation and conducts joint
merchandising and promotion efforts.
A contractual association between a manufacturer,
wholesaler, or service organization (a franchiser)
and independent businesspeople (franchisees) who
buy the right to own and operate one or more
units in the franchise system.
11-12
Organizational Classification
Merchandising Conglomerates:
A free-form corporation that combines several
diversified retailing lines and forms under central
ownership, along with some integration of their
distribution and management functions.
11-13
Retailer Marketing Decisions
11-14
Assortment and Services Decisions
Product Assortment:
Brand of merchandise
Merchandising events
Services Mix:
Different numbers and types of
services are key to non-price store
differentiation
Store Atmosphere:
Physical layout and “feel” of the store
11-15
Price, Promotion, & Place Decisions
Price policy must fit its target market and positioning,
product and service assortment, and competition
Can use any or all of the promotion tools—advertising,
personal selling, sales promotion, public relations,
and direct marketing—to reach consumers
Retailers can locate in CBDs, various types of
shopping centers, strip malls, or power centers
11-16
The Future of Retailing
1. New Retail Forms
2.
3.
4.
and Shortening
Retail Life Cycles
Growth of Nonstore
Retailing
Retail Convergence
Rise of the
Megaretailers
5. Growing Importance
6.
7.
of Retail Technology
Global Expansion of
Major Retailers
Retail Stores as
“Communities” or
“Hangouts”
11-17
The Future of Retailing
New Retail Forms and Shortening Retail Lifecycle
Increasing Intertype Competition
Growing Importance of Retail Technology
Global Expansion of Major Retailers
11-18
The Wheel of Retailing
High Margin
High Price
High Status
1
3
2
1
2
3
4
Low Margin
Low Price
Low Status
2
1 = Discount
2 = Superstore
3 = Warehouse Club
4 = Combination Store
3
1
11-19
Wholesaling
• Wholesaling includes all activities involved
in selling goods and services to those
buying for resale or business use.
11-20
Functions Provided by Wholesalers
Management
Services & Advice
Market
Information
Risk Bearing
Selling & Promoting
Buying &
Assortment Building
Wholesaler
Functions
Bulk-Breaking
Warehousing
Financing
Transportation
11-21
Types of Wholesalers
Merchant Wholesaler
Independently Owned
Business that Takes Title to the
Merchandise it Handles.
Account for 50% of wholesaling
Manufacturers’ Sales
Branches and Offices
Wholesaling by Sellers or
Buyers Themselves
Rather Than Through
Independent
Wholesalers.
They Don’t Take Title to
the Goods, and They
Perform Only a Few
Functions.
11-22
Types of Wholesalers
• Brokers and Agents
– Do not take title to goods
– Perform fewer functions
– Brokers bring buyers and sellers together
– Agents represent buyers on more permanent
basis
– Manufacturers’ agents are most common type
of agent wholesaler
11-23
Wholesaler Marketing Decisions
11-24
Trends in Wholesaling
Distinction Between Large Retailers & Wholesalers is Blurry
Will Continue to Increase the Services Provided to Retailers
Wholesalers Are Now Going Global
11-25