Retailing
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
Types of Retailers
Retailers are classified based on:
Amount of Service They Offer
Breadth & Depth of Product Lines
Relative Prices Charged
How They Are Organized
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:
Carry narrow product lines
with deep assortments
within those lines, e.g jewelry,
Books stores ,sports goods
Single line-shopper stop
Limited line- raymonds
Super speciality-all brands
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.
E.g- akbarally’s
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.e.g- foodland & garware
Convenience Stores:
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
Web-Based Supermarket
In the battle for “share of stomachs,” Safeway and many large
supermarkets have added Web-based sales.
11-7
Product Line Classification
Superstores:
Much larger than regular supermarkets and
offer a large assortment of routinely purchased
food products, nonfood items, and services.
Offer dry cleaning, shoe repair
Category Killers:
Giant specialty stores that carry a very deep
assortment of a particular line and is staffed
by knowledgeable employees. e.g toys R U, home depot
11-8
Discussion Question
• What type of impact did the
emergence of category killers have on
department stores?
11-9
Relative Prices Classification
Discount Store:
A retail institution that sells standard merchandise
at lower prices by accepting lower margins and
selling at higher volume. e.g walmart, big bazaar
•Sells goods at discounted price
•Carries national brands
•Operational costs r min. as self service & no frills
•Location in low rent areas, it draws customers
from distant areas
11-10
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.
Factory Outlet:
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.
11-11
Factory Outlets
Factory outlet malls and value-retail centers have blossomed in recent
years, making them one of retailing’s hottest growth areas.
11-12
Relative Prices Classification
Warehouse Club:
Off-price retailer that sells a limited selection of
brand-name grocery items, appliances, clothing,
at deep discounts to members who pay annual
membership fees.
11-13
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.
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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.
Franchise:
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.
11-15
Franchising
Franchisees now
command 35% of
all retail sales in
the U.S. Subway
is one of the
fastest growing
franchises, with
nearly 20,000
shops in 74
countries.
11-16
Retailer Marketing Decisions
11-17
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
Location-road infrastructure,power and public transport
Visibility-ability to see the store,parking lo
11-18
Mall of America
• The Mall of America
“megamall” contains:
– Over 520 specialty
stores
– 49 restaurants
– 7-acre indoor theme
park
– Underwater World
featuring hundreds of
marine specimens
– A two-story miniature
golf course.
11-19
Business model
• Low margin-high turnover
– High operational efficiency
– Economic drivers- high inventory turnover,
low operating cost
– Operating drivers- merchandise ,cost,
sales productivity mgmt.
11-20
Trends in retailing
• New retails forms&
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•
•
•
•
•
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combinations-gas stations
include food stores
Shorter life span
Electronic age-non store
retailing via mail, tv, phones
Intertype competition-discount
store vs deptt. Store
Deptt. Stores gave way to
malls
Technology-Pcs for forecast,
control inventory costs,
scanning systems.
Unique formats & strong brand
positioning. Mc, gap
Establishments provide people
to congregate e.g tea shops,
café coffee day, book stores,
pubs
11-21
Wholesaling
• Wholesaling includes all activities involved
in selling goods and services to those
buying for resale or business use.
• Difference b/w wholesalers & retailers
– Less attention to promos, atmosphere,
location then retailers
– Transactions are larger ,cover large trade area
– Govt. dealing will be different
11-22
Functions Provided by Wholesalers
Management
Services & Advice
Selling & Promoting
Buying &
Assortment Building
Market
Information
Bulk-Breaking
Risk Bearing
Warehousing
Financing
Transportation
11-23
Types of Wholesalers
• Merchant Wholesalers- independently
owned business take title to merchandise they
handle
– Largest group of wholesalers
– Account for 50% of wholesaling
– Two broad categories:
• Full-service wholesalers
• Limited-service wholesalers
– Cash n carry ,truck wholesalers, drop shippers, rack
jobbers ,producers cooperatives, mail order wholesalers
11-24
Types of Wholesalers
• Brokers
– Do not take title to goods,
Perform fewer functions
– Brokers bring buyers and
sellers together
– Paid by party who hired
them
– Do not carry inventory, no
finance, risk
– E.g food brokers, real
estate, insurance
• Agents
– Agents represent buyers or
sellers on more permanent
basis
– Manufacturers’ agents –
written agreement on
• Pricing
• territories
• delivery, order procedure
– Apparel, furniture,
electrical goods
11-25
Types of Wholesalers
• Manufacturers’ Sales Branches and
Offices
– Wholesaling by sellers or buyers themselves
rather than through independent wholesalers.
11-26
Wholesaling In Action
Grainger is by far the
world’s leading
wholesaler of
maintenance, repair,
and operating
supplies.
200,000
products,520
branches
Satellite network
Online ordering
11-27
Wholesaler Marketing Decisions
11-28
11-29
Trends in Wholesaling
Must Constantly Improve Services and Reduce Costs
Distinction Between Large Retailers & Wholesalers is Blurry
Will Continue to Increase the Services Provided to Retailers
Wholesalers Are Now Going Global
11-30