Retailing and WholesalingRetailing and Wholesaling

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ROAD MAP: Previewing the Concepts

• Explain the roles of retailers and Explain the roles of retailers and wholesalers in the distribution channel.wholesalers in the distribution channel.

• Describe the major types of retailers Describe the major types of retailers and give examples of each.and give examples of each.

• Identify the major types of wholesalers Identify the major types of wholesalers and give examples of each.and give examples of each.

• Explain the marketing decisions facing Explain the marketing decisions facing retailers and wholesalers.retailers and wholesalers.

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What is Retailing?

• Retailing includes all the activities Retailing includes all the activities involved in selling products or involved in selling products or services directly to final consumers services directly to final consumers for their personal, non-business use.for their personal, non-business use.

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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

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Amount of Service

• Self-Service Retailers:Self-Service Retailers:– Serve customers who are willing to Serve customers who are willing to

perform their own “locate-compare-perform their own “locate-compare-select” process to save money.select” process to save money.

• Limited-Service Retailers:Limited-Service Retailers:– Provide more sales assistance because Provide more sales assistance because

they carry more shopping goods about they carry more shopping goods about which customers need information.which customers need information.

• Full-Service Retailers:Full-Service Retailers:– Usually carry more specialty goods for Usually carry more specialty goods for

which customers like to be “waited on.”which customers like to be “waited on.”

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Product Line Classification

Specialty Stores:Carry narrow product lines with deep assortmentswithin those lines.

Department Stores:Carry a wide variety of product lines—typically clothing, home furnishings, and household goods.Each line is operated as a separate departmentmanaged by specialist buyers or merchandisers.

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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.

Convenience Stores:Small stores located near residential areas that are open long hours 7 days a week and carrya limited line of high-turnover convenience goods.

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Web-Based Supermarket

In the battle for “share of stomachs,” Safeway and many large supermarkets have added Web-based sales.

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Product Line Classification

Superstores:Much larger than regular supermarkets and offer a large assortment of routinely purchasedfood products, nonfood items, and services.

Category Killers:Giant specialty stores that carry a very deepassortment of a particular line and is staffedby knowledgeable employees.

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•What type of impact did the What type of impact did the emergence of category killers emergence of category killers have on department stores?have on department stores?

Discussion Question

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Relative Prices Classification

Discount Store:A retail institution that sells standard merchandiseat lower prices by accepting lower margins andselling at higher volume.

Off-Price Retailer:Retailer that buys at less-than-regular wholesaleprices and sells at less than retail. Examples arefactory outlets, independents, and warehouse clubs.

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Relative Prices Classification

Factory Outlet:Off-price retailing operation that is owned and operated by a manufacturer and that normallycarries the manufacturer’s surplus, discontinued,or irregular goods.

Independent Off-Price Retailer:Off-price retailer that is either owned and run byentrepreneurs or is a division of a larger retailoperation.

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Factory Outlets

Factory outlet malls and value-retail centers have blossomed in recent years, making them one of retailing’s hottest growth areas.

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Relative Prices Classification

Warehouse Club:Off-price retailer that sells a limited selection ofbrand-name grocery items, appliances, clothing,and a hodgepodge of other goods at deep discounts to members who pay annual membership fees.

Click Here to Visit Sam's Club

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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 independentretailers that engages in bulk buying and commonmerchandising.

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Organizational Classification

Retailer Cooperative:A group of independent retailers that bands together to set up a jointly owned, centralwholesale operation and conducts jointmerchandising and promotion efforts.

Franchise:A contractual association between a manufacturer, wholesaler, or service organization (a franchiser) and independent businesspeople (franchisees) whobuy the right to own and operate one or moreunits in the franchise system.

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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.

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Organizational Classification

Merchandising Conglomerates:A free-form corporation that combines severaldiversified retailing lines and forms under centralownership, along with some integration of theirdistribution and management functions.

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Retailer Marketing Decisions

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Assortment and Services Decisions

Product Assortment:Brand of merchandiseMerchandising events

Services Mix:Different numbers and types of services are key to non-price storedifferentiation

Store Atmosphere:Physical layout and “feel” of the store

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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 ofshopping centers, strip malls, or power centers

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Mall of America

• The Mall of America The Mall of America “megamall” contains:“megamall” contains:– Over 520 specialty Over 520 specialty

storesstores– 49 restaurants49 restaurants– 7-acre indoor 7-acre indoor

theme parktheme park– Underwater World Underwater World

featuring hundreds featuring hundreds of marine of marine specimensspecimens

– A two-story A two-story miniature golf miniature golf course.course.

• Click Here to Visit Click Here to Visit the Mall of Americthe Mall of Americaa

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The Future of Retailing

1.1. New Retail Forms New Retail Forms and Shortening and Shortening Retail Life CyclesRetail Life Cycles

2.2. Growth of Growth of Nonstore Nonstore RetailingRetailing

3.3. Retail Retail ConvergenceConvergence

4.4. Rise of the Rise of the MegaretailersMegaretailers

5.5. Growing Growing Importance of Importance of Retail TechnologyRetail Technology

6.6. Global Expansion Global Expansion of Major Retailersof Major Retailers

7.7. Retail Stores as Retail Stores as “Communities” or “Communities” or “Hangouts”“Hangouts”

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Wholesaling

• Wholesaling includes all activities Wholesaling includes all activities involved in selling goods and involved in selling goods and services to those buying for resale or services to those buying for resale or business use.business use.

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Functions Provided by Wholesalers

Selling & PromotingSelling & Promoting

Buying &Assortment Building

Buying &Assortment Building

Bulk-BreakingBulk-Breaking

WarehousingWarehousing

TransportationTransportation

FinancingFinancing

Risk BearingRisk Bearing

MarketInformation

MarketInformation

ManagementServices & Advice

ManagementServices & Advice

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Types of Wholesalers

• Merchant WholesalersMerchant Wholesalers– Largest group of wholesalersLargest group of wholesalers– Account for 50% of wholesalingAccount for 50% of wholesaling– Two broad categories:Two broad categories:

•Full-service wholesalersFull-service wholesalers

•Limited-service wholesalersLimited-service wholesalers

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Types of Wholesalers

• Brokers and AgentsBrokers and Agents– Do not take title to goodsDo not take title to goods– Perform fewer functionsPerform fewer functions– Brokers bring buyers and sellers togetherBrokers bring buyers and sellers together– Agents represent buyers on more Agents represent buyers on more

permanent basispermanent basis– Manufacturers’ agents are most common Manufacturers’ agents are most common

type of agent wholesalertype of agent wholesaler

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Types of Wholesalers

• Manufacturers’ Sales Branches Manufacturers’ Sales Branches and Officesand Offices– Wholesaling by sellers or buyers Wholesaling by sellers or buyers

themselves rather than through themselves rather than through independent wholesalers.independent wholesalers.

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Wholesaling In Action

Grainger is by far the world’s leading wholesaler of maintenance, repair, and operating supplies.

Click Here to Explore Grainger's Website

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Wholesaler Marketing Decisions

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Must Constantly Improve Services and Reduce CostsMust Constantly Improve Services and Reduce Costs

Distinction Between Large Retailers & Wholesalers is BlurryDistinction Between Large Retailers & Wholesalers is Blurry

Will Continue to Increase the Services Provided to RetailersWill Continue to Increase the Services Provided to Retailers

Wholesalers Are Now Going GlobalWholesalers Are Now Going Global

Trends in Wholesaling

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Rest Stop: Reviewing the Concepts

1.1. Explain the roles of retailers and Explain the roles of retailers and wholesalers in the distribution channel.wholesalers in the distribution channel.

2.2. Describe the major types of retailers Describe the major types of retailers and give examples of each.and give examples of each.

3.3. Identify the major types of wholesalers Identify the major types of wholesalers and give examples of each.and give examples of each.

4.4. Explain the marketing decisions facing Explain the marketing decisions facing retailers and wholesalers.retailers and wholesalers.