Retailing and WholesalingRetailing and Wholesaling

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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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Self-Service, Limited-Service and

Full-Service Retailer

Self-Service, Limited-Service and

Full-Service Retailer

Product LineLength and Breadth of the Product

Assortment

Product LineLength and Breadth of the Product

Assortment

Relative PricesPricing Structure that is Used

by the Retailer

Relative PricesPricing Structure that is Used

by the Retailer

Independent, Corporate, or Contractual

Ownership Organization

Classification of Retailing

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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:

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.

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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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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Relative Prices Classification

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

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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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.

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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.

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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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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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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New Retail Forms and Shortening Retail LifecycleNew Retail Forms and Shortening Retail Lifecycle

Increasing Intertype CompetitionIncreasing Intertype Competition

Growing Importance of Retail TechnologyGrowing Importance of Retail Technology

Global Expansion of Major RetailersGlobal Expansion of Major Retailers

The Future of Retailing

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1 = Discount2 = Superstore3 = Warehouse Club4 = Combination Store

1 = Discount2 = Superstore3 = Warehouse Club4 = Combination Store

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High MarginHigh PriceHigh Status

Low MarginLow PriceLow Status

The Wheel of Retailing

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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

WholesalerFunctions

WholesalerFunctions

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

Manufacturers’ Sales Branches and OfficesWholesaling by Sellers or

Buyers Themselves Rather Than Through

Independent Wholesalers.

Merchant WholesalerIndependently Owned

Business that Takes Title to the

Merchandise it Handles.Account for 50% of Account for 50% of

wholesalingwholesaling

They Don’t Take Title to

the Goods, and TheyPerform Only a Few

Functions.

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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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Wholesaler Marketing Decisions

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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