Ch. 11 ? Retailing and Wholesaling Retailing Retailing includes all the activities involved in selling products or services directly to final consumers for their personal use What?s wrong with this definition? It implies retailers only serve customers for personal use but retailers also serve small businesses Ex: Office Max The current trend in retailing is toward either large ?power centers? (huge unenclosed shopping malls) or ?lifestyle centers? (smaller malls with upscale stores and nonretail activities such as dining and a movie theatre in affluent areas), or a hybrid of both Ex: Turkey Creek Types of Retailers Amount of Service They Offer Self-service retailers Serve customers who are willing to perform their own ?locate-compare-select? process to save money Ex: Kroger Limited-Time Retailers Provide more sales assistance because they carry more shopping goods about which customers need information Ex: Best Buy Full-Service Retailers Usually carry more specialty goods for which customers like to be ?waited on? Ex: High-end Jewelry store Breadth and Depth of Product lines Specialty Stores Carry narrow product lines with deep assortments within those lines Ex: Footlocker and Sunglass Hut 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 Ex: Dillard?s, Belk Supermarket Large, low cost, low margin, high volume, self-service store that carries a wide variety of food, laundry, and household products. About 40,000 sku?s in typical grocery stores Ex: Winn-Dixie 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 Coffee ? popular product, fountain soda Ex: Wergel?s, Pilot Superstores Much larger than regular supermarkets and offer a large assortment of routinely purchased food products, nonfood items, and services Ex: Walmart Category Killers Giant specialty stores that carry a very deep assortment of a particular line and is staffed by knowledgeable employees Ex: Borders, Lowes, Home Depot, Toys R Us Relative Prices Charged Discount Store A retail institution that sells standard merchandise at lower prices by accepting lower margins and selling at higher volume Ex: Walmart, Target Off-Price Retailer Retailer that buys at less than regular wholesale prices and sells at less than retail Ex: Factory Outlets 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 Ex: Ralph Lauren Factory Outlet, Nike Factory Outlet. Factory Outlet Malls are very popular Warehouse Clubs 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 Large quantities bought Ex: Sam?s Costco How They Are Organized Chain Stores Two or more outlets that are owned and controlled, have central buying and merchandising, and sell similar lines of merchandise Ex: Victoria?s Secret Voluntary Chain A wholesaler-sponsored group of independent retailers that engages in bulk buying and common merchandising Ex: IGA ? type of grocery stores 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 Ex: McDonald?s Franchises demand 35% of all retail sales in U.S. (Ex. Subway) simple, low cost Retailer Marketing Decisions Retailer Strategy Segmentation and Targeting Store differentiation and positioning Retail Marketing Mix Retailers cannot make meaningful decisions related to the retail marketing mix until they first define and profile their target market Ex: Whole Foods ? upscale customers, organic foods Assortment and Services Decision Product Assortment ? brand of merchandise; Merchandising events Service Assortment ? different numbers and types of services are key to non-price store differentiation Store Atmosphere ? physical layout and ?feel? of the store Ex: Sony Atmosphere, Abercrombie 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 (Central Business Districts), various types of shopping centers, strip malls, etc. The Future of Retailing New Retail Forms and Shortening retail life cycles Growth of non-store retailing (Amazon) Retail Convergence Rise of the Mega-retailers Growing importance of retail technology (RFID) Global expansion of major retailers (Home Depot, Walmart ? had problems) Retail stores as ?Communities? or ?Hangouts? (Starbucks) Wholesaling Includes all activities involved in selling goods and services to those buying for resale or business use Types of Wholesaling Merchant Wholesalers Largest group of wholesalers Account for 50% of wholesaling Two broad categories: Full-service wholesalers Limited service wholesalers Take title to goods (buy and sell) 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 Manufacturer agents are most common type of agent wholesaler Ex: Grainger Trends in Wholesaling Must constantly improve services and reduce costs Distinction between large retailers and wholesalers in blurry Will continue to increase the services provided to retailers Wholesalers are now going global
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