Retailing and Wholesaling Bluefield College October 28, 2010

Retailing All activities involved in selling goods or services directly to final consumers for their personal, nonbusiness use. Most retailing is done by retailers, but nonstore retailing has recently grown by leaps and bounds. Nonstore retailing includes sales made via the internet, direct mail, catalogs, telephone and other direct sales methods.

Types of Retailers Classification by the 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 as they carry more shopping goods about which details are needed. Full-service retailers: Usually carry more specialty goods for which customers need or want assistance or advice. Classification by length and breadth of their product offerings: Specialty stores: Feature narrow product lines, with deep assortments Department stores: Offer a wide variety of clothing, home furnishings, household goods Supermarkets: Carry large variety of low cost, low-margin groceries and consumables

Types of Retailers Classification by length and breadth of their product assortments: Convenience stores: Carry a limited line of high turnover convenience goods Superstores: Larger than supermarkets, superstores offer a large of assortment of routinely purchased food goods, nonfood items, and services Category killers are really giant specialty stores. Relative prices classification: Discount stores: Sell standard merchandise at lower prices and margins, in return for higher volume. Off-price retailers: Buy merchandise at less-than-regular wholesale prices which are sold at less than retail. Goods include irregulars, and leftovers. Includes independent off-price retailers, factory outlets and warehouse / wholesale clubs.

Types of Retailers Major types of retail organizations include: Corporate chain stores Two or more outlets that are commonly owned and controlled. Voluntary chain: Wholesaler-sponsored group of independent retailers engaged in group buying and merchandising. Retailer cooperative: Group of independent retailers who set up a central buying organization and conduct joint promotion efforts. Franchise organization: Contractual association between a franchisor and franschisees.

Retailer Marketing Strategies

Retailer Marketing Decisions Retail marketing mix: Product assortment should differentiate the retailer while matching target shoppers’ expectations. Services mix can help differentiate one retailer from another (e.g., Home Depot’s “how-to” classes for do-it-yourselfers). Store atmosphere is important as a unique store experience can move customers to buy. Experiential retailing is growing in popularity. Promotion decisions: Retailers can use any or all of the promotion tools—advertising, personal selling, sales promotion, public relations, and direct marketing—to reach consumers.

Retailer Marketing Decisions Price decisions: The price policy must fit with the target market and positioning, the product and service assortment, and the competition. Price promotions vs. EDLP. “High-low” pricing. Place (distribution) decisions: Location is the key to success. Retailers can locate in: Central business districts. Regional shopping centers. Community shopping centers. Strip malls (neighborhood shopping center). Power centers. Lifestyle centers.

Retail Trends & Developments New retail forms and shortening retail life cycles. Slowed economy and lower consumer spending. Growth of nonstore retailing. Retail convergence. Rise of the megaretailers. Growing importance of retail technology. Global expansion of major retailers. Retail stores as “communities” or hangouts”.

Wholesaling All activities involved in selling goods and services to those buying for resale or business use. Wholesalers add value for producers by performing one or more channel functions. Functions performed by wholesalers: Selling and promoting Buying and assortment building Bulk-breaking Warehousing Transportation Financing Risk bearing Market information Management services and advice

Types of Wholesalers Merchant Wholesaler: an independently owned business that takes title to the merchandise it handles. Largest group of wholesalers. Account for 50% of wholesaling. Two broad categories: Full-service wholesalers. Limited-service wholesalers. Brokers and agents: Do not take title to goods. Perform only a few functions. Specialize by product line or customer type. Brokers bring buyers and sellers together. Agents represent buyers on a more permanent basis. Manufacturers’ agents are the most common type of agent wholesaler.

Wholesaler Marketing Strategies

Trends in Wholesaling Need for ever greater efficiency. Demands for lower prices. Winnowing out of suppliers who are not adding value based on cost and quality. Distinction between large retailers and wholesalers continues to blur. Wholesalers will continue to increase the services provided to retailers. Wholesalers are now going global.