Chapter 13 Retailing and Wholesaling

What is Retailing? Includes all the activities Involved in Selling Goods or Services Directly to Final Consumers for Their Personal, Nonbusiness Use.

Retailing Retailing can be done in stores (store retailing) or out of a store (nonstore retailing) such as: –Direct mail, –Catalogs, –Telephone, –Home shopping shows, –Internet.

Mail Order Catalogs - from clothing to computers Direct Mail - brochure offering a product or service at one point in time. Mail Order Catalogs - from clothing to computers Direct Mail - brochure offering a product or service at one point in time. Direct Selling Door-to-Door Sales - declining in U.S. Parties & Networks - presentations Telemarketing - over the phone Direct Selling Door-to-Door Sales - declining in U.S. Parties & Networks - presentations Telemarketing - over the phone Automatic Vending Best suited to inexpensive merchandise and food and beverages. Automatic Vending Best suited to inexpensive merchandise and food and beverages. Nonstore Retailing Direct Response Television Infomercials - 30 to 60 minute commercials Home Shopping Networks - TV channels that sell products Direct Response Television Infomercials - 30 to 60 minute commercials Home Shopping Networks - TV channels that sell products

Amount of Service Self-Service, Limited-Service and Full-Service Retailer Amount of Service Self-Service, Limited-Service and Full-Service Retailer Product Line Length and Breadth of the Product Assortment Product Line Length and Breadth of the Product Assortment Relative Prices Pricing Structure that is Used by the Retailer Relative Prices Pricing Structure that is Used by the Retailer Retail Organizations Independent, Corporate, or Contractual Ownership Organization Classification of Retailing

Self-ServiceRetailer Provide Few or No Services to Shoppers i.e. Best Buy Limited-ServiceRetailers Provide Only a Limited Number of Services to Shoppers i.e. Sears Full-ServiceRetailers Retailers that Provide a Full Range of Services to Shoppers i.e. Neiman Marcus Classification of Retailing: Amount of Service

Specialty Stores Department Stores Supermarkets Convenience Stores Superstores Discount Stores Narrow Product Line, Deep Assortment i.e. The Limited or Athlete’s Foot Wide Variety of Product Lines i.e. Clothing, Home Furnishings, Saks Fifth Avenue Wide Variety of Food, Laundry, & Household Products i.e. Kroger Limited Line of High-Turnover Convenience Goods i.e. 7-Eleven Large Assortment of Routinely Purchased Food & Nonfood Products i.e. Toys R Us Standard Merchandise at Lower Prices i.e. Wal-Mart Off-Price Retailers Changing Collection of Higher-Quality Goods at a Reduced Price i.e. T.J. Maxx Warehouse Clubs Limited Selection of Brand-Name Grocery Items, Appliances, Etc. i.e. Sam’s Club Classification of Retailing: Product Line (Tab. 13.1) Store Description

Price Decisions Target Market, Product & Service Assortment, Competition Place Decisions Shopping Centers, Central Business Districts, or Power Centers, or Online Shopping Retailer’s Price, Promotion, and Place Decisions Promotion Decisions Using Advertising, Personal Selling, Sales Promotion, Public Relations, & Direct Marketing to Reach Customers

1 = Discount 2 = Superstore 3 = Warehouse Club 4 = Combination Store 1 = Discount 2 = Superstore 3 = Warehouse Club 4 = Combination Store High Margin High Price High Status Low Margin Low Price Low Status The Wheel of Retailing

Electronic Retailing: Back to the Future Allure of Electronic Retailing – Search for product information in hyperspace, – Retailers can update price/product information continuously, – Order 24 hours a day, – Time-saver for many customers.

Electronic Retailing: Back to the Future Barriers to Success – Customer must still wait a few days to receive products by mail, – People need “touch-and-feel” information before buying, – Security concerns, – Concerns that inventory sold online will cannibalize store sales, – May increase price competition.

What is Wholesaling? All the activities involved in selling goods and services to those buying for resale or business use. Wholesaler - those firms engaged primarily in wholesaling activity. Wholesalers buy mostly from producers and sell mostly to: –Retailers, –Industrial consumers, and –Other wholesalers.

Wholesaler Functions Management Services & Advice Management Services & Advice Selling and Promoting Selling and Promoting Market Information Market Information Buying and Assortment Building Buying and Assortment Building Risk Bearing Bulk Breaking Transportation Financing Warehousing Wholesalers are Often Better at Performing One or More of the Following Channel Functions: Why are Wholesalers Used?

Types of Wholesalers Merchant Wholesaler Independently Owned Business that Takes Title to the Merchandise it Handles. Brokers/ Agents They Don’t Take Title to the Goods, and They Perform Only a Few Functions. Manufacturers’ Sales Branches and Offices Wholesaling by Sellers or Buyers Themselves Rather Than Through Independent Wholesalers.

Consolidation within the Industry is Reducing # of Wholesalers Distinction Between Large Retailers and Wholesalers Blurs Wholesalers Will Continue to Increase the Services Provided Wholesalers Are Beginning to Go Global Trends in Wholesaling