Distribution and Retailing

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Chapter 12

• Distribution and Retailing

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Distribution Strategies

• Choice based on
• Type of market channel
• Target market
• Buying habits
• Product type
• Wholesale price zones

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• Intensive/mass distribution
• As many consumers as possible with a variety of
  outlets
• Selective
• Only distribute to certain types of stores
• Exclusive
• Limit stores to create image

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Distribution Centers

• Manufactures and retailers
• From many locations to one
• Drop ship
• Distribution Center
• Technologies
• Conveyors
• Robotics
• Flow through - little storage

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Bar-codes and Vendor marking

• UPC
• Universal product code
• 12 digits
• Identifies vendor, style, color, size
• Benefits
• Maximize efficiency
• Time
• Accuracy
• Better inventory planning
• Perpetual inventory

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• Other uses
• Shipping
• Transfers
• Receiving
• EDI
• Electronic data interchange
• eMarkets
• Vendor managed retail
• Data mining

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Retail level

• Defined
• The business of selling goods to the ultimate
  consumer
• Focus efforts on the final consumer

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Classifications

• Department Store
• Departmentalized
• Full markup
• Full and limited lines
• Goal
• Broad range of customers, wide variety of
  merchandise, wide selection within categories,
  national and private labels

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• Specialty Store
• Specific one or a few closely related
  categories
• Specific target market or product category
• Goal
• Well defined target market, limited, deep
  assortment, national and private label
• Boutiques
• Specialty store with designer priced merchandise
• Image and uniqueness

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• Chain stores
• Several retail units with similar merchandise
• Standardized
• Centralized organizational structure
• Large chains (11 or more)
• Wal-Mart
• Private label is important

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• Discount
• Below traditional prices
• Utilize mass merchandising
• High turnover, limited assortment, self-service,
  low overhead

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• Off-price
• Buy merchandise at low prices
• Carry well known brands
• Assortments that change frequently, inconsistent

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• Types
• Factory outlet
• Manufacturer owned
• Seconds, irregulars, overruns
• Test markets
• Independent off priced
• Retailer-owned off price
• Close-out stores
• Obtain merchandise through liquidations,
  bankruptcies and close outs

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Contractual Retailers

• Franchise
• Exclusive distribution of a recognized brand
  within a specific area
• Organizational and management assistance
• Franchise fee
• Agreement of standards

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• Leased department
• Lease space within a store
• Operators of specialty department
• Provide inventory and expertise

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Non-store Retailers

• Three most common
• Mail order
• E-tailing
• Television
• Why?
• Convenience
• Fragmented markets
• Time restraints on consumers
• Expand credit card use
• Increased delivery available
• Improvements in security

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• Others
• Telephone
• At home
• Door to door, party planning
• Vending
• Will non store retailers eventually put brick
  and mortar retailers out of business?

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Happy Thanksgiving