Chapter 13: Retailing and Wholesaling

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Chapter 13 Retailing and Wholesaling
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Chapter 13 Retailing and Wholesaling

• Retailing
• All activities involved in selling goods or
  services directly to final consumers for their
  personal, nonbusiness use.
• Retailer
• Business whose sales come primarily from
  retailing.

Types of Retailers Specialty Stores
Department Stores Supermarkets Discount
Stores Convenience Stores Off-Price
Retailers Superstores
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Chapter 13 Retailing and Wholesaling
Retailers Are Classified By Amount of service

• Self-service retailers
• Customers are willing to self-serve to save money
• Convenience stores and fast moving shopping goods
• Limited-service retailers
• Most department stores
• Full-service retailers
• Salespeople assist
• customers in every
• aspect of shopping
• experience
• High-end department
• stores and specialty
• stores

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Chapter 13 Retailing and Wholesaling
Retailers Are Classified By Product lines

• Specialty stores
• Narrow product lines with deep assortments
• Department stores
• Wide variety of product lines
• Supermarkets
• Convenience stores
• Limited line
• Superstores
• Food, nonfood, and services
• Category killers
• Giant specialty stores

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Chapter 13 Retailing and Wholesaling
Retailers Are Classified By Relative prices

• Discount stores
• Low margins are offset by high volume
• Off-price retailers
• Independent off-price retailers
• TJ Maxx, Marshalls
• Factory outlets
• Levi Strauss, Reebok
• Warehouse clubs
• Sams Club, Costco

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Discount Stores Target Corporation
Chapter 13 Retailing and Wholesaling

• First store opened in 1902
• Currently has 1,147 stores in 47
• states.
• Builds brand name to heighten
• barriers to entry in the market.
• Began a collaboration with Sony
• in 2002 for Sony to design products
  specifically for Target.
• Successful in building defensible niche with
  middle and upper-end customers with low price but
  high style.

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Discount Stores Kmart
Chapter 13 Retailing and Wholesaling

• Once the top discount retailer in the U.S.
• Wal-Mart positioned on price and Target
• as upscale discount
• Kmart tried a value repositioning approach which
  turned to a price war with Wal-Mart
• Kmart failed to deliver on its value proposition
• Forced into bankruptcy and closing of nearly 1/3
  of stores
• Kmart emerged from bankruptcy in May 2003
• Kmart merged with Sears creating the Sears
  Holding Company in early 2005

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Chapter 13 Retailing and Wholesaling
Retailers Are Classified By Organizational
approach

• Corporate chain stores
• Commonly owned / controlled
• Voluntary chains
• Wholesaler-sponsored groups of independent
  retailers
• Retailer cooperatives
• Groups of independent retailers who buy in bulk
• Franchise organizations
• Based on something unique
• Merchandising conglomerates
• Diversified retailing lines and forms under
  central ownership

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Retailer Marketing Decisions
Chapter 13 Retailing and Wholesaling
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Chapter 13 Retailing and Wholesaling
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The Future of Retailing
Chapter 13 Retailing and Wholesaling

• New retail forms and shortening retail life
  cycles
• Wheel-of-retailing concept
• Growth of nonstore retailing
• Mail-order, television, phone, online shopping
• Retail convergence
• The merging of consumers, products, prices, and
  retailers
• Rise of mega retailers
• Growing importance of retail technology
• Global expansion of major retailers
• Retail stores as Communities or Hangouts

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Chapter 13 Retailing and Wholesaling

• Wholesaling
• All activities involved in selling goods and
  services to those buying for resale or business
  use.
• Wholesaler
• A firm engaged primarily in wholesaling activity.

Wholesalers functions Selling and
promoting Buying and assortment
building Bulk-breaking
Warehousing Transportation
Financing Risk bearing Market
information Management services and
advice
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Chapter 13 Retailing and Wholesaling
Types of Wholesalers Merchant Wholesalers

• Full-service wholesalers
• Wholesale merchants
• Industrial distributors
• Limited-service wholesalers
• Cash-and-carry wholesalers
• Truck wholesalers (jobbers)
• Drop shippers
• Rack jobbers
• Producers cooperatives
• Mail-order wholesalers

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Chapter 13 Retailing and Wholesaling
Types of Wholesalers Brokers and Agents

• Brokers and agents do not take title of the
  goods.
• Brokers
• Bring buyers and sellers together and assist in
  negotiation
• Agents
• Manufacturers agents
• Selling agents
• Purchasing agents
• Commission merchants

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Chapter 13 Retailing and Wholesaling
Types of Wholesalers Manufacturers and
retailers branches and offices

• Sales branches and offices
• Branches carry inventory lumber, auto equipment,
  parts
• Offices do not carry inventory dry goods
• Purchasing officers
• Perform roles similar to brokers and agents
  however, these individuals are employees of the
  organization

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Wholesaler Marketing Decisions
Chapter 13 Retailing and Wholesaling
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Chapter 13 Retailing and Wholesaling
Trends in Wholesaling

• Price competition is still intense
• Successful wholesalers must add value by
  increasing efficiency and effectiveness
• The distinction between large retailers and
  wholesalers continues to blur
• More services will be provided to retailers
• Many wholesalers are going global