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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-compareselect” 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 doit-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:
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Central business districts.
Regional shopping centers.
Community shopping centers.
Strip malls (neighborhood shopping center).
Power centers.
Lifestyle centers.
Retail Trends & Developments
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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:
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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:
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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.