RETAILING

CHAPTER 8
Learning Objectives
• Explain the roles of retailers and
wholesalers in the distribution
channel.
• Describe the major types of retailers
and give examples of each.
• Identify the major types of
wholesalers and give examples of
each.
• Explain the marketing decisions
facing retailers and wholesalers.
 What Is Retailing?
Retailing includes all the activities
involved in selling products or
services directly to final consumers
for their personal or business use.

Most retailing is done by retailers, but non-

store retailing has recently grown
substantially.
CLASSIFICATION OF
RETAIL OPERATIONS

• Retailers are classified based

on:
– a. Level of service they offer.
– b. Breadth and depth of
product lines.
– c. Relative prices charged.
– d. How they are organized.
 (a) Level of Service Classification
• 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 because they
carry more shopping goods about which
customers need information.

• Full-Service Retailers:
– Usually carry more specialty goods for which
customers like to be “waited on.”
 (b) Product Line Classification

• Specialty stores
• Department stores
• Supermarkets
• Convenience stores

• Superstores
– Category killers
– Super centers
– Hypermarkets
• Specialty stores
– Carry narrow product lines with deep
assortments within those lines.
• Department stores
– Carry a wide variety of product
lines – typically clothing, home
furnishings, and household goods.
Each product line is operated by
a separate department managed
by specialist buyers or
merchandisers.
• Supermarkets
– Large, low-cost, low-margin, high-
volume, self-service store that carries
a wide variety of food, laundry, and
household products.
• Convenience stores
– Small stores located near residential
areas that are open long hours 7 days
a week and carry a limited line of
high-turnover convenience goods.
 Superstores
• Larger than regular supermarkets
and offer a large assortment of
routinely purchased food products,
nonfood items, and services.
• Category Killers
– Giant specialty stores that carry a very
deep assortment of a particular line and
are staffed by knowledgeable employees.
• Super centers
– Large combination discount and grocery
stores.
• Hypermarkets
– Gigantic super centers the size of 6
football fields.
 Discount Stores
A retail institution that sells
standard merchandise at lower
prices by accepting lower
margins and selling at higher
volume.

Wal-Mart is such a successful discounter that

they now sell more toys than category killer
Toys ‘R Us.
(c) Relative Prices
Classification

• Discount stores
• Off-price retailers
– Independent off-price
retailers
– Factory outlets
• Factory outlet malls
• Value-retail centers
– Warehouse club
 Relative Prices Classification

• Off-price Retailers
– Independent Off-price Retailers:
• Either owned and run by entrepreneurs or as a
division of a larger retail operation.
– Factory Outlets:
• Owned and operated by a manufacturer.
Normally carries the manufacturer’s surplus,
discontinued, or irregular goods.
– Warehouse Club:
• Sells a limited selection of brand-name grocery
items, appliances, clothing, and a hodgepodge of
other goods at deep discounts to members who
pay annual membership fees.
 (d) Organizational
Classification
• Corporate chain
stores
• Voluntary chain
• Retailer
cooperative
• Franchise
True Value is an example
of a voluntary chain. • Merchandising
conglomerates
 Organizational Classification

• Chain Stores
– Two or more outlets that are owned
and controlled, have central buying
and merchandising, and sell
similar lines of merchandise.
• Voluntary Chains
– A wholesaler-sponsored group of
independent retailers that engages
in bulk buying and common
merchandising.
 Organizational Classification

• Retailer Cooperatives
– A group of independent retailers that
bands together to set up a jointly owned,
central wholesale operation and
conducts joint merchandising and
promotion efforts.
• Franchises
– Contractual association between a
manufacturer, wholesaler, or service
organization (a franchiser) and
independent businesspeople
(franchisees) who buy the right to own
and operate one or more units in the
franchise system.
 Organizational Classification
• Merchandising
Conglomerates
– Corporation that
combines several
diversified retailing lines
and forms under central
ownership, as well as
some integration of their
distribution and
Limited Brands operates six retail
brands. Visit the Web site for management functions.
details.
www.limitedbrands.com
 Figure 11-1
Retailer Marketing Decisions
 Non-store Retailing

• Direct Marketing
– Five basic forms
• Catalog
• Direct response
• Telemarketing
• Television home shopping
• Online
– No-call list becoming a problem
• Automatic Vending
 Franchising
• Three major types
– Manufacturer authorizes retail stores to sell a
branded item
– Manufacturer licenses distributors to sell a given
product to retailers
– Franchiser supplies systems, techniques,
support, etc., instead of complete products
• Advantages include a proven system, support,
limited capital needed
• Disadvantages include loss of control, continuing
costs, long hours
Strategic Issues
• Marketing is War!
• Location ! Location! Location!
– Least flexible
– Most important
– Consider “Blaze” factor among
other issues (target audience, type of
products to be sold, entrance
and egress, compatibility with
surrounding businesses)
– Traffic and pedestrian counts vital
for walk-in or impulse business
 Strategic Issues

• Retail Positioning
• Store Image
• Merchandising