CHAPTER

RETAILING AND
WHOLESALING
 THE VALUE OF RETAILING

Retailing

Retailing includes all activities involved in

Selling and providing goods and
services to ultimate consumers for personal,
or household use.
 CLASSIFYING RETAIL OUTLETS

Ownership-place
Ownership-place

Level
Level of
of Service-promotion
Service-promotion

Classification
Classification Product
Product Assortment-product
Assortment-product
of
of
Retail
Retail
Establishments
Establishments Price
Price

Retailers manipulate their 4 P’s to get the best position in the

marketplace– in other words, to create a competitive advantage
CLASSIFICATION BY OWNERSHIP

Independent
Independent
Retailers-one
Retailers-one store
store
ownership
ownership

Chain
Chain Stores-many
Stores-many
stores
stores but
but only
only one
one
owner
owner

Franchises-many
Franchises-many
owners
owners of
of many
many
stores
stores
 BASIC FORMS OF FRANCHISING

Dealer
Dealer agrees
agrees to
to sell
sell certain
certain
Product
Product and
and products
products provided
provided byby aa
Trade
Trade Name
Name manufacturer,
manufacturer, but
but can
can use
use any
any sales
sales
Franchising
Franchising tactics
tactics he
he chooses.
chooses.
Ex-Michelin
Ex-Michelin Tires,
Tires, Avon
Avon

Dealer
Dealer must
must sell
sell the
the franchiser’s
franchiser’s
Business
Business product
product in
in the
the exact
exact way
way the
the
Format
Format franchiser
franchiser prescribes.
prescribes.
Franchising
Franchising Ex
Ex –– McDonalds,
McDonalds, Wendy's
Wendy's
 CLASSIFICATION BY LEVEL OF
SERVICE

Self Service Full Service

Discount stores
Factory outlets
Warehouse clubs Exclusive stores
CLASSIFICATION BY PRODUCT
OFFERING

The mix of products offered

to the consumer by the
retailer; also called the
product assortment

Deep & narrow-like Starbucks

Or
Shallow & broad like Walmart
 CLASSIFICATION BY PRODUCT
OFFERING

 Depth of Product Line

• Specialty Outlets

• Category Killers

 Breadth of Product Line

• General Merchandise Stores
• Scrambled Merchandising

Why do this?
Breadth versus depth of merchandise lines
MAJOR TYPES OF RETAILERS BY
PRODUCT OFFERING

Department
Department Stores
Stores
Specialty
Specialty Stores
Stores
Supermarkets
Supermarkets
Drugstores
Drugstores
Convenience
Convenience Stores
Stores
Discount
Discount Stores
Stores
Restaurants
Restaurants
 NON-STORE RETAILING

Automatic
Automatic Vending
Vending

Direct
Direct Marketing
Marketing

Major
Major Forms
Forms
of
of
Nonstore
Nonstore Electronic
Electronic Retailing
Retailing
Retailing
Retailing
 DIRECT MARKETING

Direct
Direct Mail
Mail
Direct
Direct
Marketing
Marketing needs
needs
no
no personal
personal Catalogs
Catalogs &
& Mail
Mail Order
Order
interaction
interaction
Telemarketing
Telemarketing
 CHOOSING THE RETAIL MIX

Product
Product Place
Place

Choosing
Choosing the
the Price Personnel
Retailing Price Personnel
Retailing Mix
Mix

Promotion
Promotion Presentation
Presentation
 CHOOSING THE RETAIL MIX

Product
Product

Personnel
Personnel Promotion
Promotion

Target
Market

Presentation
Presentation Place
Place

Price
Price
PRESENTATION (COMMUNICATION) OF
THE RETAIL STORE

Employee
Employee Type
Type &
& Density
Density

Merchandise
Merchandise Type
Type &
& Density
Density

Fixture
Fixture Type
Type &
& Density
Density

Factors
Factors Sound
Sound
in
in
Creating
Creating Odors
Odors
Store’s
Store’s
Atmosphere
Atmosphere Visual
Visual Factors
Factors
PERSONNEL OF THE RETAIL STORE

How
How many
many

How
How knowledgeable
knowledgeable

How
How helpful
helpful // invasive
invasive

Factors
Factors Fit
Fit the
the image
image of
of the
the product
product
in
in
Personnel
Personnel
decisions
decisions Good
Good personal
personal sellers
sellers
RETAILING STRATEGY-PRICING

 How much mark-up?

 Allow for Shrinkage and discounting
OR
 Use Everyday Low Pricing

 Benchmark or Signpost Items –

items used by consumers as an index
of overall price level of the store
I.e. – “How much do they sell T shirts for?”
RETAILING STRATEGY - LOCATION

 Central Business District

• Parasites
Freestanding
Freestanding
 Regional Shopping Centers Store
Store
• Anchor Stores
Shopping
Shopping
 Strip Location Center
Center Tenant
Tenant
• Destination stores
• Power centers Mall
Mall Tenant
Tenant

 Multichannel Retailers
FIGURE 14-5 The retail life cycle
 Scrambled Merchandising

Scrambled
Scrambled merchandising
merchandising involves
involves
offering
offering several
several unrelated
unrelated product
product lines
lines in
in
aa single
single store.
store.
 Retailing Mix

The
The retailing
retailing mix
mix includes
includes the
the activities
activities
related
related to
to managing
managing the the store
store and
and the
the
merchandise
merchandise in in the
the store,
store, which
which includes
includes
retail
retail pricing,
pricing, store
store location,
location, retail
retail
communication,
communication, and and merchandise.
merchandise.
 Shrinkage

Shrinkage
Shrinkage is
is the
the breakage
breakage and
and theft
theft of
of
merchandise
merchandise by
by customers
customers and
and
employees.
employees.
 Multichannel Retailers

Multichannel
Multichannel retailers
retailers utilize
utilize and
and
integrate
integrate aa combination
combination ofof traditional
traditional
store
store formats
formats and
and nonstore
nonstore formats
formats such
such
as
as catalogs,
catalogs, television,
television, and
and online
online
retailing.
retailing.
 Retail Life Cycle

The
The retail
retail life
life cycle
cycle is
is the
the process
process of
of
growth
growth and
and decline
decline that
that retail
retail outlets,
outlets, like
like
products,
products, experience,
experience, which
which consists
consists ofof
the
the early
early growth,
growth, accelerated
accelerated
development,
development, maturity,
maturity, and
and decline
decline
stages.
stages.
 Parasites

Parasite
Parasite stores
stores do
do not
not create
create
their
their own
own traffic.
traffic. They
They make
make
money
money based
based on
on
their
their proximity
proximity to
to things
things that
that
will
will draw
draw foot
foot traffic.
traffic. (bigger
(bigger
stores,
stores, train
train stations,
stations, airports,
airports,
office
office buildings,
buildings, etc.)
etc.)
 Destination Stores

Stores
Stores that
that generate
generate customers
customers
from
from larger
larger trading
trading areas
areas than
than
their
their neighbors
neighbors or
or competitors.
competitors.

i.e.-Dunkin’
i.e.-Dunkin’ Donuts:
Donuts: “It’s
“It’s
worth
worth the
the trip!”
trip!”
 Power Centers

Huge
Huge shopping
shopping strips
strips with
with multiple
multiple
anchors
anchors and
and often
often aa supermarket
supermarket
 Anchor Stores

AA large
large store,
store, such
such as
as aa
department
department store
store or
or supermarket,
supermarket,
that
that is
is prominently
prominently located
located inin aa
shopping
shopping mall
mall to
to attract
attract customers
customers
who
who are
are then
then expected
expected toto patronize
patronize
the
the other
other shops
shops in
in the
the mall.
mall.