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
of
of
Retail
Retail
Establishments
Establishments

Product
Product Assortment-product
Assortment-product

Price
Price

Retailers manipulate their 4 Ps 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

Product
Product and
and
Trade
Trade Name
Name
Franchising
Franchising

Dealer
Dealer agrees
agrees to
to sell
sell certain
certain
products
products provided
provided by
by aa
manufacturer,
manufacturer, but
but can
can use
use any
any sales
sales
tactics
tactics he
he chooses.
chooses.
Ex-Michelin
Ex-Michelin Tires,
Tires, Avon
Avon

Business
Business
Format
Format
Franchising
Franchising

Dealer
Dealer must
must sell
sell the
the franchisers
franchisers
product
product in
in the
the exact
exact way
way the
the
franchiser
franchiser prescribes.
prescribes.
Ex
Ex McDonalds,
McDonalds, Wendy's
Wendy's

CLASSIFICATION BY LEVEL OF
SERVICE

Self Service

Factory outlets
Warehouse clubs

Full Service
Discount stores
Exclusive stores

CLASSIFICATION BY PRODUCT
OFFERING
Themixofproductsofferedtothe
consumerbytheretailer;alsocalled
theproductassortment
Deep&narrowlikeStarbucks
Or
Shallow&broadlikeWalmart

CLASSIFICATION BY PRODUCT
OFFERING
Depth of Product Line
Specialty Outlets
Category Killers

Breadth of Product Line

General Merchandise Stores
Scrambled Merchandising
Whydothis?

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
Retailing
Retailing

Electronic
Electronic Retailing
Retailing

DIRECT MARKETING

Direct
Direct
Marketing
Marketing needs
needs
no
no personal
personal
interaction
interaction

Direct
Direct Mail
Mail
Catalogs
Catalogs &
& Mail
Mail Order
Order
Telemarketing
Telemarketing

CHOOSING THE RETAIL MIX

Choosing
Choosing the
the
Retailing
Retailing Mix
Mix

Product
Product

Place
Place

Price
Price

Personnel
Personnel

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
in
in
Creating
Creating
Stores
Stores
Atmosphere
Atmosphere

Sound
Sound
Odors
Odors
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
in
in
Personnel
Personnel
decisions
decisions

Fit
Fit the
the image
image of
of the
the product
product
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

Regional Shopping Centers

Anchor Stores

Strip Location

Freestanding
Freestanding
Store
Store
Shopping
Shopping
Center
Center Tenant
Tenant

Destination stores
Power centers

Multichannel Retailers

Mall
Mall Tenant
Tenant

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 of
of 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 of
of
the
the early
early growth,
growth, accelerated
accelerated
development,
development, maturity,
maturity, and
and decline
decline
stages.
stages.

Parasites

Parasitestoresdonotcreatetheirown
Parasitestoresdonotcreatetheirown
traffic.Theymakemoneybasedon
traffic.Theymakemoneybasedon
theirproximitytothingsthatwilldraw
theirproximitytothingsthatwilldraw
foottraffic.(biggerstores,train
foottraffic.(biggerstores,train
stations,airports,officebuildings,etc.)
stations,airports,officebuildings,etc.)

Destination Stores
Storesthatgeneratecustomersfromlarger
Storesthatgeneratecustomersfromlarger
tradingareasthantheirneighborsor
tradingareasthantheirneighborsor
competitors.
competitors.
i.e.DunkinDonuts:Itsworththetrip!
i.e.DunkinDonuts:Itsworththetrip!

Power Centers

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

Anchor Stores

Alargestore,suchasadepartmentstore
Alargestore,suchasadepartmentstore
orsupermarket,thatisprominently
orsupermarket,thatisprominently
locatedinashoppingmalltoattract
locatedinashoppingmalltoattract
customerswhoarethenexpectedto
customerswhoarethenexpectedto
patronizetheothershopsinthemall.
patronizetheothershopsinthemall.