Retailers, Wholesalers, and Direct Marketers

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• Chapter 14
• Retailers, Wholesalers, and Direct Marketers

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Objectives

• Explain the wheel of retailing.
• Explain how retailers select target markets.
• Show how the elements of the marketing mix apply
  to retailing strategy.
• Explain the concepts of retail convergence and
  scrambled merchandising.
• Identify the functions performed by wholesaling
  intermediaries.
• Identify the major types of independent
  wholesaling intermediaries and the situations
  appropriate for each.
• Compare the basic types of direct marketing and
  nonstore retailing.
• Explain ways in which the Internet has altered
  the wholesaling, retailing, and direct marketing
  environments.

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Retailing

• Describes the activities involved in selling
  merchandise to ultimate consumers.
• Represent the distribution channel to most
  consumers
• Determine
• locations,
• store hours,
• quality and quantity of salespeople,
• store layouts,
• merchandise selections and
• return policies.

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Wheel of Retailing

• Explains the patterns of change in retailing.
• A new type of retailer gains a competitive
  foothold by offering customers lower prices.
• Maintains profits by reducing or eliminating
  services.
• Once established the innovator adds more services
  and prices gradually rise.

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Wheel of Retailing

• Low-end strategy
• Low prices
• Limited facilities and services
• Price-sensitive consumers

• Medium strategy
• Moderate prices
• Improved facilities
• Broader base of value- and service-conscious
  consumers

• High-end strategy
• High prices
• Excellent facilities and services
• Upscale consumers

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Retailing Strategy

• Controllable variables
• Selecting a target market
• Developing a retailing mix
• Retailing mix specifies
• Merchandise strategy
• Customer service standards
• Pricing guidelines
• Target market analysis
• Promotion goals
• Location/distribution decisions
• Store atmosphere

• Uncontrollable variables
• Consumers
• Competition
• Technology
• Economic conditions
• Seasonality
• Legal restrictions

Retailing Strategy
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Markup

• The amount that a retailer adds to a products
  cost to set the final selling price.
• The amount of the markup typically results from
• The services performed by the retailer.
• The inventory turnover rate.
• Typically state markups as percentages.
• Marketers determine markups based partly on their
  judgments.

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Location Decisions
Type of merchandise
Financial resources
Target market
Site availability
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Planned Shopping Center

• A group of retail stores designed, coordinated,
  and marketed as a unit to shoppers in a
  geographical trade area.
• Provide a single convenient location for
  shoppers.
• Free parking.
• Facilitate shopping by maintaining uniform hours
  of operation.

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Four Main Types of Planned Shopping Centers

• Neighborhood Shopping Center
• Consists of a supermarket and group of smaller
  stores.
• Provides convenient shopping for 5,000 to 50,000
  shoppers who live within a few minutes commute.
• Contains 5 to 15 stores.
• Product mix is usually confined to convenient
  goods and some shopping goods.

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Four Main Types of Planned Shopping Centers

• Community Shopping Center
• Serves 20,000 to 100,000 people in a trade area
  extending a few miles from its location.
• Contains anywhere from 10 to 30 retail stores.
• A Branch of a local department store or some
  other large store as the primary tenant.
• Encompasses more stores featuring shopping goods.
• Some professional office.
• A branch bank.
• Maybe a movie theater or supermarket.
• Tenants often share some promotion costs.

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Four Main Types of Planned Shopping Centers

• Regional Shopping Center
• At least 400,000 square feet of shopping space.
• Emphasizes one or more major department stores.
• Supplemented by as many as 200 smaller stores.
• Needs a location within 30 minutes driving time
  of at least 250,000 people.

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West Edmonton Mall

• Promoted as the worlds largest mall.
• Over 800 stores.
• There are 110 eating establishments.
• Seven world class attractions.

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Four Main Types of Planned Shopping Centers

• Power Center
• Located near a regional or superregional mall.
• Brings together several huge specialty stores.
• Rising in popularity during the 1990s.
• Lifestyle Center
• Offers a combination of shopping, entertainment
  and restaurant.
• At least 300,000 square feet.
• Offer the intimacy and easy access of
  neighborhood retailing with a fashionable cachet.
• No big anchor stores.

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Defining Categories of Retailers
Forms of ownership. Shopping effort. Services
provided to customers. Product lines. Locations
of retail transactions.
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Mall of America

• Not just a mall but a destination.
• Has over 520 stores.
• Employs more than 12,000 people.
• Has between 35 and 42 million visitors per year.
• Mall of America is one of the most visited
  destinations in the United States, attracting
  more visitors annually than Disney World,
  Graceland and the Grand Canyon combined.
• Source Mall of America web site

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Retailers by Form of Ownership

• Chain Stores
• Chain stores are groups of retail outlets that
  operate under central ownership and management
  and handle the same product lines.
• Major advantage economies of scale.
• May advertise in a variety of media.
• Independent Retailers
• Account for about 43 percent of all retail sales.
• Traditional advantage of independent stores is
  friendly, personalized service.

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Shopping by Store Type

• Convenience retailers focus their marketing
  appeals on accessible locations, long store
  hours, rapid checkout service, and adequate
  parking facilities.
• Shopping stores include furniture stores,
  appliance retailers, clothing outlets, and
  sporting goods stores.
• Consumers usually compare prices.
• Specialty retailers combine carefully defined
  product lines, services, and reputations.

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Classification by Services

• Consists of three retailer types
• Self-service
• Self-selection
• Full-service retailers

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Self Service Look For It ComingTo A Store Near
You!

• SYDNEY, Australia -- NCR Corp. will introduce
  its FastLane self-checkout lanes to consumers in
  Australia early next year. Two Big W stores in
  New South Wales will install eight of the units.
  
• Source KioskMarketplace.com

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Classification by Product Lines

• Specialty store typically handles only part of a
  single product.
• Stocks in considerable depth or variety.
• Typically carry convenience and shopping goods.
• Limited-line retailers
• Customers find a large assortment of products
  within one product line or a few related lines.
• Typically develops in areas with a large enough
  population to sufficiently support it.
• General Merchandise retailer
• Carry a wide variety of product lines that are
  all stocked in some depth.

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Convergence and Scrambled Merchandising

• Retail convergence, whereby similar merchandise
  is available from multiple retail outlets
  distinguished by price more than any other
  factor.
• Scrambled merchandising - in which a retailer
  combines dissimilar product lines in an attempt
  to boost sales volume.

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Independent Wholesaling

• Two categories
• Merchant wholesalers
• Agents and brokers
• Two types of wholesalers
• Full function merchant wholesalers
• Limited function merchant wholesalers