Chapter 16 Retailing Direct Marketing and Wholesaling 16 1 Retailing Retailing includes all transactions in which the buyer intends to consume the product through personal family or household use o Often takes place in stores vending machines outdoor markets online stores etc o Can be clustered geographically like many car dealerships to enhance product comparison Retailer an organization that purchases products for the purpose of reselling them to ultimate consumers o Retailers provide the environment in which exchanges with ultimate consumers occur o To compete with the rise in online shopping many stores have partnered with restaurant chains such as McDonald s or Starbucks to bring customers to their stores General Merchandise Retailer a retail establishment that offers a variety of product lines that 16 2A General Merchandise Retailers are stocked in considerable depth Types of general merchandise retailers staffs of at least 25 people o Department Stores large retail organizations characterized by wide product mixes and Related product lines are organized into separate departments such as cosmetics housewares apparel appliances etc Distinctly service oriented Their total product may include credit delivery personal assistance merchandise returns and a pleasant atmosphere Example Macy s Sears JCPenny Dillard s and Neiman Marcus o Discount Stores self service general merchandise outlets that regularly offer brand name and private brand products at low prices These stores accept lower margins for higher sales volume Carry wide variety of products Example Walmart and Target Offer everyday low prices instead of sales events o Convenience Stores small self service store that is open long hours and carries a narrow assortment of products usually convenience items such as soft drinks and other beverages snacks tobacco and gasoline o Supermarkets large self service stores that carry a complete line of food products as well as some nonfood products such as cosmetics and nonprescription drugs Major retailers like Walmart and Target now have a range of store sizes offering different depth and width of grocery product offerings Often cheaper than local grocers and a wider variety of products o Superstores Originated in Europe and are giant retail outlets that carry not only food and nonfood products that are ordinarily found in supermarkets but also routinely purchased consumer products Besides a complete food line they sell housewares hardware small appliances clothing personal care products garden products and tires Services available at superstores include dry cleaning automotive repair check cashing snack bars etc Example Walmart Supercenters Kroger stores SuperTarget Super Kmart o Hypermarkets combine supermarket and discount store shopping in one location Larger than superstores 40 50 of space is reserved for groceries Remaining space is for general merchandise o Warehouse Clubs a rapidly growing form of mass merchandising are large scale members only selling operations that combine cash and carry wholesaling with discount retailing Offer same products as discount stores but in a limited range of sizes and styles Example Sam s Club Costco BJ s Wholesale Club To keep prices lower than those of supermarkets and discount stores warehouse clubs provide few services Generally do not advertise o Warehouse Showrooms retail facilities with five basic characteristics large low cost buildings warehouse materials handling technology vertical merchandise displays large on premises inventories and minimal services Example IKEA a Swedish company that sells furniture household goods and kitchen accessories 16 2B Specialty Retailers Three types of specialty retailers product lines o Traditional Specialty Retailers stores that carry a narrow product mix with deep Typically sell apparel jewelry sporting goods computers pet supplies etc Example Radio Shack GAP Footlocker etc Have high costs in proportion to sales volume Usually offer better selections and more sales expertise than department stores their main competitors o Category Killer a very large specialty store that concentrates on one major product category and competes on the basis of low prices and enormous product availability Example Home Depot Lowe s Staples Office Depot and OfficeMax Barnes and Noble Petco and PetSmart Best Buy o Off Price Retailers stores that buy manufacturers seconds overruns returns and offseason production runs at below wholesale prices for resale to consumers at deep discounts Example T J Maxx Marshalls Stein Mart ROSS and Burlington Coat Factory Typically perform well in recessionary times as consumers who will want namebrand items search for good value Charge 20 50 less than department stores for comparable merchandise but offer few customer services 16 3A Location of Retail Stores In choosing location a retailer evaluates the relative ease of movement to and from the site including factors such as pedestrian and vehicular traffic parking and transportation Retailers must analyze stores in the area and relative rental leasing or ownership terms Stores that complement one another ie Target and Walmart close together complement all stores of that type There are several types of shopping centers o Neighborhood Shopping Centers usually consist of several small convenience and specialty stores such as small grocery stores gas stations and fast food restaurants o Community Shopping Centers include one or two department stores and some specialty stores as well as convenience stores o Regional Shopping Centers usually have the largest department stores widest product mixes and deepest product lines of all shopping centers Many shopping malls are regional shopping centers o Superregional Shopping Centers have the widest and deepest product mixes and attract customers from many miles away Often have special attractions beyond stores such as skating rinks amusement centers or upscale restaurants Example Mall of America o Lifestyle Shopping Center typically an open air shopping center that features upscale specialty dining and entertainment stores usually owned by national chains Usually near affluent neighborhoods and can have fountains benches and other amenities that encourage casual browsing o Power Shopping Center combination of off price stores and small stores with category killers GAP ToysRUs PetSmart and Home Depot 16 3B Retail Positioning 16 3C Store Image Retail Positioning involves identifying an unserved or
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