CHAPTER 11 RETAILING AND WHOLESALING Retailing includes all activities involved in selling goods or service directly to the consumer for their personal use retailer business whose sales come primarily from retailing shopper marketing using in store promotions and advertising to extend brand equity to the last mile Type of Retailers Level of Service Major Store Retail Types compare select process Self service Retailers serve customer who are willing to perform their own locate Limited service Retailers carry more shopping goods about which customers Full service Retailers carry more specialty goods assist customers in every need information Provides more sales assistance phase of the shopping process separate department managed by specialist buyers or merchandisers Specialty Store carry narrow product line with deep assortment within that line Department Store carries wide variety of product lines each operated as a Supermarket large low cost low margin high volume self service stores that Convenience Store small stores located near residential areas that are open long hours 7 days a week and carry limited line of high turnover convenience goods carry a wide variety of grocery and household products margins and selling at higher volume Discount Store sells standard merchandise at lower prices by accepting lower Off Price Retailer sells merchandise bought at lower than regular wholesale prices and sell at less than retail division of a larger retail corporation independent off price retailer independently owned and run or is a factory outlets owned and operated by a manufacturer and normally carries the manufacturers surplus discontinued or irregular goods warehouse clubs sells limited selection of brand name grocery items appliances clothing and other goods at deep discounts to members who pay annual membership fees of routinely purchased food products non food items and services Superstore much larger than a regular supermarket and offer a large assortment category killer giant specialty store that carries a very deep assortment of a particular line Major Types of Retail Organizations Service Retailer one whose product line is actually a service Corporate Chain two or more outlets that are commonly owned and controlled Their size allows them to buy in large quantities at lower prices and gain promotional economies engaged in group buying and common merchandising Voluntary Chain wholesaler sponsored group of independent retailers that Retailer Cooperative group of independent retailers that band together to set up a jointly owned central wholesale operation and conducts joint merchandising and promotion efforts Franchise contractual association between a manufacturer wholesaler or service organization called a franchisor and independent business people called franchisees who buy the rights to own and operate one or more units in the franchise system Retailer Marketing Strategy Product Assortment and Service Decisions Product Assortment Service Mix Store Atmosphere Price Decisions experiential retailing sales or discounts Everyday Low Price EDLP charging constant everyday low prices with few High Low Pricing charging higher prices on an everyday basis coupled with frequent sales and other price promotions to increase store traffic create a low price image or attract customers who will buy other goods at full price Promotion Decisions Advertising Personal Selling Sales Promotion Public Relations PR Place Decision Direct Marketing Shopping Center group of retail businesses built on a site that is planned regional shopping center regional shopping mall largest and most developed owned and managed as a unit dramatic shopping center has from 50 100 stores including two or more full line department stores community shopping center contains between 15 50 retail stores contains a branch of a department store or variety store supermarket specialty stores professional offices and sometimes a bank neighborhood shopping center strip mall contains 5 15 stores close and convenient for consumers contains supermarket perhaps a discount store and several service stores strip of retail stores such as Walmart Home Depot Costcos power center huge unenclosed shopping centers consisting of a long lifestyle center smaller open air malls with upscale stores convenient locations and non retail activities Retailing Trends and Developments Tighter Consumer Spending Retailing Convergence merging of consumers products prices and retailers Rise of Megaretailers Growth of direct online mobile and social media retailing Showrooming checking out merchandise and price in retail showroom but buying Importance of Retail Technologies Green Retailing Global Expansion of Major Retailers from an online only rival Wholesaling Involves all the activities in selling goods and services to those buying for resale or business use Wholesaler a firm primarily engaged in wholesaling activities Channel Functions Performed by Wholesalers Selling and Promoting Buying and Assortment Building Bulk Breaking Warehousing Transportation Financing Risk Bearing Market Information Management Services and Advice Types of Wholesalers Merchant Wholesalers independently owned wholesale business that takes title to the merchandise it handles full service wholesalers provide full set of services wholesale merchants sells to retailers industrial distributors sells to manufacturers limited service wholesalers offer fewer services to their suppliers and customers cash and carry wholesalers carry a limited line of fast moving goods and sell to small retailers for cash They normally do not deliver merchandise which is sold for cash as deliveries are made truck wholesalers carry a limited line of semi perishable drop shippers do not carry inventory or handle the product On receiving an order drop shippers select a manufacturer who then ships the merchandise directly to the customer rob jobbers price the goods keep them fresh set up point of purchase displays and keep inventory records productive cooperatives farmer owned members that assemble farm produce for sale in local markets mail order or web wholesalers send catalogs to or maintain Web sites for retail industrial and institutional customers featuring jewelry cosmetics specialty foods and other small items functions brings buyers and sellers together and assisting in negotiation Broker do not take title to goods and services and only perform a few Agents represents buyers and sellers on a more