Chapter 14 Retailers, Wholesalers, and Direct Marketers

1. Chapter 14 Retailers, Wholesalers, and Direct Marketers

2. 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.

3. 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.

4. 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.

5. 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

6. 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

7. Markup • The amount that a retailer adds to a product’s 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.

8. Location Decisions Type of merchandise Financial resources Site availability Target market

9. 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.

10. 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.

11. 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.

12. 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.

13. West Edmonton Mall • Promoted as the world’s largest mall. • Over 800 stores. • There are 110 eating establishments. • Seven world class attractions.

14. 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.

15. 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

16. 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.

17. 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.

18. Classification by Services • Consists of three retailer types: • Self-service • Self-selection • Full-service retailers

19. 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

20. 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.

21. 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.

22. Independent Wholesaling • Two categories: • Merchant wholesalers • Agents and brokers • Two types of wholesalers: • Full function merchant wholesalers • Limited function merchant wholesalers