Chapter 13
Retailing and Wholesaling
Idil Yaveroglu
Lecture Notes
Retailing and Wholesaling

Retailing


All activities involved in selling goods or services directly to
final consumers for their personal, nonbusiness use.
Retailer

Business whose sales come primarily from retailing.
Retailers can be classified as:
 Store Retailers
 E.g. Vakko, Bauhaus
 Non-store Retailers
 E.g. Vending machines, Amazon.com
Retailing and Wholesaling

Wholesaling
 All
activities involved in selling goods and services to
those buying for resale or business use.

Wholesaler
A
firm engaged primarily in wholesaling activity.
Types of Retailers
Department Stores: Represent manufacturers with non-competing product lines.

Work under contract within protected sales territories. Prices, delivery, service, warranties,
and other handling are spelled out within the contract
Specialty Stores: Feature a deep assortment of products

Examples: Lady Footlocker, Naturalizer Shoes, Hallmark Card Shops, Tiffany’s, and collectible
sports card shops
Category Killers: The ultimate in specialty stores - carries tremendous specialized items


Examples: Toys ‘R’ Us, Carmax, AutoNation, etc.
Convenience Stores:
–
Supercenters:

–
–
–

Serve a neighborhood with a radius of about 1.5 miles
Combination supermarket and department store
One stop shopping with up to a 30-50 mile radius in rural areas
Dominant new form of growth for major retailers
Supermarkets: Self-service, centralized customer service, large-scale and low-cost, price
emphasis, broad assortment of merchandise
Classification of Retailers

Form of Ownership
Independent Retailer
 Corporate Chain
 Contractual Systems


Level of Service
Self-service
 Limited Service
 Full Service


Merchandise Line


Breath of Product Line
By Organizational Approach
Classification of Retailing: Level of Service
Self Service
Full Service
Self-Service
Retailers
Limited-Service
Retailers
Full-Service
Retailers
Provide Few or No
Services to
Shoppers
i.e. Factory outlets
Warehouse clubs
Provide Only a Limited
Number of Services
to Shoppers
i.e. Sears
Discount stores
Retailers that Provide a
Full Range of Services
to Shoppers
i.e. Neiman Marcus
Exclusive stores
Classification of Retailers:
Merchandise Line

A merchandise line describes how many different
types of products a store carries and in what
assortment.
 Depth
of product line means that the store carries a
large assortment of each item.
 Category
Killers
 Specialty Stores
 Breadth
of product line refers to the variety of
different items a store carries.
 Department
Stores, Super-centers, Hypermarkets
Breadth versus depth of
merchandise lines
Slide 17-19
Classification of Retailers: By Relative
Price

Discount stores
 Low

margins are offset by high volume
Off-price retailers
 Independent
 TJ
off-price retailers
Maxx, Marshall’s
 Factory
outlets
 Levi Strauss,
 Warehouse
 Sam’s
Reebok
clubs
Club, Costco
Discount Stores
Target Corporation





First store opened in 1902
Currently has 1,147 stores in 47
states.
Builds brand name to heighten
barriers to entry in the market.
Began a collaboration with Sony in
2002 for Sony to design products
specifically for Target.
Successful in building defensible
niche with middle and upper-end
customers with low price but high
style.
Source: Datamonitor
Classification of Retailers: By
Organizational Approach

Corporate chain stores


Voluntary chains


Groups of independent retailers who buy in bulk
Franchise organizations


Wholesaler-sponsored groups of independent retailers
Retailer cooperatives


Commonly owned / controlled
Based on something unique
Merchandising conglomerates

Diversified retailing lines and forms under central
ownership
Types of Non-Store Retail
1.
2.
3.
4.
5.
6.
7.
Street Peddling:

Oldest non-store format

Major U.S. metropolitan cities

Inexpensive Items
Direct Mail & Catalogs:

Mail order houses

Catalogs such as L.L. Bean, Williams-Sonoma, Right Start, etc.
Electronic Shopping:

Home-based Internet shopping
Automatic Merchandising (Automatic Vending):

Sale of products by vending machines (but not video games)
Direct Selling:

Personal basis

Tupperware, CUTCO, Avon

Move to cold-calling instead of canvasing
TV Home Shopping
Telemarketing
Vending Machines - Japan
Eggs
Umbrellas
Lobster
Rice
Toilet Paper
Page #13
Flowers
Wholesalers

Wholesalers add value by performing the following
functions:
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



Brokers and Agents









Full service wholesalers
Limited service wholesalers
Brokers and agents do not take title of the goods.
Brokers
Bring buyers and sellers together and assist in negotiation
Agents
Manufacturers’ agents
Selling agents
Purchasing agents
Commission merchants
Manufacturers’ and retailers’ branches and offices
Retail Strategy
Retailing Strategy
Retail Positioning
Retailing Mix

Product: The mix of products offered to the consumer by
the retailer; also called the product assortment or
merchandise mix.
• Assortment: width, depth, quality
• Atmosphere / ambiance
• Service



Retail Promotion: Advertising, publicity, public relations,
sales promotion
Place (Proper Location):
•
Free Standing Store
•
Shopping Center
•
Mall
Price
Low Price
Good Value
High Price
Quality
Image
Atmospherics in Retailing
(Presentation)

Retailers must attract customers and entice them
to purchase
 Quality
and style of products
 Employee helpfulness and reliability
 Store fixtures, spacing
 Appeal to the human senses
 Music
Mall of America

The Mall of America
“megamall” contains
more than:
 520
specialty stores,
 49 restaurants,
 7-acre indoor theme
park,
 Underwater World
featuring hundreds of
marine specimens,
 And a two-story miniature
golf course.