1. Chapter 13 Retailing and Wholesaling
Idil Yaveroglu
Lecture Notes

2. Retailing and Wholesaling
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

3. Retailing and 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.

4. 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:
Serve a neighborhood with a radius of about 1.5 miles
Supercenters:
Combination supermarket and department store
One stop shopping with up to a 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

5. 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

6. Classification of Retailing: Level of Service
Self Service
Full Service
Self-Service
Retailers
Provide Few or No
Services to
Shoppers
i.e. Factory outlets
Warehouse clubs
Limited-Service
Retailers
Provide Only a Limited
Number of Services
to Shoppers
i.e. Sears
Discount stores
Full-Service
Retailers
Retailers that Provide a
Full Range of Services
to Shoppers
i.e. Neiman Marcus
Exclusive stores

7. 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

8. Breadth versus depth of merchandise lines
Slide 17-19

9. Classification of Retailers: By Relative Price
Discount stores
Low margins are offset by high volume
Off-price retailers
Independent off-price retailers
TJ Maxx, Marshall’s
Factory outlets
Levi Strauss, Reebok
Warehouse clubs
Sam’s Club, Costco

10. 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 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

11. Classification of Retailers: By Organizational Approach
Corporate chain stores
Commonly owned / controlled
Voluntary chains
Wholesaler-sponsored groups of independent retailers
Retailer cooperatives
Groups of independent retailers who buy in bulk
Franchise organizations
Based on something unique
Merchandising conglomerates
Diversified retailing lines and forms under central ownership

12. Types of Non-Store Retail
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

13. Vending Machines - Japan
Eggs
Umbrellas
Lobster
Rice
Toilet Paper
Page #13
Flowers

14. 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

15. Types of Wholesalers Merchant Wholesalers Brokers and Agents
Full service wholesalers
Limited service wholesalers
Brokers and Agents
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

16. Retail Strategy

17. Retailing Strategy

18. Retail Positioning

19. 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
High Price
Low Price
Good Value
Quality
Image

20. 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

21. 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.