Retailing & Wholesaling

Chapter 13
Top 10 Retailers in America
Sales Change
(in billions) (00-01)
1 Wal-Mart $ 193.295 +15.9%
2 Kroger $ 49.000 +8.0%
3 Home Depot $ 45.738 +19.0%
4 Sears $ 40.937 +3.7%
5 K-Mart $ 37.028 +3.1%
6 Albertson’s $ 36.762 -1.9%
7 Target $ 36.362 +9.5%
8 J.C. Penny $ 32.649 +0.4%
9 Costco $ 32.164 +17.1%
10 Safeway $ 31.976 +10.8%
http://www.stores.org/archives/2001top100_1.html
What is Retailing?
Retailing - Includes all the activities Involved in Selling
Goods or Services Directly to Final Consumers for
Their Personal, Non-business Use.
Retailing can be done in stores (store retailing) or out of
a store (nonstore retailing) such as:
Direct mail
Catalogs
Telephone
Home shopping shows
Internet
Top 10 Internet Retailers
US Sales
1 eBay $ 3.5-3.7B
2 Amazon.com $ 1.7-1.9B
3 Dell $ 1.1-1.3B
4 Buy.com $ 7-800M
5 Egghead.com $ 5-600M
6 Gateway $ 5-600M
7 Quixtar $ 4-450M
8 uBid $ 275-325M
9 Barnes & Noble $ 275-325M
10 Outpost $ 2-250M
http://www.stores.org/eng/archives/00top100int_1.html
Classification of Retailing
Amount
Amount of
of Service
Service
Self-Service,
Self-Service, Limited-Service
Limited-Service and
and
Full-Service
Full-Service Retailer
Retailer
Product
Product Line
Line
Length
Length and
and Breadth
Breadth of
of the
the Product
Product
Assortment
Assortment
Relative
Relative Prices
Prices
Pricing
Pricing Structure
Structure that
that isis Used
Used by
by
the
the Retailer
Retailer
Retail
Retail Organizations
Organizations
Independent,
Independent, Corporate,
Corporate, or
or Contractual
Contractual
Ownership
Ownership Organization
Organization
Classification of Retailing: Amount of Service

Self-Service Retailer
Provide Few or No
Services to Shoppers

Limited-Service Retailers
Provide Only a Limited
Number of Services to
Shoppers

Full-Service Retailers
Retailers that Provide a Full
Range of Services to
Shoppers
Classification of Retailing:Product Line
(Tab. 13.1)

Store Description

Specialty Narrow Product Line, Deep

Stores Assortment

Department Wide Variety of Product

Stores Lines i.e. Clothing, Home
Furnishings,…

Wide Variety of Food,

Supermarkets Laundry, & Household
Products

Convenience Limited Line of High-

Stores Turnover Convenience
Goods
Classification of Retailing:Product Line
(Tab. 13.1)

Store Description
Large Assortment of
Superstores Routinely Purchased Food
& Nonfood Products

Discount Standard Merchandise at

Stores Lower Prices

Off-Price Changing Collection of

Retailers Higher-Quality Goods at a
Reduced Price

Warehouse Limited Selection of Brand-

Clubs Name Grocery Items,
Appliances
Classification of Retailing:Relative Prices
Higher
Higher Prices
Prices and
and Offer
Offer Higher-Quality
Higher-Quality Goods
Goods
and
and Superior
Superior Customer
Customer Service
Service

Regular
Regular Prices
Prices and
and Offer
Offer Normal-Quality
Normal-Quality Goods
Goods
and
andAverage
Average Customer
Customer Service
Service

Low
Low Prices
Prices and
and Offer
Offer Lower-Quality
Lower-Quality Goods
Goods
and
and Little
Little Customer
Customer Service
Service

Discount
Discount “Off-Priced”
“Off-Priced” Catalog
Catalog
Stores
Stores Retailers
Retailers Showrooms
Showrooms
Classification of Retailing:Retail Organization

Merchandising Conglomerates Corporate

Chain

Voluntary
Chain

Retailer
Franchise Organizations Cooperatives
Retailer Marketing Decisions (Fig. 13.1)

Retailer
Retailer Strategy Marketing Mix
• Target Market •Product and service
• Retail Store assortment
Positioning •Prices
•Promotion
•Place (location)
Product Assortment and Services Decisions
Product Assortment
• Width and Depth of Assortment
• Quality of Products
• Product Differentiation Strategies
Services Mix
Key Tool of Non-price Competition
for Setting One Store Apart From
Another

Store’s Atmosphere
• Physical Layout
• “Feel” That Suits the Target Market
and Moves Customers to Buy
Retailer’s Price, Promotion, & Place Decisions

Price Decisions
Target Market, Promotion Decisions
Product & Service Using Advertising, Personal
Assortment, Selling, Sales Promotion,
Competition Public Relations, & Direct
Marketing to Reach
Customers
Place Decisions
Shopping Centers, Central Business Districts, or
Power Centers, or Online Shopping
The Future of Retailing

New
New Retail
Retail Forms
Forms and
and Shortening
Shortening Retail
Retail Lifecycle
Lifecycle
Growth
Growth of
of Non-store
Non-store Retailing
Retailing
Increasing
Increasing Intertype
Intertype Competition
Competition
Rise
Rise of
of the
the Megaretailer
Megaretailer
Growing
Growing Importance
Importance of
of Retail
Retail Technology
Technology
Global
Global Expansion
Expansion of
of Major
Major Retailers
Retailers
Retail
Retail Stores
Stores as
as “Communities”
“Communities” or
or “Hangouts”
“Hangouts”
The Wheel of Retailing
High Margin
High Price
High Status

11
33
22
22 33 Low Margin
Low Price
Low Status
11
11 11=
=Discount
Discount
22=
=Superstore
Superstore
22 33 44 33=
= WarehouseClub
Warehouse Club
44=
= CombinationStore
Combination Store
ELECTRONIC COMMERCE

DEFINITION:
Exchange of information, goods, service,
and payments by electronic means.
History of E-Commerce
E-commerce actually began in the 1970s when
larger corporations started creating private
networks to share information with business
partners and suppliers. This process is called
Electronic Data Interchange (EDI).
Prodigy was running text ads and selling
flowers in the early '80s. The first
documented Online sale in 1994 was
what?
A CD
E-Commerce Today
Some major product categories have paved the way:
travel services ($5.95 billion in 1999 sales),
computer hardware and software ($5.8 billion),
books ($1.7 billion),
gifts and flowers ($730 million),
music ($540 million), and
apparel and footwear ($460 million),
(eMarketer in Business 2.0 Jan 2000).
E-Commerce Services Today
In 1999, the online market size for business
services was estimated at $22 billion.
Primary service categories include
 financial ($7.3 billion, 1999),
 professional ($4.4 billion),
 administrative support ($3.9 billion),
 corporate travel ($5 billion), and
 telecommunications ($1.5 billion).
By 2003, Forrester Research predicts that
online services will represent nearly 8 percent
of the overall sector hardly a drop in the bucket.
Future of E-Commerce
eMarketer, an Internet technology (IT) research and
reporting firm, estimates that the dollar figure for e-
commerce will rise from approximately
 U.S. $18 billion in 1998 to

 U.S. $294 billion in 2002. US

 Or maybe $184 billion by 2004.

(Forrester, Business 2.0 Jan 2000)

In Europe, consumers' internet purchases will jump
from:
 US $2.9 billion in 1999 to

 US $174 billion in 2005.

Online business-to-business e-commerce is projected

to speed past $1 trillion in annual revenue by 2003
Future Trends to Watch in E-Commerce
Women take control. Women make or influence 80
percent of household sales in the United States,
according to WomanTrend, despite the fact that they
make up 51 percent of the population.
The untapped get tapped. Two highly touted
markets $509 million health and beauty, and $513
million grocery still lag behind expectations.
More "click and mortar." Traditional retailers Circuit
City, Crate and Barrel, Sears, Toys R Us, Wal-Mart,
and Federated Department Stores missed the boat in
1995 and 1996, but rest assured they "get it" now,
and are attempting re-entry, this time around with
more money and smarts. Watch out.
Still a Long Way To Go
Andersen Consulting and Forrester
Research both show shopping cart
abandonment rates of 25%.
E-commerce still accounts for less than
1% of total retail sales
Pure plays are struggling to maintain
cash flow and are either:
 Folding
 Cutting back
 Being bought at cheap prices
Security
Issues are
Important
Discussion Connections
Online retailers provide an alternative to
shopping the old fashioned way.
Discuss the differences in shopping for books
and music at www.Amazon.com vs. Barnes &
Noble Booksellers.
Discuss the differences in shopping for
groceries at www.peapod.com vs. your local
grocery store.
Which do you prefer and why?
What is Wholesaling?
All the activities involved in selling goods and
services to those buying for resale or
business use.
Wholesaler - those firms engaged primarily
in wholesaling activity.
Wholesalers buy mostly from producers and
sell mostly to:
 Retailers,
 Industrial consumers, and
 Other wholesalers.
Why are Wholesalers Used?
Wholesalers are Often Better at Performing One
or More of the Following Channel Functions:

Management
Management Selling
Selling and
and
Services
Services &
& Advice
Advice Promoting
Promoting
Market
Market Buying
Buying and
and
Information
Information Assortment
Assortment Building
Building
Wholesaler
Risk
Risk Bearing
Bearing
Functions Bulk
Bulk Breaking
Breaking

Financing
Financing Warehousing
Warehousing

Transportation
Transportation
Types of Wholesalers
Merchant Wholesaler
Independently Owned
Business that Takes Title to
the Merchandise it Handles.
Brokers/ Agents
They Don’t Take Title to
Manufacturers’ Sales the Goods, and They
Branches and Offices Perform Only a Few
Functions.
Wholesaling by Sellers or
Buyers Themselves Rather
Than Through Independent
Wholesalers.
Wholesaler Marketing Decisions (Fig. 13.1)

Wholesaler Wholesaler
Strategy Marketing Mix
• Target Market • Product and
• Service service assortment
Positioning • Prices
• Promotion
• Place (location)
Trends in Wholesaling

Consolidation
Consolidation within
within the
the Industry
Industry is
is Reducing
Reducing
#
# of
of Wholesalers
Wholesalers

Distinction
Distinction Between
Between Large
Large Retailers
Retailers and
and
Wholesalers
Wholesalers Blurs
Blurs

Wholesalers
Wholesalers Will
Will Continue
Continue to
to Increase
Increase the
the
Services
Services Provided
Provided

Wholesalers
Wholesalers Are
Are Beginning
Beginning to
to Go
Go Global
Global