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Retailing & Wholesaling
Chapter 13
Top 10 Retailers in AmericaSales
(in billions)Change(00-01)
Wal-Mart $ 193.295 +15.9%12 Kroger $ 49.000 +8.0%3 $ 45.738 +19.0%Home Depot4 Sears $ 40.937 +3.7%5 $ 37.028 +3.1%K-Mart6 Albertson’s $ 36.762 -1.9%7 Target $ 36.362 +9.5%
9 $ 32.164 +17.1%Costco10 Safeway $ 31.976 +10.8%
8 J.C. Penny $ 32.649 +0.4%
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 SaleseBay $ 3.5-3.7B1
Amazon.com2 $ 1.7-1.9BDell3 $ 1.1-1.3B
http://www.stores.org/eng/archives/00top100int_1.html
Gateway6 $ 5-600M
4 $ 7-800MBuy.com5 $ 5-600MEgghead.com
7 Quixtar $ 4-450MuBid8 $ 275-325M
Barnes & Noble9 $ 275-325M10 Outpost $ 2-250M
Amount of ServiceSelf-Service, Limited-Service and
Full-Service RetailerProduct Line
Length and Breadth of the ProductAssortment
Relative PricesPricing Structure that is Used
by the RetailerRetail Organizations
Independent, Corporate, or ContractualOwnership Organization
Classification of Retailing
Classification of Retailing: Amount of Service
Self-Service RetailerSelf-Service RetailerProvide Few or No
Services to Shoppers
Limited-Service RetailersLimited-Service RetailersProvide Only a Limited Number of Services to
Shoppers
Full-Service RetailersFull-Service RetailersRetailers that Provide a Full
Range of Services to Shoppers
Department Stores
Wide Variety of Product Lines i.e. Clothing, Home
Furnishings,…
SupermarketsWide Variety of Food, Laundry, & Household
Products
Convenience Stores
Limited Line of High-Turnover Convenience
Goods
Specialty Stores
Narrow Product Line, Deep Assortment
Classification of Retailing:Product Line (Tab. 13.1)
Store Description
Off-Price Retailers
Changing Collection of Higher-Quality Goods at a
Reduced Price
Warehouse Clubs
Limited Selection of Brand-Name Grocery
Items, Appliances
SuperstoresLarge Assortment of Routinely Purchased
Food & Nonfood Products
Classification of Retailing:Product Line (Tab. 13.1)
Store Description
Discount Stores
Standard Merchandise at Lower Prices
Low Prices and Offer Lower-Quality Goods and Little Customer Service
Discount Stores
“Off-Priced” Retailers
CatalogShowrooms
Higher Prices and Offer Higher-Quality Goods and Superior Customer Service
Regular Prices and Offer Normal-Quality Goods and Average Customer Service
Classification of Retailing:Relative Prices
Voluntary Chain
Franchise OrganizationsRetailer
Cooperatives
Merchandising Conglomerates
Classification of Retailing:Retail Organization
Corporate Chain
Retailer Marketing Decisions (Fig. 13.1)
Retailer Strategy• Target Market• Retail Store
Positioning
RetailerMarketing Mix•Product and service assortment•Prices•Promotion•Place (location)
Product Assortment and Services Decisions
Product Assortment• Width and Depth of Assortment• Quality of Products• Product Differentiation Strategies
Services MixKey Tool of Non-price Competitionfor 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, Product & Service
Assortment, Competition
Promotion Decisions
Using Advertising, Personal Selling, Sales
Promotion, Public Relations, & Direct Marketing to Reach
CustomersPlace DecisionsShopping Centers, Central Business Districts, or
Power Centers, or Online Shopping
New Retail Forms and Shortening Retail Lifecycle
Growth of Non-store RetailingIncreasing Intertype Competition
Growing Importance of Retail TechnologyGlobal Expansion of Major RetailersRetail Stores as “Communities” or “Hangouts”
Rise of the Megaretailer
The Future of Retailing
1 = Discount2 = Superstore3 = Warehouse Club4 = Combination Store
4321
1
23
3 2
1
High MarginHigh PriceHigh Status
Low MarginLow PriceLow Status
The Wheel of Retailing
ELECTRONIC COMMERCE
DEFINITION:Exchange of information, goods, service, and payments by electronic means.
History of E-CommerceE-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 TodaySome 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-CommerceeMarketer, 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 GoAndersen Consulting and Forrester Research both show shopping cart abandonment rates of 25%.E-commerce still accounts for less than 1% of total retail salesPure plays are struggling to maintain cash flow and are either: Folding Cutting back Being bought at cheap prices
Security Issues are Important
Discussion ConnectionsOnline 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:
WholesalerFunctions
ManagementServices & Advice
Selling andPromoting
MarketInformation
Buying andAssortment Building
Risk Bearing Bulk Breaking
Transportation
Financing Warehousing
Types of WholesalersMerchant WholesalerIndependently Owned Business that Takes Title to the Merchandise it Handles.
Brokers/ AgentsThey Don’t Take Title
to the Goods, and They Perform Only a
Few Functions.Manufacturers’ Sales Branches and OfficesWholesaling by Sellers or Buyers Themselves Rather Than Through Independent Wholesalers.
Wholesaler Marketing Decisions (Fig. 13.1)
Wholesaler Strategy• Target Market• Service
Positioning
WholesalerMarketing Mix• Product and
service assortment• Prices• Promotion• Place (location)
Consolidation within the Industry is Reducing # of Wholesalers
Distinction Between Large Retailers and Wholesalers Blurs
Wholesalers Will Continue to Increase the Services Provided
Wholesalers Are Beginning to Go Global
Trends in Wholesaling