Genesis Management Services Pty Ltd gmservices.com.au
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SERVICES
EXPERIENCE
RETAILING & WHOLESALING STRATEGY
1. Nature & Importance of Retailing
Retailing includes all activities involved in selling goods or services directly to final consumers for their personal, non-business use.
A retailer (retail store) is any business enterprise whose sale volume primarily comes from retailing.
Retailing is one of the major industries in Australia & employs over 13 million people.
Retailers range in size from very small to very large.
2. Types of Retailers
Range from self-service (supermarket), to self-selection retailing (variety store), to limited service (dealers), to full-service (department store).
Product line sold is the first basis for classifying retailing institutions:
Specialty store carries a narrow product line with a deep assortment within that line. Can be subdivided into single-line store, limited-line store & superspeciality store. Most are independently owned.
Department store carries several product lines (e.g. clothing, home furnishings, & household goods) where each line is operated as a separate department managed by specialist buyers or merchandisers. Most started in downtown areas and gradually moved to suburbs.
Supermarket is a relatively large, low-cost, low-margin, high-volume self-service operation designed to service the consumer's total needs for food, laundry & household maintenance products. Grew in 1930s because of price-conscious consumers, mass ownership of automobiles, advances in refrigeration technology & developments in packaging technology.
Convenience stores are food stores that are relatively small, located near residential areas, open for long hours and seven days a week, and carry a highly limited line of high-turnover convenience products.
Combination store (primarily a diversification of the food store into the growing drug & prescription field).
Superstore (larger than the conventional supermarket & aims to meet the consumers' total needs for routinely purchased items such as food, personal care, alcoholic beverages, housewares and hardware, etc.)
Hypermarche (larger than the superstore & combines supermarket, discount & warehouse retailing principles).
Service business includes an array of retailers where product line is service, such as hotels & motels, banks, airlines, colleges, and tennis club. They are growing at a faster rate than product retailers.
Relative
price emphasis refers to distinguishing retail forms according to
their price image & pricing policy.
Discount
store is one that sells standard merchandise at lower prices than
conventional merchants through lower margins and higher volume. K
Mart is largest & now discount retailing has moved into special
merchanddise forms such as sporting goods & stereo equipment &
food stores (box stores) Warehouse
store is a no-frill, discount, reduced-service operation which seeks
to move high volume at low prices (e.g. furniture warehouse
showroom). Catalogue
showroom applies catalogue & discounting principles to a wide
selection of high-markup, fast-moving brand-name goods in the area
of jewellery, power tools, luggages and photographic equipment.
They first emerged in the 1960s and have grown rapidly.
Nature
of business premises refers to where the product is sold.
Mail
and telephone order retailing covers any selling that involves using
the mail or telephone to get orders and/or using them to facilitate
the delivery of the goods (including the mail-order catalogue,
direct response from ad, direct mail and telephone selling). Automatic
vending (also called automatic merchandising or robot retailing)
through coin-operated machines hasbeen a major post-World War II
growth area. Vending only useful for small, standardized, low-unit
value convenience items. Buying
service is a storeless retailer serving specific clienteles -
usually the employees of large organizations such as schools,
hospitals and government agencies. Door-to-door
retailing includes selling door-to-door, office-to-office, or
at-home sale parties (e.g. Fuller Brush, encyclopaedia companies,
Avon & tupperware). meets the needs of people for convenience
& personal attention.
Control
of outlets refers to classifying retailing institutions by their
form of ownership.
Corporate
chain is two or more outlets that are commonly owned &
controlled, sell similar lines of merchandise, have central buying &
merchandising, and may use a similar architectural motif. Voluntary
chains & retailer co-operatives are a wholesaler sponsored group
of independents engaged in bulk buying & common merchandising &
a co-operative agreement between independent retailers who set up a
central buying organization, respectively. Consumer
co-operative (coop) is any retail firm that is owned by its
customers (e.g. credit unions). Franchise
organization is a contractual association between a franchiser (who
may be a manufacturer, wholesaler, independent businesspeople who
buy the right to own & operate one or more units in the
franchise system). Conglomerchant
(merchandising conglomerates) are free-form corporations that
combine several diversified retailing lines & forms under
central ownership, along with some integration of their distribution
& management functions. Clustered
stores refers to whether consumers face a single isolated store or
one of several types of clustered stores.
Central business district includes department stores, specialty stores, banks and major cinemas.
Regional shopping centre is a group of commercial establishments planned, developed, owned and managed as a unit related in location, size & type of shop to the trade area that it services & providing on-site parking. May contain from 40 to over 100 stores.
Community shopping centre contains 15 to over 50 retail stores, one of which is a primary store (department or variety store).
Neighbourhood shopping contains 5 to 15 stores & customers can walk to the stores.
3. Retailer Marketing Decisions
Target market decision is the first & most important decision. May have to conduct marketing research to make sure target market is satisfied.
Product assortment & services decision must then be made.
Retailer's product assortment can be described in terms of decisions of width (narrow or wide) & depth (shallow or deep) & should match the shopping expectations of the target market.
Decisions must be made on the mix of services to be provided to customers.
The store's atmospherics can be used to differentiate it from competitors.
Pricing decisions means that retailers must develop a set of pricing policies suited to their target market & reflecting the quality of goods they carry, the services they offer & the type of price image they want.
Promotion decisions revolve around the normal promotional tools advertising, personal selling, sales promotion & publicity to reach consumers.
Place decisions largely mean the choice of locations, which is a key competitive factor in retailer's attraction of customers.
4. The Future of Retailing
Must adapt to major changes in the macroenvironment.
Trends call for more professional management.
Key need will be to find ways to increase retail productivity.
5. Nature & importance of Wholesaling
Wholesaling includes all activities involved in selling goods or services to those who are buying for purposes of resale or business use.
Wholesale transactions are usually larger than retail transactions.
Wholesalers perform several functions (selling & promoting, buying & assortment building, bulk-breaking, warehousing, transportation, financing, ris bearing, market information & management services & counselling).
Wholesalers are used because of their ability to perform one or more useful functions for manufacturers, retailers & other business establishments.
6. Types of Wholesalers
Over 30,000 wholesalers in Australia.
w Merchant wholesalers are independently owned businesses that take title to the merchandise they handle (jobbers, distributors, or mill supply houses) and account for 50 percent of all wholesaling.
v Full-service wholesaler provides several services, such as carrying stock, using a sales force, offering credit, making deliveries & providing management assistance. There are two types: wholesale merchants, who sell primarily to retailers & industrial distributors, who sell to manufacturers.
v Limited-service wholesalers offer few services. There are several types: cash-and-carry wholesalers (limited line of fast-moving goods to retailers for cash); truck wholesalers (perform a selling & delivery function); drop shippers (do not carry inventory or handle the product, just take title); rack jobbers (deliver & set nonfood items in supermarket); producers' co-operatives (sell farm produce to local markets); & mail-order wholesalers (send catalogues to customers featuring jewellery, cosmetics, etc.).
w Agents & brokers do not take title to the goods & they tend to perform even fewer functions than limited-sedrvice merchant wholesalers.
v Brokers perform the function of bringing the buyers & sellers together (food & real estate).
v Agents represent either buyers or sellers on a permanent basis. types are: manufacturers' agents (represent two or more manufacturers of complementary lines); selling agents (sell entire output of a manufacturer); purchase agents (make purchases for buyers); commission merchants (take physical possession & negotiate sales).
w Manufacturers' & retailers' branches & offices are wholesaling operations conducted by sellers or buyers themselves rather than through independent wholesalers.
v Sales branches & offices give manufacturers better control of inventory & improved selling & promotion. Branches carry inventory but offices do not.
v Purchasing offices perform a role similar to brokers & agents but are part of the buyers' organization.
w Miscellaneous wholesalers include:
v Agricultural assemblers collect farm products from farmers & build them into larger lots for shipment to food processors, bakers, & government.
v Petroleum bulk plants & terminals specialize in selling & delivering petroleum products to filling stations, other retailers & organizational users.
v Auction companies (houses) are important where buyers want to see & inspect goods prior to purchase (tobacco & livestock markets).
7. Wholesaler Marketing Decisions
Target market decisions have to develop a better definition of the target market & not serve everyone.
Product assortment & services decisions have to be examined in light of customer needs.
Pricing decision may change from the traditional mark-up approach.
Promotion decision usually revolves around trade advertising, sales promotion, publicity & little personal selling.
Place decision means that wholesalers typically locate in low-rent, low-tax areas & do not put money into their physical setting & offices.
8. Future of Wholesaling
Changes less dramatic than in retailing.
Wholesalers will have to adapt to keep pace with rapidly changing world.