Retailing
Retailing includes all the activities in selling goods or services directly to final consumers for personal, nonbusiness use. A retailer or retail store is any business enterprise whose sales volume comes primarily from retailing. Any organization selling to final consumers—whether it is a manufacturer, wholesaler, or retailer—is doing retailing. It doesn’t matter how the goods or services are sold (in person, by mail, by telephone, by vending machine, or online) or where (in a store, on the street, or in the consumer’s home).
Types of Retailers
Consumers today can shop for goods and services at store retailers, nonstore retailers, and retail organizations, as shown in Table 13.1. Different formats of store retailers will have different competitive and price dynamics. Discount stores, for example, historically have competed much more directly with each other than with other formats, though that is changing.2 Retailers can position themselves as offering one of four levels of service:
- 1. Self-service—Self-service is the cornerstone of all discount operations. Many customers are willing to carry out their own “locate-compare-select” process to save money.
- 2. Self-selection—Customers find their own goods, though they can ask for assistance.
- 3. Limited service—These retailers carry more shopping goods and services such as credit and merchandise-return privileges. Customers need more information and assistance.
- 4. Full service—Salespeople are ready to assist in every phase of the “locate-compare-select” process. The high staffing cost and many services, along with the higher proportion of specialty goods and slower-moving items, result in high-cost retailing.
TABLE 13.1 Major Types of Store Retailers
|
Specialty store: Narrow product line. The Limited, The Body Shop. |
|
Department store: Several product lines. Macy’s, Bloomingdale’s. |
|
Supermarket: Large, low-cost, low-margin, high-volume, self-service store designed to meet total needs for food and household products. Kroger, Safeway. |
|
Convenience store: Small store in residential area, often open 24/7, limited line of high-turnover convenience products plus takeout. 7-Eleven, Circle K. |
|
Drug store: Prescription and pharmacies, health and beauty aids, other personal care, small durable, miscellaneous items. CVS, Walgreens. |
|
Discount store: Standard or specialty merchandise; low-price, low-margin, high-volume stores. Walmart, Kmart. |
|
extreme value or hard-discount store: A more restricted merchandise mix than discount stores but at even lower prices. Aldi, Dollar General. |
|
Off-price retailer: Leftover goods, overruns, irregular merchandise sold at less than retail. Factory outlets; independent off-price retailers such as TJ Maxx; warehouse clubs such as Costco. |
|
Superstore: Huge selling space, routinely purchased food and household items, plus services (laundry, shoe repair, check cashing). Category killer (deep assortment in one category) such as Staples; combination store such as Jewel-Osco; hypermarket (huge stores that combine supermarket, discount, and warehouse retailing) such as Carrefour in France. |
|
Catalog showroom: Broad selection of high-markup, fast-moving, brand-name goods sold by catalog at a discount. Customers pick up merchandise at the store. Inside Edge Ski and Bike. |
Source: Data from www.privatelabelmag.com.
Nonstore retailing has been growing much faster than store retailing, as shown in the rise of e-commerce and m-commerce. Nonstore retailing falls into four major categories: (1) direct marketing (including telemarketing, direct mail, catalog marketing, and online shopping); (2) direct selling, also called multilevel selling and network marketing, in which companies sell door to door or through at-home sales parties; (3) automatic vending for impulse goods such as soft drinks and other products such as cosmetics; and (4) buying service, a storeless retailer serving a specific clientele—usually employees of large organizations—who are entitled to discounts in return for membership.
An increasing number are part of a corporate retailing organization (see Table 13.2). These organizations achieve economies of scale, greater purchasing power, wider brand recognition, and better-trained employees than independent stores can usually gain alone.
