Retailing
I
INTRODUCTION
Retailing, business activity of selling goods and services directly to consumers. Instead of selling products for resale, a retailer sells goods or services to individuals making purchases for themselves or their families. Some retailing businesses sell a combination of goods and services. For example, an automobile dealership that sells automobiles (goods) may also provide automobile repairs (services).
Retailers play an important role in getting products from producers to consumers. Retailers help direct the physical flow of goods and services from places that produce goods to places where goods are used. Since the retailer has direct contact with the users of goods and services, the retailer can discover and attempt to meet the needs and preferences of consumers.
II
RETAILING STRATEGY
To be successful, a retailer must distinguish itself from other retailers and develop a strategy for satisfying the needs and preferences of a specific consumer group. This strategy, called a retail mix, involves careful consideration of (1) the productto sell, (2) the quantity at which to make the product available, (3) the location at which to sell the product, (4) the time to make the product available, (5) the pricing of the product, and (6) the appeal that can be generated to attract the consumer’s interest.
A
The Product
Retailers strive to offer products that appeal to the tastes of the consumer, are of good quality, and function properly. Sometimes the product must also provide psychological and emotional benefits, such as prestige or convenience. For example, an expensive watch with a well-known, visible brand name may give its owner a sense of prestige.
B
Quantity
Unlike wholesalers, who sell goods in quantities that often are too large to be useful for individuals or families, retailers sell products in small quantities that are more convenient for consumers. For example, wholesalers may sell jeans to retail stores in lots (units) of a dozen pairs each. Retailers then sell consumers jeans by the individual pair.
C
Location
A retailer’s location must be convenient. In locating retail stores, retailers consider the market or town in which they want to establish themselves, the part of town to be in, and the actual site of their store. In some cases, no store is involved because the right location for shopping for a product is the consumer’s home or place of business. These retailers without stores, known as nonstore retailers, act as direct marketers by contacting customers directly through mail, the Internet, television, telephone, or other means.
D
Timing
Retailers must make their products available at times when consumers are willing and able to buy them. Retailers identify consumer buying patterns and adjust such things as store hours, inventory levels, and promotional programs to accommodate consumers. Retailers also identify special times that generate opportunities to sell merchandise, such as holidays, changing seasons, and special occasions, such as weddings and school graduations.
E
Pricing
Retailers use different pricing strategies to attract different consumers. For example, some stores use low or discount prices to attract economy-minded consumers, while some stores set higher prices to convey an upscale image.
F
Appeal
Retailers work hard at creating an image of their store or product that customers find appealing. Retailers use such promotional techniques as advertising and public relations to create awareness and build interest in their products. These techniques also attract customers to the retailer’s store, provide valuable information about the retailer, and persuade customers to buy.
III
KINDS OF RETAILERS
There are many kinds of retailers and they can be categorized according to their store format. Each format has different management and selling techniques for satisfying the needs of a select group of customers. By using different formats, retailers are able to differentiate themselves from their competition. The most common kinds of retailers include specialty stores, department stores, discount stores, retail chain stores, warehouse retailers, and off-price retailers.
A
Specialty Stores
Specialty stores offer a limited number of different product lines, such as women’s clothing or sporting goods, but provide their customers with an extensive selection of brands and styles within each product line. Examples of specialty stores include those operated by Toys “R” Us, Circuit City, Tower Records, and Eddie Bauer.
B
Department Stores
Department stores feature a wide variety of different product lines and a selection of merchandise within each line. These large stores have many separate departments that sell different types of merchandise, making a wide variety of goods available to consumers in one place. Bloomingdale’s and Macy’s are examples of two national department store chains.
C
Discount Stores
Discount stores, such as Wal-Mart and Kmart, sell a wide variety of merchandise at low prices. Discount retailers focus on attaining a large volume of sales and in return give up some profit margin per sale.
D
Retail Chain Stores
Retail chain stores are multiple stores that carry much of the same merchandise and are managed with the same policies. In many cases chain stores have the same owner, although sometimes individuals own franchises that are part of a chain. Any kind of store, such as a specialty store, a department store, or a supermarket, can be a chain store. For example, The Gap is a chain of specialty stores that offers casual apparel for teenagers and adults. Sears and J. C. Penney are two large department store chains.
E
Warehouse Retailers
Warehouse retailers offer a limited selection of many kinds of products. They deal in large quantities and tend to have lower prices. Home improvement centers and warehouse clubs are examples of warehouse retailers.
F
Off-Price Retailers
Off-price retailers include factory outlet stores, close-out stores, and one-price retailers. These stores sell irregular or flawed merchandise, factory overruns—that is, excess merchandise—and other goods at prices below regular retail prices.
IV
OTHER RETAILERS
Supermarkets and convenience stores are also retailers. Supermarkets offer a broad variety of groceries, as well as nonfood items such as toiletries and school and office supplies. Many supermarkets also offer a wide selection of ready-to-eat items, such as prepared salads, sandwiches, and entrees. Convenience stores, such as 7-11 and White Hen Pantry, also sell a variety of food and other items. Their strategy is to provide customers with a convenient time and place to buy needed items. Convenience stores are usually small and located on busy streets to make it easy for customers to make a quick purchase.
Some retailers do not use a store as their principle means of contacting customers. Instead, these nonstore retailers contact customers by telephone, mail, the Internet, or by personally meeting with potential customers at their home, workplace, or some other convenient location. For example, telemarketers phone potential customers to market goods and services. Some retailers send catalogs to homes and businesses so customers can order merchandise at their convenience. Cybermalls on the Internet allow customers to browse for goods and services by visiting a site on the World Wide Web. Finally, vending machine companies act as nonstore retailers by selling items from machines that are located where people are likely to find them convenient, such as in gas stations or work places.
See also Marketing.
Contributed By:Dale M. Lewison
Microsoft ® Encarta ® 2009. © 1993-2008 Microsoft Corporation. All rights reserved.
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