Chapter 13: Retailing and Wholesaling
Describe the seven different types of Retail Store models and what they focus on as their business models? (Specialty, Department, Supermarket, Convenience, Discount, Off-price and Superstore)
1.Specialty- offers specific products with expert knowledge about the specific product (florists, furniture stores) 2. Department-the most complex offering a wide range of products that can appear as a collection of smaller retail stores managed by one company. The department store offers products at various pricing levels. This type of retailer adds high levels of customer service by adding convenience. (Macy's, Neiman Marcus) 3. Supermarket- Supermarkets have significant buying power and therefore often retail goods at low prices. Usually offer food and drink but have recently diversified to home, electrical, fashion, etc. (Publix) 4. Convenience- located in residential areas, this type of retailer offers a limited range of products at premium prices due to the added value of convenience.(7-Eleven) 5. Discount- This type of retailer offers a variety of discounted products. They offer low prices on less fashionable branded products from a range of suppliers (Walmart) 6. Off-price- retailers who provide high quality goods at cheap prices. They usually sell second-hand goods, off-the-season items etc. (TJ Maxx) 7. Superstore- offer a wide variety of all types of products at low prices to get everything you need from one store. (Super Target, Best Buy)
What is the role and the future of a "shopping center" and a "lifestyle center"? What is a "retail convergence" and why is it so highly competitive?
A shopping center is a group of retail business built on a site that is planned, developed, owned and managed as a unit. (Regional shopping center, community shopping center, neighborhood shopping centers, power centers) Lifestyle centers are smaller, open-air malls with upscale stores, convenient locations, and non retail activities such as playground, hotels, movie theaters, etc. Retail convergence is the merging of consumers, products prices, and retailers. This means great competition between places that were mutually exclusive before like Sears and Best Buy, which makes it hard to differentiate a certain company.
What is a "corporate" chain, franchise chain and a "voluntary" chain in retail?
Corporate chain-two or more outlets that have common ownership and control, centralized buying and merchandising options, and similar lines of merchandise are considered corporate chain stores. They appear in all types of retailing but strongest in department, discount, good, drugstores, and restaurants (can buy in large quantities at lower prices and gain promotional economies) Franchise chain- franchise arrangements are characterized by a contractual relationships between a franchiser (a manufacturer, wholesaler, or service organization) and franchisees (independent entrepreneurs who purchase the right to own and operate any number of units in the franchise systems). (McDonald's, Subway) Voluntary chain- sponsored group of independent retailers that engaged in group buying and common merchandising. These are associations of independent retailers, unlike corporate chains, Wholesaler-sponsored voluntary chains of retailers who engage in bulk buying and collective merchandising are prevalent in many countries. One example is Try Value hardware stores.
Name several types of new retail store models?
E-tailers, dollar stores, warehouse stores, and mom and pop shops (spontaneity and excitement, new and exclusive products, limited time)
What is Omni-channel retailing? Why is it so important in today's environment for retailer to survive?
Omni-channel retailing: integrating all available shopping channels and devices into a seamless customer shopping experience. It is so important because it allows consumers to buy wherever and whenever it is most convenient for them to. In turn, their experience is bettered and their loyalty to the retailer increases. It is also important because physical brick and mortar stores are often going out of business so they need a new channel to sell products. It is creating a seamless cross-channel buying experience that integrates in-store online and mobile shopping Today's buyers shift across online and offline Tactics to deal with this type of buyer such as price matching, personal advice and service, immediacy, convenient locations, easy returns Order online and pickup in store, and then buy additional things in person
What is a "Limited-service Wholesaler" and give three examples like rack jobber, drop shippers?
Limited-service wholesaler: offer fewer services than full-service wholesalers cash-and-carry wholesalers: carry a limited line of fast-moving goods and sell to small retailers for cash. Normally do not deliver. Truck wholesalers: perform primarily a selling and delivery function. Carry a limited line of semi-perishable merchandise (milk, bread) which is sold for cash as deliveries are made to supermarkets, hospitals, restaurants, cafeterias, hotels Dropshippers: do not carry inventory or handle the product. On receiving an order, they select a manufacturer who then ships the merchandise directly to the customer. Operate in bulk industries (coal, lumber, equipment) § Rack jobbers: serve grocery and drug retailers, mostly non-food items. Send delivery trucks to stores where the delivery people set up toys, health and beauty, etc. They price the goods, keep them fresh, set up point-of-purchase displays and keep inventory records. § Producers cooperatives: farmer-owned members that assemble farm produce for sale in local markets. Often attempt to improve product quality and promote a co-op brand name such as sun-maid raisins, Sunkist oranges, diamond nuts. § Mail-order or web wholesalers: send catalogs to or maintain websites for retail, industrial, and institutional customers featuring jewelry, cosmetics, specialty foods, and other small items. Primary customers are businesses in small outlying areas
What is a "service retailer" and what is their role or mission?
Service retailer refers to a retailer whose product line is actually a service, including hotels and motels, banks, airlines, colleges, hospitals, movie theaters, etc. Their mission is to provide a specialized service for the customer They grow faster than product retailers
What is a "category killer" in retailing?
Superstores, giant specialty store that carry a very deep assortment of a particular line (Best Buy) A retail chain store that is dominant and its product category Electronics, home-improvement, books, baby gear, toys
What is the role of a "sales agent" in the marketing value chain? How do they become more powerful and vital for a business?
The "sales agent" is part of the primary marketing value chain. They are responsible for creating, communicating, delivering, and exchanging offerings that have value for customers. They become more powerful and vital for a business when they are able to sell large amounts of a product.
Why has the warehouse retailer model been so success, like COSTCO and SAM's Club?
The warehouse retailer model has been so successful because they only minimally markup offerings, they pass along lower costs to consumers, and they proved "differentiated and high quality" products. They are also convenient and provide a variety of materials in one centralized location. Limited selection of nationally branded and private-label products in a wide range of categories at very low prices. Operate out of big, drafty bare bones to keep prices low.
Is "web-casing" (web rooming) or "show-rooming" a better strategy to sell products?
Web-casing (web-rooming)- the practice of first checking out merchandise online, then buying it in traditional stores.The key for store retailers is to convert these shoppers into buyers when they visit the store. Showrooming: consumers come into a store to check out merchandise and prices and then buy online from a rival. Some retailers are embracing it as an opportunity to highlight the advantages of shopping in person.
What is a wholesaler and what vital role do they play in the economy?
Wholesalers are firms who sell goods and services to those who are buying them for resale or business use. (operate behind the scenes) They play a vital role in the economy because they supply the various items to different companies throughout the world that we use every day. They buy from producers and sell mostly to retailers, industrial consumes and other wholesalers They add value because they perform channel functions: (selling and promoting, buying and assortment building, bulk breaking, warehousing, transportation, financing, risk bearing, market information, management service and advice)
What is the future of the shopping center/mall given the changing nature of retailing?
o A newer form of shopping center is the power center. o Power centers are huge unenclosed shopping centers consisting of a long strip of retail store, including large, free standing anchors such as Walmart, Home Depot, Costco. Each store has its own entrance with parking directly in front for shoppers who only want to go to one store. o New lifestyle centers which consist of mixed-use developments with ground-floor establishments and apartments or condominiums above, combining shopping convenience with the community feel of a neighborhood center
Why did Bass Pro Shops succeed where Cabela's failed? Was it a good idea to buy them?
o Cabela's failed because they fell victim to intense competition from online vendors, while Bass Pro Shops did not. o It was a good idea to buy them because it made one large successful company o Were able to acquire them at a cheap price, the synergies lined up
Bass Pro Shops and Jungle Jim's are two Retail business models that represent "experiential retailing" shopping. Is this a trend and the way of the future for stores or is it virtual reality?
o Experiential retailing is useful to a company to attract people who wouldn't normally enter the store, but VR could be a new wave of experiential retailing that could put old model of massive museum like stores out of business
What is "Green Retailing and why is it catching on among the public?
o Green retailing: adopting environmentally sustainable practices, promoting more environmentally responsible products, launching programs to help customers be more responsible, working with channel partners to reduce environmental impact. o Sustainable building design, construction and operations o Greening up product assortments from renewable sources, sustainable products, packaging, and distribution systems
What are the latest trends in wholesaling as technology changes and disintermediation occurs?
o Wholesalers are facing growing competitive pressures, more demanding customers, new technologies and more direct-buying programs on the part of large industrial, institutional and retail buyers. o Wholesalers today are cutting down on the number of lines they carry, choosing to carry only more profitable ones o Rethinking which services count most in building strong customer relationships o Need to maintain strong presence on social media o Investing in automated warehouses and IT systems, more online business o Increasing the services that they provide to retailers o Wholesalers are opening up their own retail divisions, retailers have become massive wholesalers.
