Retailing and Wholesaling

• Retailing includes business activities that add value to products and services sold to consumers for personal or family use.
• Wholesaling involves buying goods in bulk from manufacturers at a discounted price.
• These goods are then sold to retailers at a higher price for repackaging and resale to consumers at an even higher price.
• The distribution channel is a network of firms facilitating the movement of products, from production to the final point of sale.
• Manufacturers typically sell their products to retailers or wholesalers.
• Wholesalers purchase products from manufacturers and then resell them to retailers, who in turn sell them to consumers.

Activities of Retailing

• Vertical integration is when firms perform multiple sets of activities within the channel, like retailer investments in wholesaling or manufacturing.
• Backward integration happens when a retailer undertakes distribution and manufacturing activities (e.g., operating warehouses or designing private label merchandise).
• Forward integration is when manufacturers start engaging in retailing activities.

Functions Performed by Retailers

• Retailers provide an assortment of products and services, specializing in specific assortments.
• Retailers offer products in smaller quantities tailored to individual consumers' and households' consumption patterns.
• Retailers maintain user-friendly inventory, ensuring product availability when consumers want it.
• Retailers offer services to ease customer purchases and product use.
• Retailers increase the value of products and services by providing assortments, breaking bulk, holding inventory, and offering services.

Economic Significance of Retailing

• Retailing supports communities.
• It drives retail sales.
• Provides employment opportunities.
• Involves global retailers.

Opportunities in Retailing

• Management roles
• Entrepreneurial ventures.

Retail Management Decision Process

• Understanding the world of retailing involves considering critical environmental factors, like the macro and micro environments.
• The macroenvironment’s impact includes technological, social, ethical, legal, and political factors.
• Microenvironment focuses on competitors and customers.

Competitors

• Competitors are any entities that are rivals against another.
• Intratype competition involves competition between similar types of retailers.
• Intertype competition is competition between retailers selling similar merchandise but using different formats (e.g., discount and department stores).
• Customers are individuals or organizations that purchase goods or services from a store or business.

Developing a Retail Strategy

• It outlines how a firm will allocate resources to achieve its objectives.
• It includes goals such as defining the target market, determining the nature of merchandise and services to satisfy that market, and building a long-term competitive advantage.

Strategic Decision Areas

• The key strategic decision areas involve determining market, financial aspects, location, organizational structure, human resources, information systems, supply chain, and customer relationship management strategies.
• The retail mix encompasses the decision variables that retailers use to meet customer needs and influence their purchasing decisions.
• Elements includes customer service, store design and display, communication, location, merchandise assortments, and pricing.

Ethical and Legal Considerations

• Ethics involves the principles that govern behavior of individuals and companies, indicating what is right and wrong.
• Variety and assortment help even competitor retailers differentiate themselves.
• Variety represents the number of merchandise categories a retailer offers, also known as the breadth of merchandise.
• Assortment represents the number of different items within a merchandise category, also known as the depth of merchandise.
• The stock-keeping unit refers to an individual item of merchandise.

Food Retailers

• Over the past twenty years there have been dramatic changes to the food retail landscape.
• Conventional supermarkets now account for only 61% of food sales.
• Conventional supermarkets are self-service food stores offering groceries, meat, and produce with limited sales of non-food items.
• Supercenters, the fastest growing retail category, are large stores that combine with full line discount stores.
• Warehouse clubs offer limited and irregular assortments of food and general merchandise.
• Convenience stores provide a limited variety and assortment of merchandise at convenient locations.

General Merchandise Retailers

• The major types are: department stores, full line discount stores, specialty stores, category specialists, home improvement centers, off-price retailers, and extreme value retailers.
• Department stores carry a broad variety and deep assortment of merchandise, and offer customer service, specialty stores, and category specialists.
• Full line discount stores offer a broad variety of merchandise, limited services, and low prices, featuring both private label and national brands that are typically less fashion-oriented than those in department stores.
• Specialty stores concentrate on a limited number of complementary merchandise categories, providing a high level of service in relatively small stores.
• Drug stores focus on health and personal grooming merchandise.
• Pharmaceuticals often represent over 50% of drugstore sales and an even greater percentage of their profit.
• Extreme value retailers are small, full-line discount stores that offer a limited merchandise assortment at very low prices.
• Off-price retailers offer an inconsistent assortment of brand-name merchandise at a low price.
• Non-store retailers include the internet, the catalogs, direct mail, direct selling, television home shopping, and vending machines.
• Electronic retailers which are also called e-tailing, online retailing, and internet retailing, communicate with customers and offer products and services for sale over the internet.
• Catalog and direct mail retailers are a non-store retail format in which the retail offering is communicated to customers through a catalog for broad variety and specific brochures.
• Direct selling is a retail format in which salespeople directly contact customers in convenient locations, such as their homes or workplaces.
• Television home shopping: Customers watch TV programs that demonstrate merchandise and can order the items by telephone.
• Cable channels are fully dedicated to television shopping.
• Direct response advertising includes advertisements on TV and radio.
• Infomercials are TV programs typically 30 minutes in length, combining entertainment with product demonstration.
• Vending machine retailing is a non-store format where merchandise or services are stored in a machine and dispensed to customers upon payment via cash or card.
• Service retailing primarily sells services rather than merchandise.
• Intangible services cannot be seen by the customer.
• Simultaneous production and consumption happens because the product is typically made in a factory, and is stored and sold in a retailer before consumption.
• Perishable services exist because the creation and consumption of services are inseparable, services are perishable.
• Inconsistency of service qualities is reasonably assured with tight quality control measures via automated machinery.
• Sari-sari stores are convenience stores found in the Philippines.
• Sari-sari is a Tagalog word meaning "variety" or "sundry" and the stores hold economic and social importance, prevalent in neighborhoods.