TYPES OF RETAILERSOver time, different types ofretailers have emerged andprospered because they haveattracted and maintained asignificant customer base.
FOOD RETAILERS Supermarkets Supercenters Warehouse Clubs Convenience Stores Box(Limited-Line) Store
SUPERMARKETS A Conventional supermarket is a self-servicedfood store offering groceries, meat, and producewith limited sales of non food items, such ashealth and beauty aids and general merchandise. Whereas conventional supermarkets carry about30,000 SKUs, Limited assortment supermarkets,also called extreme value food retailers, onlystock 1,250 SKUs. Rather than carrying twenty brands of laundrydetergent, limited assortment stores offer one ortwo brands and sizes, one of which is a storebrand. Stores are designed to maximize efficiencyand reduce costs.
SUPERCENTERS The fastest growing retail category, are large storesthat combine a supermarket with a full-line discountstore. By offering board assortments of grocery and generalmerchandise products under one roof, super centersprovide a one-stop shopping experience. Hypermarkets: are also large combination food andgeneral merchandise stores. Hypermarkets typicallystock fewer SKUs than supercenters - between 40,000and 60,000 items ranging from groceries, hardware,and sports equipment to furniture and appliance tocomputers and electronics.
WAREHOUSE CLUBS Warehouse clubs are retailers that offer a limited andirregular assortment of food and general merchandise withlittle service at low prices for ultimate consumers andsmall businesses. Warehouse clubs are large (at least 100,000-150,000square feet) and typically located in low-rent districts.They have simple interiors and concrete floors. Warehouse clubs can offer low prices because they uselow-cost locations, inexpensive store designs, and littlecustomer service and keep inventory holding costs low bycarrying a limited assortment of fast selling items. Most warehouse clubs have two types of members:wholesale members who own small businesses andindividual members who purchase for their own use.
CONVENIENCE STORES Convenience stores provide a limited variety andassortment of merchandise at a convenientlocation in 2,000- 3,000 square foot stores withspeedy checkout. They are the modern version of the neighborhoodmom-and pop grocery/general store. Customerscan shop very quickly. Due to their small size and high sales,convenience stores typically receive deliveriesevery day. Convenience stores only offer limitedassortments and variety, and they charge higherprices than supermarkets.
BOX(LIMITED-LINE) STORE The Box (Limited-Line) Store is a food baseddiscounter that focuses on a small selection of items,moderate hours of operation (compared to othersupermarkets), few additional services, and limitedmanufacturer brands. There stock usually less items, few or norefrigerated perishables, and few sizes and brandsper item. Items are displayed in cut cases.Customers do their own bagging. Box stores depend on low –priced private-labelbrands. They aim to price merchandise 20 to 30percent below supermarkets.
GENERAL MERCHANDISERETAILERS Department stores Full-line discount stores Specialty storesDrug storesCategory SpecialistsHome improvement centers Off-price retailers Extreme value retailers Factory Outlet Stores Hypermarkets Variety Store Flea Market
DEPARTMENT STORES Department stores are retailers that carry a broadvariety and deep assortment, offer customerservices, and organize their stores into distinctlyseparate departments for displaying merchandise. Traditionally, department stores attractedcustomers by offering a pleasing ambience,attentive service, and a wide variety ofmerchandise under one roof. They sold both soft goods (apparel and bedding)and hard goods (appliances, furniture, andconsumer electronics). But now most department stores focus almostexclusively on soft goods.
FULL-LINE DISCOUNT STORES Full-line discount stores are retailers that offer abroad variety of merchandise, limited service, andlow prices. Discount stores offer both private and national label,but these brands are typically less fashion orientedthan the brands in department stores. Target is becoming one of the most successfulretailers in terms of sales growth and profitability.Target succeeds because its stores offer fashionablemerchandise at low prices in a pleasant shoppingenvironment.
SPECIALTY STORES Specialty stores concentrate on a limited number ofcomplementary merchandise categories and providea high level of service in relatively small stores. Specialty stores tailor their retail strategy toward avery specific market segment by offering deep butnarrow assortments and sales associate expertise. Because specialty retailers focus on specific marketsegments, they are vulnerable to shifts in consumertastes and preferences.
DRUGSTORES Drugstores are specialty stores that concentrateon health and personal grooming merchandise. Drugstores, particularly the national chains, areexperiencing sustained sales growth because theaging population requires more prescriptiondrugs. Drugstores are also being squeezed byconsiderable competition from pharmacies indiscount stores and supermarkets, as well asfrom prescription mail-order retailers. Drugstore retailers are using systems to allowpharmacists time to provide personalized service.
CATEGORY SPECIALISTS Are big box discount stores that offer a narrow butdeep assortment of merchandise. These retailers are basically discount specialtystores. Most category specialists use a self-serviceapproach, but some specialists in consumerdurables offer assistance to customers.
HOME IMPROVEMENT CENTERS One of the largest and most successful types ofcategory specialist is the home improvementcenter. A home improvement center is a categoryspecialist offering equipment and material usedby do-it-yourselfers and contractors to makehome improvements.
OFF-PRICE RETAILERS Offer an inconsistent assortment of brand namemerchandise at low prices. Off-price retailers sell brand name and evendesigner label merchandise at low prices throughtheir unique buying and merchandisingpractices. Most merchandise is bought opportunisticallyfrom manufacturers or other retailers withexcess inventory at the end of the season. Due to this pattern of opportunistic buying,customers can’t be confident that the same typeof merchandise will be in stock each time theyvisit the store.
EXTREME VALUE RETAILERS Are small, full-line discount stores that offer alimited merchandise assortment at very lowprices. Extreme value retailers are one of the fastestgrowing segments in retailing. Like limitedassortment food retailers, extreme value full-lineretailers reduce costs and maintain low prices byoffering a limited assortment and operating inlow-rent, urban, or rural locations.
FACTORY OUTLET STORES Outlet Stores are off-price retailers owned bymanufacturers or by department or specialtystore chains and are frequently referred to asfactory outlets. A factory outlet is a manufacturer–owned storeselling manufacturer closeouts, discontinuedmerchandise, irregulars, cancelled orders, andsometimes, in season, first quality merchandise. They closely resemble shopping centers, both interms of size, layout, and in carefully controlledtenant mix, with manufacturers operatingseparate units on a single co-coordinated site.
HYPERMARKETS A hypermarket is a very large retail storeoffering low prices. It combines a discount store and superstore foodretailer in one warehouse like building. Hypermarkets can be up to 300,000 square feetand stock over 50,000 different items. All hypermarkets are based on three concepts of:one stop shopping, ample free parking and adiscount pricing strategy.
VARIETY STORE A variety store handles a wide assortment ofinexpensive and popularly priced goods andservices, such as stationary, gift items, women’saccessories, health and beauty aids, lighthardware, toys, house ware and confectioneryitems. They do not carry full product lines, may not bedepartmentalized and do not deliver products. Transactions are often on a cash basis. There areoften displays and few salespeople.
FLEA MARKET A flea market has many retail vendors offering arange of products at discount prices in plainsurroundings. It is rooted in the centuries old tradition of streetselling -shoppers touch, sample and haggle over theprices of items. Price-conscious consumers who find that other retailformats have upgraded merchandise and customerservice or raised prices frequent them. Many flea markets are located in nontraditional sitesnot normally associated with retailing: racetracks,stadiums and arenas.
NON STORE RETAILERS Types of retailers thatoperate primarily throughnon-store channels
ELECTRONIC RETAILERS Electronic Retailing (also called e-tailing, onlineretailing, and Internet retailing) is a retail format inwhich the retailers communicate with customers andoffer products and service for sale over the Internet. Internet continues to provide opportunities forentrepreneurs in the retail industry, it is now primarilyused by traditional retailers as a tool to complementtheir store and catalog offerings, grow their revenues,and provide more value for their customers. Most of the retailers that sell merchandise exclusivelyover the Internet target niche markets – markets thatare so small and dispersed that they cannot beeconomically serviced by stores.
CATALOG AND DIRECT-MAILRETAILERS Catalog retailing is a non-store retail format in whichthe retail offerings are communicated through acatalog, whereas direct-mail retailers communicatewith their customers using letters and brochures. In 2003, $125 billion of merchandise and serviceswere sold through catalogs, and over 17 billioncatalogs were distributed in the United States. The merchandise categories with the greatest catalogsales are apparel, gifts, books, and home décor.
DIRECT SELLING Direct selling is a retail format in whichsalespeople, frequently independentbusinesspeople, contact customers directly in aconvenient location, either at the customer’shome or at work; demonstrate merchandisebenefits and/or explain a service; take an order;and deliver the merchandise or perform theservice. Direct selling is a highly interactive form ofretailing in which considerable information isconveyed to customers through face-to facediscussions with salespeople.
TELEVISION HOME SHOPPING Television home shopping is a retail format inwhich customers watch a TV program thatdemonstrates merchandise and then place ordersfor the merchandise by telephone. The three forms of electronic home shoppingretailing are o Cable channels dedicated to television shopping o Infomercials o Direct-response advertising
VENDING MACHINE RETAILING Vending machine retailing is a non-store formatin which merchandise or services are stored in amachine and dispensed to customers when theydeposit cash or use a credit card. Vending machines are placed at convenience,high-traffic locations, such as in the workplace oron university campuses, and primarily containsnacks and drinks.
INDEPENDENT, SINGLE-STOREESTABLISHMENTS Retailing is one of the few sectors in our economyin which entrepreneurial activity is extensive. Many of these retail start-ups are ownermanaged, which means management has directcontact with customers and can respond quicklyto their needs. Small retailers are also very flexible and cantherefore react quickly to market changes andcustomer needs.
CONT. To better compete against corporate chains, someindependent retailers join a wholesale-sponsoredvoluntary cooperative group, which is anorganization operated by a wholesaler offering amerchandising program to small, independentretailers on a voluntary basis. In addition to buying, warehousing, anddistribution, these groups offer members servicessuch as advice on store design, and layout, siteselection, bookkeeping and inventory managementsystems, and employee training programs.
CORPORATE RETAIL CHAINS A retail chain is a company that operatesmultiple retail units under common ownershipand usually has centralized decision makingfor defining and implementing its strategy.
FRANCHISING Franchising is a contractual agreement betweena franchisor and a franchisee that allows thefranchisee to operate a retail outlet using a nameand format developed and supported by thefranchisor. In a franchise contract, the franchisee pays alump sum plus a royalty on all sales for the rightto operate a store in a specific location. Thefranchisee also agrees to operate the outlet inaccordance with procedures prescribed by thefranchisor.
LEASED DEPARTMENT A Leased Department is a department in a retailstore rented generally by a manufacturer. Thelessee is responsible for all aspects of businessand pays the store a rent. The store may impose operating restrictions forthe leased department to ensure the overallconsistency. The leased departments choose to operate incategories that are generally on the fringe of thestore’s major product lines, such as in-storebeauty salons, banks, photographic studios andfood courts.
CONSUMER CO-OPERATIVES A Consumer Cooperative is a retail firm in which agroup of consumers invest in the enterprise. Theofficers are elected. Consumer-members share the profits or savings thataccrue. Such retailers are many in number but smallin size and are most popular in food retailing. They are started mainly to guard against themalpractice that many retailers indulge in andeither charge higher prices or offer inconsistentquality of merchandise.