This document discusses key concepts in retailing and wholesaling from Chapter 13. It defines retailing and identifies different ways to classify retail outlets based on form of ownership, level of service, and merchandise line. It also describes various non-store and store retailing formats. The retailing mix and strategies for implementing a retail strategy are discussed. Concepts like the wheel of retailing and retail life cycle are introduced. Wholesaling functions performed by merchant wholesalers, manufacturers' agents, and brokers are also summarized.

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Retailing and
Wholesaling
CHAPTER
13
Roger A. Kerin
Steven W. H artley
MARKETING
THE CORE
Eighth Edition

2. ©McGraw-Hill Education.
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 13, YOU SHOULD BE ABLE TO: (1 of 2)
1. Identify retailers in terms of the utilities they
provide.
2. Explain the alternative ways to classify
retail outlets.
3. Describe the many methods of nonstore
retailing.
4. Specify the retailing mix actions used to
implement a retailing strategy.
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3. ©McGraw-Hill Education.
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 13, YOU SHOULD BE ABLE TO: (2 of 2)
5. Explain changes in retailing with the wheel
of retailing and the retail life-cycle concepts.
6. Describe the types of firms that perform
wholesaling activities and their functions.
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4. ©McGraw-Hill Education.
SMART STORES ARE CHANGING THE
CUSTOMER JOURNEY!
Technology and Retailing – The Smart Store:
• Biometric Scanners
• 3-D Modeling Tools
• Wearable Technology
• Shopping Apps
• Pay via Smartphones and Watches
Apple Watch
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5. ©McGraw-Hill Education.
THE VALUE OF RETAILING
Retailing
Consumer utilities offered by retailing
1. Place (Wells Fargo)
2. Possession (CarMAx)
3. Form (Ralph Lauren)
4. Time (Dick’s Sporting Goods)
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6. ©McGraw-Hill Education.
FIGURE 13-1 Which retailer best provides which
utilities?
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7. ©McGraw-Hill Education.
THE VALUE OF RETAILING
The global economic impact of retailing:
• 5 of 40 largest businesses in the U.S. are
retailers: Walmart, Costco, Home Depot,
Target, and Lowe’s
• Japan: Aeon
• France: Carrefours
• Germany: Metro Group
• Britain: Tesco
CarMax
Video
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8. ©McGraw-Hill Education.
CLASSIFYING RETAIL OUTLETS
Form of Ownership
Level of Service
Merchandise Line
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9. ©McGraw-Hill Education.
MAKING RESPONSIBLE DECISIONS
How Green Is Your Retailer? The Rankings are Out!
Newsweek
Green
Rankings
Nielsen survey of consumers in 60 countries:
• 55% are willing to pay more for products
with positive environmental impact
• Many retailers are “going green”
• Social and environmental responsibility
Does it matter to you?
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10. ©McGraw-Hill Education.
CLASSIFYING RETAIL OUTLETS
FORMS OF OWNERSHIP
Independent retailer
• Accounts for most of the 3.7 million stores
in the U.S.
Corporate chain
• Has multiple outlets under common
ownership
Contractual systems
• Independently owned stores work together
to act as a chain
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11. ©McGraw-Hill Education.
CLASSIFYING RETAIL OUTLETS
FORM OF OWNERSHIP—CONTRACTUAL SYSTEMS
Retailer-Sponsored Cooperatives
Wholesaler-Sponsored Voluntary Chains
Franchises
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CLASSIFYING RETAIL OUTLETS
LEVEL OF SERVICE
Levels of Service
• Self service: customers perform
functions
• Limited service: provide some services
only
• Full service: provide full services to
customers
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13. ©McGraw-Hill Education.
FIGURE 13-2 Stores vary in terms of the breadth and
depth of their merchandise lines.
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CLASSIFYING RETAIL OUTLETS
TYPE OF MERCHANDISE LINE (1 of 3)
Depth of Product Line
• Specialty Outlets: Limited- and Single-Line
Stores
• Category Killers: Dominate the Market
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CLASSIFYING RETAIL OUTLETS
TYPE OF MERCHANDISE LINE (2 of 3)
Breadth of product line
General merchandise stores
• Broad product line
• Large department stores
Scrambled merchandising
• Carries unrelated product lines in a single
store
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16. ©McGraw-Hill Education.
NONSTORE RETAILING (1 of 3)
Automatic vending machines:
• Serves customers when stores cannot
• 40% cold beverages
• 38% candy and snacks
• 7% food
Direct mail and catalogs: “The store that
comes to the door.”
IKEA
Video
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17. ©McGraw-Hill Education.
NONSTORE RETAILING
Specialty Catalogs for Market Niches:
• Ikea
• Crate & Barrel
• L. L. Bean Fishing
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NONSTORE RETAILING (2 of 3)
Television home shopping:
• Consumers watch a shopping channel,
then order
• 24/7, 364 days a year
• 360 million homes in U.S., U.K.,
Germany, Japan, Italy, and China
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NONSTORE RETAILING (2 of 3)
Online retailing:
• 24-hour access, comparison shop, in-
home privacy
• Melding “bricks and clicks”
• Online discount services
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NONSTORE RETAILING (3 of 3)
Telemarketing
• Using telephone to sell
• Used by 40% of businesses
• Do Not Call Registry
Direct Selling
• Personal interactions in home/office
• Expanding outside of U.S.
Do Not Call
Registry Website
Mary Kay Video
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FIGURE 13-3 Retailing strategy is related to store
positioning and the retailing mix. Note the similarity
between retailing mix and marketing mix.
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22. ©McGraw-Hill Education.
RETAILING STRATEGY
RETAILING MIX (1 of 5)
Retailing mix
Retail pricing
• Original markup
• Maintained markup
• Gross margin
Markdown
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RETAILING STRATEGY
RETAILING MIX (2 of 5)
Everyday low pricing (EDLP)
Everyday fair pricing
Benchmark or signpost items
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RETAILING STRATEGY
RETAILING MIX (3 of 5)
Off-price retailing
• Warehouse club
• Outlet store
• Unpredictable selection
• Consumers search for bargains
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RETAILING STRATEGY
RETAILING MIX (4 of 5)
Store location:
– Central business district
– Regional shopping centers
• Anchor stores
– Strip mall
– Power center
Multichannel retailers
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RETAILING STRATEGY
RETAILING MIX (5 of 5)
Retail communication
• Image
• Shopper marketing
• Shopping experience
Merchandise
• Category management
• Marketing metrics
• Sales per square foot
• Same store sales
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APPLYING MARKETING METRICS
Why Apple Stores May Be
the Best in the United States!
Sales per Square Foot ($) and Same Store Sales Growth (%)
Sales per Square Foot ($) =
Total Sales ($)
Selling Area in Square Feet
Same Store Growth (%) =
Store Sales Year 2 ($) – Store Sales Year 1 ($)
( )
Store Sales Year 1 ($)
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THE CHANGING NATURE OF RETAILING
THE WHEEL OF RETAILING
Wheel of retailing: How new forms of
retail enter the market
Retail life cycle: Growth and decline
McDonald’s Video
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FIGURE 13-4 The wheel of retailing describes how outlets
change over time.
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30. ©McGraw-Hill Education.
FIGURE 13-5 The retail life cycle describes the stage of
growth and decline for retail outlets.
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31. ©McGraw-Hill Education.
FUTURE CHANGES IN RETAILING
Data Analytics
• The “new science of retailing.”
• Benefits retailers:
• Understand how consumers shop.
• Provide personalized, real-time messaging
and promotions.
• Offer innovative products, inventory, manage
prices.
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WHOLESALING
MERCHANT WHOLESALERS (1 of 2)
Merchant wholesalers
Full-service wholesalers
• General merchandise (full-line)
wholesalers
• Specialty merchandise (limited-line)
wholesalers
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WHOLESALING
MERCHANT WHOLESALERS (2 of 2)
Limited-service wholesalers
• Rack jobbers
• Cash and carry wholesalers
• Drop shippers/desk jobbers
• Truck jobbers
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WHOLESALING: AGENTS, BROKERS, AND
MANUFACTURER’S OFFICES
Manufacturers’ agents or reps
Selling agents
Brokers
Manufacturers
• Branch offices
• Sales offices
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35. ©McGraw-Hill Education.
Retailing
Retailing consists of all activities involved in
selling, renting, and providing products and
services to ultimate consumers for personal,
family, or household use.
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Form of Ownership
Form of ownership distinguishes retail
outlets based on whether independent
retailers, corporate chains, or contractual
systems own the outlet.
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Level of Service
Level of service is the degree of service
provided to the customer from three types of
retailers: self-, limited-, and full-service.
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Merchandise Line
A merchandise line describes how many
different types of products a store carries
and in what assortment.
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Depth of Product Line
Depth of product line means that the store
carries a large assortment of each product
item.
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Breadth of Product Line
Breadth of product line describes the
variety of different product items a store
carries.
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Scrambled Merchandising
Scrambled merchandising consists of
offering several unrelated product lines in a
single store.
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Telemarketing
Telemarketing consists of using the
telephone to interact with and sell directly to
consumers.
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Shopping Experience
The shopping experience is a consumer’s
perception of an encounter with a store’s
physical environment, personnel, and
policies and procedures.
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Retailing Mix
The retailing mix consists of the activities
related to managing the store and the
merchandise in the store, which includes
retail pricing, store location, retail
communication, and merchandise.
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Off-Price Retailing
Off-price retailing consists of selling brand-
name merchandise at lower than regular
prices.
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Central Business District
A central business district is the oldest
retail setting, usually located in the
community’s downtown area.
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Regional Shopping Centers
Regional shopping centers are retail
locations that consist of 50 to 150 stores that
typically attract customers who live or work
within a 5- to 10-mile range, often containing
two or three anchor stores.
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Community Shopping Center
A community shopping center is a retail
location that typically has one primary store
(usually a department store branch) and
often 20 to 40 smaller outlets, serving a
population of consumers who are within a
10- to 20-minute drive.
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Strip Mall
A strip mall is a retail location that consists
of a cluster of neighborhood stores to serve
people who are within a 5- to 10-minute
drive.
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Power Center
A power center is a retail location that
consists of a huge shopping strip with
multiple anchor (or national) stores.
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Shopper Marketing
Shopper marketing is the use of displays,
coupons, product samples, and other brand
communications to influence shopping
behavior in a store.
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Category Management
Category management is an approach to
managing the assortment of merchandise in
which a manager is assigned the
responsibility for selecting all products that
consumers in a market segment might view
as substitutes for each other, with the
objective of maximizing sales and profits in
the category.
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Wheel of Retailing
The wheel of retailing is a concept that
describes how new forms of retail outlets
enter the market.
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Retail Life Cycle
The retail life cycle is the process of growth
and decline that retail outlets, like products,
experience, consisting of the early growth,
accelerated development, maturity, and
decline stages.
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Multichannel Retailers
Multichannel retailers are retailers that
utilize and integrate a combination of
traditional store formats and nonstore
formats such as catalogs, television home
shopping, and online retailing.
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Merchant Wholesalers
Merchant wholesalers are independently
owned firms that take title to the
merchandise they handle.
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Manufacturer’s Agents
Manufacturer’s agents are agents who
work for several producers and carry
noncompetitive, complementary
merchandise in an exclusive territory. Also
called manufacturers’ representatives.
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Brokers
Brokers are independent firms or
individuals whose principal function is to
bring buyers and sellers together to make
sales.
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