{"id":7405,"date":"2016-09-30T14:12:52","date_gmt":"2016-09-30T14:12:52","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/masterybusiness2xngcxmasterspring2016\/?post_type=chapter&p=7405"},"modified":"2019-01-05T01:42:39","modified_gmt":"2019-01-05T01:42:39","slug":"reading-types-of-retailers","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/chapter\/reading-types-of-retailers\/","title":{"raw":"Reading: Retailers","rendered":"Reading: Retailers"},"content":{"raw":"\"A<\/a>\r\n

Introduction<\/h2>\r\nRetailing involves all activities required to market consumer goods and services to ultimate consumers who are purchasing for individual or family needs.\r\n\r\nBy definition, B2B purchases are not included in the retail channel since they are not made for individual or family needs. In practice\u00a0this can be confusing because many retail outlets do serve both consumers and business customers\u2014like Home Depot, which has a Pro Xtra program for selling\u00a0directly to builders and contractors. Generally, retailers that have a significant B2B or wholesale business report those numbers separately in their financial statements, acknowledging that they are separate lines of business within the same company. Those with a pure retail emphasis do not seek to exclude business purchasers. They simply focus their\u00a0offering to\u00a0appeal to individual consumers, knowing that some businesses may also choose to purchase from them.<\/span>\r\n\r\nWe typically think of a store when we think of a retail sale, even though retail sales occur\u00a0in other places and settings. For instance, they can be made\u00a0by a Pampered Chef salesperson in someone's home. Retail sales also happen\u00a0online, through catalogs, by automatic vending machines, and in\u00a0hotels and restaurants. Nonetheless, despite tremendous growth in both nontraditional retail outlets and online sales, most retail sales still take place\u00a0in brick-and-mortar stores.<\/span>\r\n\r\nBeyond the distinctions in the products they provide, there are structural differences among retailers that influence their strategies and results. One of the reasons the retail industry is so large and powerful is its diversity. For example,\u00a0stores vary in size, in the kinds of services that are provided, in the assortment of merchandise they carry, and in their ownership and management structures.\r\n

Department Stores<\/h2>\r\nDepartment stores are characterized by their very wide product mixes. That is, they carry many different types of merchandise, which may include hardware, clothing, and appliances. Each type of merchandise is typically displayed in a different section or department within the store. The depth of the product mix depends on the store, but department stores' primary distinction is the ability to provide a wide range of products within a single store. For example, people shopping at Macy's can buy clothing for a woman, a man, and children, as well as house wares such as dishes and luggage.\r\n

Chain Stores<\/h2>\r\nThe 1920s saw the evolution of the chain store movement. Because chains were so large, they were able to buy a wide variety of merchandise in large quantity discounts. The discounts substantially lowered their cost compared to costs of single unit retailers. As a result, they could set retail prices that were lower than those of their small competitors and thereby increase their share of the market. Furthermore, chains were able to attract many customers because of their convenient locations, made possible by their financial resources and expertise in selecting locations.\r\n\r\n\"A<\/a>\r\n

Supermarkets<\/h2>\r\nSupermarkets evolved in the 192os and 1930s. For example, Piggly Wiggly Food Stores, founded by Clarence Saunders around 1920, introduced self-service and customer checkout counters. Supermarkets are large, self-service stores with central checkout facilities. They carry an extensive line of food items and often nonfood products. There are 37,459 supermarkets operating in the United States,\u00a0and the average store now carries nearly\u00a044,000 products in roughly 46,500 square feet of space. The average customer visits a store just under twice a week, spending just over $30 per trip. Supermarkets' entire approach to the distribution of food and household cleaning and maintenance products is to offer\u00a0large assortments these\u00a0goods at each store at a minimal\u00a0price.\r\n

Discount\u00a0Retailers<\/h2>\r\nDiscount retailers, like Ross Dress for Less and Grocery Outlet, are characterized by a focus\u00a0on price as their main sales appeal. Merchandise assortments are generally broad\u00a0and include\u00a0both hard and soft goods, but assortments are typically limited to the most popular items, colors, and sizes. Traditional stores are usually large, self-service operations with long hours, free parking, and relatively simple fixtures. Online retailers such as Overstock.com have aggregated products and offered them at deep discounts. Generally, customers sacrifice having a reliable assortment of products to receive deep discounts on the available\u00a0products.\r\n

Warehouse Retailers<\/h2>\r\nWarehouse\u00a0retailers provide a bare-bones shopping experience at very low prices. Costco is the dominant warehouse retailer, with $79.7 billion in sales in 2014. Warehouse retailers streamline all operational aspects of their business and pass on the efficiency savings to customers. Costco generally uses a cost-plus pricing structure and provides goods in wholesale quantities.\r\n

Franchises<\/h2>\r\n\"A<\/a>\r\n\r\nThe franchise approach brings together national chains and local ownership. An owner purchases a franchise which gives her the right to use the firm's business model and brand for a set period of time. Often, the franchise agreement includes well-defined guidance for the owner, training, and on-going support. The owner, or franchisee, builds and manages the\u00a0local business. Entrepreneur<\/em> magazine posts a list each year of the 500 top franchises according to an evaluation of financial strength and stability, growth rate, and size. The 2016 list<\/a> is led by Jimmy John's gourmet sandwiches, Hampton by Hilton midprice hotels, Supercuts hair salon, Servpro insurance\/disaster restoration and cleaning, and Subway restaurants.\r\n

Malls and Shopping Centers<\/h2>\r\nMalls and shopping centers are successful because they provide customers with a wide assortment of products across many stores. If you want to buy a suit or a dress, a mall provides many alternatives in one location. Malls\u00a0<\/i>are larger centers that typically have one or more department stores as major tenants. Strip malls\u00a0<\/em>are a common string of stores along major traffic routes, while isolated locations are freestanding sites not necessarily in heavy traffic areas. Stores in isolated locations must use promotion or some other aspect of their marketing mix to attract shoppers.\r\n

Online Retailing<\/h2>\r\nOnline retailing is unquestionably a dominant force in the retail industry, but today it accounts for only a small percentage of total retail sales. Companies like Amazon and Geico complete all or most of their sales online. Many other online sales result from online sales from traditional retailers, such as purchases made at Nordstrom.com. Online marketing plays a significant role in preparing the buyers who shop in stores. In a similar integrated approach, catalogs that are mailed to customers' homes drive online orders. In a survey on its Web site, Land's End found that 75 percent of\u00a0customers who were making purchases had reviewed the catalog first.[footnote]http:\/\/www.nytimes.com\/2015\/01\/26\/business\/media\/catalogs-after-years-of-decline-are-revamped-for-changing-times.html?_r=0[\/footnote]\r\n\r\n\"US<\/a>\r\n

Catalog Retailing<\/h2>\r\nCatalogs have long been used as a marketing device to drive phone and in-store sales. As online retailing began to grow, it had a significant impact on catalog sales. Many retailers who depended on catalog sales\u2014Sears, Land's End, and J.C. Penney, to name a few\u2014suffered as online retailers and online sales from traditional retailers pulled convenience shoppers away from catalog sales. Catalog mailings peaked in 2009 and saw a significant decrease through 2012. In 2013, there was a small increase in catalog mailings. Industry experts note that catalogs are changing, as is their role in the retail marketing process. Despite significant declines, U.S. households still receive 11.9 billion catalogs each year.[footnote]http:\/\/www.forbes.com\/sites\/loisgeller\/2012\/10\/16\/why-are-printed-catalogs-still-around\/#75a143e17fcb[\/footnote]\r\n

Nonstore Retailing<\/h2>\r\n\"Benefit<\/a>\r\n\r\nBeyond those mentioned in the categories above, there's a wide range of traditional and innovative retailing approaches. Although\u00a0the Avon lady largely disappeared at the end of the last century, there are still in-home sales from\u00a0Arbonne facial products, cabi women's clothing, WineShop at Home, and others. Many of\u00a0these models are based on the idea of\u00a0a woman using her\u00a0personal network to sell products to her friends and their friends, often in a party setting.\r\n\r\nVending machines and point-of-sale kiosks have long been a popular retail device. Today they are becoming\u00a0more targeted, such as companies selling easily forgotten items\u2014such as\u00a0small electronics devices and makeup items\u2014to travelers in airports.\r\n\r\nEach of these retailing approaches can be customized to meet the needs of the target buyer or combined to span a range of needs.","rendered":"

\"A<\/a><\/p>\n

Introduction<\/h2>\n

Retailing involves all activities required to market consumer goods and services to ultimate consumers who are purchasing for individual or family needs.<\/p>\n

By definition, B2B purchases are not included in the retail channel since they are not made for individual or family needs. In practice\u00a0this can be confusing because many retail outlets do serve both consumers and business customers\u2014like Home Depot, which has a Pro Xtra program for selling\u00a0directly to builders and contractors. Generally, retailers that have a significant B2B or wholesale business report those numbers separately in their financial statements, acknowledging that they are separate lines of business within the same company. Those with a pure retail emphasis do not seek to exclude business purchasers. They simply focus their\u00a0offering to\u00a0appeal to individual consumers, knowing that some businesses may also choose to purchase from them.<\/span><\/p>\n

We typically think of a store when we think of a retail sale, even though retail sales occur\u00a0in other places and settings. For instance, they can be made\u00a0by a Pampered Chef salesperson in someone’s home. Retail sales also happen\u00a0online, through catalogs, by automatic vending machines, and in\u00a0hotels and restaurants. Nonetheless, despite tremendous growth in both nontraditional retail outlets and online sales, most retail sales still take place\u00a0in brick-and-mortar stores.<\/span><\/p>\n

Beyond the distinctions in the products they provide, there are structural differences among retailers that influence their strategies and results. One of the reasons the retail industry is so large and powerful is its diversity. For example,\u00a0stores vary in size, in the kinds of services that are provided, in the assortment of merchandise they carry, and in their ownership and management structures.<\/p>\n

Department Stores<\/h2>\n

Department stores are characterized by their very wide product mixes. That is, they carry many different types of merchandise, which may include hardware, clothing, and appliances. Each type of merchandise is typically displayed in a different section or department within the store. The depth of the product mix depends on the store, but department stores’ primary distinction is the ability to provide a wide range of products within a single store. For example, people shopping at Macy’s can buy clothing for a woman, a man, and children, as well as house wares such as dishes and luggage.<\/p>\n

Chain Stores<\/h2>\n

The 1920s saw the evolution of the chain store movement. Because chains were so large, they were able to buy a wide variety of merchandise in large quantity discounts. The discounts substantially lowered their cost compared to costs of single unit retailers. As a result, they could set retail prices that were lower than those of their small competitors and thereby increase their share of the market. Furthermore, chains were able to attract many customers because of their convenient locations, made possible by their financial resources and expertise in selecting locations.<\/p>\n

\"A<\/a><\/p>\n

Supermarkets<\/h2>\n

Supermarkets evolved in the 192os and 1930s. For example, Piggly Wiggly Food Stores, founded by Clarence Saunders around 1920, introduced self-service and customer checkout counters. Supermarkets are large, self-service stores with central checkout facilities. They carry an extensive line of food items and often nonfood products. There are 37,459 supermarkets operating in the United States,\u00a0and the average store now carries nearly\u00a044,000 products in roughly 46,500 square feet of space. The average customer visits a store just under twice a week, spending just over $30 per trip. Supermarkets’ entire approach to the distribution of food and household cleaning and maintenance products is to offer\u00a0large assortments these\u00a0goods at each store at a minimal\u00a0price.<\/p>\n

Discount\u00a0Retailers<\/h2>\n

Discount retailers, like Ross Dress for Less and Grocery Outlet, are characterized by a focus\u00a0on price as their main sales appeal. Merchandise assortments are generally broad\u00a0and include\u00a0both hard and soft goods, but assortments are typically limited to the most popular items, colors, and sizes. Traditional stores are usually large, self-service operations with long hours, free parking, and relatively simple fixtures. Online retailers such as Overstock.com have aggregated products and offered them at deep discounts. Generally, customers sacrifice having a reliable assortment of products to receive deep discounts on the available\u00a0products.<\/p>\n

Warehouse Retailers<\/h2>\n

Warehouse\u00a0retailers provide a bare-bones shopping experience at very low prices. Costco is the dominant warehouse retailer, with $79.7 billion in sales in 2014. Warehouse retailers streamline all operational aspects of their business and pass on the efficiency savings to customers. Costco generally uses a cost-plus pricing structure and provides goods in wholesale quantities.<\/p>\n

Franchises<\/h2>\n

\"A<\/a><\/p>\n

The franchise approach brings together national chains and local ownership. An owner purchases a franchise which gives her the right to use the firm’s business model and brand for a set period of time. Often, the franchise agreement includes well-defined guidance for the owner, training, and on-going support. The owner, or franchisee, builds and manages the\u00a0local business. Entrepreneur<\/em> magazine posts a list each year of the 500 top franchises according to an evaluation of financial strength and stability, growth rate, and size. The 2016 list<\/a> is led by Jimmy John’s gourmet sandwiches, Hampton by Hilton midprice hotels, Supercuts hair salon, Servpro insurance\/disaster restoration and cleaning, and Subway restaurants.<\/p>\n

Malls and Shopping Centers<\/h2>\n

Malls and shopping centers are successful because they provide customers with a wide assortment of products across many stores. If you want to buy a suit or a dress, a mall provides many alternatives in one location. Malls\u00a0<\/i>are larger centers that typically have one or more department stores as major tenants. Strip malls\u00a0<\/em>are a common string of stores along major traffic routes, while isolated locations are freestanding sites not necessarily in heavy traffic areas. Stores in isolated locations must use promotion or some other aspect of their marketing mix to attract shoppers.<\/p>\n

Online Retailing<\/h2>\n

Online retailing is unquestionably a dominant force in the retail industry, but today it accounts for only a small percentage of total retail sales. Companies like Amazon and Geico complete all or most of their sales online. Many other online sales result from online sales from traditional retailers, such as purchases made at Nordstrom.com. Online marketing plays a significant role in preparing the buyers who shop in stores. In a similar integrated approach, catalogs that are mailed to customers’ homes drive online orders. In a survey on its Web site, Land’s End found that 75 percent of\u00a0customers who were making purchases had reviewed the catalog first.[1]<\/sup><\/a><\/p>\n

\"US<\/a><\/p>\n

Catalog Retailing<\/h2>\n

Catalogs have long been used as a marketing device to drive phone and in-store sales. As online retailing began to grow, it had a significant impact on catalog sales. Many retailers who depended on catalog sales\u2014Sears, Land’s End, and J.C. Penney, to name a few\u2014suffered as online retailers and online sales from traditional retailers pulled convenience shoppers away from catalog sales. Catalog mailings peaked in 2009 and saw a significant decrease through 2012. In 2013, there was a small increase in catalog mailings. Industry experts note that catalogs are changing, as is their role in the retail marketing process. Despite significant declines, U.S. households still receive 11.9 billion catalogs each year.[2]<\/sup><\/a><\/p>\n

Nonstore Retailing<\/h2>\n

\"Benefit<\/a><\/p>\n

Beyond those mentioned in the categories above, there’s a wide range of traditional and innovative retailing approaches. Although\u00a0the Avon lady largely disappeared at the end of the last century, there are still in-home sales from\u00a0Arbonne facial products, cabi women’s clothing, WineShop at Home, and others. Many of\u00a0these models are based on the idea of\u00a0a woman using her\u00a0personal network to sell products to her friends and their friends, often in a party setting.<\/p>\n

Vending machines and point-of-sale kiosks have long been a popular retail device. Today they are becoming\u00a0more targeted, such as companies selling easily forgotten items\u2014such as\u00a0small electronics devices and makeup items\u2014to travelers in airports.<\/p>\n

Each of these retailing approaches can be customized to meet the needs of the target buyer or combined to span a range of needs.<\/p>\n\n\t\t\t

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Candela Citations<\/h3>\n\t\t\t\t\t
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CC licensed content, Original<\/div>