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Managing Retailing, Wholesaling and Logistics
Part A: Retailing
| Retailing includes all the activities involved in selling goods or services directly to final consumers for personal, non-business use. Any organisation that does this, whether manufacturer, wholesaler or retailer, is doing retailing. It does not matter how the goods are sold (in person, by mail, phone or online) or where (in a store, on the street or at home). |
1. Types of retailers
Retailers fall into three groups: store retailers, nonstore retailers and retail organisations.
| Store type | Description |
| Specialty stores | Narrow product line with a deep assortment (a shoe shop, a bookshop). |
| Department stores | Several product lines, each operated as a separate department. |
| Supermarkets | Large, low-cost, low-margin, high-volume self-service stores for food and household items. |
| Convenience stores | Small stores near residential areas, open long hours, limited lines, higher prices. |
| Discount stores | Standard merchandise at lower prices with lower margins and higher volume. |
| Off-price retailers | Buy surplus or irregular goods at below-wholesale prices and sell at lower prices (factory outlets, warehouse clubs). |
| Superstores and combination stores | Very large stores meeting all routine food and non-food needs. |
| Extreme value or hard-discount stores | A more limited assortment at very low prices. |
| Catalog showrooms | Sell a wide selection of high-markup, fast-moving, brand-name goods at discount prices through catalogues and a showroom. |
Nonstore retailing
- Direct selling: one-to-one selling, one-to-many party selling, and multilevel (network) marketing.
- Direct marketing: including e-commerce and internet retailing.
- Automatic vending: machines selling snacks, drinks and more.
- Buying services: serve specific clients (such as employees of large organisations) who agree to buy from selected retailers for a discount.
Corporate retailing (retail organisations)
These achieve economies of scale, greater purchasing power, wider brand recognition and better-trained employees. The main types are corporate chain stores, voluntary chains, retailer cooperatives, consumer cooperatives, franchise organisations and merchandising conglomerates.
2. The wheel of retailing
Retailers go through stages of growth and decline. A new type of store enters with low prices and low margins. Over time it adds services, upgrades and raises costs and prices. That opens the door for another low-price newcomer, and the wheel turns again.
3. The new retail environment
- New forms of retail compete with each other (online versus store, discounters versus department stores).
- The rise of giant retailers goes along with the decline of mid-market retailers.
- There is growing investment in technology.
- Shopper marketing inside stores has become a priority (everything from displays to digital signage).
4. Retailer marketing decisions
| Decision | What to settle |
| Target market | Who are we serving? Everything else flows from this. |
| Channels | Which channels, or a mix of channels, will reach them? |
| Product assortment and procurement | Breadth and depth of the range; sources, policies and practices for buying. |
| Prices | Retailers choose between high markup/low volume and low markup/high volume, and between EDLP and high-low pricing. |
| Services and store atmosphere | Services mix (pre-purchase, post-purchase, ancillary) and the atmosphere (sight, sound, scent, touch) the store creates. |
| Store activities and experiences | Events, demonstrations and experiences that draw shoppers. |
| Communications | Advertising, sales promotion, personal selling, loyalty programmes, social media. |
| Location | Where to place the store: central business districts, regional shopping centres, community shopping centres, strip malls, or inside larger stores. Location is often the single most important factor. |
Part B: Wholesaling
Wholesaling includes all activities in selling goods or services to those who buy for resale or business use. Wholesalers (also called distributors) are used because they perform some functions better and more cost-effectively than manufacturers can. These functions include selling and promoting, buying and assortment building, bulk breaking, warehousing, transportation, financing, risk bearing, market information and management services and consulting.
| Type of wholesaler | Description |
| Merchant wholesalers | Independently owned businesses that take title to the goods. The largest group: full-service wholesalers and limited-service wholesalers (cash-and-carry, truck jobbers, drop shippers, rack jobbers, producers’ cooperatives, mail-order). |
| Brokers and agents | Do not take title; they bring buyers and sellers together and are paid a commission. |
| Manufacturers’ and retailers’ branches and offices | Wholesaling operations owned by the manufacturer or retailer itself: sales branches, sales offices and purchasing offices. |
| Miscellaneous wholesalers | Specialised types such as agricultural assemblers and auction companies. |
Like retailers, wholesalers must decide on target markets, product assortment and services, price, promotion and place. The most successful wholesalers adapt their services to what their suppliers and target customers really need. The trend is towards fewer, larger and more tech-driven wholesalers, and many have moved into added-value services.
Part C: Market logistics
| In plain English Market logistics is about planning, implementing and controlling the physical flow of materials and final goods from points of origin to points of use, to meet customer requirements at a profit. It goes beyond old-style “physical distribution” because it covers inbound logistics, outbound logistics and reverse logistics. Its larger idea is supply chain management (SCM), the coordinated effort of suppliers, purchasing agents, manufacturers, marketers, channel members and customers. |
Market-logistics decisions
| Decision | Key question |
| Order processing | How quickly and accurately can orders be received, handled and billed? Modern firms use electronic data interchange to speed this up. |
| Warehousing | How many and what kind of warehouses (storage versus distribution centres) are needed, and where? |
| Inventory | When to reorder (order point) and how much to order (order quantity). Too little means lost sales; too much means high carrying costs. Many firms aim for just-in-time systems. |
| Transportation | Which modes (rail, air, truck, ship, pipeline) offer the best balance of speed, dependability and cost? Choice also affects product pricing and condition on arrival. |
Logistics objectives are to deliver the desired customer service at the lowest total cost. Tools include information systems, RFID tags and software, as well as integrated logistics systems that coordinate all the parts. Major gains in efficiency have come from advances in information technology. Firms also weigh the trade-offs between speed, cost and service, because improving one often hurts another, and must consider environmental and social impacts.
| Remember this Retail types: store, nonstore, retail organisations.Wheel of retailing: low-price entry, trading up, new low-price entrant.Wholesaler types: merchant, brokers and agents, manufacturers’ and retailers’ branches, miscellaneous.Logistics decisions: order processing, warehousing, inventory, transportation. |
