Case Study Wal-Mart. Definitions. Retailing and Wholesaling. Chapter 13. Retailing. Retailer. Retailer The Gap

Size: px
Start display at page:

Download "Case Study Wal-Mart. Definitions. Retailing and Wholesaling. Chapter 13. Retailing. Retailer. Retailer The Gap"

Transcription

1 Chapter 13 and Case Study Wal-Mart Current annual sales approximately $260 billion Value proposition is Always Low Prices, Always! Wal-Mart executives spend at least two days a week visiting stores to stay connected with customers The first to call employees associates to denote the partnership Wal-Mart maintains low prices by keeping a sharp eye on costs including tough buying practices Technological advances in distribution and communications systems help efficiency and lowers costs. Lower advertising as a percentage of sales helps keep costs low 13-2 Definitions All activities involved in selling goods or services directly to final consumers for their personal, non-business use. Retailer Business whose sales come primarily from retailing. Retailer The Gap Celebrity Endorsement

2 Definitions All activities involved in selling goods and services to those buying for resale or business use. Wholesaler A firm engaged primarily in wholesaling activity. Types of Retailers Specialty Stores Department Stores Supermarkets Superstores Discount Stores Convenience Stores Off-Price Retailers 13-4 Retailers Are Classified By: Amount of service Product lines Relative prices Organizational approach Self-service retailers Customers are willing to selfserve to save money Convenience stores and fast moving shopping goods Limited-service retailers Most department stores Full-service retailers Salespeople assist customers in every aspect of shopping experience High-end department stores and specialty stores 13-5 Retailers Are Classified By: Amount of service Product lines Relative prices Organizational approach Specialty stores Narrow product lines with deep assortments Department stores Wide variety of product lines Supermarkets Convenience stores Limited line Superstores Food, nonfood, and services Category killers Giant specialty stores

3 Retailers Are Classified By: Amount of service Product lines Relative prices Organizational approach Discount stores Low margins are offset by high volume Off-price retailers Independent off-price retailers TJ Maxx, Marshall s Factory outlets Levi Strauss, Reebok Warehouse clubs Sam s Club, Costco 13-7 Target is low price but high style 13-8 Source: Business Week Retailers Are Classified By: Amount of service Product lines Relative prices Organizational approach Corporate chain stores Commonly owned / controlled Voluntary chains Wholesaler-sponsored groups of independent retailers Retailer cooperatives Groups of independent retailers who buy in bulk Franchise organizations Based on something unique Merchandising conglomerates Diversified retailing lines and forms under central ownership

4 add value by performing the following functions: Selling and promoting Buying and assortment building Bulk-breaking Warehousing Transportation Financing Risk bearing Market information Management services and advice Types of Merchant Brokers and Agents Manufacturers and retailers branches and offices Full-service wholesalers Wholesale merchants Industrial distributors Limited-service wholesalers Cash-and-carry wholesalers Truck wholesalers (jobbers) Drop shippers Rack jobbers Producer s cooperatives Mail-order wholesalers Types of Merchant Brokers and Agents Manufacturers and retailers branches and offices Brokers and agents do not take title of the goods. Brokers Bring buyers and sellers together and assist in negotiation Agents Manufacturers agents Selling agents Purchasing agents Commission merchants

5 Types of Merchant Brokers and Agents Manufacturers and retailers branches and offices Sales branches and offices Branches carry inventory: lumber, auto equipment, parts Offices do not carry inventory: dry goods Purchasing officers Perform roles similar to brokers and agents; however, these individuals are employees of the organization Retailer Marketing Decisions Figure The Future of New retail forms and shortening retail life cycles Wheel-of-retailing concept Growth of non-store retailing Mail-order, television, phone, online shopping Retail convergence The merging of consumers, products, prices, and retailers Rise of mega retailers (Mall of America) Growing importance of retail technology Global expansion of major retailers Retail stores as Communities or Hangouts

6 Wholesaler Marketing Decisions Figure Trends in Price competition is still intense Successful wholesalers must add value by increasing efficiency and effectiveness The distinction between large retailers and wholesalers continues to blur More services will be provided to retailers Many wholesalers are going global

7 Retailer The Gap Retailers will often use celebrity spokespeople to endorse their brand Types of Retailers Specialty Stores Department Stores Supermarkets Discount Stores Convenience Stores Off-Price Retailers Superstores Discussion Question Retailer Level of Service Self service checkout scanners are growing in use. What advantages for retailer? Consumer? What are the disadvantages?

8 Discount Stores Target Corporation First store opened in 1902 Currently has 1,147 stores in 47 states. Builds brand name to heighten barriers to entry in the market. Began a collaboration with Sony in 2002 for Sony to design products specifically for Target. Successful in building defensible niche with middle and upper-end customers with low price but high style Source: Datamonitor The UPS Store is an example of a popular franchise. See more franchises by clicking on image. Click on screenshot for website with franchises How might the National Beer Association add value to retailers? Click on screenshot for website

9 Export trade brokers help manufacturers with overseas distribution and marketing Click on screenshot for website A retailer like Brooks Brothers chooses to locate in very highend shopping districts QVC Website Shop online while you watch the show Click on screenshot for website

10 The Future of Rise of mega retailers (Mall of America) Growing importance of retail technology Global expansion of major retailers Retail stores as Communities or Hangouts Mall of America is more than just stores. This major tourist attraction includes stores, events and a 30- ride indoor theme park. Click on screenshot for website with information