9
Managing Retailing,
Wholesaling, and Logistics
ZARA Places Retail Stores in
High-End, High Traffic Areas
What is Retailing?
Retailing includes all the activities
involved in selling goods or services
directly to final consumers for personal,
nonbusiness use.
Table 9.1 Major Retailer Types
• Specialty store • Discount store
• Department store • Off-price retailer
• Supermarket • Superstore
• Convenience store • Catalog showroom
Levels of Retail Service
Self-service
Self-selection
Limited service
Full service
Figure 9.1 Retail Positioning Map
Nonstore Retailing
Direct Direct
selling marketing
Automatic Buying
vending service
Table 9.2 Major Types of Corporate
Retail Organizations
• Corporate chain store
• Voluntary chain
• Retailer cooperative
• Consumer cooperative
• Franchise organization
• Merchandising conglomerate
Corporate Retailing
What is a Franchising System?
A franchising system is a system of
individual franchisees, a tightly knit
group of enterprises whose systematic
operations are planned, directed, and
controlled by the operation’s franchisor.
Characteristics of Franchises
• The franchisor owns a trade or service
mark and licenses it to franchisees in
return for royalty payments
• The franchisee pays for the right to be
part of the system
• The franchisor provides its franchisees
with a system for doing business
Quiznos is a Franchising System
Changes in the
Retail Environment
• New retail forms and combinations
• Growth of intertype competition
• Competition between store-based and
non-store-based retailing
• Growth of giant retailers
• Decline of middle market retailers
• Growing investment in technology
• Global profile of major retailers
New Retail Forms and Combinations
• Combination retailers
• Pop-ups
• Showcase stores
Retailers’ Marketing Decisions
Target market
Product assortment
Procurement
Prices
Services
Retailers’ Marketing Decisions
(cont.)
Store atmosphere
Store activities
Communications
Locations
Retail Category Management
Define the category
Figure out its role
Assess performance
Set goals
Choose the audience
Figure out tactics
Implement the plan
Direct Product Profitability
Retailer Services Mix
Prepurchase services
Postpurchase services
Ancillary services
Store Atmosphere
• Walls
• Lighting
• Signage
• Product placement
• Floors
• Surface space
• Music
The Fornarina flagship store
features award-winning retail
design.
Tips for Increasing Sales
in Retail Space
• Keep shoppers in the store
• Honor the transition zone
• Don’t make them hunt
• Make merchandise available to the
reach and touch
• Note that men do not ask questions
• Remember women need space
• Make checkout easy
Location Decision
• Central business
districts
• Regional shopping
centers
• Community shopping
centers
• Shopping strips
• Location within a larger
store
Indicators of Sales Effectiveness
Number of people passing by
% who enter store
% of those who buy
Average amount
spent per sale
Private Labels
Private Label Brands
• Private labels are ubiquitous
• Consumers accepts private labels
• Private-label buyers come from all
socioeconomic strata
• Private labels are not a recessionary
phenomenon
• Consumer loyalty shifts from manufacturers
to retailers
Wholesaling Functions
• Selling and • Transportation
promoting • Financing
• Buying and • Risk bearing
assortment building
• Market information
• Bulk breaking
• Management
• Warehousing services and
counseling
Major Wholesaler Types
Merchant
Full-service
Limited-service
Brokers and agents
Manufacturers
Specialized
Market Logistics Planning
• Deciding on the company’s value
proposition to its customers
• Deciding on the best channel design
and network strategy
• Developing operational excellence
• Implementing the solution
What are
Integrated Logistics Systems?
An integrated logistics system (ILS)
includes materials management, material
flow systems, and physical distribution,
aided by information technology.
Market Logistics
• Sales forecasting • In-plant
• Distribution warehousing
scheduling • Shipping-room
• Production plans processing
• Finished-goods • Outbound
inventory decisions transportation
• Packaging • Field warehousing
• Customer delivery
and servicing
Market Logistics Decisions
• How should orders
be handled?
• Where should stock
be located?
• How much stock
should be held?
• How should goods
be shipped?
Figure 9.2 Determining
Optimal Order Quantity
Transportation Factors
• Speed
• Frequency
• Dependability
• Capability
• Availability
• Traceability
• Cost
Containerization
Marketing Debate
✓ Should national brand manufacturers
also supply private label brands?
Take a position:
1. Manufacturers should feel free to sell
private labels as a source of revenue.
or
2. National manufacturers should never get
involved with private labels.
Marketing Discussion
✓ Think of your favorite stores.
✓ What do they do that encourages
your loyalty?
✓ What do you like about the in-store
experience?
