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Retailing Encompasses The Business Activities Involved in Selling Goods and

Retailing encompasses the business of selling goods and services directly to consumers. It is the last stage of distribution and includes sales of a wide range of products from cars to apparel. Retailing is an important field to study because of its impact on the economy and its relationships with suppliers. Relationships between retailers and suppliers can be complex, as they have different priorities regarding issues like control of distribution channels and profit allocation. Channel relations tend to be smoothest with exclusive distribution and most volatile with intensive distribution, while selective distribution combines aspects of both.

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120 views3 pages

Retailing Encompasses The Business Activities Involved in Selling Goods and

Retailing encompasses the business of selling goods and services directly to consumers. It is the last stage of distribution and includes sales of a wide range of products from cars to apparel. Retailing is an important field to study because of its impact on the economy and its relationships with suppliers. Relationships between retailers and suppliers can be complex, as they have different priorities regarding issues like control of distribution channels and profit allocation. Channel relations tend to be smoothest with exclusive distribution and most volatile with intensive distribution, while selective distribution combines aspects of both.

Uploaded by

ciriaco jan
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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An Introduction to Retailing

Retailing encompasses the business activities involved in selling goods and


services to consumers for their personal, family, or household use. It includes every
sale to the final consumer— ranging from cars to apparel to meals at restaurants to
movie tickets. Retailing is the last stage in the distribution process.

Retailing is an important field to study because of its impact on the economy, its
functions in distribution, and its relationship with firms selling goods and services to
retailers for their resale or use. Retail sales and employment are vital economic
contributors, and retail trends often mirror trends in a nation’s overall economy.

THE RELATIONSHIPS AMONG RETAILERS AND THEIR SUPPLIERS

Relationships among retailers and suppliers can be complex. Because retailers are
part of a distribution channel, manufacturers and wholesalers must be concerned
about the caliber of displays, customer service, store hours, and retailers’ reliability as
business partners. Retailers are also major customers of goods and services for resale,
store fixtures, computers, management consulting, and insurance. These are some
issues over which retailers and their suppliers have different priorities: control over
the distribution channel, profit allocation, the number of competing retailers handling
suppliers’ products, product displays, promotion support, payment terms, and
operating flexibility. Due to the growth of large chains, retailers have more power
than ever. Unless suppliers know retailer needs, they cannot have good rapport with
them; as long as retailers have a choice of suppliers, they will pick those offering
more.

Channel relations tend to be smoothest with exclusive distribution, whereby


suppliers make agreements with one or a few retailers that designate the latter as the
only ones in specified geographic areas to carry certain brands or products. This
stimulates both parties to work together to maintain an image, assign shelf space, allot
profits and costs, and advertise.

Channel relations tend to be most volatile with intensive distribution, whereby


suppliers sell through as many retailers as possible. This often maximizes suppliers’
sales and lets retailers offer many brands and product versions. Competition among
retailers selling the same items is high; retailers may use tactics not beneficial to
individual suppliers, because they are more concerned about their own results.
Retailers may assign little space to specific brands, set very high prices on them, and
not advertise them.

With selective distribution, suppliers sell through a moderate number of retailers.


This combines aspects of exclusive and intensive distribution. Suppliers have higher
sales than in exclusive distribution, and retailers carry some competing brands. It
encourages suppliers to provide some marketing support and retailers to give adequate
shelf space.

The Special Characteristics of Retailing

1. The average amount of a sales transaction for retailers is much less than for
manufacturers.
2. Final consumers make many unplanned or impulse purchases.
3. Retail customers usually visit a store, even though mail, phone, and Web sales have
increased.

THE IMPORTANCE OF DEVELOPING AND APPLYING A RETAIL


STRATEGY

A retail strategy is the overall plan guiding a retail firm. It influences the firm’s
business activities and its response to market forces, such as competition and the
economy. Any retailer, regardless of size or type, should utilize these six steps in
strategic planning:

1. Define the type of business in terms of the goods or service category and the
company’s specific orientation (such as full service or “no frills”).
2. Set long-run and short-run objectives for sales and profit, market share, image, and
so on.
3. Determine the customer market to target on the basis of its characteristics (such as
gender and income level) and needs (such as product and brand preferences).
4. Devise an overall, long-run plan that gives general direction to the firm and its
employees.
5. Implement an integrated strategy that combines such factors as store location,
product assortment, pricing, and advertising and displays to achieve objectives.
6. Regularly evaluate performance and correct weaknesses or problems when
observed

The Retailing Concept


Four principles form the retailing concept which should be understood and
applied by all retailers:
1. Customer orientation. The retailer determines the attributes and needs of its
customers and
endeavors to satisfy these needs to the fullest.
2. Coordinated effort. The retailer integrates all plans and activities to maximize
efficiency.
3. Value driven. The retailer offers good value to customers, whether it be upscale or
discount. This means having prices appropriate for the level of products and customer
service.
4. Goal orientation. The retailer sets goals and then uses its strategy to attain them.

The retailing concept means communicating with shoppers and viewing their
desires as critical to the firm’s success, having a consistent strategy (such as offering
designer brands, plentiful sales personnel, attractive displays, and above-average
prices in an upscale store); offering prices perceived as “fair” (a good value for the
money) by customers; and working to achieve meaningful, specific, and reachable
goals. However, the retailing concept is only a strategic guide. It does not deal with a
firm’s internal capabilities or competitive advantages but offers a broad planning
framework.

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