Retail Management and Types of Retailers

TOPIC: PRINCIPLES OF MARKETING CHAPTER 2 RETAIL MANAGEMENT AND TYPES OF RETAILERS Introduction The book Retailing Management 9th edition by Michael Levy, PhD, Barton A. Weitz, Ph.D., and Druv Grewal, Ph.D. has 18 chapters that talk about the different fields of Retail Management. Retail Management refers to all processes which help the customers to procure the desired merchandise from the retail stores for their personal or end-use. This paper will mainly focus on Chapter 2: Types of Retailers. There are many retailers worldwide, some are individual street vendors who sell different kinds of food products with limited stocks, and some are multichannel retailers that offer multiple products in their stores or even through catalogs and Internet channels. Thus, different types of retailers offer unique benefits. The essential principles of the different types of retailers are their retail mix or the aspects that retailers use to satisfy their consumers ' needs. Four elements of the retail mix are particularly useful for classifying retailers. First is the type of merchandise or services offered, which they usually keep in check the products they sell according to their sector and classification. Second, is the variety and assortment of merchandise offered to customers to help and give them more choices on what to buy. However, variety and assortment differ, where variety is referred to as the breadth of merchandise, and the assortment is referred to as the depth of merchandise. Third, regarding the level of customer service, retailers differ in offering services to their customers. Some offer free parking, accept credit cards, and are open at convenient hours. Still, some retailers charge customers for certain services that need much effort since the retailers also have to pay their workers to do such services. Lastly, the price and cost of offering breadth and depth of merchandise and services by retailers, which is stocking a 1 deep and broad assortment of products, is somehow costly because when a retailer offers many SKUs, its inventory will increase to have backup stock for every SKU. Most services are costly for retailers since they have more staff to be paid to assist and provide for the customer’s needs. With this, to make a profit, retailers must charge. 2 Higher prices when they offer a wide variety of products and services, especially when retailers have higher costs and also depending on their locations. Twenty years ago, consumers usually purchased food at conventional supermarkets. However, conventional supermarkets only account for slightly more than sixty percent of food sales. There are different kinds of Food retailers, which include first the supermarkets, where it is a large and self-service retail food store that offers different kinds of groceries and meat, as well as some non-food items. They make thirty percent of their margin from perishable goods, whereas limited-assortment supermarkets only sell about 20 brands to maximize efficiency and reduce cost. Supermarkets found ways to cope with the challenges and necessities of the customers by generating income through trends in supermarket retailing. From fresh merchandise, which is located in the areas of supermarkets known as the “power perimeter”; green merchandise that offers fair trade, natural, organic, and locally sourced food straight from the farmers; ethnic merchandise, which is more likely to prepare meals from scratch for those who have different ethnicity and can still be catered; private-label merchandise which offers choices for the customers in finding the same ingredient /quality in national brands at a lower price or higher quality at a similar price to the national brands; and lastly, improving the shopping experience where supermarkets offer self-service kiosk for the customers to have fun and to be more convenient. Another supercenter food retailer is like a supermarket with a fullline discount store. On the other hand, hypermarkets are almost similar to supercenters but have a larger proportion of food items and a greater emphasis on perishables than supercenters. The third food retailer is warehouse clubs, which offer a limited and irregular assortment of food and merchandise for ultimate customers and small businesses. Lastly, are convenience stores that provide limited merchandise with a speedy checkout. 3 Aside from Food retailers, there are also General Merchandise retailers, which first include department stores with a wide variety and deep assortment that sells soft, hard, and durable goods. Like department stores, full-line discount stores also offer various merchandise but mainly private labels and national brands. Another thing is category specialists that offer a narrow yet deep assortment. 4 Of merchandise and often called category killers. On the other hand, specialty stores focus more on a limited number of complementary merchandise categories, which also provide a high level of service. In line with this, drugstores are specialty stores concentrating on health and beauty care products. Moreover, extreme-value retailers, known as dollar stores, offer a wide variety but shallow assortment of products and groceries. Lastly, the off-price retailers offer an inconsistent assortment of brand-name merchandise at a significant discount on the manufacturer’s suggested retail price. On the other hand, service retailing offers or sells services from the word itself rather than merchandise. There are four differences between the offerings provided by services and merchandise retailers; the first is intangibility, where services are less tangible than products, which means that customers cannot see nor touch them since they are actions performed rather than objects. Second is simultaneous production and consumption, where products are typically made in a factory, stored and sold by a retailer, and used by consumers. At the same time, service providers create and deliver the service as the customer consumes it. Third is perishability, where services are perishable, meaning they can’t be saved, stored, or resold compared to merchandise. Lastly is inconsistency; machines can produce products, so customers are reasonably assured that it is identical, while services are performances produced by people, and no two services will be identical. Conclusion Another way to classify retailers is by their ownership. There are three classifications of retail ownership. First is the independent, single-store establishments, which are owner-managed 5 businesses, which means that management has direct contact with customers and can easily cater to their needs. Second, a corporate retail chain is a company that operates multiple retail units under common ownership and usually has centralized decision-making for defining and implementing its strategy. Lastly is franchising, a contractual agreement where the franchiser or the company sells the rights to use its business trademark, service mark, trade name, or any other commercial symbol of the company. 6