Retailing and Wholesaling

marketing fundamentals -- part 11 -- summary

Although most retailing is conducted in retail stores, in recent years, nonstore retailing has increased rapidly. In addition, although many retail stores are independently owned, an increasing number are now banding together under some form of corporate or contractual organization. Wholesalers, too, have experienced resent environmental changes, most notably mounting competitive pressures. They have faced new sources of competition, more demanding customers, new technologies, and more direct buying programs on the part of large industrial, institutional, and retail buyers.

Retailers and wholesalers in the distribution channel

Retailing and wholesaling consist of many organizations bringing goods and services from the point of production to the point of use. Retailing includes all activities involved in selling goods or services directly to final consumers for their personal, nonbusiness use. Wholesaling includes all the activities involved in selling goods or services to those who are buying for the purpose of resale or for business use. Wholesalers perform many functions, including selling, promoting, buying and an assortment building, bulk breaking, warehousing, transporting, financing, risk bearing, supplying market information, and providing management services and advice.

Retailers can be classified as store retailers and nonstore retailers. Although most goods and services are sold through stores, nonstore retailing has been growing much faster than store retailing. Store retailers can be further classified by the amount of service they provide (self-service, limited service, or full-service), product lines sold in (specialty stores, department stores, supermarkets, convenience stores, superstores, and services business), and relative prices (discount stores and off-price retailers). Today, many retailers are banding together in corporate and contractual retail organizations (corporate chains, voluntary chains and retailer cooperatives, franchise organizations, and merchandising conglomerates).

Wholesalers fall into three groups. First, merchant wholesalers take possession of the goods. They include full-service wholesalers (wholesale merchants, industrial distributors) and limited service wholesalers (cash and carry wholesalers, truck wholesalers, drops her first, rack jobbers, producers cooperatives, and mail-order wholesalers ). Second, brokers and agents do not take possession of the goods but are paid a commission for assisting buying and selling. Finally, manufacturers sales branches and offices are wholesaling operations conducted by non-wholesalers to bypass the wholesalers.

Each retailer must make decisions about its target markets and positioning, product assortment and services, price, promotion, and place. Retailers need to choose target markets carefully and position themselves strongly. Today, wholesaling is holding its own in the economy. Progress of wholesalers are adapting their services to the needs of the target customers and are seeking cost reducing methods of doing business. Faced with slow growth in their domestic markets and development such as the North American Free Trade Association, many large wholesalers are now going global as well.