The Marketing Book 5th Edition

Buying power

Supplyof goods

Services to retailer

Land acquisition

Acquiring companies

Recruiting staff

Economies ofscale

Branding/advertising

Product development

Format development

Supplychains

Management expertise

Information systems

Competitivepricing

Discounting

Localflexing

Specialoffers

Leaderlines

Product/service mix

Product quality

Choice

Service(s)

Environments

Convenience

Growth Impromargvinsed

Retailing 777

Retail strategy is then considered briefly, stress-
ing the importance of customer focus. The
specific functions of retailing are then exam-
ined, representing an extended ‘retail market-
ing mix’. Given the emphasis in recent years
upon retail internationalization, additional
attention is given to that element of retail
strategy. The chapter concludes by looking at
non-store retailing, notably the progress and
prospects of e-tailing.

Evolution of retailing

The growth of power

Retailing has always been a major component
of economic activity. In Great Britian, over £200
billion in consumer spending passes through
retailers, some 35.6 per cent of all expenditure,
and the sector employs 2.5 million people, 10.5
per cent of all employees (Nielsen, 2001;
National Statistics, 2001). In the European
Union as a whole, over 14 million are employed
in retail, around 20 million in the United States
(Euromonitor, 2000). Such expressions of scale
cannot alone capture the major changes that
have taken place, as retailing has switched from
a more passive to a highly proactive role within
the overall marketing process.
Many of the revered concepts of market-
ing, including the marketing mix, originated in
a period when the manufacturer was truly
‘king’. Post-war product shortages focused
attention upon production, which gave way to
an emphasis upon branding as shortages
diminished. Inevitably, retailing tended to be
depicted as just part of the marketing channels,
largely controlled by manufacturers. Recent
decades have seen retailers grow in size and
sophistication, often exceeding that of their
largest suppliers.
Figure 30.1 depicts in outline the growth
cycle of powerful retailers. Growth enhances
buying power and helps in the achievement of
other economies of scale. The improved mar-
gins thus gained may be used to achieve further

growth, through competitive pricing and/or a

product–service mix which offers superior

value to customers. As the growth cycle con-

tinues, major retailers have invested in better

management and superior information sys-

tems. Their power has been increased further

by the development of retailer brands, exten-

sive advertising and sophisticated trading

environments.

Many large retailers have subsumed the

roles traditionally ascribed to wholesalers,

increasing further their dominance of the mar-

keting channel. It is now equally appropriate to

present a view of consumer goods marketing

that is retailer driven (McGoldrick, 2002).

Within this alternative view, manufacturers

may be depicted as part of the ‘channels of

supply’, with only limited power to influence

the marketing strategies of major retailers.

Large-scale retailers have truly evolved from

shopkeeping to strategic marketing.

Figure 30.1 The retail growth cycle