Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e- Retailers, Wholesalers
and Their Strategy
Planning
Text © The McGraw−Hill
Companies, 2002364 Chapter 13
low-rent store, pay cash, and take care of any service or repair problems them-
selves. These retailers sold at 20 to 30 percent off the list price being charged by
conventional retailers.
In the early 1950s, with war shortages finally over, manufacturer brands became
more available. The discount houses were able to get any brands they wanted and
to offer wider assortments. At this stage, many discounters turned respectable—
moving to better locations and offering more services and guarantees. It was from
these origins that today’s mass-merchandisers developed.Mass-merchandisersare large, self-service stores with many departments that
emphasize “soft goods” (housewares, clothing, and fabrics) and staples (like health
and beauty aids) but still follow the discount house’s emphasis on lower margins
to get faster turnover. Mass-merchandisers—like Wal-Mart and Target—have
checkout counters in the front of the store and little sales help on the floor. Today
the average mass-merchandiser has nearly 60,000 square feet of floor space, but
many new stores are 100,000 square feet or more.
Mass-merchandisers grew rapidly—and they’ve become the primary nonfood
place to shop for many frequently purchased consumer products. By itself, Wal-Mart
handles a whopping 20 percent or more of the total national sales for whole cate-
gories of products. Even if you don’t shop at Wal-Mart, Sam Walton (who started
the company) has had a big impact on your life. He pioneered the use of high-tech
systems to create electronic links with suppliers and take inefficiencies out of retail-
ing logistics. That brought down costs andprices and attracted more customers,
which gave Wal-Mart even more clout in pressuring manufacturers to lower prices.
Other retailers are still scrambling to catch up. It was competition from Wal-Mart
on staples such as health and beauty aids and household cleaning products that
prompted firms in the supermarket supply chain to start the Efficient Consumer
Response movement we discussed in Chapter 12. Many catalog showroom retailers
didn’t adjust fast enough and went bust. Many conventional retailers are adjusting
their strategies—just to survive. And it’s Wal-Mart’s phenomenal growth and suc-
cess that motivates many new online retailers to think that their innovations can
do the same thing. But this dynamic change is what marketing is all about—and it
is providing consumers with superior value.
Although these mass-merchandisers are the driving force in much of retailing in
the U.S. today, they’ve expanded so rapidly in many areas that they’re no longer
just taking customers from conventional retailers but instead are locked in head-to-
head competition with each other. So their growth rate in the U.S. has slowed
substantially and, for future growth, they’re expanding internationally.^11Some supermarkets and mass-merchandisers have moved toward becoming
supercenters (hypermarkets)—very large stores that try to carry not only food and
drug items but all goods and services that the consumer purchases routinely.These
superstores look a lot like a combination of the supermarkets, drugstores, and mass-
merchandisers from which they have evolved, but the concept is different. A super-
center is trying to meet allthe customer’s routine needs at a low price. Supercenter
operators include Wal-Mart, Meijer, Fred Meyer, and Super Target.
Supercenters average more than 150,000 square feet and carry about 50,000
items. In addition to foods, a supercenter carries personal care products, medicine,
some apparel, toys, some lawn and garden products, gasoline, and services such as
dry cleaning, travel reservations, bill paying, and banking. Growth in the number
of supercenters seems to be slowing. Their assortment in one place is convenient,
but many time-pressured consumers think that the crowds, lines, and “wandering
around” time in the store are not. Expect someone to see this as an opportunity—
perhaps for a new type of fast-service mass-merchandiser with stores in the 30,000-
to 40,000-square-foot range.^12Supercenters meet
all routine needs
Mass-merchandisers
are more than
discounters