Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

13. Retailers, Wholesalers
    and Their Strategy
    Planning

Text © The McGraw−Hill

Companies, 2002

Retailers, Wholesalers, and Their Strategy Planning 371

The wheel of retailing

keeps rolling

Scrambled

merchandising—mixing

product lines for higher

profits

Why Retailers Evolve and Change

The wheel of retailing theorysays that new types of retailers enter the market as

low-status, low-margin, low-price operators and then—if successful—evolve into

more conventional retailers offering more services with higher operating costs and

higher prices. Then they’re threatened by new low-status, low-margin, low-price

retailers—and the wheel turns again. Department stores, supermarkets, and mass-

merchandisers went through this cycle.

The wheel of retailing theory, however, doesn’t explain all major retailing devel-

opments. Vending machines entered as high-cost, high-margin operations.

Convenience food stores are high-priced. Suburban shopping centers don’t empha-

size low price. Current retailers who are adding websites are likely to face

competitors who cut operating expenses even deeper.

Conventional retailers tend to specialize by product line. But most modern

retailers are moving toward scrambled merchandising—carrying any product lines

they think they can sell profitably. Supermarkets and drugstores sell anything they

can move in volume—panty hose, phone cards, one-hour photo processing, motor

oil, potted plants, and computer software. Mass-merchandisers don’t just sell

everyday items but also cellular phones, computer printers, and jewelry.^21

Price oriented

Specialty

shops

Convenience

food stores

Vending

machines

Little

Much

Depth

Inte

rnet

Mas

s-m

erch

and

iser

s

Most single-line,

limited-line,

and department

stores

Price/service

Service oriented

Little Width Much

Single-line

mass-merchandisers

Som

e

dep

artm

ent

sto

res

Exhibit 13-3 A Three-Dimensional View of the Market for Retail Facilities and the Probable Position of Some Present

Offerings

people—in the front upper left-hand corner—have a strong need for a specific item

and are not interested in width of assortment, depth of assortment, or price. Note

where Internet retailers are placed in the diagram. Does that position make sense

to you?