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 361

Department stores

combine many limited-

line stores and

specialty shops

Evolution of Mass-Merchandising Retailers

So far we’ve been describing retailers primarily in terms of their product assort-

ment. This reflects traditional thinking about retailing. We could talk about

supermarkets, discount houses, or online retailers in these terms too. But then we

would miss some important differences—just as some conventional retailers did

when mass-merchandising retailers first appeared.

Conventional retailers think that demand in their area is fixed—and they have

a “buy low and sell high” philosophy. Many modern retailers reject these ideas. They

accept the mass-merchandising concept—which says that retailers should offer low

prices to get faster turnover and greater sales volumes—by appealing to larger

markets. The mass-merchandising concept applies to many types of retailers—

including both those that operate stores and those that sell online. But to under-

stand mass-merchandising better, let’s look at its evolution from the development

Mass-merchandising

is different from

conventional retailing

Expanded assortment

and service

Expanded assortment

and/or reduced

margins and service

Added convenience and

higher than conventional

margins, usually

reduced assortment

Specialty shops and

department stores

Supermarkets, discount

houses, mass-merchandisers,

catalog showrooms,

superstores

Telephone and mail order,

vending machines,

door to door, convenience

stores, some electronic retailing

Expanded assortment,

reduced margins, and

more information

Internet

Conventional

offerings

Single- and

limited-line

stores

Exhibit 13-1 Types of Retailers and the Nature of Their Offerings

speeds turnover, and cuts costs due to obsolescence and style changes. Specialty

shops probably will continue to be a part of the retailing scene as long as customers

have varied tastes and the money to satisfy them.^4

Department storesare larger stores that are organized into many separate depart-

ments and offer many product lines. Each department is like a separate limited-line

store and handles a wide variety of shopping products—such as men’s wear or house-

wares. They are usually strong in customer services—including credit, merchandise

return, delivery, and sales help on the floor.

Department stores are still a major force in big cities. But in the U.S., the num-

ber of department stores, the average sales per store, and their share of retail business

has declined continuously since the 1970s. Well-run limited-line stores compete

with good service and often carry the same brands. In the U.S. and many other

countries, mass-merchandising retailers have posed an even bigger threat. We’ll dis-

cuss them next.^5