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

362 Chapter 13

of supermarkets and discounters to modern mass-merchandisers like Wal-Mart in

the U.S., Tesco in the U.K., and Amazon.com on the Internet.

From a world view, most food stores are relatively small single- or limited-line

operations, a situation that makes shopping for food inconvenient and expensive.

Many Italians, for example, still go to one shop for pasta, another for meat, and yet

another for milk. Although this seems outdated, keep in mind that many of the

world’s consumers don’t have access to supermarkets—large stores specializing in

groceries with self-service and wide assortments.

The basic idea for supermarkets developed in the U.S. during the early Depres-

sion years. Some innovators felt they could increase sales by charging lower prices.

They introduced self-service to cut costs but provided a broad product assortment

in large bare-bones stores. Success and profits came from large-volume sales—not

from high traditional markups.^6

Newer supermarkets carry 40,000 product items and stores average around 45,000

square feet. To be called a supermarket, a store must have annual sales of at least

$2 million, but the average supermarket sells much more, an average of about

$17 million a year. In the U.S., the number of supermarkets has continued to grow

and it is now about 32,000. In most areas they are at the saturation level and com-

petition is intense. In many other countries, however, they are just becoming a

force.^7

To outsell competitors, supermarkets try to differentiate their offerings. Some

have better produce, others have lower prices, some offer a deli or cleaner store,

and so forth. But there are many things they all have to offer—like milk and eggs

and cereal. In fact, an average family gets about 80 percent of its needs from only

about 150 skus. The rub is that particular 150 skus vary from family to family. In

the end, a consumer makes a single choice in deciding to shop at a particular super-

market. But to come out on top in thatchoice, the supermarket must offer consumers

many thousands of choices and at the same time keep costs low.^8

Although U.S. supermarkets were the first mass-merchandisers, the mass-merchandising concept has now been introduced by many
retailers. Single-line mass-merchandisers like Office Depot offer selections and prices that make it difficult for traditional retailers to compete.

Supermarkets
started the move to
mass-merchandising