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 363

Modern supermarkets are planned for maximum efficiency. Scanners at checkout

counters make it possible to carefully analyze the sales and profit of each item and

allocate more shelf space to faster-moving and higher-profit items. This helps sell

more products—faster. It also reduces the investment in inventory, makes stocking

easier, and minimizes the cost of handling products. Survivaldepends on such effi-

ciency. Net profits in supermarkets usually run a thin 1 percent of sales or less!

To increase sales volume and turnover, some supermarket operators open “super

warehouse” stores. These 50,000- to 100,000-square-foot stores carry more items

than supermarkets, but they usually put less emphasis on perishable items like pro-

duce or meat. These efficiently run, warehouse-like facilities sell groceries at about

25 percent off the typical supermarket price.^9

Catalog showroom retailerssell several lines out of a catalog and display show-

room—with backup inventories. Before 1940, most catalog sellers were wholesalers

who also sold at discounted prices to friends and members of groups—such as labor

unions or church groups. In the 1970s, however, these operations expanded rapidly

by aiming at final consumers and offering attractive catalogs and improved facili-

ties. Catalog showroom retailers—like Service Merchandise—offer price savings

and deliver almost all the items in their catalogs from backroom warehouses. They

emphasize well-known manufacturer brands of jewelry, gifts, luggage, and small

appliances but offer few services.^10

Early catalog retailers didn’t bother conventional retailers because they weren’t

well publicized and accounted for only a small portion of total retail sales. If those

catalog retailers had moved ahead aggressively, the current retailing scene might be

different. But instead, discount houses developed and now most catalog showroom

retailers have gone out of business.

Right after World War II, some retailers moved beyond offering discounts to

selected customers. These discount housesoffered “hard goods” (cameras, TVs,

appliances) at substantial price cuts to customers who would go to the discounter’s

Catalog showroom

retailers preceded

discount houses

Discount houses upset

some conventional

retailers