RETAILING by icestar

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• Mostly buy from producers and sell mostly to retailers, industrial
  consumers, institutions and other wholesalers
• Includes all activities involved in selling goods and services to those
  buying for resale or business use
• Sale of product between businesses, as opposed to ultimate household
• Provides added by providing channel flows. Value of these flows are
  often underappreciated
• Tasks are mundane, but bundled with valued services at low cost, treated
  as unglamorous unlike other channel members
Types of Wholesaler
                              Merchant Wholesalers

• Independently owned businesses, take title to goods
• Full-Service wholesalers: Provide a full line of
  services, carrying stock, maintaining a sales force,
  offering credit, making deliveries, providing
  management assistance.
  – Wholesale Merchants – sell to retailers
  – Industrial Distributors – Sell to manufacturers
                                                 Merchant Wholesalers
• Limited Service Wholesalers: Offer few services than
  full-service wholesalers.
  – Cash-and-carry wholesalers: Carry a limited line of fast-moving goods and sell to
    small retailers for cash.
  – Truck Wholesalers: Perform a selling and delivery function (semi perishables)
  – Drop Shippers: Do not carry inventory or handle the product. On receiving order, select
    a manufacturer, who ships directly to customer.
    Assumes title and risk from order to delivery. (coal, heavy equipment, lumber)
  _ Rack Jobbers: Serve grocery and drug retailers, in non-food items. Bills only goods
    sold by retailers, title retained.
                                        Brokers and Agents

• Do not take title to goods. Facilitate buying and selling on a
   – Broker: Bringing buyers and sellers together and assisting in
     negotiation. Paid by the party who hired them. Do not carry
     inventory, do assume risk
   – Agents: Represent either buyer or seller on a more permanent basis
     than brokers do
      •   Manufacturers’ agents
      •   Selling agents
      •   Purchasing agents
      •   Commission merchants
                            Trends in Wholesaling

• Wholesale industry is facing considerable challenges
• Fierce resistance to price increases and winnowing out
  of suppliers who are not adding value based on cost
  and quality
• Distinction between large retailers and large
  wholesalers is getting blurred

Retailing is the set of business activities that adds value
  to the products & services sold to the consumers for
  their personal or family use.
• It is not only sale of products in stores but also sale of
• Not all retailing done in stores
   - direct sales of cosmetics, catalog sales, home
  shopping n/w on cable TV ,haircut

Distribution channel

          Manufacturing   wholesaler

             Consumer     RETAILER

 • Retailers are at the end of the distribution chain &
   involve in direct interface with the customer
 • Referred as intermediaries – pass on products from
   producers & wholesalers to customers
 • Provision of channel in a convenient location to provide a
   successful channel of distribution
 • Key objective: availability of right product, in right qty,
   at right time – successful channel

Annual sales of Wal – mart, kmart.Sears are much greater
than annual sales of P&G,Pepsico
                          Functions of Retailing

• Retailers perform business activities that increase the
  value of product & service they sell to customers
• Activities:
  * Providing an assortment of products & services
  * Breaking bulk
  * Holding inventory
  * Providing services
      Providing an assortment of products

• Supermarkets carry 15000 different items made by
  over 500 companies
• This assortment enables customers to buy wide
  selection of brands,designs,sizes.colors & prices in
  one location
• Not the case in individual manufacture’s retail outlets
                                      Breaking Bulk

• To reduce transportation costs, mfrs ship whole cases
  of their products to retailers
• Retailers then offer the products in smaller quantities
  tailored to individual consumers usage pattern
• Breaking the large shipments into smaller consumer
  quantities – Breaking Bulk
                               Holding inventory

• Function of retailers – to make the availability of
  products when consumers want them
• Consumers can have small inventory of products at
  home as retailers will have the availability
• By maintaining inventory,retailers reduce customer’s
  cost of storing products
                                Providing services

• Provide services that make it easier for customers to
  buy & use products
• Offer products on credit
• Display products for ease of use by customers for
• Assistance provided by sales people on purchase
                                      Retailing formats in India
•   Malls: The largest form of organized retailing today. Located mainly in metro cities, in proximity
    to urban outskirts. Ranges from 60,000 sq ft to 7,00,000 sq ft and above. They lend an ideal
    shopping experience with an amalgamation of product, service and entertainment, all under a
    common roof.Examples include Shoppers Stop, Piramyd, Pantaloon.
•   Specialty Stores: Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer
    Crossword, RPG's Music World and the Times Group's music chain Planet M, are focusing on
    specific market segments and have established themselves strongly in their sectors.
•   Discount Stores: As the name suggests, discount stores or factory outlets, offer discounts on the
    MRP through selling in bulk reaching economies of scale or excess stock left over at the season.
    The product category can range from a variety of perishable/ non perishable goods
•   Department Stores: large stores ranging from 20000-50000 sq. ft, catering to a variety of
    consumer needs. Further classified into localized departments such as clothing, toys, home,
    groceries, etc.

•   Hyper marts/Supermarkets: Large self service outlets, catering to varied shopper needs are
    termed as Supermarkets. These are located in or near residential high streets. These stores today
    contribute to 30% of all food & grocery organized retail sales. Super Markets can further be
    classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets
    ranging from of 3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personal
                                          Trends in India

• Retailing in India is witnessing a huge revamping exercise.
• Estimated to be US$ 200 billion, of which organized retailing
  (i.e. modern trade) makes up 3 percent or US$ 6.4 billion.
• India is rated the fifth most attractive emerging retail market: a
  potential goldmine
• Ranked second in a Global Retail Development Index of 30
  developing countries drawn up by AT Kearney.
• Food and apparel retailing key drivers of growth.
• Organized retailing in India has been largely an urban
  phenomenon with affluent classes and growing number of
  double-income households.

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