; Chapter 19 Wholesaling and Retailing - _Dr._ SL Gupta
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Chapter 19 Wholesaling and Retailing - _Dr._ SL Gupta


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									                                  Wholesaling and Retailing

      19     Chapter
                       and Retailing

19-1 Dr S.L Gupta
                                                               Wholesaling and Retailing

Wholesaling is concerned with the activities of individuals and establishments
that sell to retailers and other merchants, or to industrial, institutional, and
commercial users, but do not sell in large amounts to ultimate consumers.

19-2   Dr S.L Gupta
                                                                  Wholesaling and Retailing

                      Functions for Producers   Functions for Customers
                      Market Coverage.          Product Availability.
Functions for
Producers and         Sales Contacts.           Assortment Convenience.
Customers             Inventory Holding.        Bulk-breaking.
                      Order Processing.         Credit Facility and Finance.
                      Market Information.       Customer Service.
                      Customer Support.         Technical Support.

19-3   Dr S.L Gupta
                                                    Wholesaling and Retailing

Major Types of Wholesalers
1.     merchant wholesaler,
2.     agents and brokers, and
3.     manufacturer’s sales branches and offices.

19-4     Dr S.L Gupta
                                                               Wholesaling and Retailing

Merchant Wholesalers
These are independent businesses that take title to goods and assume risks
associated with ownership and generally buy and resell products to industrial
or retail customers.

They are divided into two subtypes:

      full-service and

      limited-service wholesalers.

19-5     Dr S.L Gupta
                                               Wholesaling and Retailing

      Full-Service Merchant Wholesalers

            General merchandise wholesalers

            Industrial distributors

            Limited line-wholesalers

            Speciality-line wholesalers

            Rack jobbers

19-6    Dr S.L Gupta
                                              Wholesaling and Retailing

      Limited-Service Merchant Wholesalers
           Cash-and-carry
           Truck wholesalers
           Drop-shippers
           Mail-order wholesalers

19-7     Dr S.L Gupta
                                                            Wholesaling and Retailing

Agents and Brokers
Agents and brokers form the second major category of wholesalers. They
negotiate purchase and speed up sales but do not take title to merchandise.
They perform fewer services for producers and work on commission, generally
based on product price. Agents represent buyers or sellers on an almost
permanent basis. Brokers are employed to represent buyers or sellers

Manufacturer’s Agents:

            A selling agent

            Commission merchants

            Export or import

19-8       Dr S.L Gupta
                                                                Wholesaling and Retailing

Manufacturers’ Sales Branches and Offices
Manufacturers set up Sales branches and offices to improve selling, promotion,
and inventory control. Sales branches carry inventory and provide support
services to manufacturer’s sales force, particularly in areas with concentration
of large customers and considerable demand. Sales offices do not carry
inventory and operate much like agents and in addition to manufacturer’s
products may sell other complimentary products produced by other firms.

19-9   Dr S.L Gupta
                                                                  Wholesaling and Retailing

A retailer is a business and can be an individual, chain store, departmental
store, supermarket, speciality store, small locality shop, paan-bidi kiosk, or
a service retailer etc., who links the producers and the final consumer.

19-10 Dr S.L Gupta
                                                                              Wholesaling and Retailing

                     Vulnerability phase                                  Entry phase

                              Top heaviness
                              Conservatism                            Low price
The Wheel of                  Declining ROI                          Low margin
Retailing                                                            Poor facilities
                          Becomes                                     Low status
                                                                   Limited products

                                            Up-market location
                     Trading-up phase       Fashion orientation
                                           Extended assortment         Becomes
                                               Higher prices
                                            Elaborate facilities
                                              Exotic services

19-11 Dr S.L Gupta
                               Wholesaling and Retailing

Functions of Retailers
   Arranging Assortment
   Breaking Bulk
   Holding Stock
   Channel of Communication
   Promotional Support
   Extending Services

19-12 Dr S.L Gupta
                                                                   Wholesaling and Retailing

Major Types of Retail Stores
Various schemes have been proposed to categorise retailers based on (a)
number of outlets, (b) margin vs turnover, (c) location, and (d) size.

An independent store is a single retail unit owned by an individual, partnership,
or corporation. A retail chain store is a part of a multiple retail outlet business.

19-13 Dr S.L Gupta
                                                                Wholesaling and Retailing

1. General Merchandise Retailers
General merchandise retailers carry a variety of product lines, with considerable
depth. Some major types of these stores include supermarkets and
hypermarkets, discount stores, and department stores.
   Supermarkets: A supermarket is a large self-service retail store that carries
    a wide variety of consumer products under one roof, such as complete line
    of food products, laundry requirements, household maintenance items, and
    OTC or non-prescription drugs etc.
   Discount Store: These stores are self-service, standard general
    merchandise retailers regularly offering brand name and private brand items
    at low prices, earn lower margins, and push for high sales turnover.
   Department Stores: A department store is large retail store organised into
    several departments, offering a broad variety and depth of product lines.

19-14 Dr S.L Gupta
                                                               Wholesaling and Retailing

2. Speciality Stores
Speciality stores carry a narrow product mix and deep product lines.
        Speciality Retail Stores
        Off-Price Retailers
        Category Killers

3. Shopping Malls
4. Retail Chains
5. Non-Store Retailing

19-15 Dr S.L Gupta
                                                                 Wholesaling and Retailing

Target Market and Store Location
Identifying target market is essential to determine all other aspects of
retailing decisions, such as location, merchandise mix, pricing, store
atmospherics, promotional efforts, and level of service. Location decision is
quite significant because it dictates the area of customer coverage and it is
the least flexible strategic issue.

19-16 Dr S.L Gupta
                                                                Wholesaling and Retailing

Merchandise Variety and Assortment
Merchandise variety generally means breadth of product lines and
assortment refers to different models in the same or different brands in a

19-17 Dr S.L Gupta
                                                                 Wholesaling and Retailing

Store Image and Atmospherics
This would require proper location, consideration of traffic congestion, exterior
storefront appearance, display windows, and entrance etc.

19-18 Dr S.L Gupta
                                                                Wholesaling and Retailing

Services, Price, and Promotion
Service mix includes pre-purchase, and post-purchase services, such as
accepting customers’ orders on telephone or by mail, advertising and
promotions, helpful sales personnel, gift-wrapping, delivery, returns,
installations, extending credit, and repairs etc.

Price is also a critical differentiating factor and needs to be carefully
determined in relation to target customers, the nature of product mix, desired
level of service, and what kind of competition exists and anticipated.

19-19 Dr S.L Gupta

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