🛍️Principles of Marketing Unit 18 – Retailing and Wholesaling
Retailing and wholesaling are crucial links in the distribution chain, connecting manufacturers to consumers. Retailers sell directly to end users through various channels, while wholesalers sell in bulk to other businesses. Both add value through functions like inventory management and providing product assortments.
The retail landscape has evolved with e-commerce and omnichannel strategies. Brick-and-mortar stores now compete with online retailers, leading to innovative approaches like experiential retail and pop-up shops. Wholesalers face challenges from retailer consolidation and manufacturers selling directly to consumers.
Retailing involves selling products directly to end consumers through various channels (brick-and-mortar stores, online, catalogs)
Wholesaling involves selling products in bulk to retailers or other businesses who then resell to end consumers
Wholesalers often purchase directly from manufacturers and sell to retailers
Wholesalers typically do not sell directly to end consumers
Retailing and wholesaling are crucial components of the distribution process, connecting manufacturers to end consumers
Retailers and wholesalers add value through various functions (breaking bulk, providing assortments, holding inventory, providing services)
Retailing and wholesaling have evolved significantly with the rise of e-commerce and omnichannel strategies
The relationship between retailers and wholesalers can be complex, with power dynamics shifting based on market conditions and bargaining power
Retailers and wholesalers face challenges such as intense competition, changing consumer preferences, and supply chain disruptions
Key Players in the Distribution Game
Manufacturers produce goods and sell them to wholesalers or directly to retailers
Wholesalers purchase goods in bulk from manufacturers and resell them to retailers
Types of wholesalers include merchant wholesalers, agents and brokers, and manufacturer sales branches and offices
Retailers sell goods directly to end consumers through various channels (stores, online, mobile)
Types of retailers include department stores, specialty stores, supermarkets, convenience stores, and e-tailers
Distributors are intermediaries that help move products from manufacturers to retailers or end consumers
Logistics providers offer services such as transportation, warehousing, and inventory management to facilitate the distribution process
Consumers are the end users who purchase goods from retailers for personal or household use
Government agencies regulate and monitor the distribution process to ensure fair competition and consumer protection
Retail Strategies: From Brick-and-Mortar to Click-and-Order
Brick-and-mortar retailing involves selling products through physical stores
Advantages include the ability to touch and try products, immediate gratification, and personal service
Challenges include high overhead costs, limited reach, and competition from online retailers
E-commerce involves selling products through online channels (websites, mobile apps)
Advantages include lower overhead costs, wider reach, and 24/7 availability
Challenges include shipping costs, returns management, and building trust with customers
Omnichannel retailing combines brick-and-mortar and online channels to provide a seamless customer experience
Pop-up stores are temporary retail spaces used to generate buzz, test new products, or enter new markets
Experiential retailing focuses on creating engaging and memorable in-store experiences to differentiate from online competitors
Subscription-based retailing involves customers paying a recurring fee for regular product deliveries (meal kits, beauty boxes)
Retail pricing strategies include everyday low pricing, high-low pricing, and dynamic pricing based on demand and competition
Wholesale Magic: Supplying the Suppliers
Wholesalers buy goods in bulk from manufacturers and resell them to retailers or other businesses
Wholesalers often specialize in specific product categories (grocery, electronics, apparel)
Wholesalers provide value-added services such as product assortment, bulk breaking, financing, and market information
Wholesalers help manufacturers reach a wider market by selling to multiple retailers
Wholesalers help retailers manage inventory by providing just-in-time delivery and flexible ordering options
Wholesalers face challenges such as intense price competition, consolidation among retailers, and disintermediation by manufacturers selling directly to retailers
Wholesale pricing strategies include cost-plus pricing, market-based pricing, and volume discounts for larger orders
Location, Location, Location: Where to Set Up Shop
Retail location decisions involve choosing the best sites to reach target customers and maximize sales
Factors to consider in retail location decisions include demographics, competition, accessibility, and lease terms
Types of retail locations include downtown areas, shopping centers, strip malls, and freestanding sites
Site selection techniques include geographic information systems (GIS), customer surveys, and traffic counts
Trade area analysis involves defining the geographic area from which a store draws customers
Retail gravity models help predict the attractiveness of different locations based on factors such as size and distance
Online retailers face different location considerations, such as the placement of distribution centers and delivery networks
The Customer Experience: More Than Just Buying Stuff
Customer experience encompasses all interactions a customer has with a retailer, from pre-purchase to post-purchase
Factors that influence customer experience include store atmosphere, product assortment, pricing, customer service, and after-sales support
Retailers use customer journey mapping to understand and optimize the customer experience across different touchpoints
In-store technologies such as mobile apps, digital signage, and self-checkout can enhance the customer experience
Personalization involves tailoring the customer experience based on individual preferences and behaviors
Loyalty programs reward customers for repeat purchases and encourage long-term relationships
Customer feedback and reviews provide valuable insights for improving the customer experience
Tech Takeover: How Digital is Changing the Game
E-commerce has disrupted traditional retailing by providing consumers with convenient, 24/7 access to a wide range of products
Mobile commerce involves selling products through mobile devices and apps
Social commerce involves selling products through social media platforms (Instagram, Facebook)
Augmented reality (AR) and virtual reality (VR) technologies enable customers to visualize products in different settings
Artificial intelligence (AI) and machine learning help retailers personalize recommendations, optimize pricing, and improve demand forecasting
Blockchain technology has potential applications in supply chain transparency, product authentication, and loyalty programs
Internet of Things (IoT) devices such as smart shelves and sensors can help retailers optimize inventory management and store operations
Future Trends: What's Next in Retail and Wholesale?
Sustainability and ethical sourcing will become increasingly important as consumers demand more environmentally and socially responsible products
Direct-to-consumer (DTC) brands will continue to disrupt traditional retail by selling products directly to consumers online
Subscription-based models will expand beyond traditional categories (meal kits, beauty products) into new areas such as clothing and home goods
Experiential retailing will become more prevalent as retailers seek to differentiate themselves from online competitors
Personalization will become more sophisticated, using AI and machine learning to provide highly targeted recommendations and experiences
Voice commerce, using smart speakers and virtual assistants, will grow as consumers become more comfortable with voice-based interactions
Retailers will focus on creating seamless, omnichannel experiences that blend online and offline channels
Wholesalers will face pressure to provide more value-added services and support to help retailers compete in a rapidly changing market