Chapter15-4

Overview of Retail Intermediaries

• Definition of a Retailer: A retailer is defined as a marketing intermediary that sells goods directly to ultimate consumers. Examples include supermarkets and shoe stores.

• Retail Sector Statistics in the United States:
      * The United States contains more than $4.2 \times 10^{6}$ retail stores.
      * Retail organizations employ a workforce exceeding $52 \times 10^{6}$ people.
      * The industry is identified as one of the primary employers for marketing graduates.

• Competition and Market Dynamics:
      * Retailers are currently engaged in intense competition with Amazon.
      * Brick-and-Mortar Response: Physical stores are fighting back by offering increased convenience options and specific bargains.
      * Omnichannel Strategies: A key strategy involves offering digital deals exclusively for online ordering paired with in-store pickup.
      * Employment Concerns: There is an ongoing debate regarding whether Amazon's potential long-term dominance will negatively affect the total number of retail jobs.

• Competitive Tools: Retailers use different methods to compete; some focus primarily on price, while others (like specialty stores) use variety as their primary competitive tool.

Detailed Classification of Retail Store Types

• Department Store:
      * Description: Sells a wide variety of products, including clothing, furniture, and housewares, organized into separate departments.
      * Examples: Macy's, JCPenney, Nordstrom.

• Discount Store:
      * Description: Sells many different products at prices that are generally lower than those found in department stores.
      * Examples: Walmart, Target.

• Supermarket:
      * Description: Sells mostly food items alongside nonfood products such as paper products and detergent.
      * Examples: Safeway, Kroger, Albertsons.

• Warehouse Club:
      * Description: Sells food and general merchandise in facilities that are typically larger than standard supermarkets; offers discount prices and often requires a membership.
      * Examples: Costco, Sam's Club.

• Convenience Store:
      * Description: Sells food and other items that are often needed at locations that are convenient for shoppers; these stores may remain open 24 hours a day.
      * Example: 7-Eleven.

• Category Killer:
      * Description: Sells a huge variety of one specific type of product in order to dominate that entire category of goods.
      * Examples: Bass Pro Shops, Office Depot/OfficeMax.

• Outlet Store:
      * Description: Sells general merchandise directly from the manufacturer at a discount; products may be discontinued models or have flaws (referred to as "seconds").
      * Examples: Nordstrom Rack, Saks OFF 5th, Nike, TJ Maxx.

• Specialty Store:
      * Description: Sells an extensive selection of goods within a single category.
      * Examples: Jewelry stores, shoe stores, and bicycle shops.

Retail Distribution Strategies

• Selection Rationale: Marketers must make the major decision of selecting the right retailers because different products require different distribution strategies. There are three primary categories: intensive, selective, and exclusive.

• Intensive Distribution:
      * Definition: A strategy that involves placing products into as many retail outlets as possible.
      * Scope: Includes the use of vending machines.
      * Category Application: Used for convenience goods.
      * Specific Examples: Soft drinks and candy.

• Selective Distribution:
      * Definition: A strategy that uses only a preferred group of the available retailers in a specific geographic area.
      * Purpose: This selection helps ensure that producers receive high-quality sales support and service.
      * Category Application: Used for shopping goods.
      * Specific Examples: Manufacturers of furniture, appliances, and clothing.

• Exclusive Distribution:
      * Definition: The use of only one retail outlet in a specific geographic area.
      * Retailer Benefits and Behavior: Because the retailer holds exclusive rights to sell the product, they are likely to:
          * Maintain a large inventory.
          * Provide exceptional service.
          * Dedicate more attention to that specific brand over competitors.
      * Category Application: Used for luxury goods and specialty goods.
      * Specific Examples: Luxury automobile manufacturers and producers of specialty equipment like skydiving gear.