🛍️Principles of Marketing Unit 18 – Retailing and Wholesaling

What's the Deal with Retailing and Wholesaling?

• 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