Similar to manufacturing, the wholesaler sector of the United States economy underwent radical change in the 1980s. Wholesalers do not have a great deal of visibility in the eyes of the consuming public, because they operate as intermediaries between manufacturers and retailers. The sales of wholesalers are large accounting in trillions of dollars. This activity far exceeds the level of retail sales because many products are sold a number of times from the time they were first manufactured until they are finally sold to retailers or end users. To expand their role in the distributions process, wholesalers are actively pursuing strategies of broader assortments of proprietary brands, expansion into international markets, a broader range of value added services, increased focus on niche markets, and the adoption of new technology. All evidence suggests that the new breed wholesalers of the 1980s will continue to be a prime time player in the distribution arrangements of the 1990s and beyond.
Retailing: In simplest terms, retailing is the business of selling goods and services to the consuming public for their own use and benefits,. Because of this relationship to the consuming public; there are many similarities among all types of retailers. The range of functions performed by retailers combine to satisfy five basic consumer rights: having the right place, at the right time, at right price, and in the right quantities. However, it is misleading to think of all retailers as the same. The retail structure of the United States is actually a composite of many diverse types of businesses. Following an examination of retail structure we will focus attention on key management issues of retailing. The section concludes with a discussion of merging retail strategies that have important implications for distribution channel management.
Key Management Issues: Retail management involves the translation of the business mission objectives and strategies into a specific operating profile. The retailing mix consists of all of those variables that are directly under the control of the manager. Managers must make logical decisions with respect to each component of the retail mix so that they fit together to create a consistent and desirable image in the minds of target consumers. Each retail firm develops its own strategic profile by mixing these elements to create a unique method of presenting product to target consumers.
Merchandise: The component of the retail that is most obvious to consumers is the merchandise variety. The investment in merchandise and the resulting inventory risk assumed by retailers is substantial. In fact, investigation of a typical retailer’s balance sheet will reveal that over 50 percent of all asset investment is represented by inventory. The types or varieties of merchandise carried by a store serve to limit the kinds of consumer needs and wants that a store seeks to satisfy. Closely related to variety are decisions concerning assortment. For any product line, the retailer must decide how many brands, colors, styles sizes and so on.
Store Atmosphere: The internal environment of a store has a major impact on customers and the overall efficiency of operations. Some of the decisions concerning internal atmosphere are related to space utilization. Decisions regarding selling versus non-selling (offices and storages) space must be reached as well as the meant of space devoted to aisles and open areas. Space must also be allocated to various products and departments. General layout designs must be evaluated. Display equipment must be chosen. There, however, some more artistic considerations in the creation of store atmosphere. For example, lighting different colors, floor and wall coverings ad methods of merchandise presentation have a direct impact on the mood and behavior of customer while in the store.
Logistics operations are not highly visible to retail customers. However, the smooth functioning of a retail store is dependent upon the physical flow of products from manufacturers and wholesalers. Many retailers operate their own distribution centers to ensure continuous efficient supply.
Locations: No single decision in the retail mix is more critical than the choice of location. Once sites are selected and operations are committed, it is extremely difficult to relocate a store. Retail management must choose the trade area or areas in which stores will be located. Such decisions often establish the fundamental directions that affirm will ultimately follow. For example, Wal Mart’s rapid growth has centered around a strategy of building in medium size communities that are not the primary trading centers of their market areas. In a broader sense, decisions are required concerning of location and whether it should be downtown in a shopping center, or free standing.