Warming Up

1. Which types of shops do you use to buy different things? Why?

2. What are potential pitfalls in running a shop? How to avoid them?

3. Which business activity would you choose: retailing or wholesaling and why?

Intensive Reading retailing

Retailing covers all of the activities involved in the sale of products to final consumers. Retailers range from large, sophisticated chains of specialized stores — like Toys “R” Us — to individual merchants like the woman who sells baskets from an open stall in the central market in Ibadan, Nigeria.

Retailing is crucial to consumers in every macro-marketing system. For example consumers spend $1.8 trillion (that's $1,800,000,000,000!) a year buying goods and services from U.S. retailers. If the retailing effort isn't effective, everyone in the channel suffers — and some products aren't sold at all.

The nature of retailing — and its rate of change — are generally related to the stage and speed of a country's economic development. In the United States, retailing tends to be more varied — and more mature — than in most other countries.

Retailers interact directly with final consumers — so strategy planning is critical to their survival. If a retailer loses a customer to a competitor, the retailer is the one who suffers. Producers and wholesalers still make their sale regardless of which retailer sells the product. Retailers must be guided by the old maxim “Goods well bought are half sold.”

Most retailers in developed nations sell more than one kind of product. Think of the retailer’s whole offering — assortment of goods and services, advice from salesclerks, convenience, and the like — as its “Product.” In the case of service retailing — dry cleaning, fast food, or one-hour photo processing, for example — the retailer is also the producer. Now let's look at why customers choose particular retailers.

Different consumers prefer different kinds of retailers. But many retailers don’t know or don’t care why. All too often, beginning retailers just rent a store and assume customers will show up. As a result, in the United States, for example, more than three fourths of new retailing ventures fail during the first year. To avoid this fate, a new retailer — or one trying to adjust to changing conditions — should carefully identify possible target markets and try to understand why these people buy where they do.

Consumers consider many factors when choosing a particular retailer. Some of the most important ones relate to their economic needs. Obviously price is relevant, and so are:

1. Convenience.

2. Variety of selection.

3. Quality of products.

4. Help from salespeople.

5. Reputation for integrity and fairness in dealings.

6. Special services offered — delivery, credit, returned-goods privileges.

7. Value offered.

Consumers may also have important emotional reasons for preferring particular retailers. Some people get an ego boost from shopping in a prestige store. Others just want to shop in a store where they won't feel out of place.

Different stores seem to attract customers from different social classes. People like to shop where salespeople and other customers are similar to themselves. So a store fills the emotional needs of its target market(s). Dollar General — a chain of 1,300 general merchandise stores — succeeds with a “budget” image that appeals to lower-class customers. Tiffany's, on the other hand, works at its upper-class image.

There is no one right answer as to whom a store should appeal. But ignorance about emotional dimensions — including social class appeal — could lead to serious errors in marketing strategy planning.