Retailing

Retailing is the selling of goods and SERVICES to final consumers. Retailing in the United States is big business; approximately one-fifth of all U.S. GROSS DOMESTIC PRODUCT is transacted through retailers. Wal-Mart, the country’s largest retail company, sells nearly $140 billion annually and now operates in dozens of countries around the world. Within marketing DISTRIBUTION CHANNELs, retailers serve the functions of providing small quantities for frequent and assorted consumer purchases, customer service, and an environment conducive to shopping. One retailing slogan is, “Have the right product in the right place at the right time for the right price.” One distinguishing feature about retailing is environment, including the layout, color, sound, lighting, displays, and other features created to stimulate consumer interest and PURCHASING. Simple measures like the amount of lighting in a store and its sounds and smells can affect CONSUMER BEHAVIOR. For PRODUCTs consumers want to inspect closely, bright lighting is important; for other products, lower levels of lighting can enhance the store’s atmosphere. Some bookstores have learned to place a coffee shop near the front of the store so consumers can immediately smell coffee aromas as they walk in. Fish departments are often placed in the rear of a store for just the opposite effect. Customer service is another important consideration in retailing strategy. Credit, delivery, check cashing, gift wrapping, rest rooms, repair services, warranties, return privileges, sales assistance, play areas for children, and waiting areas for spouses are just some of the customerservice issues that retailers have to address. It is often said that the three most important factors in retailing success is location, location, and location. Retailers generally develop locations accessible to TARGET MARKETS with sufficient numbers of potential customers and adjacent to stores with either complementary or competing products. Major retail companies have departments whose sole function is to evaluate future locations using DEMOGRAPHICS, highway traffic counts, and local zoning laws. In addition to location considerations, retailers vary their retailing strategy depending on the type of business they are developing. Retail strategy includes number of outlets, merchandise number and assortment of items, PRICING STRATEGIES, environment, and MARKETING COMMUNICATIONS (ADVERTISING, SALES PROMOTION, and PERSONAL SELLING). For example, convenience-store strategy includes numerous outlets, easy access, less variety, higher prices, and minimal advertising and promotion. By contrast, warehouse stores have few outlets, large selection, low prices, and advertising that emphasizes expanding membership. Department stores also have few outlets, extensive assortment, and depth in product offerings; they also put less emphasis on price competitiveness but more on the store’s environment and heavy use of advertising, sales staff, and displays. Retailers face a variety of ethical and legal issues, including shoplifting, consumer FRAUD, supplier practices, and use of customer information. Shoplifting, or “shrink” as retail managers often call it, is a major cost. Retailers use many different methods to reduce shoplifting losses, including electronic tags, guards, observation booths, and monitors. One of the major sources of shoplifting losses is employee theft. Consumer fraud—whether changing price tags, taking a product off the shelf and then “returning” it for a refund, or purchasing products with the intention of returning them for a refund when finished—reduce retailer PROFITs. In recent years retailers have increasingly needed to address criticism for using unethical suppliers. Reports of “sweatshops” employing children and of environmentally irresponsible manufacturers have forced retailers to monitor their suppliers more closely. Lastly, the nature of their work means that retailers have access to considerable information about their customers. How they use that information is of increasing concern to consumers.