Page 431 - Foundations of Marketing

398 Part 5 | Distribution Decisions

The key to success in retailing is to have a strong customer focus with a retail strategy that
provides the level of service, product quality, and innovation that consumers desire. New store
formats, service innovations, and advances in information technology have helped retailers to
better serve customers. Advances in inventory management and tracking have allowed major
online retailers to compete with traditional retailers on distribution through offering same-day
delivery in major markets, providing even greater satisfaction to customers. This strategy is
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expensive for the retailer, but is aimed at attracting customers who need items right away.
Retailing is increasingly international. While growth in developed markets has slowed or
stopped in many product categories, and the recent global recession slowed economic growth
everywhere, many retailers see significant growth potential in some international markets.
The market for a product category such as cell phones is maturing in areas such as North
America and Europe, but producers forecast strong future demand in places like India, China,
and Brazil. These countries all have large, relatively new middle classes with consumers hun-
gry for goods and services. For example, Apple’s iPhone sales are growing rapidly in India,
increasing more than 100 percent a year. Apple has discovered, however, that the Indian mar-
ket is more price sensitive than the American one, so it has adapted to local needs by working
with local distributors to lower prices and offer installment-based payment plans to make the
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phones more affordable. Many major U.S. retailers have international outlets in order to capi-
talize on international growth. On the other hand, international retailers, such as Aldi, IKEA,
and Zara, have also found receptive markets in the United States.

LO 2 . Identify the major types of MAJOR TYPES OF RETAIL STORES
retailers.
Many types of retail stores exist. One way to classify them is by the breadth of products they
offer. Two general categories include general-merchandise retailers and specialty retailers.

General-Merchandise Retailers
A retail establishment that offers a variety of product lines that are stocked in considerable
depth is referred to as a general-merchandise retailer . The types of product offerings, mixes
of customer services, and operating styles of retailers in this category vary considerably. The
primary types of general-merchandise retailers are department stores, discount stores, con-
venience stores, supermarkets, superstores, hypermarkets, warehouse clubs, and warehouse
showrooms (see Table 14.1 ).

Department Stores

Department stores are large retail organizations characterized by wide product mixes with at
least 25 employees. To facilitate marketing efforts and internal management, related product
lines are organized into separate departments such as cosmetics, housewares, apparel, home
furnishings, and appliances. This arrangement facilitates marketing and internal management.
Often, each department functions as a self-contained business, with buyers for individual
departments acting fairly autonomously.
general-merchandise Department stores are distinctly service-oriented. Their total product may include credit,
retailer A retail establishment delivery, personal assistance, merchandise returns, and a pleasant atmosphere. Although some
that offers a variety of product
lines that are stocked in so-called department stores are actually large, departmentalized specialty stores, most depart-
considerable depth ment stores are shopping stores. Consumers can compare price, quality, and service at one
store with competing stores. Along with large discount stores, department stores are often
department stores Large retail
organizations characterized by a considered retailing leaders in a community and are generally found in areas with populations
wide product mix and organized of more than 50,000 .
into separate departments to At typical department stores, such as Macy’s, Sears, JCPenney, Dillard’s, and Neiman
facilitate marketing efforts and Marcus, a large proportion of sales come from apparel, accessories, and cosmetics. These
internal management stores carry a broad assortment of other products as well, including gift items, luggage,

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