Page 565 - Business Principles and Management

Unit 6

Focus On...

Retail Strategy–Retailers that Changed Business

Most manufacturers of consumer goods rely on retailers to provide
the connection with the customers who will purchase their products.
The retailers purchase the products from the manufacturer, stock
them in stores that are close to where customers live, advertise and
sell the products, and often offer delivery of the products and many
customer services. Retailers provide these important marketing func-
tions for manufacturers.
A few retailers have changed the way business is done. Because of
their ideas, they forced their competitors to respond or risk going out
of business.
One of the first was Sears Roebuck. In the late 1800s and early 1900s,
some of the largest retailers reached their customers by mail. They sent
catalogs to people all over the country and filled customer orders by
mail or by shipping in trucks and trains. Sears decided customers wanted
faster service and the opportunity to examine merchandise before
making a purchase. The company began building large stores filled
with a wide variety of products. Customers flocked to the stores, and
Sears became the largest retailer in the world.
Sears stores were located in large and mid-size cities. Sam Walton
saw opportunities in the thousands of small communities around the
country. Wal-Mart grew because of its emphasis on carefully chosen
locations, working with manufacturers to buy at the lowest prices,
developing an efficient product distribution system, and creating a
friendly shopping experience. Because of those efforts, Wal-Mart could
offer lower prices than most other retailers. With this new philosophy
of retailing, Wal-Mart replaced Sears as the world’s largest retailer.
Today, a new form of retailing is developing, led by Jeff Bezos.
Mr. Bezos recognized the potential of Internet commerce. By devel-
oping an easy-to-use Web site and offering customers secure online
transactions, rapid product delivery, and effective customer service,
Amazon.com developed into the largest e-retailer, with revenues
approaching $1 billion.
In each example, the success of the companies resulted from find-
ing new ways to offer products and services to consumers. By perform-
ing marketing activities more effectively than its competitors, each
company has become a leading retailer.

Think Critically

1. Why were major retailers using catalogs and mail order in the
late 1800s and early 1900s to sell products to their customers?
What changes were occurring in the United States that pro-
vided the opportunity for Sears Roebuck to change the way
products were sold?
2. Review the eight marketing activities described in the chapter
and suggest which of the activities were most important to
the success of Wal-Mart. Why were many of Wal-Mart’s com-
petitors not able to offer the same low prices to customers?
3. Do you believe that an e-retailer like Amazon.com will ever re-
place Wal-Mart as the world’s largest retailer? Why or why not?

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