Page 386 - Introduction to Business

360 PART 3 Marketing

commission merchants Sellers that Commission merchants take physical possession of products and usually are
have power over prices and terms of granted broad powers over prices and terms of sale. The major services they provide
sale and specialize in providing
transportation and arranging delivery are transportation and arranging delivery. They are most likely to be used in mar-
for agricultural products keting agricultural products and are paid a commission.

Retailers. There are four basic types of retailer organizations in the United
States: stores, mail order, automatic vending, and direct selling. About two-thirds of
U.S. retailers are stores and they account for around 90 percent of total retail sales.

department stores Large stores that sell STORES. Department stores are large stores that sell a wide variety of merchan-
a wide variety of merchandise dise organized into separate departments. In each line there is usually a wide
organized into separate departments
assortment. The buyer for each department manages that department. Thus, buy-
ers not only purchase merchandise for their departments—their major function—
but they also supervise clerks, engage in inventory control, arrange for sales (mark-
downs), plan promotional campaigns, and so on. Department stores offer a wide
variety of services to their customers. Some examples include luncheon rooms, gift
wrapping, delivery, nurseries, beauty consultants, and charge accounts.
The traditional department store emphasizes the sale of soft goods, such as
men’s wear, women’s wear, children’s clothing, and household items like curtains,
blankets, and sheets. Other lines of merchandise commonly carried include china,
gourmet foods, cameras, luggage, tobacco products, shoes, jewelry, and cosmetics.
In the past, many department stores carried appliances and sporting goods, but
because of increased competition, they have dropped these lines.
Most department store buyers prefer to deal directly with manufacturers and
thus bypass wholesalers. Because of their large size, they are often able to get good
prices and favorable terms of sale.
discount stores Stores that emphasize Discount stores appeared in the United States after World War II in response to
the sale of hard goods at low prices consumer demand for low prices. In order to achieve these low prices, discount
with low levels of service at
operators located in inexpensive buildings, used inexpensive fixtures, employed
inexpensive locations
few clerks, and offered few services. Their main merchandise line was hard goods,
such as washers, dryers, television sets, and radios. They tended to sell major brand
names so that promotional costs could be minimized and consumers could easily
see the price savings offered.
In recent years discount operations have moved to better locations, improved the
quality of their interiors, and have begun to offer some services, such as credit and
delivery. These actions have resulted in higher operating expenses and illustrate a
wheel of retailing The process by which phenomenon called the wheel of retailing, which means that low-cost retailers gain
low-cost retailers begin offering services a competitive advantage when getting started by offering few services so that low
that increase their prices, making them prices can be charged. Once they become established, they add services that increase
vulnerable to new, low-cost retailers
their costs and their prices. Thus, they become vulnerable to new forms of competi-
tion that stress low prices. Wal-Mart is the leading discounter in the United States and
one of the largest global companies in terms of revenues ($245 billion in 2002).
supermarkets Large food stores that sell Supermarkets are large food stores that sell dry goods, frozen foods, meat, and
a wide variety of food and nonfood items fresh fruit and vegetables. They frequently have 30,000 or more square feet of sell-
ing area and stock as many as 10,000 different items. Supermarkets have added
many nonfood items, including toys and games, housewares, drugs, books and
magazines, plants and flowers, and clothing. Supermarkets emphasize self-service.
Because self-service allows them to hire fewer clerks, they reduce their costs and
are able to charge lower prices.
convenience stores Small-sized stores Convenience stores are small-sized food stores that sell a limited line of grocery
that sell limited lines of food and items such as milk, bread, pastries, soft drinks, and ice cream. They tend to keep
nonfood items
long hours. In fact, many such operations stay open 24 hours a day. Because these

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