| Retailing and Wholesaling 373

Chapter 13 | Retailing and Wholesaling 373

nology. Its Bentonville, Arkansas, headquarters contains a computer communications system that the U.S. Department of Defense would envy, giving managers around the country instant access to sales and operating information. And its huge, fully automated distribution centers employ the latest technol- ogy to supply stores efficiently.

Walmart also keeps costs down through good old “tough buying.” The company is known for the calculated way it wrings low prices from suppliers. “Don’t expect a greeter and don’t expect friendly,” said one supplier’s sales executive after a visit to Walmart’s buying offices. “Once you are ush- ered into one of the spartan little buyers’ rooms, expect a steely eye across the table and be prepared to cut your price. They are very, very focused people, and they use their buying power more force-

higher-quality merchandise: Many urban At Walmart, the

fully than anyone else in America.”

Walmarts now carry a slew of higher-end company promises,

Some critics argue that Walmart squeezes its suppliers too

consumer electronics products, from Sony you'll “Save

hard, driving some out of business. Walmart proponents

plasma televisions to Dell and Toshiba lap- money. Live

counter, however, that it is simply acting in its customers’ inter-

tops to Apple iPods. The retailer has also better.” Says

ests by forcing suppliers to be more efficient. And most suppli-

dressed up its apparel racks with more- Walmart’s CEO,

ers seem to agree that although Walmart is tough, it’s honest and

stylish fashion lines. Finally, Walmart has “We’re obsessed

straightforward in its dealings.

dropped its old, hard-sell “rollback prices” with delivering

Despite its incredible success over the past four decades,

advertising in favor of softer, more refined value to

mighty Walmart faces some weighty challenges ahead. Having

lifestyle ads that better support its “Save customers.”

grown so big, the maturing giant is having difficulty maintain-

money. Live better.” slogan.

ing the exploding growth rates of its youth. To reignite growth, But don’t expect Walmart to try to out-Target Target. In Walmart is pushing into new, faster-growing product and ser-

fact, given the recently troubled retail economy, Target has vice lines, including organic foods, store brands, in-store health

moved more toward Walmart than the other way around. Dur- clinics, and consumer financial services. It’s also pushing its ex-

ing and following the recent recession, Walmart found itself pansion into international markets and online sales. Still,

strongly positioned to serve today’s thriftier consumers. By growth remains a daunting task. Think about this: To grow just

contrast, the more stylish Target was forced to drop its prices

7 percent next year, Walmart will have to add nearly $30 billion and margins to avoid losing market share to Walmart. And in new sales. That’s a sales increase equivalent to the total sales of

whereas other retailers’ sales suffered in hard times, Walmart’s Coca-Cola, DuPont, or more than 1.5 Nikes. That’s a lot of

continued to grow.

growth. So even as it brushes up its image, in no way will Walmart Recently, to refresh its positioning relative to younger, hip-

ever give up its core low price value proposition. After all, Wal- per competitors such as Target, Walmart has been giving itself

mart is and always will be a discount store. “I don’t think Wal-

a modest image face-lift. For example, it’s spruced up its stores mart’s . . . ever going to be edgy,” says a Walmart marketer. “I with a cleaner, brighter, more open look and less clutter to make

don’t think that fits our brand. Our brand is about saving peo- them more shopper-friendly, like Target. It’s added some new,

ple money” so that they can live better. 1

The Walmart story sets the stage for examining the fast-changing world of today’s resellers. This chapter looks at retailing and wholesaling. In the first section, we look at the nature and importance of retailing, the major types of store and nonstore retailers, the

decisions retailers make, and the future of retailing. In the second section, we discuss these same topics as they apply to wholesalers.

Objective OUTLINE

Explain the role of retailers in the distribution channel and describe the major types of retailers.

Retailing (374–382)

Describe the major retailer marketing decisions. Retailer Marketing Decisions (382–388)

Discuss the major trends and developments in retailing. Retailing Trends and Developments (389–394)

Explain the major types of wholesalers and their marketing decisions. Wholesaling (394–400)

Retailing

Author You already know a lot

(pp 374–394)

Comment

about retailers. You deal with them every day—store retailers,

What is retailing? We all know that Costco, Home Depot, Macy’s, Best Buy, and Target are service retailers, online retailers, and

retailers, but so are Avon representatives, Amazon.com, the local Hampton Inn, and a doc- others.

tor seeing patients. Retailing includes all the activities involved in selling products or services directly to final consumers for their personal, nonbusiness use. Many institutions—

manufacturers, wholesalers, and retailers—do retailing. But most retailing is done by All the activities involved in selling goods

Retailing

retailers , businesses whose sales come primarily from retailing.

or services directly to final consumers for Retailing plays a very important role in most marketing channels. Each year, retailers their personal, nonbusiness use.

account for more than $4.1 trillion of sales to final consumers. They connect brands to con-

sumers in what marketing agency OgilvyAction, calls “the last mile”—the final stop in the A business whose sales come primarily