Chapter 2: Category of Retailers

Question 1

Explain the four retail mix strategies in classifying retailers.

Answer 1

Type of merchandise and/or service.

Variety and assortment of merchandise.
- Retailers can offer the same merchandise but differ in the variety and assortment of the merchandise offered.
- A merchandise mix is the variety (breadth) and assortment (depth) of the products offered in a merchandise category by retailers.
- Variety is the number of merchandise categories that a retailer offers.
- Assortment is the number of different items offered in a merchandise category. Variety is often referred to as the breadth of the merchandise, and assortment is referred to as depth of merchandise. Each different item of merchandise is called a stock-keeping unit (SKU).

Level of customer service.
- Customers expect almost all retailers to provide certain services such as displaying merchandise, accepting credit cards, providing parking and being open at convenient hours.
- Some retailers charge customers for other services, such as home delivery, gift wrapping and promotional discounts.

Price of merchandise.
- When a retailer offers many SKUs, its inventory investment increases, because the retailer must have backup stock for each and every SKU.
- Similarly, services attract customers to the retailer, but they are also costly.
- More staff must be paid to provide information and assist customers, alter products to meet customers’ needs and demonstrate merchandise.

Question 2

Distinguish between store-based retailing and non-store retailing.

Answer 2

Store-based retailing
- is basically a process in which the retailer carries merchandise using the brick-and-mortar store concept.
- This includes specialty stores, department store, supermarket, convenience store, superstore, discount store and hypermarket.

Non-store retailing
- Reflects an electronic or online store-based concept for retailers to sell their merchandise.
- There is no physical presence of a store or retail outlet.
- Examples are direct marketing, e-retailing, direct selling, direct mail retailing, automotive vending retailing and mobile commerce.

Question 3

Describe the different approaches that conventional retail formats utilize.

Answer 3

• conventional retail stores offer a number of benefits that customers cannot get when shopping through other forms of channels such as catalogs and the Internet.
• These benefits include: browsing, touching and feeling products, providing personal service, as well as cash and credit payment, providing entertainment and social experience, providing immediate gratification and also reducing risks involved.
• here are several different types of conventional retail stores:
  Specialty stores
  Convenience stores
  Supermarkets
  Supercentres
  Hypermarkets
  Department stores
  Category specialists
  Off-price retailers
  Outlet stores

Question 4

Explain service-based retailing.

Answer 4

Services retailers or firms that primarily sell services rather than merchandise.

Examples of companies selling goods and services to consumers are banks and financial institutions, insurance companies, hospitality and healthcare sectors.

There are generally two kinds of retail services: profit-centred services, and sales supporting services.

Service retailing has certain characteristics attached to it. The services offered must be intangible, perishable, and timely. Also, service companies tend to be small in nature.

Question 5

Explain multi-channel retailing.

Answer 5

Multi-channel retailing is a form of retail format that embraces both offline and online retail channels.

A multi-channel retailer is a retailer that sells merchandise and/or services through more than one channel.

By using a combination of channels, retailers can exploit the unique benefits provided by each channel to attract and satisfy more customers.