CHAPTER 9

RETAILING
AND
WHOLESALING

PMK1213/0722/NA0
 LEARNING OBJECTIVES

01. 02.
Define retailing and Describe the store
explain the types of retailing and non store
retailers. retailing by giving
examples on each.

03. 04. 06.

Define wholesaling and Explain about the major types
explain about the types of of wholesaling functions.
wholesalers.
 RETAILING
Retailing includes all the activities involved in selling products or services
directly to final consumers for their personal, non-business use.

Many institutions – manufacturers, wholesalers and retailers – do retailing.

In recent years non store retailing has been growing much faster than store
retailing.
Non store retailing: is shopping without visiting a store with fixed physical
environment. Ex. Auto vending machine, direct selling, online retailing,
catalog direct mail, TV shopping show
Examples of non-store retailing
 TYPES OF RETAILERS

[Link] of [Link] line

service

[Link] prices [Link]

approach
 TYPES OF RETAILERS
[Link] Of Service
● 1) Self-service retailers serve customers who are willing to perform their own
locate-compare-select process to save time or money.
○ Self-service is the basis of all discount operations and is typically used by
retailers selling convenience goods (such as supermarkets)

● 2) Limited-service retailers(electrical goods, motoring, cycling products etc.),

○ provide more sales assistance because they carry more shopping goods about
which customers need information.

● 3) Full-service retailers, such as high-end speciality stores (for example, jewelry

and exclusive stores), assist customers in every phase of the shopping process.
○ Full-service stores usually carry more speciality goods.
○ E.g Gucci, LV
 TYPES OF RETAILERS
[Link] Line

● 1) Speciality stores, carry narrow product lines with deep assortments within those
lines.
○ E.g. Toys “R” Us (toys), JD sports (sporting goods)

● 2) Department stores carry a wide variety of product lines.

○ E.g SOGO presently has three stores in Malaysia. The first store, KL SOGO, is located
along Jalan Tuanku Abdul Rahman. The SOGO store commenced business [Link]'s
second store, located at the Central i-City shopping mall in Shah Alam, opened in 2019, and
the third store at The Mall - Midvalley Southkey in Johor Bahru, opened in 2019.

● 3) Supermarkets are the most frequently visited type of retail store.

○ supermarkets have moved upmarket, providing improved store environments and
higher-quality food offerings, such as from-scratch bakeries, gourmet deli counters etc.
○ E.g. Cold Storage,Jaya Grocer
 TYPES OF RETAILERS
[Link] Line (cont.)

● 4) Convenience stores are small stores that carry a limited line of high-turnover
convenience goods.
○ For example, 7E, Speedmart, Kedai Mesra Petronas

● 5) Superstores are much larger than regular supermarkets and offer a large assortment
of routinely purchased food products, non-food items and services.
○ supercenters, very large combination food and discount stores. E.g. AEON Big
○ category killers feature huge stores that carry a very deep assortment of a
particular line with a knowledgeable staff. E.g. IKEA, Decathlon.

● 6) Service retailers include hotels, banks, airlines, restaurants, colleges, hospitals,

cinemas, tennis clubs, bowling alleys, repair services, hair salons and dry cleaners.
○ E.g. restaurants, repair services, saloon, movie theaters.
 TYPES OF RETAILERS
[Link] Prices
● 1) Discount store sells standard merchandise at lower prices by accepting lower
margins and selling higher volume.E.g. Daiso, Eco Shop

● 2) O -price retailers buy at less-than regular wholesale prices and charge consumers less
than retail.
○ Independent o -price retailers either are independently owned and run or are
divisions of larger retail corporations. E.g. Brands Outlet (Padini), Reject Shop (Metrojaya)
○ Factory outlets – manufacturer-owned and operated stores by firms sometimes group
together in factory outlet mall. At these centres, outlet stores offer prices as much as 50
percent below retail on a wide range of surplus, discounted or irregular goods. E.g.
GPO, JPO
● 3) Warehouse clubs (also known as wholesale clubs or membership
warehouses),operate in huge, warehouse-like facilities and offer few frills.
○ sells a limited selection of brand name, grocery items, appliances, clothing and other
goods at deep discounts to members who pay annual membership fees.
 TYPES OF RETAILERS
4. Organizational Approach

● Corporate (organization) chains are two or more outlets that are commonly owned and
controlled.

○ voluntary chain – a wholesaler-sponsored group of independent retailers that

engages in group buying and common merchandising (convenience products).

○ retailer cooperative – a group of independent retailers that bands (joint venture)

together to set up a jointly owned.

○ franchise - franchise systems are normally based on some unique product or

service; a method of doing business (franchise/royalty fees); or the trade name,
goodwill or patent (intellectual property rights: slogan, icon, brands, music)that the
franchisor has developed. E.g Mc Donalds, Subway,Pizza Hut.
 WHOLESALING
Wholesaling
includes all the
activities involved Firms engaged
in selling goods primarily in
wholesalers.
and services to wholesaling
those buying them activities are called
for resale or
business use.
 TYPES OF WHOLESALER
[Link] WHOLESALERS
• are the largest group of wholesalers, accounting for roughly 50 percent of
all wholesaling.
• Two types of merchant wholesalers:

Full-service wholesaler

provide full set of services; carrying stock, maintaining a sales force,

offering credit, making deliveries and providing management assistance.
 Limited-service wholesalers

offer fewer services to their suppliers and customers :

1. Cash and carry - carry a limited line of fast-moving goods and sell to small retailers for cash.
Normally do not deliver.

2. Truck wholesaler - perform primarily a selling and delivery function. Carry a limited line of
semi-perishable-merchandise (such as milk, bread, snack foods), which is sold for cash as
deliveries are made to supermarkets, small groceries, hospitals, restaurants, factory cafeterias
and hotels.

3. Drop shipper - do not carry inventory or handle the product. On receiving an order, drop shippers
select a manufacturer, who then ships the merchandise directly to the customer. Drop shippers
operate in bulk industries, such as coal, timber and heavy equipment.
 Limited-service wholesalers

4. Rack jobbers - Serve grocery and drug retailers, mostly in non-food items. Rack jobbers send
delivery trucks to stores, where the delivery people set up toys, paperbacks, hardware items,
health and beauty aids or other items. Rack jobbers price the goods, keep them fresh, set up
point-of-purchase displays, and keep inventory records.

5. Producer cooperative - Farmer-owned members that assemble farm produce for sale in local
markets. Producers’ cooperatives often attempt to improve product quality and promote a co-op
brand name, such as Sun-Maid raisins, Sunkist oranges

6. Mail order wholesaler - Send catalogues to or maintain websites for retail, industrial and
institutional customers featuring jewelry, cosmetics, speciality foods and other small items. Its
primary customers are businesses in small outlying areas.
 TYPES OF WHOLESALER(cont.)
[Link] & BROKERS
Broker and agents do not take title of the goods.

● Broker brings buyers and sellers • Agent represent buyers or seller

together and assists in negotiation on a more permanent basis
• Manufacturer’s agents
• Selling agents
• Purchasing agents
• Commission agents
 TYPES OF WHOLESALER (cont.)
[Link]’ AND RETAILERS. BRANCHES AND OFFICES
Wholesaling operations conducted by sellers or buyers themselves rather
than operating through independent wholesalers. Separate branches and
o ces can be dedicated to either sales or purchasing.

Sales branches and offices Purchasing officers

• Branches carry inventory: lumber, auto

• Perform role similar to
brokers and agent:
equipment and parts
however this individuals are
• O ces do not carry inventory: dry goods employees of the
organization.
• “Manufacturers' sales branches
and offices are owned and
operated by manufacturers but
 WHOLESALING FUNCTIONS
Wholesalers add value by performing one or more of the following channel functions:

Wholesalers’ sales forces help manufacturers reach

[Link] and promoting.
many small customers at a low cost.

Wholesalers can select items and build assortments

[Link] and assortment building
needed by their customers, thereby saving much work.

Wholesalers save their customers money by buying in

[Link] breaking large lots and breaking bulk (breaking large lots into
small quantities).

Wholesalers hold stocks, thereby reducing the inventory

[Link]
costs and risks of suppliers and customers.

Wholesalers can provide quicker delivery to buyers

[Link]
because they are closer to buyers than are producers.
 WHOLESALING FUNCTIONS(cont.)
Wholesalers add value by performing one or more of the following channel functions:

Wholesalers finance their customers by giving credit, and

[Link] they finance their suppliers by ordering early and paying
bills on time.

Wholesalers absorb risk by taking title and bearing the

[Link] bearing
cost of theft, damage, spoilage and obsolescence.

Wholesalers give information to suppliers and customers

[Link] information about competitors, new products and price
developments.

Wholesalers often help retailers train their sales staff,

[Link] services and
improve store layouts and displays, and set up
advice
accounting and inventory control systems.
Thank you..