Retailing today
The world of retailing is a
mystery to many people, and
it is a complex world. It
basically involves buying
merchandise, usually from
manufacturers, and reselling it
to end consumers to generate
a profit.
Demand is created through marketing, advertising and
promotional activity. Profit is generated by buying at
one price, selling at another that will cover overheads
and leave an amount for the retailer’s profit.
In the last century retailing was almost entirely carried
out in stores, whether small high street retailers, chain
or department stores, or out of town shopping Malls.
Retailers offer benefits to consumers in that they are
able to purchase small quantities of a wide range of
products at commercially viable and affordable prices,
usually at a store near them.
Online retailing has made store location less of a
consideration. But has the drawback that customers
can’t handle the product, or try it on for size. They can
easily compare the features and benefits of several
products, and of course competitive pricing.
Retailers offer benefits to manufacturers in that they
are a route to market for them, allowing the
manufacturer access to their customers, and allowing
manufacturers to promote their product to their target
market, and get consumer feedback.
Without retailers, consumers would have to go directly
to a manufacturer to buy every single item they need –
a daunting and probably impossible task. Retailers add
value to the supply chain by making it possible for
manufacturers to sell their product and easy for
consumers to buy it. They are the last link in the chain
Effect of online retailing
These days an increasing amount of business is
transacted online, paid for electronically and delivered
by couriers. For a while it looked as if the demise of
“bricks and mortar “stores was likely and many
retailers cut back their store development plans.
However one of the most successful retail models in
very recent times has been “click n collect”. Here the
customer orders online, from a retailer who may have
many retail branches and distribution centres. If the
retailer has the item in stock, it is reserved for the
customer. If not, it will be shipped into the store from
stock held in the nearest distribution centre. This is
usually done overnight and the customer can collect the
item the next day.
It is easy to see why this is so popular. If the
customer knows what they want, they just check
pricing online, and order from the retailer who offers
them the best price. No wondering if there will be
stock left, your item is reserved.
Gone are the days of wandering around a shopping
centre with no idea what you might want to buy until
you come across something nice. Shopper’s attention
needs to be attracted long before they venture out of
the house with this model.
So in a sense, the world of retailing, promotions and
advertising has been turned upside down. The customer
makes their selection in response to brand awareness,
advertising and promotions and Internet presence. Often
the decision to purchase is made in the home. The
store just delivers what the customer has already
decided on.
Why do manufacturers need retailers?
So why does a manufacturer need a retailer? Well in
years gone by, retailers were crucial to them. It was a
life and death issue to have your product listed by
retailers -how else would the customers see your
product and buy it, other than in the store?
The retailer might co –advertise with the manufacturer
to get consumers into their stores. They would haggle
about prices, both cost and selling price for the
retailer, who wants to sell at competitive price and
make a decent margin.
They would work together on “point of sale” material
and advertising, worry about ordering and re-ordering,
and distribution into all their stores. And surplus, that
was always a problem for the retailer.
Why do they need them now?
Surely the next few years will mark the demise of, or at
loss diminish the importance of, the retailer. They are
just a middleman here. If a manufacturer has a strong
brand presence, and a website, why do they need a
retailer? The retailer is just an on- cost (or additional
cost), and an unnecessary part of the supply chain.
They can deal directly with the consumer. They don’t
need to organise stock in thousands of stores across
the country, and deal with Buyers from different retail
groups. As soon as the big brands are confident they
don’t need retailers, they will dispense with them and
sell direct to consumers from a couple of distribution
centres around the country.
The world of retailing is a
mystery to many people, and
it is a complex world. It
basically involves buying
merchandise, usually from
manufacturers, and reselling it
to end consumers to generate
a profit.
Demand is created through marketing, advertising and
promotional activity. Profit is generated by buying at
one price, selling at another that will cover overheads
and leave an amount for the retailer’s profit.
In the last century retailing was almost entirely carried
out in stores, whether small high street retailers, chain
or department stores, or out of town shopping Malls.
Retailers offer benefits to consumers in that they are
able to purchase small quantities of a wide range of
products at commercially viable and affordable prices,
usually at a store near them.
Online retailing has made store location less of a
consideration. But has the drawback that customers
can’t handle the product, or try it on for size. They can
easily compare the features and benefits of several
products, and of course competitive pricing.
Retailers offer benefits to manufacturers in that they
are a route to market for them, allowing the
manufacturer access to their customers, and allowing
manufacturers to promote their product to their target
market, and get consumer feedback.
Without retailers, consumers would have to go directly
to a manufacturer to buy every single item they need –
a daunting and probably impossible task. Retailers add
value to the supply chain by making it possible for
manufacturers to sell their product and easy for
consumers to buy it. They are the last link in the chain
Effect of online retailing
These days an increasing amount of business is
transacted online, paid for electronically and delivered
by couriers. For a while it looked as if the demise of
“bricks and mortar “stores was likely and many
retailers cut back their store development plans.
However one of the most successful retail models in
very recent times has been “click n collect”. Here the
customer orders online, from a retailer who may have
many retail branches and distribution centres. If the
retailer has the item in stock, it is reserved for the
customer. If not, it will be shipped into the store from
stock held in the nearest distribution centre. This is
usually done overnight and the customer can collect the
item the next day.
It is easy to see why this is so popular. If the
customer knows what they want, they just check
pricing online, and order from the retailer who offers
them the best price. No wondering if there will be
stock left, your item is reserved.
Gone are the days of wandering around a shopping
centre with no idea what you might want to buy until
you come across something nice. Shopper’s attention
needs to be attracted long before they venture out of
the house with this model.
So in a sense, the world of retailing, promotions and
advertising has been turned upside down. The customer
makes their selection in response to brand awareness,
advertising and promotions and Internet presence. Often
the decision to purchase is made in the home. The
store just delivers what the customer has already
decided on.
Why do manufacturers need retailers?
So why does a manufacturer need a retailer? Well in
years gone by, retailers were crucial to them. It was a
life and death issue to have your product listed by
retailers -how else would the customers see your
product and buy it, other than in the store?
The retailer might co –advertise with the manufacturer
to get consumers into their stores. They would haggle
about prices, both cost and selling price for the
retailer, who wants to sell at competitive price and
make a decent margin.
They would work together on “point of sale” material
and advertising, worry about ordering and re-ordering,
and distribution into all their stores. And surplus, that
was always a problem for the retailer.
Why do they need them now?
Surely the next few years will mark the demise of, or at
loss diminish the importance of, the retailer. They are
just a middleman here. If a manufacturer has a strong
brand presence, and a website, why do they need a
retailer? The retailer is just an on- cost (or additional
cost), and an unnecessary part of the supply chain.
They can deal directly with the consumer. They don’t
need to organise stock in thousands of stores across
the country, and deal with Buyers from different retail
groups. As soon as the big brands are confident they
don’t need retailers, they will dispense with them and
sell direct to consumers from a couple of distribution
centres around the country.
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