As consumers, we are very familiar with the traditional view of retail. We make our purchases at Walmart, Target, Dick’s Sporting Goods, Foothill Bookshop, Starbucks Cafes, and other points of sale. The retailer’s job is to connect the consumer to products and facilitate the purchase. Sounds simple, right?

Well, the reality today is that most consumers are omnichannel shoppers. That means that we don’t use a single channel for making purchasing decisions. If you are in the market for a laptop, you may go to Best Buy to see (touch and feel) what’s available, you may also visit company sites (Apple, Dell, Samsung) to collect information about features and capabilities. You may check out discount online retailers to see if you can get a better price. Finally, you may look for customer reviews on consumer sites, before you make your decision. Using multiple channels to make a purchasing decision enables the customer to choose the right product, but what does that mean for the business? It means that it is not enough to place your product in your store or at a chosen retailer. The company must support its product on all these channels.

So, if we are shopping in so many different ways, why are we still buying mostly via retail shops?

Smart retailers implement strategies that add value to the shopping experience. For example, you may get an extra warranty or a return guarantee if you purchase at a retail shop that offers it as an added service (Nordstrom). You may experience something that’s only available at the retail shop – a fashion show, a relaxing atmosphere, a digital interactive display (AT&T store in Chicago).

In 2016 for the first time, online retailers outperformed in-store retailers on Black Friday! As a result, many traditional retailers downsized (Payless Shoes, BCBG, Macy’s).

In 2017, the writing was on the wall! Most of Black Friday purchases were done online!

Link (Links to an external site.)

Retail business is often overcrowded. Take a coffee shop business, for example. There are 33,000 coffee shops in the United States (WSJ, November 8, 2017). 42% of them are owned by Starbucks. There are market trends to consider: the coffee business is slowing down, consumers are not visiting coffee shops as often as they used to. Instead, they brew specialty coffee at home, they buy it at grocery stores and gas stations.

Caffeine Crush WSJ

While we all agree, online retailing is the future, there are still many people who shop at stores (even if they are checking out prices online while at the store!). Which is why Amazon is opening brick and mortar bookstores in Seatle and right here in California. This is Santana Row in San Jose, CA.

amazon bookstore santana row

Grocery retailing is undergoing a major change. From delivery services to online ordering, to “curb-side” pickup, retailers are scrambling to figure out the right combination of digital and in-person services to deliver the best value to the consumer. And, who is turning up the heat? You guessed it! Amazon.

https://youtu.be/IAXSfAUcOeI (Links to an external site.)

 

Point is, retailers are figuring out that it is NOT an isolated “brick-and-mortar” strategy OR online strategy that wins today, it is a combination of the two.

In e-readers (aka Kindle), where Amazon started, a late-2016 Pew Research Center study showed that 65% of its respondents read a printed book over the past year, while only 28% read a digital book. (WSJ, October 31, 2017) And those who read digital copies are now less likely to be reading them on dedicated e-readers, preferring tablets, laptops, and even phone screens (which can reduce comprehension). So, once again, retailers have to figure out how to present products/services across many channels and devices.

Amazon Oasis

Restoration Hardware (RH)  – still betting on retail

One company is betting heavily on maintaining physical spaces where people can gather, shop, dine, and experience the products. Read this letter from RH’s CEO Gary Friedman (Links to an external site.), a visionary leader. I bet, you will be moved and inspired by his take on retail.

Wholesaling

Businesses that get involved in selling goods and services to other businesses (for use or resale) are called Wholesalers.

Table 11.3 in your text identifies different types of wholesalers. As you read through the table, keep in mind that all wholesalers take possession of the products except Agents and Brokers. When you buy a house (or a boat) you hire an agent or a broker with the understanding that he/she does not own the house you want to buy. The job of an Agent/Broker is to simply connect the seller with the buyer. Other types of wholesalers typically add value in one of the following areas:

 

Competitive Environment

In Wholesale and Retail there is constant pressure to gain efficiencies and lower prices. Both are essentially middlemen, and if they don’t add enough value to the end-user (consumer), they are out. Some operate as both – wholesale and retail. SuperValue brand is one of many examples. It is a wholesale food distributor that also operates its own retail stores. Another example is Johnson & Johnson, a company that provides supplies to clinics and hospitals, but also sells to consumers (bandaids and other consumer products).

Think of other industries/companies where choosing an innovative distribution channel made all the difference…