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Marketing Basics - Kotler Philip

Retail

The nature and importance of retail

What is retail ? Everyone knows that Sears is a retailer. But what about the “Lady Avon” knocking on the door, about the contractor offering home repair services over the phone, about the doctor visiting patients, about the hotel that advertises weekend vacations at low prices? Yes, yes, these are all retailers. We define retail as follows:

Retail trade - any activity selling goods or services directly to end consumers for their personal non-commercial use.

Any institution that deals with this is engaged in retail trade. Moreover, it does not matter exactly how goods or services are sold (by personal sale, by mail, by phone or via a vending machine) and where they are sold (in a store, on the street or at the consumer’s home).

Retail is one of the largest industries in the United States. Retail stores account for approximately 25% of all US businesses and are the third largest source of employment in the country, with nearly 16 million workers and employees. The structure of the retail industry includes over 1.5 million single-point and more than 340 thousand multi-point trading establishments, the total volume of commodity circulation of which in 1981 amounted to 1,038,000,000 thousand. 2

Who are the largest retailers in the country? In 1981, the top ten largest retailers included Sears Robuck Corporation with a turnover of $ 27.3 billion, Seafay Stores (16.5), K-Mart (16.6), and J. K. Penny "(11.8)," Kroger "(11.2)," F. W. Woolworth ”(7.2), American Stars (7.1), Lucky Stars (7.2), Federated Department Apartments (7.0) and IP and PI (6.8 billion dollars) 3. The largest retail companies are, first of all, a network of department stores with a mixed assortment and a network of supermarkets.

Whether it’s for sale to one of the social classes or to the mass market, over the years retailers have acquired the idea that they operate in a rapidly changing environment. Yesterday's retail formulas may not work today and probably will not work tomorrow. Where did the “U.T. Grant, one of the country's oldest and largest haberdashery chains, and Food Fair, the eighth largest supermarket chain? They went bankrupt. And what happened to the great IP network? “Considered to be almost a monopolistic colossus, the arbiter of the fate of petty competitors and the target of fighters against trusts, now the IP network has become like a battered toothless lion.” 4 And what happened to Montgomery Ward, the fourth largest mixed-use department store chain? She is busy looking for a strategy to revive her former glory. Even the Sears Corporation is not all right.

In the 70s, Sirs Corporation painfully felt the consequences of changes in the environment. The strategic objectives adopted by the company for every decade, since its founding in 1886, have always hit the mark, and in the 40s the corporation ousted Montgomery Ward, which was older in age, from the leader's place. The Sears firm relied on economic growth in the post-war period, and Montgomery Ward relied on economic stagnation. The calculation of the Sirs firm was justified. She opened hundreds of new stores in the suburbs, modernized her old stores, took up new types of activities insurance, organizing savings banks, selling paintings. The corporation particularly succeeded in the early 70s, after which it decided to turn its strategic line from expanding the service sector to raising their quality level. She decided to focus her efforts on wealthy customers, replenishing the range with high-quality goods and even fashionable goods of individual design. However, the time of change was chosen poorly. The boom turned into an empty hype, and buyers did not want to pay higher prices. Instead, they began to shop at K-Mart and other merchants offering discounted goods. Not attracted a new approach and new wealthy buyers. In 1974, for the first time in 13 years, Sears Corporation experienced a sharp drop in profits - by as much as 24.8%. In 1976, its retail profits reached a record high of $ 441.2 million, and then went down again to $ 363.9 million in 1977 and $ 330.7 million in 1978. .5

What is the corporation doing in the 80s to restore its former position? She began to adhere to the following strategic approaches: recognizing that the most stable market is “middle class Americans,” Sears is no longer chasing an increase in the number of wealthy customers. Instead, the corporation strengthens relations with its current customers with the help of credit and directs its products and services to this market. For example, in 1981, Sears Corporation acquired a real estate and investment company specifically to offer their services to its customers. And one more change: today Sears sells in its stores jeans and Levi Strauss brand clothes.

A modern retailer needs to carefully monitor the signs of change and be prepared to reorient its strategy - and better sooner rather than later. However, the decision to change the strategy was not so easy to implement. A large retailer is often tied to their own political attitudes, which management considers "common sense." And besides, he is attached to his own public image, which remains in the minds of consumers long after the store itself has already changed.

Many retail and small "family" shops. Small retailers play an important role for several reasons. 1. They often appear new forms of retail, which are later adopted by large stores. 2. They are more convenient for the consumer, since they are found almost everywhere. 3. Often they are more adaptable and provide consumers with more personalized services. 4. They give buyers the opportunity to feel like they are masters of the situation.