SH1628

Retailing and Wholesaling

I. Retailing
A. Types of retailer according to product line
• Specialty store – A store that carries a narrow product line with a high assortment of
products, such as apparel stores, sporting-goods stores, florists, and bookstores.
• Department store – This is a store that carries several product lines-typically clothing,
home furnishings, and household goods, with each line operate as a separate department
managed by specialist merchandisers.
• Supermarket – This is a relatively large, low-cost, low-margin, high-volume, self-
service operation designed to serve the consumer’s total needs for grocery and
household products.
• Convenience stores – A relatively small store located near residential areas, open at all
hours for seven days a week, and carrying a limited line of products at slightly higher
prices.

B. Types of retailer according to relative prices

• Discount stores – These are stores that carries standard merchandise sold at lower
prices with lower margins at higher volumes.
• Off-price retailers – These retailers buy from wholesalers at lower prices compared to
normal wholesalers. They would then sell these products at a lower price than other
retailers.
o Independent off-price retailer – These are independently owned off-price
retailers.
o Factory outlet – These are manufacturer-owned and operated stores that normally
carries the manufacturer’s surplus or discontinued goods.
o Warehouse clubs – This is an off-price retailer that sells a limited selection of
grocery items, appliances, clothing, and other goods to its members.

C. Types of retailer according to organizational approach

• Chain stores – These are two (2) or more outlets that are commonly controlled and
owned.
• Franchise – A contractual association between a manufacturer, wholesaler, or service
organization (a franchisor) and independent businesspeople (franchisees) who buy the
right to own and operate one or more units in the franchise system.

II. Wholesaling

A. Functions of wholesalers
• Selling and promoting – Wholesalers’ sales forces help manufacturers reach many
small customers at a lower cost. The wholesaler has more contacts and is often more
trusted by the buyer.
• Buying and assortment building – Wholesalers can select items and build assortments
needed by their customers.

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• Bulk breaking – Wholesalers save their customers money by breaking large lots into
smaller quantities.
• Warehousing – Wholesalers hold inventories, thereby reducing inventory costs and
risks of suppliers and customers.
• Transportation – Wholesalers can provide quicker delivery to buyers because they are
closer to buyers than producers.
• Financing – Wholesalers finance their customers by giving credit. They finance their
suppliers by ordering early and paying bills on time.
• Risk bearing – Wholesalers absorb risk by taking title and bearing the cost of theft,
damage, spoilage and obsolescence.
• Market information – Wholesalers give market information to suppliers and
customers about the competitors, new products, and price developments.
• Management services and advice – Wholesalers often help retailers train their
salesclerks, improve store layouts and displays, and set up accounting and inventory
control systems.

B. Types of wholesalers
• Merchant wholesaler – This is an independently owned wholesale business that takes
title to the merchandise it handles.
• Agents and brokers – An agent represents buyers or sellers on a relatively permanent
basis, performs only a few functions, and does not take a title to the goods. A broker is
a wholesaler who does not take title to the goods and whose function is to bring buyers
and sellers together and assist in negotiation.
• Manufacturers’ sales branches and offices – Wholesaling by sellers or buyers
themselves rather than through independent wholesalers.

References
Chua-Delayco, M. L. (2016). Learning to Succeed in Business with Marketing Senior High School.
Quezon City : Phoenix Publishing House.
Kotler , P., & Armstrong , G. (2012). Principles of Marketing, 14th Edition. Upper Saddle River:
Prentice Hall.
Lamb, C., Hair , J., & McDaniel, C. (2012). Essentials of Marketing, 7th Edition . Independence:
Cengage Learniing .
Pereda, P., Pereda, P., & Castillo, V. (2014). Principles of Marketing . Intramuros : Mindshapers Co.,
Inc.
So, R. C., & Torres, O. G. (2016). Principles of Marketing . Quezon City : Vibal Group, Inc.

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