Quiz 2: Types of Retailers
Retail market structure refers to the structure that describes the number of companies that sell similar products or identical products in the similar particular geographical area. Difference between variety and assortment can be described in a way that variety is the different types of the products or the categories of the products that the retailer displays for selling to the customers, while assortment refers to the selection of the products and planning to increase the sales of those products for a specific period of time. Variety is the number of products the retailer sells, while, assortment refers to the proper selection of products and planning to sell those products to the customers which is undertaken by the retailer. Variety and assortment are important elements of the retail market structure because unless the retailer will offer large number of products to the customers, it cannot expand its business and improve its sales and overall profits. Customers are very demanding today, and they need everything under one roof to save time and other resources. Assortment of products facilitates the retailer to carefully choose and display only those products which are saleable and can attract customers. This is the reason variety and assortment are important elements of the retail market structure.
Retailer refers to a business through which the end customers purchase goods. An independent retailer has its own store and is responsible for its own business. A retail chain refers to a firm that operates multiple retail stores in different locations under the same name and have centralized decision making for the operations and strategy of the firm. A corporate chain can provide merchandise at very low prices than an independent retailer because the corporate can buy that merchandise from the supplier at a very low cost as they buy in very large quantities to fulfil the needs of their chain stores. Independent retailers buy limited merchandise which increases the costs. The drawback of having a retail chain is that the all the stores carry almost the same assortment of products irrespective of where they are located. Independent retailers can take advantage of this opportunity by customizing their offerings according to local needs. Also, corporate chains tend to be more bureaucratic because of the centralized decision-making. The management introduces various rules and procedures for the stores so that the customer service is consistent throughout the chain. Independent retailers can tailor their service and change their roles and procedures aligning with the dynamic environment to better serve the customers.
Off-price retailers refer to the retailers who are in the business of selling high quality/high-priced products at cheap prices. These retailers mostly sell second-hand goods and off-season products. When it comes to compete against other formats in the future, off-price retailers are required to offer everyday low-pricing to the customers in relation to large number of products sold by it. The customers would become loyal towards off-retailer if the products sold by the retailer is of good quality and is priced less. The off-price retailers need to buy those products which are in excess with the manufacturer. This way the retailer would be able to buy these products at low prices and could sell it to the customers at low prices adding considerable profit to it. These retailers need to sell many brand name products so that the customers can compare and the make a decision to the products that suits its budget and interests. This way if off-price retailers will deal in in old stocks, leftover items available with the manufacturers and sell then at appropriate times in off-seasons, then the off-price retailers can compete against other formats in the future.