Classification of Retail Operations

615 Words May 8th, 2011 3 Pages
BSM 302
PRINCIPLE OF MARKETING

ASSIGNMENT 4
CLASSIFICATION OF RETAIL OPERATIONS

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CLASSIFICATION OF RETAIL OPERATIONS

OWNERSHIP Retailers can be broadly classified by form of ownership; independent, part of chain, or franchise outlet. Retailers owned by a single person or partnership and not operated as part of a larger retail institution are independent retailers. Around the world, most retailers are independent, operating one or a few stores in their community. Local florists, shoe stores, and ethnic fooed markets typically fit this classification. Chain stores are owned and operated as a group by a single organization. Under this form of ownership, many
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For example, target carries automotive supplies, household cleaning products, and pet food. Typically, though, it carries only four or five brands of dog food. In contrast, a specialty sore, such as Petsmart, may carry as many as 20 brands in large variety of flavours, shapes, and, sizes. Other retailers, such as factory outlet stores, may carry only part of a single line. Nike stores sell only certain items of its own brand. Discount specialty stores like Home Depot and Rack Room Shoes carry a broad assortment in concentrated product lines, such as building and home supplies or shoes.

PRICE Price is a fourth way to position retail stores. Traditional department stores and specialty stores typically charge the full “suggested retail price”. In contrast, discounters, factory outlets, and off-price retailers use low prices as a major lure for shoppers.
The last column in Exhibit 12.2 shows the typical gross margin – how much the retailer makes as a percentage of sales after the cost of goods sold is subtracted. The level of margin and the price level generally match. For example, a traditional jewellery store has high prices and high gross margins. A factory outlet has low prices and low gross margins. Markdowns on merchandise during sale periods and price wars among competitors, in which stores lower price on certain items in an effort to win customers, cause gross margins to decline. When Wal-Mart entered the grocery business in a small