Chapter 13
RETAILING AND WHOLESALING
MARKETING STARTER: CHAPTER 13
Uniqlo: The Innovative Route in Fashion Retailing
Synopsis
UNIQLO is Japan’s first specialty store retailer of private label apparel (known as an SPA), and it has continuously
innovated in functional materials through collaborations with manufacturers and suppliers as well as customers. For
example, it has developed a material known as HEATTECH, a unique, highly functional line of inner wear that
preserves body warmth and has won over a multitude of customers. UNIQLO also partners with renowned artists
and designers from across the globe and has integrated is Japan’s world-renowned attentiveness and customer
service. There are advisers to help customers find what they need and keep the store neat and tidy at all times. They
are trained to project the UNIQLO way of interacting with customers. In 2013, UNIQLO’s joint project with in New
York’s Museum of Modern Art successfully boosted the company’s visibility worldwide. In the future, the company
aims to revolutionize the retail business further by constructing state-of-the-art distribution centers in order to create
an entirely new way of shopping.
Discussion Objective
A brief, focused discussion of the UNIQLO story will clarify students’ understanding of the strategy that has made
this large retailer such a major success. Its global development and growth is attributable to UNIQLO’s position as
the world’s only “lifewear” brand, which means everyday clothes for a better life—high quality, fashionable,
affordable, and comfortable.
Starting the Discussion
To get the discussion rolling on UNIQLO’s strong positioning and how it’s led to such amazing success, head to its
YouTube channel (www.youtube.com/user/uniqloukofficial). Here, you’ll find an extensive selection of video clips,
from current advertisements to celebrity interviews. You can also find an assortment of promotional content,
testimonials, and other information at www.uniqlo.com. Both sites contain enough material to last for hours. You’ll
need to pare it down to selected pages and clips that facilitate discussion based on the questions below. This short
discussion will reveal that UNIQLO stands for much more than just low prices. Although some students will turn up
their noses at UNIQLO, many customers feel strongly about how the retailer really does serve them better. Use the
following questions to help guide the discussion.
Discussion Questions
1. What is UNIQLO’s “lifewear” and “Made for All” branding all about? (Have students quickly lay out the
basics of UNIQLO’s strategy. Open the UNIQLO YouTube channel or www.uniqlo.com. Make sure that the
discussion brings out how UNIQLO’s strategy makes people’s everyday lives better. Perhaps show some of
the ads from the UNIQLO YouTube channel and discuss how “lifewear” translates into “living better.”)
2. Does UNIQLO’s message work for you? Do people feel as strongly about UNIQLO as they do about other
major retailers? (Many students will perceive that people shop at UNIQLO only for functional reasons, but
some of the clips on the YouTube channel reflect the strong emotional connections people have with
UNIQLO because of its “Made for All” strategy. Many customers are really into UNIQLO and its unique
shopping experience.)
3. How does UNIQLO do it? (Examine the ways UNIQLO delivers on its promise. Good manufacturer
relationships, constant innovation, and strong service culture create operational excellence and a low-cost
structure.)
4. Why was UNIQLO chosen to introduce the chapter on retailing? (How does UNIQLO illustrate the various
retailing concepts discussed in the chapter? UNIQLO’s extraordinarily strong targeting, positioning, and
marketing mix have provided it with an exceptional competitive advantage.)
CHAPTER OVERVIEW
Use Power Point Slide 13-1 here
This chapter is a continuation of the prior chapter on marketing channels; it provides more detail
on retailing and wholesaling, two very important concepts in the value delivery network.
Retailers can be classified according to several characteristics, including the amount of service
they offer, the breadth and depth of their product lines, the relative prices they charge, and how
they are organized.
The major decisions retailers make are centered on target market and positioning, product
assortment and services, price, promotion strategies, and where they are located.
The wheel of retailing concept says that many new retailing forms begin as low-margin,
low-price, low-status operations. They challenge established retailers, and then the new retailers’
success leads them to upgrade their facilities and offer more services. In turn, their costs
increase, and eventually they become like the conventional retailers they replaced. The cycle
begins again.
There are many types of wholesalers, including merchant wholesalers, agents and brokers, and
manufacturers’ sales branches and offices.
CHAPTER OBJECTIVES
Use Power Point Slide 13-2 here
1. Explain the role of retailers in the distribution channel and describe the major types of
retailers.
2. Describe the major retailer marketing decisions.
3. Discuss the major trends and developments in retailing.
4. Explain the major types of wholesalers and their marketing decisions.
CHAPTER OUTLINE
p. 390 INTRODUCTION
UNIQLO is Japan’s largest apparel retail chain, with a 6.5
percent market share of the Japanese apparel market,
making parent company Fast Retailing Asia’s top apparel p. 391
retailer.
The company has refined this business model, allowing
sophisticated control of the entire business process, from
planning and design to material procurement and sales.
UNIQLO is able to procure high-quality materials at low
costs through direct relationships with and bulk purchases
from material manufacturers globally, and the company’s
specialists share its expertise and experience with partners.
UNIQLO has also continuously innovated in functional
materials, retail experiences and state-of-the-art distribution
centers.
Photo: Walmart
Opening Vignette Questions
1. Do you believe that Walmart engages fairly
with its competitors in the marketplace? Defend
your answer.
2. What specific advantages does Walmart’s
distribution system provide the company?
3. Do you believe that the company’s mission
really is to “lower the world’s cost of living”?
Explain.
4. Besides offering low prices, what does Walmart
do better than its competitors to attract
customers?
p. 392
PPT 13-3
PPT 13-4
PPT 13-5
p. 393
Explain the role of retailers in the distribution channel
and describe the major types of retailers.
RETAILING
Retailing includes all the activities involved in selling
products or services directly to final consumers for their
personal, nonbusiness use.
Retailers are businesses whose sales come primarily from
retailing.
Many marketers are now embracing the concept of
shopper marketing, the idea that the retail store itself is an
important marketing medium.
The “First Moment of Truth” is the critical three to seven
seconds that a shopper considers a product on a store shelf.
Learning Objective
1
p. 392
Key Terms:
Retailing, Retailer
p. 392
Key Term:
Shopper Marketing
p. 393
Photo: Shopper
marketing
p. 393
PPT 13-6
PPT 13-7
p. 393
Today’s consumers are increasingly omni-channel buyers,
who make little distinction between in-store and online
shopping and for whom the path to a retail purchase runs
across multiple channels. Omni-channel retailing
involves creating a seamless cross-channel buying
experience that integrates in-store, online, and mobile
chopping.
Types of Retailers
Retailers can be classified in terms of several
characteristics, including the amount of service they offer,
the breadth and depth of their product lines, the relative
prices they charge, and how they are organized.
Amount of Service
Self-service retailers serve customers who are willing to
perform their own “locate-compare-select” process to save
time or money.
Limited-service retailers provide more sales assistance
because they carry more shopping goods about which
customers need information.
Full-service retailers include high-end specialty stores and
first-class department stores. Salespeople assist customers
in every phase of the shopping process.
Product Line Classifications
Specialty stores carry narrow product lines with deep
assortments within those lines.
Department stores carry a wide variety of product lines.
In recent years, department stores have been squeezed
between more focused and flexible specialty stores on the
one hand, and more efficient, lower-priced discounters on
the other.
Supermarkets are the most frequently visited type of retail
store.
Supermarkets are facing slow sales growth because of
slower population growth and an increase in competition
p. 393
Key Term:
Omni-channel
retailing
p. 393
Key Term:
Specialty store,
Department store
p. 394
Table 13.1: Major
Store Retailer
Types
p. 394
p. 394
Key Term:
Supermarket
from discounters and specialty food stores. They also have
been hit hard by the rapid growth of out-of-home eating in
the past 20 years.
Supermarkets’ share of the packaged foods sales plunged
from 53 percent in 1998 to 37 percent in 2012.
Convenience stores are small stores that carry a limited
line of high-turnover convenience goods.
Superstores are much larger than regular supermarkets and
offer a large assortment of routinely purchased food
products, nonfood items, and services.
Supercenters (called hypermarkets in some countries) are
very large combination food and discount stores.
Category killers are superstores that are actually giant
specialty stores like Best Buy and Home Depot.
Service retailers include hotels and motels, banks, airlines,
colleges, hospitals, movie theaters, tennis clubs, bowling
alleys, restaurants, repair services, hair salons, and dry
cleaners.
Service retailers in the United States are growing faster
than product retailers.
p. 395
Key Terms:
Convenience store,
Superstore,
Category killer,
Service retailer
Assignments, Resources
Use Discussion Questions 13-1 here
Use Think-Pair-Share 1 here
Use Outside Example 1 here
Troubleshooting Tip
Retailing is generally not a difficult concept for
students. However, the different types of retailers
should be thoroughly explained to the students to
ensure their understanding. Table 13.1 is an
excellent resource in this regard.
p. 395
PPT 13-8
PPT 13-9
Relative Prices
Discount stores sell standard merchandise at lower prices
by accepting lower margins and selling higher volume.
Off-price retailers offer products to fill the ultralow-price,
high-volume gap by pricing lower than discount stores.
p. 395
Key Term:
Discount store
p. 396
Photo: Dollar
General
p. 397
PPT
13-10
PPT 13-11
PPT
13-12
p. 397
PPT
13-13
PPT
13-14
PPT
13-15
There are three main types of off-price retailers.
1. Independent off-price retailers are either
independently owned and run or divisions of larger
retail corporations.
2. Factory outlets are manufacturer-owned and
operated stores—sometimes grouped together in
factory outlet malls and value-retail centers.
3. Warehouse clubs (or wholesale clubs or
membership warehouses) operate in huge, drafty,
warehouse-like facilities and offer few frills.
Organizational Approach
Corporate chains are two or more outlets that are
commonly owned and controlled.
They have many advantages over independents.
Their size allows them to buy in large quantities at
lower prices and gain promotional economies.
They can hire specialists to deal with areas such as
pricing, promotion, merchandising, inventory
control, and sales forecasting.
There are three forms of contractual associations.
1. Voluntary chain—a wholesaler-sponsored group of
independent retailers that engages in group buying
and common merchandising.
2. Retailer cooperative—a group of independent
retailers that bands together to set up a jointly
owned, central wholesale operation and conducts
joint merchandising and promotion efforts.
3. Franchise—the main difference between franchise
organizations and other contractual systems is that
franchise systems are normally based on some
unique product or service; on a method of doing
business; or the trade name or goodwill the
franchisor has developed.
Franchises now command approximately 45 percent of all
retail sales in the United States.
Review Learning Objective 1: Explain the role of
retailers in the distribution channel and describe the major
p. 396
Key Terms:
Off-price retailer,
Independent
off-price retailer,
Factory outlet,
Warehouse club
p. 397
Key Term:
Corporate Chains
p. 397
Table 13.2: Major
Types of Retail
Organizations
p. 397
Key Term:
Franchise
p. 398
Photo: Costco
p. 399
Photo: Franchising,
H&R Block
types of retailers.
Assignments, Resources
Use Discussion Question 13-3 here
Use Real Marketing 13.1 here
Use Small Group Project 1 here
Use Think-Pair-Share 2 here