218 Reading: Types of Retailers
Beyond the distinctions in the products they provide, there are structural differences among retailers that influence their strategies and results. One of the reasons the retail industry is so large and powerful is its diversity. For example, stores vary in size, in the kinds of services that are provided, in the assortment of merchandise they carry, and in their ownership and management structures.
As of December 2019, there were 63,000 grocery stores in the U.S. Micro grocery stores (which employ between one and four employees) and massive grocery stores (which employ more than 500 people) were the two largest groups, with about 20,000 stores in each category. [1]
A few stores are extremely large, having sales of $500,000 or more on a single day. In fact, on special sale days, some stores exceed $1 million in sales.
This diversity in size and earnings is reflected in the range of different ownership and management structures, discussed below.
Department Stores
Department stores are characterized by their very wide product mixes. That is, they carry many different types of merchandise, which may include hardware, clothing, and appliances. Each type of merchandise is typically displayed in a different section or department within the store. The depth of the product mix depends on the store, but department stores’ primary distinction is the ability to provide a wide range of products within a single store. For example, people shopping at Hudson’s Bay can buy clothing for a woman, a man, and children, as well as housewares, such as dishes and luggage.
Chain Stores
The 1920s saw the evolution of the chain store movement. Because chains were so large, they were able to buy a wide variety of merchandise at large quantity discounts. The discounts substantially lowered their cost compared to the costs of single-unit retailers. As a result, they could set retail prices that were lower than those of their small competitors and thereby increase their share of the market. Furthermore, chains were able to attract many customers because of their convenient locations, made possible by their financial resources and expertise in selecting locations.
Supermarkets
Supermarkets evolved in the 1920s and 1930s. For example, Piggly Wiggly Food Stores, founded by Clarence Saunders around 1920, introduced self-service and customer checkout counters. Supermarkets are large, self-service stores with central checkout facilities. They carry an extensive line of food items and often nonfood products. Supermarkets’ entire approach to the distribution of food and household cleaning and maintenance products is to offer large assortments of these goods at each store at a minimal price.
Discount Retailers
Discount retailers, like Dollorama and Dollar Tree, are characterized by a focus on price as their main sales appeal. Merchandise assortments are generally broad and include both hard and soft goods, but assortments are typically limited to the mo