Sunday, October 13, 2013

What Do Retailers Do?



I was in a discussion the other day and the question came up:  What do retailers do?  the answer is three main things.

The first service we provide:  assorting.   A retailer doing their job provides an assortment of products, whether it be PDFs from Drive Thru RPG, cards from Troll and Toad or Star City, assorted physical RPGs and board games from your local FLGS (that’s Friendly Local Game Store) or even a shopping cart full of shampoo, toothpaste, laundry detergent  and taco sauce from Wal-mart or Safeway, the customer wants to combine as many of their purchases into as few a number of trips as possible.  Long gone are the days of shopping lists and trips to several different stores to fill them.  If I want to buy groceries, garden supplies or games, the customer wants to visit as few locations as possible in order to get what they want.  The larger assortment a store offers, the more likely the customer will stop there and purchase as much as they can from there list.    If you want to buy Magic cards, which store will more likely get your money, the one that stocks Standard legal boosters and cards but little earlier or the one that stocks boosters three blocks back and single cards to match.  That’s one of the advantages online retailers have over brick and mortar, an almost infinite amount of shelf space.  Which leads us to the second service retailers provide:

Transporting.   If you want a banana, as I point out to my students regularly, you do not travel all the way to Central America to get one.  Instead, you drive to your local supermarket and buy a hand of them.  Same thing with Magic Cards, or Ticket to Ride or Castles and Crusades.  A customer does not want to drive to China, or Europe or Arkansas to get a copy; they want to go to an online store to order it and have it delivered or go to their FLGS and pick it up there for even faster gratification. Retailers bring the product conveniently to consumers.

The third main thing retailers do:  break bulk. Distributors do this regularly, even moreso than retailers.    For most manufacturers, it is most convenient to ship products in case packs.  Konami does not ship out single booster packs of Yu-Gi-Oh!,  the shipping cost eats up all the profit.   They ship in cases of booster displays to distributors or retailers, who then break the case down to sell it by the display (at distribution) or the individual pack, at retail. The consumer has no desire to purchase a case of Settlers of Catan or Rogue Trader, they want one copy,  just as a customer at Target wants one box of Tide detergent or Huggies, not a case of 6 boxes.  Retailers and distributors buy in larger quantities so the consumer can buy the quantities they want.

That’s it.  The retailer’s basic job boils down to three functions:  have the product the customer wants when they want it, where they want to buy it, in the quantities they want to buy.  Everything else the retailer does facilitates these three activities.