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TYPES OF RETAILERS - PART 2

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Prepared by-

Savita Mahendru

Assistant Professor

PG Department of Commerce & Management

HRMMV

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6. BY LEVEL OF SERVICE:�

• Retailers may offer full spectrum of services or they can extend limited services to the customers. However, level of service is largely influenced by the factors such as types of products sold, types of customers, store size, etc.
• (a) Self Service Store:
• Customers who want to carry out locate-compare-select process at their own prefer shopping in self-service retail stores. They want to enjoy their shopping and hence they want no or least interference and disturbance in their purchase from the store people. This method is suitable when the stores offer the large variety of convenience and consumer goods. Customers can move around in the shop, have a look on the variety available, and then select the right product for themselves.

BY LEVEL OF SERVICE:

• This arrangement can save stores space and cost of sales staff. Layout of the store must be designed carefully if it is a self-service store. In case of the large outlets offering thousands of items and a wide variety in each product category, it is advisable to provide sales assistance in locating the required product line. Otherwise, the exhaustive search for the required products may frustrate the customers and they may walk out without buying anything.
• In such situations, self-selection retail shops are more suitable compared to the self-service shops. In self-selection retail shops, sales staff assists the customers only in locating the right products or they help in purchase only if asked by the customers. For example, Food world operates through self- service store. Customers can pick the grocery items, households, and food products kept on the racks, shelves and counters.

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BY LEVEL OF SERVICE:

• (b) Limited Service Retailers:
• They perform a few functions of the retailer. They provide more information, assist customers in their purchase. They also provide credit facility if necessary. They have more operating costs than the self-service and self- selection retail stores.
• (c) Full Service:
• Retailers provide a full spectrum of services to their customers. Retailers assist in every phase of purchase. The services include many activities right from the customer enters the shop to after sales services. Other services include (free) home delivery, wrapping or gift packing, stitching, altering, financial assistance, free trials, demonstration, valet parking, lockers facility, trial/changing rooms, baby seating arrangement, funny games, rides for the kids coming with the customers, etc.

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BY LEVEL OF SERVICE:

• They help customers in Locate-Compare- Select process. In short full service retailers discharge all the functions of the retailer. For example, in a few large garment stores, personal shopping assistance is provided to the customer, i.e., sales staff or experts in the shop first speak with the customers, understand their needs, psychology, nature and budget.
• Then they recommend the right product for the customers, which save shopping efforts and time. Due to this, customers are satisfied and they carry favourable image about the store as they get the personal attention and right product.

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7. BY PRICING STRATEGY:�

• Retailers follow different pricing strategy. They change their strategies considering factors like level of competition, environmental factors, profit objectives, positioning strategies, etc. In practice, many retailers use mixed price techniques.
• (a) Discount Stores:
• These retailers are different from the shops offering occasional discounts and schemes for a limited period. They regularly sell the products at the lower prices. They buy at regular prices from the wholesalers. But they work on lower margins and they sell in bulk quantities.
• Hence they can sell standard product at lower prices. Many people have wrong impression about the discount stores that the quality of products sold is inferior hence the price is less. Today discount retailing has entered into specialized goods such as bookstores, consumer durable goods. For example, Wal-Mart and K Mart are the largest and popular discount stores in USA.

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BY PRICING STRATEGY:

• (b) Off-Price Shops:
• Unlike discount stores, off-price retailers buy in bulk. They generally buy directly from the manufacturers and hence can avail the bulk quantity discount. They too work on a low margin compared to other retailers. Hence they can offer the merchandise at the low prices. Products sold through these shops are of high quality but generally they are outdated (out of fashion), odd lots, leftovers, discontinued, export surplus or export rejected and irregular goods.
• There are three major types of off-price retailers – (i) Factory Outlet or a Company Showroom (ii) Independent Retail Shop (iii) Warehouse Clubs or Wholesale Club. The clothing and footwear companies commonly use this form of retailing. They dispose off such odd lots through their own stores, i.e., factory outlets. For example, Nike, Reebok, Athlete sell their regular and odd products through their own outlets.

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BY PRICING STRATEGY:

• (c) Fixed-Price Shops:
• They are also known as one-price shops. Generally they sell with gift articles, convenient goods, cosmetics, etc. The products are from low to medium price range. These shops offer the products with fixed prices. They fix some price range that even sounds attractive to the customers. The products are arranged and kept together in the racks according to their prices.
• Each product has a price tag. Customers can select from the variety available in the price range affordable to him. It reduces their shopping time and efforts as they are available in their budget. There is no need of assistance from sales staff as there is less room for ambiguity.

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8. BY SIZE OF SHOP:�

• Retailers can be classified on the basis of size of store i.e. physical area of store. Size varies from small corner shops to the large hypermarkets. Decision on size of the store is influenced by many factors — mainly by types of product sold and cost of store space. However, different nations follow different norms on ‘size’, i.e., the larger retail shop in one country may not be considered as larger shop in other country.

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BY SIZE OF SHOP:

• Considering Indian scenario, we can classify retail shops as:
• (a) Small Shops:
• Corner Shops (typically Indian pan-bidi shops), General Stores, Specialty Stores, One-price Shops, Street Stalls, Exhibition Stalls, Hawkers and Peddlers, Small Stall Holders, etc. For example, Grocery Shops, Fruit and Vegetable Stalls, Ice Cream Parlours, Tea Stalls, Automobile Repairing and Servicing Centers, Barber Shops, Beauty Parlours, Gymnasiums, etc.
• (b) Large Shops:
• Department Stores, Supermarkets, Hypermarkets, Mega Marts, Chain Stores, Consumer Cooperative Stores, Catalogue Showrooms, Exclusive Showrooms, Mail Order Houses, etc.

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9. BY LOCATION:

• a) Fixed Shop Retailers:
• All types and sizes of retail outlets having fixed store place. Fixed location retailers can open the shop in urban areas, in suburbs, in shopping centers or big malls or as a freestanding store that stands alone and unattached to other retailers. For example, General Stores, Department Stores, Chain Stores, Supermarket, Discount Shops, etc. All retailers of different sizes, formats, and categories having a fixed place for their operations are Fixed Shop Retailers.
• (b) Mobile or Itinerant Retailers:
• They do not have any fixed location for their retailing activities. For example, Hawkers and Peddlers, Street Vendors, Stalls in Exhibition or Fairs, etc.

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10. METHOD OF OPERATION:�

• (a) Store Retailers:
• All the retailers of different sizes, categories but performing their operations in the physical store are the Store Retailers.
• (b) Non-Store Retailers:
• They do not require physical stores for retailing activities. Some non-store retailing methods are quite old. Various new forms are emerging continuously. Non- store retailing has becoming more popular today. Certain methods of non-store retailing are widely accepted by the customers due to their convenience. Non-store retailing is gaining more attention as it eliminates the cost of a store. There is no need of maintaining a large sales force.

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• Some non-store retailing methods are given below:
• (i) Direct Selling /Multi Level Marketing (MLM)
• (ii) Online Retailing/Web Retailing/Retailing
• (iii) Telemarketing – Telemarketing is a form of direct marketing. Information about the products/services is given and orders are booked over a telephone. There are some complaints about this method and several constraints for selling through this method.
• (iv) Teleshopping / Television Home Shopping – In India the companies like Asian Sky Shop, Tele Shopping Network, Jaipan, Kawatchi Group, etc. use private cable Television channels for advertising their products.

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• (v) Direct Mail Marketing and Catalogue Marketing – Retailers need not have any office or outlet for selling the goods. They send the catalogues to the potential customers and book the orders. Retailers forward these orders to the manufacturers. This method is not much used in India, and still restricted to some standard industrial products and a few branded consumer goods.
• (vi) Automatic Vending Machines – There is no human interface in selling the products. Small products are dispensed through the coin-operated machines. For example, ATM, PCO Coin Boxes, etc.

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�� 11. BY LOCATION OF FACILITIES OR A CLUSTER:

(a) Freestanding Stores:

• The stores those stand alone and unattached to other retailers. They are not in the shopping complex and not a part of the cluster. They may be located in the residential areas. They are situated at the scattered individual locations.
• (b) Fixed Location Stores:
• Retail Store can be one of the outlets in the shopping mall, shopping arcade, shopping complex, and shopping centers, where many other different retailers are located. These stores are part of the neighbourhood cluster where other retailers are located. They are located in a planned shopping center, which is an integrated unit of different types of stores to satisfy customers’ needs.
• For example, HUB is one of the largest shopping malls in Mumbai. It has many large retail outlets such as multiplex, McDonald’s, Subway, Foodmall, etc.

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• (c) Temporary Stores:
• In the exhibition, fairs or shopping festivals, many shops/stalls are temporarily set up for a limited period. Many small retailers have their stalls in the general fairs or specialized fairs. For example, a retailer can have a food stall in the shopping festivals, trade fairs and industrial exhibitions, which are general fairs and wide variety of products are sold by different types of retail shops. As well as he can have his food stall in the food festivals, which is a specialized fair and many food retailers will have their shops.

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� ���������TYPES OF RETAILERS – CLASSIFIED ON THE BASIS OF OWNERSHIP AND STRATEGY

• It is important to understand the types of retail institutions because they have a competitive impact on business. With this knowledge, managers are better prepared to develop comprehensive competitive analyses for use in their retail businesses. Retail professionals must strive to stay current with the numerous changes in their environments that may affect their businesses as well as their professional lives.

1. RETAILERS CLASSIFIED ON THE BASIS OF OWNERSHIP:�

• In making the choice, the following aspects need to be considered:
• (i) Retailer’s vision regarding the size and nature of his business.
• (ii) The level of control he wishes to have.
• (iii) The level of ‘structure’ they are willing to deal with.
• (iv) The business’s vulnerability to lawsuits.
• (v) Tax implications of the different ownership structures.
• (vi) Expected profit (or loss) of the business.
• (vii) Whether or not one is required to re-invest earnings in the business.
• (viii) Retailer’s need for access to cash from the business for personal use.

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• We now take an overview of the some basic legal forms of ownership for retailers:

(i) Sole Proprietorship

(ii) Partnerships:

(iii) Joint Venture:

(iv) Limited Liability Partnership

(v) Independents:

(vi) Chains:

(vii) Franchises:

(viii) Leased Departments:

(ix) Cooperatives:

LEASED DEPARTMENTS:

• Another form of retail ownership is the leased department. A leased department consists of space in a larger retail store (such as J.C. Penney) that is rented to an outside vendor. The retail business that leases the space runs that area as if it were a small business within the larger business unit. It is generally responsible for all retail functions (in many cases including the fixtures of the leased area). In addition, the lessee pays rent for the space. Examples of leased departments often include jewellery and shoe departments in large department stores.
• Because many larger stores lack the expertise for a given product line-for example, jewellery — they get the advantage of greater expertise within the store. The stores are also assured of having a product that their customers need or want. The lessee has the advantage of established customers and customer traffic for their products and services. In addition, many costs can be reduced for the lessee, such as security and parking.

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COOPERATIVES:

• There are three major types of cooperative store arrangements (also called co-ops): retail-sponsored cooperatives, wholesale-sponsored cooperatives, and consumer cooperatives. To overcome many of the disadvantages associated with being a smaller, independent retailer, some retailers band together to create a retail-sponsored cooperative, an organization that allows centralised buying and overcomes other problems involved in running a small retail operation.
• Through centralised buying, member retailers can take advantage of the price savings that accompany large purchases from vendors. In addition, retailers can improve their operating efficiency by sharing methods developed by the cooperative organization. An example of a retail-sponsored cooperative is Carpet One, a national cooperative of independent floor retailers.

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COOPERATIVES:

• in a consumer cooperative, the consumers themselves own and operate the retail establishment. Generally, consumer cooperatives come about because members believe they can offer products and services at a lower price than traditional retailers. Often these consumers believe there is a need in the marketplace traditional retailers are not serving.
• It may be, for example, that a group of consumers believe a traditional retailer isn’t being environmentally friendly and in response join forces and form a co-op more responsive to environmental concerns. In the banking industry, consumer cooperatives have emerged in response to a perceived lack of sensitivity to the consumer by traditional banks. These cooperatives are known as credit unions.
• Suppose you and your classmates have been discussing the high cost of textbooks. You decide that you can offer textbooks cheaper than the traditional publishing houses, so you go into business. Your first job is to create a company and look for substantial company investment. Next, you elect company officers and establish the amount of time each “employee” needs to devote to running the business. You need managers and personnel to sell and buy the products (textbooks).
• In addition, you need an accountant and perhaps some retail and marketing professionals. Finally, you may want to hire a lawyer to make sure you are compliant with all laws and regulations involved in running your business. You need to find an acceptable site and negotiate rates for rent or purchase.

2. CLASSIFICATION BY STRATEGY:�

• 1. General Merchandise Retailers:
• General merchandise retailers are involved, obviously, in the sale of general, nonfood merchandise. Almost any nonfood item falls into this category. This article discusses the major types of general merchandise retailers. According to the U.S. Census Bureau, general merchandise sales in the United States were over $450 billion for the year 2002, making general merchandise retailing a powerful retail institution.

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(I) DEPARTMENT STORES:

• Department stores are large retailers that carry a wide breadth and depth of products. In addition, they offer more customer service than their general merchandise competitors. Department stores are so named because they are organized by departments — such as juniors, men’s wear, or lingerie.
• Each department acts as a ‘ministore.’ The department is allocated sales space and managers and sales personnel that pay particular attention to their departments. , Often departments are responsible for their own IMC, which is coupled with the store’s overall IMC executions.
• Department stores often are the anchors of major shopping centres. Macy’s, Nordstrom, Bloomingdale’s, Saks Fifth Avenue, J.C. Penney, and Dillard’s are some of the larger department stores. Most, but not all, department stores are parts of a large chain.
• Department stores have a perceptual advantage because they use IMC more than most other types of retailers. Department stores utilize newspapers, magazines, radio, television, and direct mail to deliver their marketing communications. Due to overstoring, most of the promotional budgets are geared to sale advertising. Couponing, historically used by grocery stores, has been used to generate sales. Unfortunately, the use of coupons diminishes profits and creates a situation where consumers do not buy unless they receive some type of discount.

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(II) DISCOUNT STORES:

• Full-line discount stores can also fall under the U.S. Census Bureau definition of a department store. The difference between a department store and a full-line discount store lies in the service and merchandise areas. Discount stores generally offer limited customer services but have merchandise priced below that of department stores. In addition, the products sold at some discount stores tend to be less fashionable than similar merchandise carried at larger department stores. Wal-Mart, Target, and Kmart are the world’s largest discount retailers.
• The main strategy employed by the discounter is to develop an image of high-volume, low-cost products. Since strong national discount retail chains began in the 1960s, they have taken a large share of the market away from traditional retailers. 
• A key factor spurring the growth of discount retailers is value consciousness. This change began in recessionary periods but has cut across all economic climates and income levels. The rise in discount retailers has been due in part to the attention they have paid to their core competencies, such as low prices and a wide selection of product

(III) SPECIALTY STORES:

• Specialty stores carry a limited number of products within one or a few lines of goods and services. They are so named because they specialise in one type of product, such as apparel and complementary merchandise. Specialty stores utilize a market segmentation strategy rather than a typical mass marketing strategy when trying to attract customers. They tend to create a market niche for their product assortments. Although they do not carry a large number of product lines (width), they offer many products within each line (depth). Specialty retailers tend to specialize in apparel, shoes, books, toys, auto supplies, jewellery, and sporting goods.
• In recent years, specially stores have seen the emergence of the category killer. Category Killers (sometimes called power retailers or category specialists) are generally discount specially stores that offer a deep assortment of merchandise in a particular category (books, toys, shoes, sports items, etc.). Blockbuster Video, for example, offers a large selection of DVDs and VHS tapes at a relatively low price�

(IV) OFF-PRICE RETAILERS:

• Off-price retailers resemble discount retailers in that they sell brand-name merchandise at everyday low prices (EDLP). Off- price retailers rarely offer many services to customers. The key strategy of off-price retailers is to carry the same type of merchandise as traditional department stores but offer prices that can be 40 to 50 percent lower.
• To be able to offer lower prices, off-price retailers develop special relationships with their suppliers for large quantities of merchandise. Inventory turnover is the key to a successful off-price retailing business. Because of this, the buying strategy developed and executed by off-price retailers is very aggressive.
• In addition to purchasing closeouts and cancelled orders, off-price retailers negotiate with manufacturers to discount orders for merchandise that is out of season or to prepay for items to be manufactured, thus reducing the buying prices of those items. Because off-price retailers do not ask the manufacturers for additional services such as return privileges, advertising allowances, or delayed payments, they are often able to get reduced prices for the merchandise they purchase.

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OFF PRICE RETAILERS

• There are many types of off-price retailers, including outlet stores. Manufacturers, department stores, or even specially store chains can own off- price stores. Stores owned by the manufacturer are usually referred to as factory out- let stores. One-price stores, such as dollar stores, are also considered off-price retailers. This type of store offers every product at the same price.
• Consumers like these stores because they know exactly how much each product costs. In each of these stores, most merchandise is discounted for the reasons, or the merchandise has been specifically made to sell at a lower price.
• In addition to outlet stores are closeout retailers, which sell broad assortments of merchandise that they purchase at closeout prices, and flea markets, where many vendors sell used as well as new and distressed merchandise.

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(V) FOOD RETAILERS:

• There are many types of food retailers. To make their classifications easier to understand, this section is broken down into the main types of food retailers that operate in the United States and around the world. The premier association for food retailing is the Food Marketing Institute (FMI). FMI conducts programs in research, education, industry relations, and public affairs on behalf of its member companies-food retailers and wholesalers. To remain competitive in the mature food retail business, many retailers are carrying merchandise outside their traditional lines. “As the mass merchandisers industry begins to mature, this channels vigorous focus on food as a vehicle for growth results in super centers that are beginning to look similar to conventional grocery stores.
• The conventional supermarket channel, in turn, has fought back with an expanded offering of general merchandise and various other peripheral departments that are beginning to look a lot like the super centre format. The net result is a blurring of the retail channels.” Nevertheless, there are general categories into which food retailers fall.

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(VI) CONVENTIONAL SUPERMARKETS:

• Conventional supermarkets are essentially large department stores that specialise in food. According to the Food Marketing Institute, a conventional supermarket is a self-service food store that generates an annual sales volume of $2 million or more. These stores generally carry grocery, meat, and produce productsA conventional food store carries very little general merchandise Supermarkets first appeared in the 1930s, when food retailers found they could increase the size of their operations to persuade customers to make purchases by offering more products at lower costs. Piggly Wiggly was the first self-service store (opened in 1916); the first supermarket was King Kullen Grocery Company in New York (1930).
• In 2002, there were about 33,000 supermarkets in the United States, accounting for approximately $411.8 billion in sales. 

(VI) CONVENTIONAL SUPERMARKETS:

• Impulse purchases are those that haven’t been planned. Shoppers at conventional supermarkets generally prepare a list of items needed for their households. While in the supermarket, however, they may find some tempting items that weren’t on the list and may purchase them on the spot, or by impulse.
• The key to successful supermarket sales is high inventory turnover. Because supermarkets have a great deal of competition from convenience stores, warehouse stores, and superstores, they must develop an effective strategy to keep their customers coming back.
• To compete effectively, many supermarkets have developed intensive To compete effectively, many supermarkets have developed intensive IMC programs that offer their customers many types of promotions — such as coupons, advertisements, fliers, free samples, and customer affinity cards. The strategic use of couponing, coupled with other promotions such as double or even triple manufacturer coupon values, is called hi-lo pricing.
• Other supermarkets do very little promotion; instead they rely on consistently low-priced merchandise sales. By selling the merchandise at the basic same low price each day, they are utilising a strategy known as everyday low pricing, or EDLP.
• On a day-to-day basis, the listed prices at an EDLP supermarket are lower than those at a promotional supermarket. At a promotional supermarket, customers must rely on their coupons and take advantage of the store’s promotional activities to keep their overall purchase costs lower.

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(VII) SUPERSTORES:

• One of the biggest trends over the past twenty years in food retailing has been the development of superstores. Superstores are food-based retailers that are larger than the traditional supermarket and carry expanded service dell, bakery, seafood, and nonfood sections. Superstores vary in size but can be as large as 150,000 square feet. Generally they are no smaller than 20,000 square feet.
• Wegmans Food Markets, Inc., is an example of a superstore, although the stores refer to themselves as supermarkets. Typical stores run 80,000 to 130,000 square feet and carry more than 60,000 products, compared to an average of 40,000 products for supermarkets. Typically included in Wegmans stores are bakeries, ready-to-cook meat and seafood entree sections, international foods, photo labs, floral shops, and a fun centre for kids to play in while their parents shop.

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(VIII) COMBINATION STORES:

• Because shoppers have been demanding more convenience in their shopping experiences, a new type of food retailer has been emerging. Called a combination store, this type of retailer combines food items with nonfood items to create a one-stop shopping experience for the customer.
• In general, customers can find general merchandise along with food products and can take all these products to a common checkout area. Combination stores emerged in the mid-1960s and early 1970s and grew rapidly. Combination stores can be as large as 100,000 or more square feet.
• In 1934, Hendrik Meijer started one of the first combination stores in the United States, in Greenville, Michigan Melier (www(dot)Meijer(dot)com) is a family- owned and operated retailer with 157 stores throughout Illinois, Indiana, Kentucky, Michigan, and Ohio. Meijer customers can select from a full range of attractively displayed food products, as well as toys, sporting goods, clothing, health and beauty aids, domestics, furniture, gifts, small appliances, and other products.

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(IX) SUPER CENTRES AND HYPERMARKETS:

• A super centre is a combination of a superstore and a discount store. Super centers developed based on the European hypermarket, an extremely large retailing facility that offers many types of products in addition to foods. In super centers, more than 40 percent of sales come from nonfood items.
• Super centers are the fastest-growing retail category and encompass as much as 200,000 square feet of area; Wal-Mart is the category leader with a 74 percent share of super centre retail sales. Wal-Mart is focusing on the food industry to spur growth. By 2005, Wal-Mart expects food sales to contribute more than 20 percent of total divisional sales.
• The key to a successful super centre is sales of food products at very low prices to stimulate customer traffic and sales of nonfood items with higher markups. The market area for super centers is much greater than that for the other food retailer classifications. This means customers are willing to drive longer distances to visit super centers than to visit any other type of food retail centre.
• The major disadvantage of super centers is that customers may not want to frequent them for small purchases. Because the centers are so large, it is often difficult to find the exact product one is looking for in a reasonable period of time.

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(X) WAREHOUSE CLUBS AND STORES:

• Warehouse clubs and warehouse stores (also known as club stores) were developed to satisfy customers who want low prices every day and are willing to give up service needs. These retailers offer a limited assortment of goods and services, both food and general merchandise, to both end users and small to midsize businesses.
• The stores are very large and are located in the lower-rent areas of cities to keep their overhead costs low. Merchandising within the store is almost nonexistent, and pallets are used extensively. Steel shelving and concrete floors are common.
• Generally, warehouse clubs offer varying types of merchandise because they purchase products that manufacturers have discounted for a variety of reasons (overruns, returns, and so on). Warehouse clubs rely on fast-moving, high- turnover merchandise. One benefit of this arrangement is that the stores purchase the merchandise from the manufacturer and sell it prior to actual, having to pay the manufacturer.
• Typically, warehouse clubs and stores charge their customers an annual membership fee. These fees vary but generally are around $30 to $40. Warehouse clubs may require that customers be affiliated with a government or business entity, such as a credit union, local business, or university. Many warehouse clubs do not carry perishable items, or carry a limited amount, because of the costs associated with storing them. Among the larger warehouse stores are Costco Wholesale, Sam’s Club, and Bj’s Wholesale Club

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(XI) CONVENIENCE STORES:

• As the name suggests, convenience stores are located in areas that are easily accessible to customers. Convenience stores (also called c-stores) carry a very limited assortment of products and are housed in small facilities. The major sellers in convenience stores are cigarettes, accounting for about 25 percent of in-store sales, and nonalcoholic beverages, which amount to about 15 percent. Owners of convenience stores locate in neighbourhoods and try to intercept consumers between their homes and places of employment.
• The strategy convenience stores employ is ‘fast shopping’ – consumers can go into a convenience store, pick out what they want or need, and check out in a relatively short time. They don’t have to search for the products they want, and they don’t have to wait a long time in line to pay. The vast majority of products purchased at convenience stores are consumed within an hour after purchase.
• Due to their high sales, convenience stores receive products almost daily because convenience stores don’t have the luxury of high-volume purchases, and because many of the products are impulse purchases, most products are priced relatively high.
• In recent years, many convenience stores have added gasoline to their product mix; gasoline now accounts for the majority of sales for those stores carrying this product. In addition, convenience goods such as milk, eggs, tobacco, soft drinks, and beer are among the largest sales items.

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(XII) LIMITED-LINE STORES:

• Limited-line stores, also known as box stores or limited-assortment stores, represent a relatively small number of food retail stores in the United States. Limited-line stores are food discounters that offer a small selection of products at low prices. They are no-frills stores that sell products out of boxes (or shippers). Limited-line stores rarely carry any refrigerated items and are often cash-and- carry, accepting no checks or credit cards.
• Limited-line store customers do their own bagging and frequently bring their own bags or purchase bags from the retailer. In a limited-line store, the strategy is to price products at least 20 percent below similar products at conventional supermarkets. Many of these stores focus “on private labels, which eliminates the need for manufacturers to recoup the costs of advertising and sales promotions.”
• Aldi is an example of a successful limited-line retailer. Located in Europe and the United States, Aldi has about 570 stores in the United States alone. Its product line includes a little more than 700 most-often-used products for the average home. In comparison, most full- line grocers offer more than 25,000 items.

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