Retailing

Service Level

Retailers attract customers not only with desirable products and affordable prices, but also by offering services that enhance the purchase experience.  There are at least three levels of retail service:

• Self-Service – This service level allows consumers to perform most or all of the services associated with retail purchasing.  For some consumers self-service is considered a benefit while others may view it as an inconvenience.  Self-service can be seen with: 1) self-selection services, such as online purchasing and vending machine purchases, and 2) self-checkout services where the consumer may get help selecting the product but they use self-checkout stations to process the purchase including scanning and payment. 
• Assorted-Service – The majority of retailers offer some level of service to consumers.  Service includes handling the point-of-purchase transaction; product selection assistance; arrange payment plans; offer delivery; and many more. 
• Full-Service – The full-service retailer attempts to handle nearly all aspects of the purchase to the point where all the consumer does is select the item they wish to purchase.  Retailers that follow a full-price strategy often follow the full-service approach as a way of adding value to a customer’s purchase.

Ownership Structure

Finally, we can categorize retailers based on the ownership structure of the business.

• Individually Owned and Operated – Under this ownership structure an individual or corporate entity owns and operates one or a very small number of outlets.  Single ownership of retail outlets most frequently occurs with small retail stores, though there are some cases, for instance in the automotive or furniture industries, where single ownership involves very large outlets.
• Corporate Chain – A retail chain consists of multiple retail outlets owned and operated by a single entity all performing similar retail activities.  While the number of retail outlets required to be classified as a chain has never been specified, we will assume that anyone owning more than five retail locations would be considered a chain.
• Corporate Structure – This classification covers large retailers predominantly operating in the non-store retail arena such as online, catalog and vending.
• Contractually Licensed and Individually Operated – The contractual channel arrangement discussed in the Distribution Decisions Tutorial has lead to a retail ownership structure in which operators of the retail outlet are not the out-right owners of the business.  Instead, the arrangement often involves a legal agreement in which the owner of the retail concept allows the operator to run the owner’s business concept in exchange for financial considerations such as a percentage of revenue.  This structure is most often seen in retail franchising.