Management of retailers in developed markets

Abstract

The ‘retailing revolution’ has seen steady growth in the size of large retailers. The emergence of large retailers has changed the face of marketing over the past two decades, and replaced manufacturer dominance of the distribution channel with that of retail channels. The table below lists the top 10 retailers in the world :- TOP 10 GLOBAL RETAILERS No. Retailer Sales in U.S. $millions Regionalisation 1 Wal-Mart Stores, lnc 163,532.00 Global 2 Carrefour Group 52,196.10 Global 3 The Kroger Co 45,352.00 Single Country 4 MetroAG 44,163.37 Global 5 The Home Depot, lnc 38,434.00 Global 6 Albertson's, lnc 37,478.00 Single Country 7 ITM Entreprises SA 36,762.45 Regional 8 Sears, Roebuck and Co 36,728.00 Regional 9 Kmart Corporation 35,925.00 Single Country 10 Target Corporation 33,702.00 Single Country An interesting fact to note is that four of the top 10 retailers have a regional focus. Thus global manufacturers have to cater not only to the global consumer through retail chains like Walmart & Carrefour, but also cater to regional needs via Kroger. In some countries these regional players might be larger than the global retailers creating pressure on global relationships. The change in the marketing landscape is evident – retailers now advertise, brand, distribute, design and develop new products. Having taken over the traditional functions of the manufacturer, they are now in a position to exert considerable backward vertical power over manufacturers. A powerful indicator of this power is the fact that retailers have grown in profitability while manufacturers’ profitability has declined. Manufacturers can no longer dictate terms to retailers, set prices and control retailer margins. It’s a small wonder that manufacturers now use terms like ‘cooperation down the vertical chain’ and ‘mutuality of interest’. This study will try to highlight the different strategies that can be employed by the manufacturer to regain power and control over the channel.