AUTHOR:
Dr. Raymond R. Burke
OVERVIEW:
The ultimate goal of retailing is to bring together supply and demand; to provide consumers with a selection of goods and services that satisfy their needs profitably. During the last 30 years, retailers have made considerable progress on the supply side, developing sophisticated logistical systems to streamline product distribution, manage inventory, allocate shelf space efficiently, and replenish stocks on a just-in-time basis. Stores can now do a much better job of providing consumers with the right product at the right place at the right time.
The news is not as good on the demand side. Retailers continue to have difficulty creating shopping environments that engage consumers’ needs and convert these desires to purchases. One critical concern is with product proliferation and duplication. Manufacturers rely heavily on line extensions to increase volume, and retailers (often mistakenly) believe stocking more products means selling more products. This has led to an explosion in the number of products available in many retail channels. In the 1950’s, a typical U.S. grocery store carried about 5,000 different items; in the 1990’s, the number topped 30,000. Today, a supercenter carries upwards of 100,000 products! This dramatic increase in the number of products and the expanding footprint of retail stores has made it increasingly difficult for consumers to find their way through stores, differentiate between brands, and assess product quality. In a 2001 consumer survey reported by Marketing Week, 75% of consumers agreed, “These days there are so many products and services that it’s often hard to choose which is best for me.” Further, 78% of consumers said, “Companies like to pretend that their brands are really different, but actually there’s rarely any substantial difference between them.”
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