Sales

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Background

Sales is a complex and diverse field. It involves the selling of all types of physical goods, such as automobile parts, pharmaceuticals, clothing, health care products, books, and food, as well as services, such as automobile repair or rug cleaning.

The selling of physical goods usually requires both a wholesaler and a retailer. The wholesaler is a go between, or person in the middle, between producers of merchandise and retail stores. The wholesaler buys goods in large quantities directly from producers, stores the goods in warehouses, takes orders from buyers (typically retail stores), and arranges for delivery of the merchandise.

The retail field consists of supermarkets, department stores, chain stores, specialty stores, variety stores, franchise stores, mail-order houses, and door-to-door sellers. Retail stores buy their goods from wholesalers, stock the goods, and resell them to individual consumers in small quantities. Retailers must know their customers’ needs and wants, and they must also advertise and attractively display the goods they sell.

Until a little more than a century ago, the buying and selling of merchandise was relatively uncomplicated. Industrial concerns usually acquired or purchased local components for the goods they produced. Retail store owners periodically would travel to major seaports and manufacturing centers to purchase products for later resale. Retail stores generally could be divided into two kinds: small shops specializing in one type of merchandise and general stores featuring a great variety of goods. In addition, itinerant peddlers served customers in outlying areas by selling goods from house to house.

The earliest wholesalers in the United States probably were the ship chandlers, or suppliers, in New England who assembled goods required by merchant and military ships. Ship owners found that a centralized supply source enabled them to equip vessels quickly. With the introduction of mass production and mass marketing techniques in the 19th century, wholesaling became a vital component of the buying and selling process. Individual manufacturers found they could sell more efficiently through the use of a wholesaler. Retail buyers found it more convenient to deal with a few sources of supply rather than hundreds of organizations.

In the 1850s and 1860s, U.S. retailing experienced immense growth. Chain organizations such as the Great Atlantic & Pacific Tea Company were established. Such firms as Macy’s and Marshall Field’s grew into sizable department stores. The introduction of low postal rates gave rise to large mail-order firms, such as Montgomery Ward and Sears & Roebuck. F. W. Woolworth organized another familiar type of retailing, the five-and-ten-cent store, better known today as the variety store.

Following World War I, self-service was introduced in the clothing and accessories fields and in the grocery business. In self-service stores, the merchandise and displays, rather than salespeople, were used to induce customers to buy. Horse-drawn streetcars and, later, electrified streetcars brought people to central locations in cities to do their shopping.

The movement of people to the suburbs in the 1950s and 1960s stimulated the creation of a new type of merchandising, the one-stop shopping center, smaller than but similar to today’s malls, where all types of merchandise were located in an easily accessible area. Ample parking space generally was available. At the same time, some large department stores, specialty stores, and mass merchandisers, aware that suburban customers no longer made frequent shopping trips to the city, established branch stores in the suburbs.

Today, one-stop shopping has been pushed to the extreme, with megamalls that include retail stores, food courts, and entertainment centers. Independent retailers in small cities and towns have been replaced by superstore chains that carry virtually every type of merchandise from groceries to clothing, hardware to DVDs, all under one roof.

In the past few decades manufacturing of products has declined and the service industry has increased. Printing, pest control, telecommunications, computer maintenance, lodging, and transportation are among a huge variety of services that employ sales forces. Originally, services sales were accomplished through individual contact with potential buyers. That method is still used today, along with direct mail, telephone, the Internet, and print and media advertising. Both product sales and services sales are closely connected with the advertising, printing, mailing, transportation, and broadcast industries. 

Structure

Wholesalers are experts in their particular line of work. They must know everything there is to know about their products and also keep up to date on what competing wholesalers are doing. There are three main types of wholesalers: merchant wholesalers, manufacturers’ sales branches, and merchandise agents and brokers.

Merchant wholesalers buy large quantities of merchandise from manufacturers, process and store the merchandise, and then resell it, usually to retail shops. They operate as independent businesses and make their profit from the markup in price they add to goods as they sell them. Merchant wholesalers make up the largest number of wholesalers and are responsible for a great percentage of the total sales in the industry. They usually hire sales workers to call on retail customers.

Manufacturers’ sales branches are another important component of the wholesale industry. These businesses are established by manufacturers for selling goods directly to retail shop owners. Manufacturers’ sales branches tend to be set up by large manufacturers.

Merchandise agents and brokers represent either the buyer or the seller in a transaction. Unlike the manufacturers’ sales branches or the merchant wholesalers, the agents and brokers do not buy or take direct control of the goods being sold. Rather, they act as intermediaries for either the buyer or seller and receive commissions for their services. Agents often contract with a manufacturer to sell a product or group of products to retail stores, industrial plants, and local distributors in a specific geographic region. They often represent more than one manufacturer.

Wholesalers provide either full or limited service. Full service wholesalers operate warehouses, supply credit, employ sales workers, and make deliveries. They also may be involved in advertising, packaging, and providing other services to customers.

Limited service wholesalers, on the other hand, may only ship merchandise from the manufacturer to the retailer or sell and deliver merchandise directly from their truck. Limited service wholesalers are smaller operations but often can deliver products at a lower cost.

There are two types of sales workers in the wholesale industry: those who work in an office and those who do most of their work on the road. Inside sales workers usually work by phone, taking and soliciting orders. They also monitor inventory levels for their customers and process orders. Outside sales workers call on retail store owners and try and persuade them to buy their products. They make periodic calls on regular customers; inform customers of new and old products, availability of supply, and prices; help with inventory control; arrange for delivery or installation; handle customer complaints; check on the competitors’ activities and products; attempt to lure customers away from other companies; and in general, do all they can to most effectively represent their companies.

Sales workers must be familiar with all the elements of their products: their purpose, construction, durability, quality, and style. In addition, sales workers must be well acquainted with the best sources of supply for each type of goods they purchase. A wholesaler who handles sporting goods equipment, for example, must keep up to date on the latest athletic products and keep in constant contact with coaches, athletic directors, and other experts in the field. Similarly, a wholesaler who sells food products reads the latest literature and speaks to experts in the food industry.

Sales workers who sell highly technical machinery, such as that sold to steel producers, need to analyze a customer’s business and then adapt products to the customer’s specialized needs. They usually prepare an extensive sales presentation that includes information on the equipment’s specifications, the cost of the equipment, and the total effect upon the customer’s profits or quality of service.

Modern technology plays an increasingly important role in wholesaling. For example, computer systems now can expedite the ordering of materials, allowing sales representatives to know at the touch of a button when a customer needs to reorder merchandise. Computers also are being used to improve the delivery of shipments and handling of inventories.

Because of its favorable location, excellent port facilities, and large population, New York City is considered the leading wholesale trade center in the United States. Other important wholesale trade centers include Chicago, Kansas City, St. Louis, New Orleans, and Los Angeles.

Although shopping in a retail store, from a catalog, or from the Internet is a common activity, the actual work of a retail organization is a mystery to most people. One of the primary tasks of retail stores is to be constantly aware of the changing lifestyle habits, needs, and desires of its customers. They must anticipate the customers’ wishes days, weeks, and even months ahead of time. In addition, because of their competition, retailers must race to get the merchandise first, to offer the best service, and to provide the most attractive setting so that customers are drawn into their particular establishment.

In general, stores can be divided into two major groups: specialty stores and general merchandise stores. Specialty stores carry just one category of merchandise or several types of closely related merchandise. Specialty stores include apparel shops, building supply stores, automobile dealers, gas stations, household appliance stores, florists, optical goods stores, newsstands, drugstores, shoe stores, sporting goods stores, computer sales outlets, grocery stores, and supermarkets.

General merchandise stores include variety stores, junior department stores, and department stores. They stock a multitude of different items under one roof. Variety stores carry broad assortments of goods at limited prices. Junior department stores carry various categories of merchandise in somewhat broader price ranges. Department stores carry large assortments of apparel, home goods, and staple items in even more extensive price ranges. When specialty stores or general merchandise stores feature self-service and bargain prices, they usually are called mass merchandisers.

Some stores have only a single location, while others, such as chain organizations and franchise operations, have more than one. The largest stores have several thousand locations. Chain organizations are parent stores with branches. Franchise operations allow individually owned stores to market or sell their line of goods.

The major functions of retailing may be divided into five categories: merchandising and buying, store operations, sales promotion and advertising, bookkeeping and accounting, and personnel. Merchandising and buying determines the assortment and amount of merchandise to be sold and displayed. Store operations maintains the retailer’s building. Sales promotion and advertising informs customers and potential customers about the available goods and services. Bookkeeping and accounting workers keep records of money spent and received, as well as records of payrolls, taxes, and money due from customers. The personnel department staffs the store with qualified people.

Many people are involved in buying merchandise in large organizations, whereas in small stores one or two persons may do all the buying. Before merchandise can be purchased from wholesalers, however, store executives plan for the kinds and amounts of merchandise to be bought. Analyses of previous sales reveal how successful the store was in selling similar merchandise during a comparable period. After these records are examined and the amount of such merchandise already in the store is determined, executives decide on the amount of new merchandise to be purchased. The person who does this kind of planning and supervising in a large organization may be called a merchandiser or merchandise manager.

After the general buying plan has been established, the buyer must go to manufacturers’ showrooms or to factories in the United States or abroad to look at the merchandise and select from the available items what the executives have determined will be in demand for the coming season. Contracts then are signed for the delivery of the goods. Buying may be completed as much as six months before the buyer anticipates selling the goods in the store.

Store managers of chain stores and department managers in branch stores are responsible not only for merchandise but also for department or store operations. The department manager acts as a departmental supervisor for the buyer in the branch store but does not have the responsibility for actual selection and purchase of merchandise.

In a small store, usually one store manager has final responsibility for all operational activities. In a larger organization each function may be supervised by a separate manager. Managers could be in charge of receiving goods, marking them, placing them in the stockrooms or warehouse, and subsequently moving the goods to the selling floor. After the merchandise is sold, other managers may be in charge of wrapping stations and delivery services. Supervision of the selling floor and handling of customer returns and complaints also are activities carried out by operating personnel. Elevator service, housekeeping service, and the relocation of goods for special selling seasons are further responsibilities of operating personnel.

Many large retail organizations maintain sales promotion, advertising, and display staffs. The people who work in these fields are responsible for the overall impression that the store creates. A favorable image generates more business for the retailer. Those who produce advertising include the advertising manager, copywriters, graphic designers, desktop publishing specialists, artists, and photographers.

Most of the positions in marketing require creative talent. Therefore, those who apply for these jobs usually excel in writing or artwork, or they have had experience in staging shows or running school publicity events.

In small stores, most owners or managers employ part-time accountants to take care of the financial records of the firm. The finances of a large store or chain of stores usually are administered by a controller, who has an accounting background and knowledge of computer systems.

Outlook

According to the U.S. Department of Labor, wage and salary jobs in the wholesale trade are expected to grow about 8 percent through 2014, which is slower than the average for all industries combined. Industry trends in the next decade will include consolidation into larger firms and the spread of new technology, both of which should slow growth in some occupations.

Heightened competition and pressure to lower operating costs should continue to force mergers. The result will be reduced demand for some workers. More jobs should be available in customer services as consolidation and competition encourage expansion of these services. There also will be employment opportunities for workers in financial, logistical, technical, and advertising positions.

Electronic commerce and other types of new technology are expected to affect employment, particularly administrative support and marketing and sales positions. Those jobs are expected to decline as computer technology improves worker productivity. Much of the record keeping, ordering, and processing in wholesaling will be automated, as will inventory management and shipping. E-commerce will lessen the need for bookkeeping, accounting, and auditing clerks. E-commerce will also affect sales workers. Inside sales workers’ jobs will become more technology-dependent as they use computers to track inventory, solicit new business, and provide customer service. Outside sales workers’ jobs will focus more on customer service.

The U.S. Department of Labor projects that employment for retail sales workers is expected to increase about as fast as the average for all occupations through 2014 due to anticipated growth in retail sales created by a growing population. There will continue to be many opportunities for part-time and temporary workers during peak selling periods. However, during economic downturns, sales decline and the demand for sales workers also declines.

Words to Know


Department store: A store that sells a variety of merchandise organized into individual departments, such as men’s, women’s, and children’s apparel, home furnishings, and accessories.

Discount/mass merchandiser: A self-service store that sells all kinds of merchandise at lower overall profit margins than other retailers.

Factory outlet: A factory-type location where retailers display and sell clearance merchandise received from other retailers or manufacturers. Factory outlets also include vendors who use a factory or outlet store location to sell their own goods (excess stock, seconds, and returns, etc.) at sharply discounted prices.

Specialty store: A store that sells a particular kind of merchandise, such as jewelry, furniture, books, or men’s or women’s apparel.

Warehouse club/superstore: A self-service store with cash-and-carry check-out operations and offering few, if any, extra services such as advertising, credit purchases, or deliveries. Some of these retailers require membership.

Wholesale club: A self-service retailer that offers nationally advertised brand name goods at wholesale prices to businesses and group members only.

For More Information

For material on educational programs in the retail industry, contact

National Retail Federation

325 7th Street, NW, Suite 1100

Washington, DC 20004-2818

Tel: 800-673-4692

http://www.nrf.com

For information on scholarships, internships, and general information about the retail industry, contact

Retail Industry Leaders Association

1700 North Moore Street, Suite 2250

Arlington, VA 22209-1933

Tel: 703-841-2300

http://www.imra.org

Seel Also


Business; Entrepreneur; Grocery Store; Antique and Art Dealer; Auctioneer; Automobile Sales Worker; Buyer; Cashier; Computer and Electronics Sales Representative; Counter and Retail Clerk; Florist; Franchise Owner; Jeweler and Jewelry Repairer; Merchandise Displayer; Personal Shopper; Purchasing Agent; Retail Business Owner; Retail Manager; Retail Sales Worker; Sales Representative; Stock Clerk; Supermarket Worker; Wireless Sales Worker

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