Operating Costs & Revenues

In many cases, direct distribution is the preferred method. The flow of technical information between buyer and seller in the industrial market often makes it impossible to use a wholesaler. The high price of many industrial goods—machinery and large quantities of raw materials, for example—also makes it practical for producers to devote more of their own staff’s time to selling to individual accounts. Producers of industrial goods usually have a smaller number of potential customers. This makes it easier to deal with them without intermediaries. For these reasons, direct distribution is popular in the industrial market.

However, some industrial suppliers do use indirect distribution. Expendable supplies, such as paper, business forms, data processing supplies, as well as office furniture are sold through wholesalers. Tools, small parts, electrical and plumbing supplies are handled by industrial distributors. The advantages for buyers and sellers are similar to those for consumer goods. Other kinds of intermediaries also operate in the industrial market. Brokers, agents and manufacturers’ representatives may perform various roles for buyers and sellers in setting up the final exchange of goods.

Once the product is passed on to the wholesaler, the wholesaler’s mission is to get the product into the hands of the retailer. The retailer then will resell the product to the consumer at a price that allows the retailer a profit. Retail units come in all sizes. Some salons can be classified as small businesses while others are chains. If each salon in a chain becomes a retail shop as well, then the chain can act as one entity to buy and sell a variety of goods throughout all the locations. This gives the salons some leverage in terms of volume buying and shared advertising.

It is not enough for a salon to adopt the new title of retail environment. There are at least five different types and each has a different mission. A salon that begins to retail without a sense of mission is liable to struggle trying to find a product line that fits its clientele. Analyze what kind of retailing is most consonant with the current ambiance of the salon and the way will be much easier.

The prototype of all retail stores is the old-fashioned general store. Here, people found a little of everything mixed together. Eventually, the need for single-line stores evolved. These stores feature only one or two limited and related lines of goods—food, stereos, clothing, etc.

Any shop that answers a specific need can be considered a single-line shop. Within the single-line shops are specialty shops. This would be where most tanning salons would want to concentrate their efforts. The specialty shop limits the products it carries to a particular line within a single line. Because the specialty store only carries that one sub-class of goods, it usually provides a greater variety of those products. For example, most hardware stores (single line) carry knives, but a specialty shop would specialize only in knives, a sub-category of hardware. Here the consumer can find a particular knife that might not be available anywhere else. The same can be true of the tanning salon. The retail operation might offer far more specialized and unique tanning products than anything found in regular drug stores or department stores.

Another kind of retail environment is the department store. Here, the accent is on upscale goods and continual service. Credit usually is extended, and the store stocks a wide assortment of goods. Finally, the variety stores exist offering large quantities of diverse goods but at a lower price.