When the goods and services are sold from a physical place or store it is called store retailing?

Retailing goes as back as time goes and the best part of it is that the concept of retailing hasn’t changed for centuries. But before we move on to elaborating retail definition or its concept, you should be clear of these two terminologies –

Good: Product offered in the market in exchange for money.

Distribution Channel: Is the path or route decided by the company to deliver its goods to the customers.

What Is Retail?

Retail is the final channel of distribution where small quantities of goods (or services) are sold directly to the consumer for their own use.

Two key-phrases in this definition that separate retail from wholesale are –

• Small quantities of goods: Unlike manufacturing or wholesale, the number of goods involved in a retail transaction is very less.
• Directly to the consumer: Retail stores are the last channels of distribution where the actual sales to the customer happen.

What Is Retailing?

Retailing is the distribution process of retailer getting the goods (either from the manufacturer, wholesaler, or agents) and selling them to the customers for the actual use.

In simple terms, retailing is the transaction of small quantities of goods between a retailer and the customer where the good is not bought for the resale purpose.

What is A Retailer?

A retailer is a person or a business who sells small quantities of goods to the customers for the actual use.

Remember –

Importance Of Retailing

Retailing is important for the creators, customers, as well as the economy.

Retail stores are the places where most of the actual sales to the customers take place. They act as both a marketing tool for the brands and a support tool for the customers to exchange and communicate important information.

Besides this, retailing is a great asset to the economy. It provides jobs, adds to the GDP, and acts as a preferred shopping channel during the holiday season.

How Retail Works?

Retail works on a simple revenue model of mark-up. The retailers buy the goods at a cost price, add up the cost of labour, equipment, and distribution to it along with the desired profit margin, and sell it at a higher price.

Retailing Types

Retailing can be divided into five types. Here are the types of retailing that exists today –

• Store retailing: This includes different types of retail stores like department stores, speciality stores, supermarkets, convenience stores, catalogue showrooms, drug stores, superstores, discount stores, extreme value stores etc.
• Non-store retailing: Non-store retailing is a type of retailing where the transaction happens outside conventional shops or stores. It is further divided into two types – direct selling (where the company uses direct methods like door-to-door selling) and automated vending (installing automated vending machines which sell offer variety of products without the need of a human retailer).
• Corporate retailing: It involves retailing through corporate channels like chain stores, franchises, and merchandising conglomerates. Corporate retailing focuses on retailing goods of only the parent or partner brand.
• Internet retailing: Internet retailing or online retailing works on a similar concept of selling small quantities of goods to the final consumer but they serve to a larger market and doesn’t have a physical retail outlet where the customer can go and touch or try the product.
• Service retailing: Retailers not always sell tangible goods, retail offerings also consists of services. When a retailer deals with services, the process is called service retailing. Restaurants, hotels, bars, etc. are examples of service retailing.

Characteristics Of Retailing

Retailing can be differentiated from wholesaling or manufacturing because of its certain distinct characteristics which include –

• Direct contact with the customer – Retailing involves direct contact with the end customer and are a mediator between the wholesaler and the customer or the manufacturer and the customer depending upon the distribution channels used.
• Relationship with the customers – Retailers form a bond with the customers and help them decide which products and services they should choose for themselves.
• Stock small quantities of goods – Retailers usually stock small quantities of goods compared to manufacturers and wholesalers.
• Stock goods of different brands – Retailers usually stock different goods of different brands according to the demand in the market.
• Customers’ contact with the company – Retailers act as the representatives of the company to the end customers who give their feedback and suggestions to them.
• Have a limited shelf space – Retail stores usually have very limited shelf space and only stock goods which have good demand.
• Sells the goods at maximum prices – Since retailing involves selling the products directly to the customers, it also witnesses the maximum price of the product.

Functions Of Retailing

Retailers have many important functions to perform to facilitate the sale of the products. These functions include –

Sorting

Manufacturers produce large quantities of similar goods and like to sell their inventories to few buyers who buy in lots. While customers desire many varieties of goods from different manufacturers to choose from. Retailers balance the demands of both sides by collecting and assorting the goods from different sources and placing them according to the customers’ needs.

Breaking Bulk

Retailers buy the goods from manufacturers and wholesalers in sufficiently large quantities but sell to the customers in small quantities.

Channel Of Communication

Since retail involves direct contact with the end consumers, it forms a very important channel of communication for the companies and manufacturers. The manufacturer tries to communicate the advantages of their products as well as the offers and discounts through retailers.

Retail also acts as a mediator between the company and the customer and communicates the feedback given by the customers back to the manufacturer or wholesaler.

Marketing

Retail stores are the final channels where the actual decisions are made. Hence, they act as important marketing channels for the brands. Smart placements, banners, advertisements, offers, and other strategies are executed by the manufacturers to increase their sales in retail stores.

Retailing Examples

The most common examples of retailing are the traditional brick-and-mortar stores like Walmart, Best Buy, Aldi, etc. But retailing isn’t limited to them. It also includes small kiosks at the malls, online marketplaces like Amazon and eBay, and even the restaurants which sell food and service.

Go On, Tell Us What You Think!

Did we miss something?  Come on! Tell us what you think about our article on what is retail in the comments section.

A startup consultant, digital marketer, traveller, and philomath. Aashish has worked with over 20 startups and successfully helped them ideate, raise money, and succeed. When not working, he can be found hiking, camping, and stargazing.

Examples - Shoppers Stop, Pantaloon

Discount stores also offer a huge range of products to the end-users but at a discounted rate. The discount stores generally offer a limited range and the quality in certain cases might be a little inferior as compared to the department stores.

Wal-Mart currently operates more than 1300 discount stores in United States. In India Vishal Mega Mart comes under discount store.

Merchandise:
Almost same as department store but at a cheaper price.

A retail store which generally sells food products and household items, properly placed and arranged in specific departments is called a supermarket. A supermarket is an advanced form of the small grocery stores and caters to the household needs of the consumer. The various food products (meat, vegetables, dairy products, juices etc) are all properly displayed at their respective departments to catch the attention of the customers and for them to pick any merchandise depending on their choice and need.

Merchandise: Bakery products Cereals Meat Products, Fish products Breads Medicines Vegetables Fruits Soft drinks Frozen Food

Canned Juices

A retail format which sells limited stock in bulk at a discounted rate is called as warehouse store. Warehouse stores do not bother much about the interiors of the store and the products are not properly displayed.

Mom and Pop stores are the small stores run by individuals in the nearby locality to cater to daily needs of the consumers staying in the vicinity. They offer selected items and are not at all organized. The size of the store would not be very big and depends on the land available to the owner. They wouldn’t offer high-end products.

Merchandise: Eggs Bread Stationery Toys Cigarettes Cereals Pulses

Medicines

As the name suggests, Speciality store would specialize in a particular product and would not sell anything else apart from the specific range.Speciality stores sell only selective items of one particular brand to the consumers and primarily focus on high customer satisfaction.

Example -You will find only Reebok merchandise at Reebok store and nothing else, thus making it a speciality store. You can never find Adidas shoes at a Reebok outlet.

Many retail stores operating at one place form a mall. A mall would consist of several retail outlets each selling their own merchandise but at a common platform.

Now a days the customers have the option of shopping while sitting at their homes. They can place their order through internet, pay with the help of debit or credit cards and the products are delivered at their homes only. However, there are chances that the products ordered might not reach in the same condition as they were ordered. This kind of shopping is convenient for those who have a hectic schedule and are reluctant to go to retail outlets. In this kind of shopping; the transportation charges are borne by the consumer itself.

Example - EBAY, Rediff Shopping, Amazon

Dollar stores offer selected products at extremely low rates but here the prices are fixed.

Example - 99 Store would offer all its merchandise at Rs 99 only. No further bargaining is entertained. However the quality of the product is always in doubt at the discount stores.

Authorship/Referencing - About the Author(s)

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