Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, a "retailer" buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy. The term "retailer" is also applied where a service provider services the needs of a large number of individuals, such as a public utility, like electric power.
Shops may be on residential streets, shopping streets with few or no houses or in a shopping mall. Shopping streets may be for pedestrians only. Sometimes a shopping street has a partial or full roof to protect customers from precipitation. Online retailing, a type of electronic commerce used for business-to-consumer (B2C) transactions and mail order, are forms of non-shop retailing.
Shopping generally refers to the act of buying products. Sometimes this is done to obtain necessities such as food and clothing; sometimes it is done as a recreational activity. Recreational shopping often involves window shopping (just looking, not buying) and browsing and does not always result in a purchase.
Retail comes from the Old French word tailer (compare modern French retailler), which means "to cut off, clip, pare, divide" in terms of tailoring (1365). It was first recorded as a noun with the meaning of a "sale in small quantities" in 1433 (from the Middle French retail, "piece cut off, shred, scrap, paring"). Like the French, the word retail in both Dutch and German (detailhandel and Einzelhandel, respectively) also refers to the sale of small quantities of items.
Types of retail outlets
A marketplace is a location where goods and services are exchanged. The traditional market square is a city square where traders set up stalls and buyers browse the merchandise. This kind of market is very old, and countless such markets are still in operation around the whole world.
In some parts of the world, the retail business is still dominated by small family-run stores, but this market is increasingly being taken over by large retail chains.
Retail is usually classified by type of products as follows:
- Food products
- Hard goods ("hardline retailers") - appliances, electronics, furniture, sporting goods, etc.
- Soft goods - clothing, apparel, and other fabrics.
There are the following types of retailers by marketing strategy:
- Department stores - very large stores offering a huge assortment of "soft" and "hard goods; often bear a resemblance to a collection of specialty stores. A retailer of such store carries variety of categories and has broad assortment at average price. They offer considerable customer service.
- Discount stores - tend to offer a wide array of products and services, but they compete mainly on price offers extensive assortment of merchandise at affordable and cut-rate prices. Normally retailers sell less fashion-oriented brands.
- Supermarkets - sell mostly food products;
- Warehouse stores - warehouses that offer low-cost, often high-quantity goods piled on pallets or steel shelves; warehouse clubs charge a membership fee;
- Variety stores - these offer extremely low-cost goods, with limited selection;
- Demographic - retailers that aim at one particular segment (e.g., high-end retailers focusing on wealthy individuals).
- Mom-And-Pop : is a retail outlet that is owned and operated by individuals. The range of products are very selective and few in numbers. These stores are seen in local community often are family-run businesses. The square feet area of the store depends on the store holder.
- Specialty stores: A typical speciality store gives attention to a particular category and provides high level of service to the customers. A pet store that specializes in selling dog food would be regarded as a specialty store. However, branded stores also come under this format. For example if a customer visits a Reebok or Gap store then they find just Reebok and Gap products in the respective stores.
- General store - a rural store that supplies the main needs for the local community;
- Convenience stores: is essentially found in residential areas. They provide limited amount of merchandise at more than average prices with a speedy checkout. This store is ideal for emergency and immediate purchases.
- Hypermarkets: provides variety and huge volumes of exclusive merchandise at low margins. The operating cost is comparatively less than other retail formats.
- Supermarkets: is a self service store consisting mainly of grocery and limited products on non food items. They may adopt a Hi-Lo or an EDLP strategy for pricing. The supermarkets can be anywhere between 20,000 and 40,000 square feet (3,700 m2). Example: SPAR supermarket.
- Malls: has a range of retail shops at a single outlet. They endow with products, food and entertainment under a roof.
- Category killers or Category Specialist: By supplying wide assortment in a single category for lower prices a retailer can "kill" that category for other retailers. For few categories, such as electronics, the products are displayed at the centre of the store and sales person will be available to address customer queries and give suggestions when required. Other retail format stores are forced to reduce the prices if a category specialist retail store is present in the vicinity.
- E-tailers: The customer can shop and order through internet and the merchandise are dropped at the customer's doorstep. Here the retailers use drop shipping technique. They accept the payment for the product but the customer receives the product directly from the manufacturer or a wholesaler. This format is ideal for customers who do not want to travel to retail stores and are interested in home shopping. However it is important for the customer to be wary about defective products and non secure credit card transaction. Example: Amazon, Pennyful and Ebay.
- Vending Machines: This is an automated piece of equipment wherein customers can drop in the money in machine and acquire the products.
Some stores take a no frills approach, while others are "mid-range" or "high end", depending on what income level they target.
Other types of retail store include:
- Automated Retail stores are self service, robotic kiosks located in airports, malls and grocery stores. The stores accept credit cards and are usually open 24/7. Examples include ZoomShops and Redbox.
- Big-box stores encompass larger department, discount, general merchandise, and warehouse stores.
- Convenience store - a small store often with extended hours, stocking everyday or roadside items;
- General store - a store which sells most goods needed, typically in a rural area;
Retailers can opt for a format as each provides different retail mix to its customers based on their customer demographics, lifestyle and purchase behaviour. A good format will lend a hand to display products well and entice the target customers to spawn sales.
The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup amount (or percentage) to the retailer's cost. Another common technique is suggested retail pricing. This simply involves charging the amount suggested by the manufacturer and usually printed on the product by the manufacturer.
In Western countries, retail prices are often called psychological prices or odd prices. Often prices are fixed and displayed on signs or labels. Alternatively, when prices are not clearly displayed, there can be price discrimination, where the sale price is dependent upon who the customer is. For example, a customer may have to pay more if the seller determines that he or she is willing and/or able to. Another example would be the practice of discounting for youths, students, or senior citizens..
There are several ways in which consumers can receive goods from a retailer:
- Counter service, where goods are out of reach of buyers and must be obtained from the seller. This type of retail is common for small expensive items (e.g. jewelry) and controlled items like medicine and liquor. It was common before the 1900s in the United States and is more common in certain countries like India.[which?]
- Delivery, where goods are shipped directly to consumer's homes or workplaces. Mail order from a printed catalog was invented in 1744 and was common in the late 19th and early 20th centuries. Ordering by telephone is now common, either from a catalog, newspaper, television advertisement or a local restaurant menu, for immediate service (especially for pizza delivery). Direct marketing, including telemarketing and television shopping channels, are also used to generate telephone orders. started gaining significant market share in developed countries in the 2000s.
- Door-to-door sales, where the salesperson sometimes travels with the goods for sale.
- Self-service, where goods may be handled and examined prior to purchase
Second hand retail
Another form is the pawnshop, in which goods are sold that were used as collateral for loans. There are also "consignment" shops, which are where a person can place an item in a store and if it sells, the person gives the shop owner a percentage of the sale price. The advantage of selling an item this way is that the established shop gives the item exposure to more potential buyers.
To achieve and maintain a foothold in an existing market, a prospective retail establishment must overcome the following hurdles:
- Regulatory barriers including
- Unfavorable taxation structures, especially those designed to penalize or keep out "big box" retailers (see "Regulatory" above);
- Absence of developed supply chain and integrated IT management;
- High competitiveness among existing market participants and resulting low profit margins, caused in part by
- Constant advances in product design resulting in constant threat of product obsolescence and price declines for existing inventory; and
- Lack of properly educated and/or trained work force, often including management, caused in part by
- Lack of educational infrastructure enabling prospective market entrants to respond to the above challenges.
Behind the scenes at retail, there is another factor at work. Corporations and independent store owners alike are always trying to get the edge on their competitors. One way to do this is to hire a merchandising solutions company to design custom store displays that will attract more customers in a certain demographic. The nation's largest retailers spend millions every year on in-store marketing programs that correspond to seasonal and promotional changes. As products change, so will a retail landscape. Retailers can also use facing techniques to create the look of a perfectly stocked store, even when it is not.
A destination store is one that customers will initiate a trip specifically to visit, sometimes over a large area. These stores are often used to "anchor" a shopping mall or plaza, generating foot traffic, which is capitalized upon by smaller retailers.
Customer service is the "sum of acts and elements that allow consumers to receive what they need or desire from your retail establishment." It is important for a sales associate to greet the customer and make himself available to help the customer find whatever he needs. When a customer enters the store, it is important that the sales associate does everything in his power to make the customer feel welcomed, important, and make sure he leave the store satisfied. Giving the customer full, undivided attention and helping him find what he is looking for will contribute to the customer's satisfaction.
The Retail Sales report is published every month. It is a measure of consumer spending, an important indicator of the US GDP. Retail firms provide data on the dollar value of their retail sales and inventories. A sample of 12,000 firms is included in the final survey and 5,000 in the advanced one. The advanced estimated data is based on a subsample from the US CB complete retail & food services sample.
It has been published by the US Census Bureau since 1951.
Among retailers and retails chains a lot of consolidation has appeared over the last couple of decades. Between 1988 and 2010, worldwide 40'788 mergers & acquisitions with a total known value of 2'255 bil. USD have been announced. The largest transactions with involvement of retailers in/from the United States have been: the acquisition of Albertson's Inc. for 17 bil. USD in 2006, the merger between Federated Department Stores Inc with May Department Stores valued at 16.5 bil. USD in 2005 - now Macy's, and the merger between Kmart Holding Corp and Sears Roebuck & Co with a value of 10.9 bil. USD in 2004.
- Krafft, Manfred; Mantrala, Murali K. (eds.) (2006). Retailing in the 21st century: current and future trends. New York: Springer Verlag. ISBN 3540283994.
Types of store or shop:
- Anchor store
- Big-box store
- Chain store
- Confectionery store
- Convenience store
- Department store
- Discount store
- General store
- Grocery store
- Hardware store
- Health food store
- Hobby store
- Liquor store
- Online shopping
- Outlet store
- Pet store
- Specialty store
- State store
- Surplus store
- Survival store
- Toy store
- Variety store
- Warehouse club
- Warehouse store
- ^ "Distribution Services". Foreign Agricultural Service. 2000-02-09. http://www.fas.usda.gov/info/factsheets/China/distribution.html. Retrieved 2006-04-04.
- ^ Harper, Douglas. "retail". Online Etymology Dictionary. http://www.etymonline.com/index.php?term=retail. Retrieved 2008-03-16.
- ^ Philip H. Mitchell 2008, Discovery-Based Retail, Bascom Hill Publishing Group ISBN 9780979846793
- ^ US Census Bureau Retail sales Retail SalesRetail Sales Definition
- ^ http://www.imaa-institute.org/statistics-mergers-acquisitions.html#M&A_Ind_Retail
- ^ http://www.supervalu.com/sv-webapp/news/new_supervalu.jsp
- ^ http://phx.corporate-ir.net/phoenix.zhtml?c=84477&p=irol-newsArticle&ID=679294&highlight=
- ^ http://www.searsholdings.com/pubrel/pressOne.jsp?id=2004-11-17-0003247050
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