Retailing

Definition of Retail
Retail is the sale of goods to end users, not for resale, but for use and consumption by the
purchaser.
 Retail involves the sale of merchandise from a single point of purchase directly to a
customer who intends to use that product. The single point of purchase could be a
brick-and-mortar retail store, an Internet shopping website, a catalog, or even a mobile
phone.
 The retail transaction is at the end of the chain. Manufacturers sell large quantities of
products to retailers, and retailers attempt to sell those same quantities of products to
consumers.
Why Is Retailing Important?
 Retailers are the final link in the supply chain between manufacturers and consumers.
Retailing is important because it allows manufacturers to focus on producing goods
without having to be distracted by the enormous amount of effort that it takes to
interact with the end-user customers who want to purchase those goods.
 Retailers should make the purchase of goods easy for the consumer. That's why retail
stores have salespeople, why Internet shopping websites have customer service instant
chat popups, and why catalogs have descriptions, photos, and toll-free phone
numbers.
What's the Difference Between Retail and Wholesale?
 Wholesalers sell in large quantities, which often allows them to sell at prices that are
lower than other retailers that sell in small quantities from impeccably merchandised
stores in high-rent shopping districts.
 The big difference between wholesale and retail is in the price. The retail price is always
more than the wholesale price. The reason for this is because the added cost of selling
merchandise to end-user customers—labor, rent, advertising, etc.—is factored into the
pricing of the merchandise. The wholesaler doesn’t have to deal with such expenses,
which allows him to sell goods at a lower cost.
Retailers
 The retailer sells products directly to the ultimate consumer. They sell products
individually, i.e., one at a time, to one consumer at a time.
 Consumers in the retail sector are not purchasing a product for business use. They are
buying it for personal use. In other words, they are not going to resell it.
Wholesalers
 The wholesaler sells in bulk quantities to other business entities. The purchasers in the
wholesale sector are buying goods for business purposes. They plan to resell those
 goods. Alternatively, they might use those goods as components for a final product
which they then sell.
Here are the roles of the key players in a typical retail supply chain:
 Manufacturers: Produce the goods, using machines, raw materials, and labor.
 Wholesalers: Purchase finished goods from the manufacturers and sell those goods to
retailers in large bulk quantities.
 Retailers: Sell the goods in small quantities to the end-user at a higher price,
theoretically at the MSRP (Manufacturers Suggested Retail Price).
 Consumer: End-user who buys the goods (or “shops”) from the retailer for personal use.
What Are Different Types of Retail Stores?
 Department Stores: Sell a wide range of merchandise that is arranged by category into
different sections of the physical retail space. Some department store categories include
shoes, clothing, beauty products, jewelry, housewares, etc. Examples of department
store retailers include Macy's, Nordstrom, and JCPenney, to name just a few.
 Grocery Stores and Supermarkets: Sell all types of food and beverage products, and
sometimes also home products, clothing, and consumer electronics as well.
 Warehouse Retailers: his type of retailer is usually situated in retail or Business Park and
where premises rents are lower. This enables this type of retailer to stock, display and
retail a large variety of good at very competitive prices
 Specialty Retailers: Specialize in a specific category of products. Toys ‘R’ Us, Victoria's
Secret, and Nike are examples of specialty retailers.
 Convenience Retailer: Usually located in residential areas this type of retailer offers a
limited range of products at premium prices due to the added value of convenience.
 Discount Retailer: This type of retailer offers a variety of discounted products. They
offer low prices on less fashionable branded products from a range of suppliers by
reselling end of line and returned goods at discounted prices.
 E- tailer – This type of retailer enables customers to shop on-line via the internet and
buy products which are then delivered. This type of retailer is highly convenient and is
able to supply a wider geographic customer base. E-tailers often have lower rent and
overheads so offer very competitive pricing
Factors Influencing Change of Retail Environment
For the consumer, technology has freed up time as capital goods replace labour in the home.
Communications in both a physical and information sense have given access to wider
geographical markets. Retailers, especially those with loyalty card schemes, rapidly embraced
the IT revolution through sharing data with their suppliers and communicating with their
customers. New technologies have been applied throughout the supply chain to ensure that
products can be designed/tested, manufactured and distributed through supply chains quicker
and at a lower cost than ever before. Markets and companies have grown due to the links
between innovation and technology
The Role of Government
The regulation of retail activity has shaped the structure of retailing in many country markets.
While most retailers have had to conform to national legislation with regard to ‘operational’
legislation, such as health and safety at work, hours of opening and employment laws, the
internationalization of retailing and the advent of the Internet have led to the establishment of
legal frameworks across national boundaries.

Source: Tullis, Graham and Tonya Trappe. 2012. New Insights into Business. London: Longman