Retail, simply put is the sale of goods and services from a business to a consumer (end-user) for their use. A retail transaction covers small quantities of goods but is not to be confused with online transactions, as retail sells goods from a single point straight to a consumer for their end-use.
Common Types of Retail
Retail is in many shapes and sizes, and each comes with its advantages and disadvantages, depending on the size of the business. Here they are:
An independent retailer is one who builds his/her business from scratch to the top. Basically, it is the owner who builds the business, even though he/she may have assistants or hire someone extra to help.
Existing Retail Business
Just as the name implies, an existing retail business is one that is already up-and-running. It is typically inherited by someone or someone who buys an existing business and takes over its ownership and responsibilities.
A Franchise is an existing business plan that includes a trademarked name, and already determined set of products, and established business concepts. A retailer who wishes to become a franchisee is granted permission to use all of the above-mentioned elements. To purchase the rights to a franchise, there are typically ground rules and processes that must be followed in order to retain rights to the franchise, and fees, which must be paid to the franchise owner.
A dealership is a level ground between a franchise and an independent retailer. A retailer who works with a dealership has the license to sell a brand of products, and there are no fees to the licensor.
Network marketing, or multi-level marketing, is a business that can be described as a business model, where the selling of products is basically dependent on the people in the network. Seen from another angle, a person is selling products, but at the same time, other people salespeople are employed to sell the same goods.
Importance of Retail
The following reasons make retailing important:
- Retailing enables manufacturers to focus on producing goods without having to deal directly with the end-users who would be using the products.
- Retailers make the purchase of goods easy for the consumer, via salespeople, shopping websites, customer service, descriptions, photos, and toll-free phone numbers.
- Most retailers make the shopping of goods easier for customers by going the extra mile to add additional services to the retail transaction like personal shopping consultations, and gift wrapping to add more perks to the retail customer experience and take the retail customer experience a notch higher.
How The Retail Supply Chain Works
The retail supply chain includes manufacturers, wholesalers, retailers, and the consumer – also known as the end-user. The chain runs from the manufacturer who is directly linked to the wholesaler, while the retailer is linked to the wholesaler.
Let’s see the roles of the key players in a typical retail supply chain:
Manufacturers are the producers of the goods, with the use of machines, raw materials, and labor.
Wholesalers buy finished goods from the manufacturers, and in turn, sell the goods to retailers in large bulk quantities.
Retailers sell goods in small quantities to consumers at a higher price.
Consumers are those who buy goods (or “shops”) from the retailer for personal use.
Types of Retail Stores
This is the oldest and often largest place that consumers shop for a variety of products at the same place.
Big Box Store
These are major retailers that specialize in one type of product, like electronics.
These are department stores that stock discounted items and lower-priced brands.
Warehouse stores are no-frills warehouses that often require you to be a member to access their low prices.
Mom-and-Pop stores are smaller, often niche stores that are run by small business owners.
E-tailers are online retailers that sell through the internet and have products delivered to your door. These retailers typically do not have physical stores.