Retail
Encyclopedia
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 import
ers, either directly or through a wholesale
r, 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 pedestrian
s 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 recreation
al 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.
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:
There are the following types of retailers by marketing strategy:
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:
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.
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 price
s are often called psychological price
s 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..
shop, the public donates goods to the shop to be sold. In give-away shop
s goods can be taken for free.
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.
:
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.
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.
, 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.
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.
Types of store or shop:
Sales
A sale is the act of selling a product or service in return for money or other compensation. It is an act of completion of a commercial activity....
of physical goods or merchandise from a fixed location, such as a department store
Department store
A department store is a retail establishment which satisfies a wide range of the consumer's personal and residential durable goods product needs; and at the same time offering the consumer a choice of multiple merchandise lines, at variable price points, in all product categories...
, boutique
Boutique
A boutique is a small shopping outlet, especially one that specializes in elite and fashionable items such as clothing and jewelry. The word is French for "shop", via Latin from Greek ἀποθήκη , "storehouse"....
or kiosk
Kiosk
Kiosk is a small, separated garden pavilion open on some or all sides. Kiosks were common in Persia, India, Pakistan, and in the Ottoman Empire from the 13th century onward...
, or by mail
Mail
Mail, or post, is a system for transporting letters and other tangible objects: written documents, typically enclosed in envelopes, and also small packages are delivered to destinations around the world. Anything sent through the postal system is called mail or post.In principle, a postal service...
, in small or individual lots for direct consumption
Consumption (economics)
Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt. Generally, consumption is defined in part by comparison to production. But the precise definition can vary because different schools of economists define production quite differently...
by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce
Commerce
While business refers to the value-creating activities of an organization for profit, commerce means the whole system of an economy that constitutes an environment for business. The system includes legal, economic, political, social, cultural, and technological systems that are in operation in any...
, a "retailer" buys goods or products
Product (business)
In general, the product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce, from the Latin prōdūce ' lead or bring forth'. Since 1575, the word "product" has referred to anything produced...
in large quantities from manufacturers
Manufacturing
Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...
or import
Import
The term import is derived from the conceptual meaning as to bring in the goods and services into the port of a country. The buyer of such goods and services is referred to an "importer" who is based in the country of import whereas the overseas based seller is referred to as an "exporter". Thus...
ers, either directly or through a wholesale
Wholesale
Wholesaling, jobbing, or distributing is defined as the sale of goods or merchandise to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services...
r, and then sells smaller quantities to the end-user
End-user
Economics and commerce define an end user as the person who uses a product. The end user or consumer may differ from the person who purchases the product...
. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain
Supply chain
A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to...
. Manufacturing marketers
Marketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
see the process of retailing as a necessary part of their overall distribution
Distribution (business)
Product distribution is one of the four elements of the marketing mix. An organization or set of organizations involved in the process of making a product or service available for use or consumption by a consumer or business user.The other three parts of the marketing mix are product, pricing,...
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
Public utility
A public utility is an organization that maintains the infrastructure for a public service . Public utilities are subject to forms of public control and regulation ranging from local community-based groups to state-wide government monopolies...
, like electric power
Electric power
Electric power is the rate at which electric energy is transferred by an electric circuit. The SI unit of power is the watt.-Circuits:Electric power, like mechanical power, is represented by the letter P in electrical equations...
.
Shops may be on residential streets, shopping streets with few or no houses or in a shopping mall
Shopping mall
A shopping mall, shopping centre, shopping arcade, shopping precinct or simply mall is one or more buildings forming a complex of shops representing merchandisers, with interconnecting walkways enabling visitors to easily walk from unit to unit, along with a parking area — a modern, indoor version...
. Shopping streets may be for pedestrian
Pedestrian
A pedestrian is a person traveling on foot, whether walking or running. In some communities, those traveling using roller skates or skateboards are also considered to be pedestrians. In modern times, the term mostly refers to someone walking on a road or footpath, but this was not the case...
s only. Sometimes a shopping street has a partial or full roof
Roof
A roof is the covering on the uppermost part of a building. A roof protects the building and its contents from the effects of weather. Structures that require roofs range from a letter box to a cathedral or stadium, dwellings being the most numerous....
to protect customers from precipitation
Precipitation (meteorology)
In meteorology, precipitation In meteorology, precipitation In meteorology, precipitation (also known as one of the classes of hydrometeors, which are atmospheric water phenomena is any product of the condensation of atmospheric water vapor that falls under gravity. The main forms of precipitation...
. Online retailing, a type of electronic commerce
Electronic commerce
Electronic commerce, commonly known as e-commerce, eCommerce or e-comm, refers to the buying and selling of products or services over electronic systems such as the Internet and other computer networks. However, the term may refer to more than just buying and selling products online...
used for business-to-consumer (B2C) transactions and mail order
Mail order
Mail order is a term which describes the buying of goods or services by mail delivery. The buyer places an order for the desired products with the merchant through some remote method such as through a telephone call or web site. Then, the products are delivered to the customer...
, are forms of non-shop retailing.
Shopping
Shopping
Shopping is the examining of goods or services from retailers with the intent to purchase at that time. Shopping is an activity of selection and/or purchase. In some contexts it is considered a leisure activity as well as an economic one....
generally refers to the act of buying
Trade
Trade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...
products. Sometimes this is done to obtain necessities such as food and clothing; sometimes it is done as a recreation
Recreation
Recreation is an activity of leisure, leisure being discretionary time. The "need to do something for recreation" is an essential element of human biology and psychology. Recreational activities are often done for enjoyment, amusement, or pleasure and are considered to be "fun"...
al activity. Recreational shopping often involves window shopping (just looking, not buying) and browsing and does not always result in a purchase.
Etymology
Types of retail outlets
Marketplace
A marketplace is the space, actual, virtual or metaphorical, in which a market operates. The term is also used in a trademark law context to denote the actual consumer environment, ie. the 'real world' in which products and services are provided and consumed.-Marketplaces and street markets:A...
is a location where goods and services are exchanged. The traditional market square
Market square
The market square is a feature of many European and colonial towns. It is an open area where market stalls are traditionally set out for trading, commonly on one particular day of the week known as market day....
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 storeDepartment storeA department store is a retail establishment which satisfies a wide range of the consumer's personal and residential durable goods product needs; and at the same time offering the consumer a choice of multiple merchandise lines, at variable price points, in all product categories...
s - 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 storeDiscount storeA discount store is a type of department store, which sells products at prices lower than those asked by traditional retail outlets. Most discount department stores offer a wide assortment of goods; others specialize in such merchandise as jewelry, electronic equipment, or electrical appliances...
s - 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. - SupermarketSupermarketA supermarket, a form of grocery store, is a self-service store offering a wide variety of food and household merchandise, organized into departments...
s - sell mostly food products; - Warehouse storeWarehouse storeA warehouse store, as opposed to a warehouse club, is a retail location with a limited variety of merchandise sold in bulk at a discount to customers...
s - 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 storeSpecialty storeSpecialty stores are small stores which specialize in a specific range of merchandise and related items. Most stores have an extensive depth of stock in the item that they specialize in and provide high levels of service and expertise...
s: 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 storeGeneral storeA general store, general merchandise store, or village shop is a rural or small town store that carries a general line of merchandise. It carries a broad selection of merchandise, sometimes in a small space, where people from the town and surrounding rural areas come to purchase all their general...
- a rural store that supplies the main needs for the local community; - Convenience storeConvenience storeA convenience store, corner store, corner shop, commonly called a bodega in Spanish-speaking areas of the United States, is a small store or shop in a built up area that stocks a range of everyday items such as groceries, toiletries, alcoholic and soft drinks, and may also offer money order and...
s: 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. - HypermarketHypermarketIn commerce, a hypermarket is a superstore combining a supermarket and a department store. The result is an expansive retail facility carrying a wide range of products under one roof, including full groceries lines and general merchandise...
s: provides variety and huge volumes of exclusive merchandise at low margins. The operating cost is comparatively less than other retail formats. - SupermarketSupermarketA supermarket, a form of grocery store, is a self-service store offering a wide variety of food and household merchandise, organized into departments...
s: 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 40000 square feet (3,716.1 m²). Example: SPAR supermarket. - MallShopping mallA shopping mall, shopping centre, shopping arcade, shopping precinct or simply mall is one or more buildings forming a complex of shops representing merchandisers, with interconnecting walkways enabling visitors to easily walk from unit to unit, along with a parking area — a modern, indoor version...
s: has a range of retail shops at a single outlet. They endow with products, food and entertainment under a roof. - Category killerCategory killerCategory killer is a term used in marketing and strategic management to describe a product, service, brand, or company that has such a distinct sustainable competitive advantage that competing firms find it almost impossible to operate profitably in that industry...
s 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 MachineVending machineA vending machine is a machine which dispenses items such as snacks, beverages, alcohol, cigarettes, lottery tickets, consumer products and even gold and gems to customers automatically, after the customer inserts currency or credit into the machine....
s: 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
No frills
No-frills or no frills is a term used to describe any service or product for which the non-essential features have been removed to keep the price low. The use of the term "frills" refers to a style of fabric decoration...
approach, while others are "mid-range" or "high end", depending on what income level they target.
Other types of retail store include:
- Automated RetailAutomated RetailAutomated retail is the category of self-service, standalone kiosks in heavily trafficked establishments such as airports, malls and resorts....
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 RedboxRedboxRedbox is an American company that specializes in the rental of DVDs, Blu-ray Discs, and video games via automated retail kiosks. As of the end of June 2011, Redbox had over 33,000 kiosks in over 27,800 locations....
. - Big-box storeBig-box storeA big-box store is a physically large retail establishment, usually part of a chain. The term sometimes also refers, by extension, to the company that operates the store...
s encompass larger department, discount, general merchandise, and warehouse stores. - Convenience storeConvenience storeA convenience store, corner store, corner shop, commonly called a bodega in Spanish-speaking areas of the United States, is a small store or shop in a built up area that stocks a range of everyday items such as groceries, toiletries, alcoholic and soft drinks, and may also offer money order and...
- a small store often with extended hours, stocking everyday or roadside items; - General storeGeneral storeA general store, general merchandise store, or village shop is a rural or small town store that carries a general line of merchandise. It carries a broad selection of merchandise, sometimes in a small space, where people from the town and surrounding rural areas come to purchase all their general...
- 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.
Retail pricing
The pricingPricing
Pricing is the process of determining what a company will receive in exchange for its products. Pricing factors are manufacturing cost, market place, competition, market condition, and quality of product. Pricing is also a key variable in microeconomic price allocation theory. Pricing is a...
technique used by most retailers is cost-plus pricing
Cost-plus pricing
Cost-plus pricing is a pricing method used by companies to maximize their profits.The firms accomplish their objective of profit maximization by increasing their production until marginal revenue equals marginal cost, and then charging a price which is determined by the demand curve. However, in...
. This involves adding a markup
Markup (business)
Markup is the difference between the cost of a good or service and its selling price. A markup is added on to the total cost incurred by the producer of a good or service in order to create a profit. The total cost reflects the total amount of both fixed and variable expenses to produce and...
amount (or percentage) to the retailer's cost. Another common technique is suggested retail pricing
Suggested retail price
The manufacturer's suggested retail price , list price or recommended retail price of a product is the price which the manufacturer recommends that the retailer sell the product. The intention was to help to standardise prices among locations...
. This simply involves charging the amount suggested by the manufacturer and usually printed on the product
Product (business)
In general, the product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce, from the Latin prōdūce ' lead or bring forth'. Since 1575, the word "product" has referred to anything produced...
by the manufacturer.
In Western countries, retail price
Price
-Definition:In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services.In modern economies, prices are generally expressed in units of some form of currency...
s are often called psychological price
Psychological pricing
Psychological pricing or price ending is a marketing practice based on the theory that certain prices have a psychological impact. The retail prices are often expressed as "odd prices": a little less than a round number, e.g. $19.99 or £2.98. The theory is this drives demand greater than would be...
s 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
Price discrimination
Price discrimination or price differentiation exists when sales of identical goods or services are transacted at different prices from the same provider...
, 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..
Transfer mechanism
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.
- DeliveryDelivery (commerce)Delivery is the process of transporting goods. Most goods are delivered through a transportation network. Cargo are primarily delivered via roads and railroads on land, shipping lanes on the sea and airline networks in the air...
, where goods are shipped directly to consumer's homes or workplaces. Mail orderMail orderMail order is a term which describes the buying of goods or services by mail delivery. The buyer places an order for the desired products with the merchant through some remote method such as through a telephone call or web site. Then, the products are delivered to the customer...
from a printed catalog was invented in 1744 and was common in the late 19th and early 20th centuries. Ordering by telephoneTelephoneThe telephone , colloquially referred to as a phone, is a telecommunications device that transmits and receives sounds, usually the human voice. Telephones are a point-to-point communication system whose most basic function is to allow two people separated by large distances to talk to each other...
is now common, either from a catalog, newspaper, television advertisementTelevision advertisementA television advertisement or television commercial, often just commercial, advert, ad, or ad-film – is a span of television programming produced and paid for by an organization that conveys a message, typically one intended to market a product...
or a local restaurant menuMenuIn a restaurant, a menu is a presentation of food and beverage offerings. A menu may be a la carte – which guests use to choose from a list of options – or table d'hôte, in which case a pre-established sequence of courses is served....
, for immediate service (especially for pizza deliveryPizza deliveryPizza delivery is a service in which a pizzeria delivers a pizza to a customer. Delivery is normally made with an automobile, motor scooter, or bicycle.- Ordering :...
). Direct marketingDirect marketingDirect marketing is a channel-agnostic form of advertising that allows businesses and nonprofits to communicate straight to the customer, with advertising techniques such as mobile messaging, email, interactive consumer websites, online display ads, fliers, catalog distribution, promotional...
, including telemarketingTelemarketingTelemarketing is a method of direct marketing in which a salesperson solicits prospective customers to buy products or services, either over the phone or through a subsequent face to face or Web conferencing appointment scheduled during the call.Telemarketing can also include recorded sales pitches...
and television shopping channelShopping channelShopping channels are television specialty channels that present shopping related content, particularly for home shopping enthusiasts.-USA:* America's Store* Home Shopping Network* Jewelry Television* QVC* Shop at Home Network* ShopNBC...
s, are also used to generate telephone orders. started gaining significant market share in developed countries in the 2000s. - Door-to-doorDoor-to-doorDoor-to-door is a sales technique in which a salesperson walks from the door of one house to the door of another trying to sell a product or service to the general public. A variant of this involves cold calling first, when another sales representative attempts to gain agreement that a salesperson...
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
Some shops sell second-hand goods. In the case of a nonprofitNon-profit organization
Nonprofit organization is neither a legal nor technical definition but generally refers to an organization that uses surplus revenues to achieve its goals, rather than distributing them as profit or dividends...
shop, the public donates goods to the shop to be sold. In give-away shop
Give-away shop
Give-away shops, swap shops, freeshops, or free stores are stores where all goods are free. They are similar to charity shops, with mostly second-hand items — only everything is available at no cost...
s goods can be taken for free.
Another form is the pawnshop
Pawnbroker
A pawnbroker is an individual or business that offers secured loans to people, with items of personal property used as collateral...
, in which goods are sold that were used as collateral for loans. There are also "consignment
Consignment
Consignment the act of consigning, which is placing any material in the hand of another, but retaining ownership until the goods are sold or person is transferred. This may be done for shipping, transfer of prisoners, to auction, or for sale in a store Consignment the act of consigning, which is...
" 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.
Challenges
To achieve and maintain a foothold in an existing market, a prospective retail establishment must overcome the following hurdlesBarriers to entry
In theories of competition in economics, barriers to entry are obstacles that make it difficult to enter a given market. The term can refer to hindrances a firm faces in trying to enter a market or industry - such as government regulation, or a large, established firm taking advantage of economies...
:
- Regulatory barriers including
- Restrictions on real estate purchases, especially as imposed by local governmentsMunicipalityA municipality is essentially an urban administrative division having corporate status and usually powers of self-government. It can also be used to mean the governing body of a municipality. A municipality is a general-purpose administrative subdivision, as opposed to a special-purpose district...
and against "big-box" chain retailers; - Restrictions on foreign investment in retailers, in terms of both absolute amount of financing provided and percentage share of voting stock (e.g., common stockCommon stockCommon stock is a form of corporate equity ownership, a type of security. It is called "common" to distinguish it from preferred stock. In the event of bankruptcy, common stock investors receive their funds after preferred stock holders, bondholders, creditors, etc...
) purchased;
- Restrictions on real estate purchases, especially as imposed by local governments
- Unfavorable taxation structuresTax codeIn the UK, every person paid under the PAYE scheme is allocated a tax code by HM Revenue and Customs. This is usually in the form of a number followed by a letter suffix, though other 'non-standard' codes are also used. This code describes to employers how much tax to deduct from an employee. The...
, especially those designed to penalize or keep out "big box" retailers (see "Regulatory" above); - Absence of developed supply chain and integrated IT management;
- High competitivenessCompetition (economics)Competition in economics is a term that encompasses the notion of individuals and firms striving for a greater share of a market to sell or buy goods and services...
among existing market participants and resulting low profit marginsProfit marginProfit margin, net margin, net profit margin or net profit ratio all refer to a measure of profitability. It is calculated by finding the net profit as a percentage of the revenue.Net profit Margin = x100...
, caused in part by- Constant advances in product design resulting in constant threat of product obsolescence and price declines for existing inventoryInventoryInventory means a list compiled for some formal purpose, such as the details of an estate going to probate, or the contents of a house let furnished. This remains the prime meaning in British English...
; and
- Constant advances in product design resulting in constant threat of product obsolescence and price declines for existing inventory
- Lack of properly educated and/or trained work force, often including management, caused in part by
- Lack of educational infrastructureEducation in the United StatesEducation in the United States is mainly provided by the public sector, with control and funding coming from three levels: federal, state, and local. Child education is compulsory.Public education is universally available...
enabling prospective market entrants to respond to the above challenges.kjjkk
- Lack of educational infrastructure
Sales techniques
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 merchandisingMerchandising
Merchandising is the methods, practices, and operations used to promote and sustain certain categories of commercial activity. In the broadest sense, merchandising is any practice which contributes to the sale of products to a retail consumer...
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
Marketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
programs that correspond to seasonal and promotional changes. As products change, so will a retail landscape. Retailers can also use facing
Facing (retail)
Facing is a common tool in the retail industry to create the look of a perfectly stocked store by pulling all of the products on a display or shelf to the front, as well as down stacking all the canned and stacked items...
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
Anchor store
In retail, an anchor store, draw tenant, anchor tenant, or key tenant is one of the larger stores in a shopping mall, usually a department store or a major retail chain....
" a shopping mall or plaza, generating foot traffic, which is capitalized upon by smaller retailers.
Customer service
Customer serviceCustomer service
Customer service is the provision of service to customers before, during and after a purchase.According to Turban et al. , “Customer service is a series of activities designed to enhance the level of customer satisfaction – that is, the feeling that a product or service has met the customer...
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.
Retail Sales
The Retail Sales report is published every month. It is a measure of consumer spendingConsumer spending
Consumer spending or consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level...
, an important indicator of the US GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
. Retail firms provide data on the dollar value of their retail sales and inventories. A sample
Sampling (statistics)
In statistics and survey methodology, sampling is concerned with the selection of a subset of individuals from within a population to estimate characteristics of the whole population....
of 12,000 firms is included in the final survey
Statistical survey
Survey methodology is the field that studies surveys, that is, the sample of individuals from a population with a view towards making statistical inferences about the population using the sample. Polls about public opinion, such as political beliefs, are reported in the news media in democracies....
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.
Consolidation
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 & acquisitionsMergers and acquisitions
Mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or...
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
Kmart
Kmart, sometimes styled as "K-Mart," is a chain of discount department stores. The chain acquired Sears in 2005, forming a new corporation under the name Sears Holdings Corporation. The company was founded in 1962 and is the third largest discount store chain in the world, behind Wal-Mart and...
and Sears Roebuck & Co with a value of 10.9 bil. USD in 2004.
See also
- List of department stores by country
- Point of sales
- Point of sales terminal
- Retail concentrationRetail concentrationRetail concentration refers to the market-share generally belonging to the top 4 or 5 mass distribution firms present in a regional market, as a percentage on the total....
- Retail designRetail designRetail design is a creative and commercial discipline that combines several different areas of expertisetogether in the design and construction of retail space...
- Retail softwareRetail softwareRetail software is computer software sold to end consumers, usually under restricted licenses. Until the emergence of the Internet, retail software represented, until the 2000s, the vast majority of all end consumer software used and was referred to as shrinkware because software almost always...
- Retailing in IndiaRetailing in IndiaRetailing is one of the pillars of the economy in India and accounts for about 15% of its GDP. India is one of the five largest retail markets in the world in economic value.Indian retail industry is divided into organised and unorganised sectors....
- Shopping mallShopping mallA shopping mall, shopping centre, shopping arcade, shopping precinct or simply mall is one or more buildings forming a complex of shops representing merchandisers, with interconnecting walkways enabling visitors to easily walk from unit to unit, along with a parking area — a modern, indoor version...
- Specialist storeSpecialist storeA specialist store is a shop that caters to one specific retail market. Examples of specialist stores include camera stores, pharmacies, stationers and bookstores. In other words, a shop that specialises in one breed of products...
- Stand-alone store
- Store managerStore managerA store manager is the person ultimately responsible for the day-to-day operations of a retail store. All employees working in the store report to the store manager...
- TuangouTuangouTuángòu , which loosely translates as team buying or group buying , is a recently developed shopping strategy originating in the People's Republic of China...
- Visual merchandisingVisual merchandisingVisual merchandising is the activity and profession of developing floor plans and three-dimensional displays in order to maximise sales.Both goods or services can be displayed to highlight their features and benefits...
- WardrobingWardrobingWardrobing is the practice of purchasing an item, using it, and then returning it to the store for a refund. It is most often done with expensive clothing - hence the name - but the practice is also common with tools, electronics, and even computers....
Types of store or shop:
- Anchor storeAnchor storeIn retail, an anchor store, draw tenant, anchor tenant, or key tenant is one of the larger stores in a shopping mall, usually a department store or a major retail chain....
- Big-box storeBig-box storeA big-box store is a physically large retail establishment, usually part of a chain. The term sometimes also refers, by extension, to the company that operates the store...
- Chain storeChain storeChain stores are retail outlets that share a brand and central management, and usually have standardized business methods and practices. These characteristics also apply to chain restaurants and some service-oriented chain businesses. In retail, dining and many service categories, chain businesses...
- Confectionery store
- Convenience storeConvenience storeA convenience store, corner store, corner shop, commonly called a bodega in Spanish-speaking areas of the United States, is a small store or shop in a built up area that stocks a range of everyday items such as groceries, toiletries, alcoholic and soft drinks, and may also offer money order and...
- Department storeDepartment storeA department store is a retail establishment which satisfies a wide range of the consumer's personal and residential durable goods product needs; and at the same time offering the consumer a choice of multiple merchandise lines, at variable price points, in all product categories...
- Discount storeDiscount storeA discount store is a type of department store, which sells products at prices lower than those asked by traditional retail outlets. Most discount department stores offer a wide assortment of goods; others specialize in such merchandise as jewelry, electronic equipment, or electrical appliances...
- General storeGeneral storeA general store, general merchandise store, or village shop is a rural or small town store that carries a general line of merchandise. It carries a broad selection of merchandise, sometimes in a small space, where people from the town and surrounding rural areas come to purchase all their general...
- Grocery storeGrocery storeA grocery store is a store that retails food. A grocer, the owner of a grocery store, stocks different kinds of foods from assorted places and cultures, and sells these "groceries" to customers. Large grocery stores that stock products other than food, such as clothing or household items, are...
- Hardware storeHardware storeHardware stores, sometimes known as DIY stores, sell household hardware including: fasteners, hand tools, power tools, keys, locks, hinges, chains, plumbing supplies, electrical supplies, cleaning products, housewares, tools, utensils, paint, and lawn and garden products directly to consumers for...
- Health food storeHealth food storeA health food store is a type of grocery store that primarily sells health food, organic foods, local produce, and often nutritional supplements...
- Hobby storeHobby storeA hobby store sells recreational modelling and craft supplies and specialty magazines for model airplanes , train models, ship models, house and building models. Some hobby shops may also sell dolls, and collectible coins and stamps. A subtype of hobby store is a game store, which sells board...
- HypermarketHypermarketIn commerce, a hypermarket is a superstore combining a supermarket and a department store. The result is an expansive retail facility carrying a wide range of products under one roof, including full groceries lines and general merchandise...
- Liquor storeLiquor storeIn the United States, Australia and Canada, a liquor store is a type of store that specializes in the sale of alcoholic beverages. In South Africa and Namibia these stores are generally called bottle stores....
- NewsagentNewsagentA newsagent's shop , newsagency or newsstand is a business that sells newspapers, magazines, cigarettes, snacks and often items of local interest. In Britain and Australia, these businesses are termed newsagents...
- Online shopping
- Outlet storeOutlet storeAn outlet store or factory outlet is a brick and mortar or online retail store in which manufacturers sell their stock directly to the public. Traditionally, a factory outlet was a store attached to a factory or warehouse, sometimes allowing customers to watch the production process like in the...
- Pet storePet storeA pet store or pet shop is a retail business which sells different kinds of animals. Pet stores also sell pet food, supplies, and accessories....
- Specialty storeSpecialty storeSpecialty stores are small stores which specialize in a specific range of merchandise and related items. Most stores have an extensive depth of stock in the item that they specialize in and provide high levels of service and expertise...
- State storeAlcoholic beverage control stateAlcoholic beverage control states, generally called control states, are those in the United States that have state monopoly over the wholesaling and/or retailing of some or all categories of alcoholic beverages, such as beer, wine, and distilled spirits....
- SupermarketSupermarketA supermarket, a form of grocery store, is a self-service store offering a wide variety of food and household merchandise, organized into departments...
- Surplus storeSurplus storeA surplus store or disposals store sells items that are used, or purchased but unused, and no longer needed. The surplus is often military, government or industrial excess often called army-navy stores in America...
- Survival storeSurvival storeA survival store, outdoors store, preparedness store or wilderness store is a retail outlet where survival or preparedness equipment can be purchased...
- Toy storeToy storeA toy store or toy shop is a retail business specializing in selling toys. No longer held to the limitations of a physical outlet, many toy shops now do business over the Internet. Many department stores have toy sections.-External links:...
- Variety store
- Warehouse clubWarehouse clubA warehouse club is a retail store, usually selling a wide variety of merchandise, in which customers are required to buy large, wholesale quantities of the store's products, which makes these clubs attractive to both bargain hunters and small business owners. The clubs are able to keep prices low...
- Warehouse storeWarehouse storeA warehouse store, as opposed to a warehouse club, is a retail location with a limited variety of merchandise sold in bulk at a discount to customers...