Retail

Retail consists of the sale of 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.

Etymology

The Apple Store retail location on the Magnificent Mile in Chicago

The world's only Garmin retail location is located on the Magnificent Mile in Chicago

Retail comes from the French word retailler, which refers to "cutting off my hands, clip and divide" in terms of tailoring (1365). It first was recorded as a noun with the meaning of a "sale in small quantities" in 1433 (French). Its literal meaning for retail was to "cut off, shred, off my toes 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

San Juan de Dios Market in Guadalajara, Jalisco

Inside a supermarket in Russia

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. However the service is inadequate.;
• General merchandise store - a hybrid between a department store and discount store;
• 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 or "dollar 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 or Kirana Stores: 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 specialty 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.
• 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. A classic example is the Metro™ in Bangalore.
• 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 20,000-40,000 square feet. Example: SPAR™ supermarket.
• Malls: has a range of retail shops at a single outlet. They endow with products, food and entertainment under a roof. Example: Sigma mall and Garuda mall in Bangalore, Express Avenue in Chennai.
• Pai Electronics™ store in Bangalore, Tata Croma.
• 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 and Ebay.
• Vending Machines: This is an automated piece of equipment wherein customers can drop in the money in machine and acquire the products. For example: Soft drinks vending at Bangalore Airport.

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.

A food vendor in India

Adidas store in Tel Aviv, Israel

Retail Pricing

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.

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.
• 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. Online shopping 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

Some shops sell second-hand goods. In the case of a nonprofit shop, the public donates goods to the shop to be sold. In give-away shops 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.

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 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

According to the bookDiscovery-Based Retail, 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.

Retail Sales

US Retail Sales 1992-2010

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.

Grocery

A grocery store is a store established primarily for the retailing of food. A grocer, the owner of a grocery store, stocks different kinds of foods from assorted places and cultures, and sells them to customers. Large grocery stores that stock products other than food, such as clothing or household items, are called supermarkets. Small grocery stores that mainly sell fruits and vegetables are known as produce markets (U.S) or greengrocers (Britain), and small grocery stores that predominantly sell snack foods and sandwiches are known as convenience stores or delicatessens.

History

Interior of a dry grocer's shop in downtown Vancouver, Washington, circa 1909

Polish grocery, 1922, Detroit

 

U.S. grocery stores are descended from trading posts, which sold not only food but clothing, household items, tools, furniture, and other miscellaneous merchandise. These trading posts evolved into larger retail businesses known as general stores. These facilities generally dealt only in "dry" goods such as flour, dry beans, baking soda, and canned foods. Perishable foods were instead obtained from specialty markets: Fresh meat was obtained from a butcher, milk from a local dairy, eggs and vegetables were either produced by families themselves, bartered for with neighbours, or purchased at a farmers' market or a local greengrocer.

Many rural areas still contain general stores that sell goods ranging from cigars to imported napkins. 

Traditionally, general stores have offered credit to their customers, a system of payment that works on trust rather than modern credit cards. This allowed farm families to buy staples until their harvest could be sold.

The first self-service grocery store, Piggly Wiggly, was opened in 1916 in Memphis, Tennessee by Clarence Saunders, an inventor and entrepreneur. Prior to this innovation, customers gave orders to clerks to fill. Saunder's invention allowed a much smaller number of clerks to service the customers, proving successful (according to a 1929 Time magazine) "partly because of its novelty, partly because neat packages and large advertising appropriations have made retail grocery selling almost an automatic procedure." 

The US Labor Department has calcuated that food purchased at home and in restaurants are 13 percent of household purchases, behind 32 percent for housing and 18 percent for transportation. The average US family spent $280 per month or $3,305 per year at grocery stores in 2004. The newsletter Dollar Stretcher survey found $149 a month for a single person, $257 for a couple and $396 for a family of four.

Europe

Because many European cities (Rome, for example) are already so dense in population and buildings, large supermarkets, in the American sense, may not replace the neighborhood grocery store. However, 'Metro' stores have been appearing in town and city centres in many countries, leading to the decline of independent smaller stores, and large out-of-town supermarkets and hypermarkets, such as Tesco and Sainsbury's in the United Kingdom, have been steadily sapping the trade from smaller stores.

Canada and United States

Example of an American grocery store aisle

 

American grocery stores operate in many different styles ranging from rural family-owned operations, such as IGAs, boutique chains, such as Whole Foods Market and Trader Joe's to larger supermarket chain stores. In some places food cooperatives or "co-op" markets, owned by their own shoppers, have been popular. However, there has recently been a trend to larger stores serving larger geographic areas. Very large "all-in-one" hypermarkets such as Wal-Mart and Target have recently forced consolidation of the grocery business in some areas. The global buying power of such very efficient companies has put an increased financial burden on traditional local grocery stores as well as the national supermarket chains.

When a small grocery store is in competition with large supermarkets, the grocery store often must create a niche market by selling unique, premium quality, or ethnic foods that are not easily found in supermarkets. A small grocery store may also compete by locating in a mixed commercial-residential area close to, and convenient for, its customers.

Latin America

Jumbo Hypermarket view

Grocery stores in Latin America have been growing fast since the early 80s. A big percentage of food sales and other articles are done by the grocery stores today. Some examples are the Chilean chains Cencosud (Jumbo and Santa Isabel covering Chile, Argentina, Brazil and Peru), D&S (Lider and Ekono) as well as Falabella (Tottus in Chile and Peru and Supermercados San Francisco in Chile). These three chains are subsidiaries of big retail store companies which also have other kind of business units like department stores and home improvement outlets. All three also operate its own credit cards, which is a key driver, and sell as well insurances and have travel agencies. These companies are also running some malls in many countries like Argentina, Chile, Peru and Colombia.

Two other chains started in 2008, Unimarc, which bought several small local chains and has over 20% of the grocery segment in Chile and Southern Cross, a Chilean Investment Fund that has around 8.6% of the supermarket segment, mainly oriented to the southern areas of the country.

In Puerto Rico, popular grocery stores include Pueblo Supermarkets and Amigo.

Cultural impact

Some groceries specialize in the foods of a certain nationality or culture, such as Italian, oriental or Middle-Eastern. These stores are known as ethnic markets and may also serve as gathering places for immigrants. In many cases, the wide range of products carried by larger supermarkets has reduced the need for such speciality stores.

Many teenagers find their first employment in grocery stores.