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Retail

Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and then sells in smaller quantities to consumers for a profit. Retailers are the final link in the supply chain from producers to consumers.

For the comic strip by Norm Feuti, see Retail (comic strip).

Retail markets and shops have a very ancient history, dating back to antiquity. Some of the earliest retailers were itinerant peddlers. Over the centuries, retail shops were transformed from little more than "rude booths" to the sophisticated shopping malls of the modern era. In the digital age, an increasing number of retailers are seeking to reach broader markets by selling through multiple channels, including both bricks and mortar and online retailing. Digital technologies are also affecting the way that consumers pay for goods and services. Retailing support services may also include the provision of credit, delivery services, advisory services, stylist services and a range of other supporting services. Retail workers are the employees of such stores.


Most modern retailers typically make a variety of strategic level decisions including the type of store, the market to be served, the optimal product assortment, customer service, supporting services, and the store's overall market positioning. Once the strategic retail plan is in place, retailers devise the retail mix which includes product, price, place, promotion, personnel, and presentation.

Etymology[edit]

The word retail comes from the Old French verb tailler, meaning "to cut off, clip, pare, divide in terms of tailoring" (c. 1365). It was first recorded as a noun in 1433 with the meaning of "a sale in small quantities" from the Middle French verb retailler meaning "a piece cut off, shred, scrap, paring".[1] At the present, the meaning of the word retail (in English, French, Dutch, German and Spanish) refers to the sale of small quantities of items to consumers (as opposed to wholesale).

Definition and explanation[edit]

Retail refers to the activity of selling goods or services directly to consumers or end-users.[2] Some retailers may sell to business customers, and such sales are termed non-retail activity. In some jurisdictions or regions, legal definitions of retail specify that at least 80 per cent of sales activity must be to end-users.[3]


Retailing often occurs in retail stores or service establishments, but may also occur through direct selling such as through vending machines, door-to-door sales or electronic channels.[4] Although the idea of retail is often associated with the purchase of goods, the term may be applied to service providers that sell to consumers. Retail service providers include retail banking, tourism, insurance, private healthcare, private education, private security firms, legal firms, publishers, public transport, and others. For example, a tourism provider might have a retail division that books travel and accommodation for consumers plus a wholesale division that purchases blocks of accommodation, hospitality, transport, and sightseeing which are subsequently packaged into a holiday tour for sale to retail travel agents.


Some retailers badge their stores as "wholesale outlets" offering "wholesale prices." While this practice may encourage consumers to imagine that they have access to lower prices, while being prepared to trade-off reduced prices for cramped in-store environments, in a strictly legal sense, a store that sells the majority of its merchandise direct to consumers, is defined as a retailer rather than a wholesaler. Different jurisdictions set parameters for the ratio of consumer to business sales that define a retail business.

– Market size, stage of market, market competitiveness, market attractiveness, market trends

Market analysis

Customer analysis – , demographic, geographic, and psychographic profile, values and attitudes, shopping habits, brand preferences, analysis of needs and wants, and media habits

Market segmentation

Internal analysis – Other capacities including human resource capability, technological capability, financial capability, ability to generate or economies of scope, trade relations, reputation, positioning, and past performance

scale economies

Competition analysis – Availability of substitutes, competitor's strengths and weaknesses, perceptual mapping, competitive trends

Review of product mix – :: Sales per square foot, stock-turnover rates, profitability per product line

Review of distribution channels – Lead-times between placing order and delivery, cost of distribution, cost efficiency of intermediaries

Evaluation of the economics of the strategy – Cost-benefit analysis of planned activities

The distinction between "strategic" and "managerial" decision-making is commonly used to distinguish "two phases having different goals and based on different conceptual tools. Strategic planning concerns the choice of policies aiming at improving the competitive position of the firm, taking account of challenges and opportunities proposed by the competitive environment. On the other hand, managerial decision-making is focused on the implementation of specific targets."[30]


In retailing, the strategic plan is designed to set out the vision and provide guidance for retail decision-makers and provide an outline of how the product and service mix will optimize customer satisfaction. As part of the strategic planning process, it is customary for strategic planners to carry out a detailed environmental scan which seeks to identify trends and opportunities in the competitive environment, market environment, economic environment and statutory-political environment. The retail strategy is normally devised or reviewed every three to five years by the chief executive officer. The profit margins of retailers depend largely on their ability to achieve market competitive transaction costs.


The strategic retail analysis typically includes following elements:[31]


At the conclusion of the retail analysis, retail marketers should have a clear idea of which groups of customers are to be the target of marketing activities. Not all elements are, however, equal, often with demographics, shopping motivations, and spending directing consumer activities.[32] Retail research studies suggest that there is a strong relationship between a store's positioning and the socio-economic status of customers.[33] In addition, the retail strategy, including service quality, has a significant and positive association with customer loyalty.[34] A marketing strategy effectively outlines all key aspects of firms' targeted audience, demographics, preferences. In a highly competitive market, the retail strategy sets up long-term sustainability. It focuses on customer relationships, stressing the importance of added value, customer satisfaction and highlights how the store's market positioning appeals to targeted groups of customers.[35]

Quality conscious/Perfectionist: Quality-consciousness is characterised by a consumer's search for the very best quality in products; quality conscious consumers tend to shop systematically making more comparisons and shopping around.

Brand-conscious: Brand-consciousness is characterised by a tendency to buy expensive, well-known brands or designer labels. Those who score high on brand-consciousness tend to believe that the higher prices are an indicator of quality and exhibit a preference for department stores or top-tier retail outlets.

Recreation-conscious/Hedonistic: Recreational shopping is characterised by the consumer's engagement in the purchase process. Those who score high on recreation-consciousness regard shopping itself as a form of enjoyment.

Price-conscious: A consumer who exhibits price-and-value consciousness. Price-conscious shoppers carefully shop around seeking lower prices, sales or discounts and are motivated by obtaining the best value for money.

Novelty/fashion-conscious: characterised by a consumer's tendency to seek out new products or new experiences for the sake of excitement; who gain excitement from seeking new things; they like to keep up-to-date with fashions and trends, variety-seeking is associated with this dimension.

Impulsive: Impulsive consumers are somewhat careless in making purchase decisions, buy on the spur of the moment and are not overly concerned with expenditure levels or obtaining value. Those who score high on impulsive dimensions tend not to be engaged with the object at either a cognitive or emotional level.

Confused (by ): characterised by a consumer's confusion caused by too many product choices, too many stores or an overload of product information; tend to experience information overload.

overchoice

Habitual/brand loyal: characterised by a consumer's tendency to follow a routine purchase pattern on each purchase occasion; consumers have favourite brands or stores and have formed habits in choosing; the purchase decision does not involve much evaluation or shopping around.

Two different strands of research have investigated shopper behaviour. One is primarily concerned with shopper motivations. The other stream of research seeks to segment shoppers according to common, shared characteristics. To some extent, these streams of research are inter-related, but each stream offers different types of insights into shopper behaviour.


Babin et al. carried out some of the earliest investigations into shopper motivations and identified two broad motives: utilitarian and hedonic. Utilitarian motivations are task-related and rational. For the shopper with utilitarian motives, purchasing is a work-related task that is to be accomplished in the most efficient and expedient manner. On the other hand, hedonic motives refer to pleasure. The shopper with hedonic motivations views shopping as a form of escapism where they are free to indulge fantasy and freedom. Hedonic shoppers are more involved in the shopping experience.[61]


Many different shopper profiles can be identified. Retailers develop customised segmentation analyses for each unique outlet. However, it is possible to identify a number of broad shopper profiles. One of the most well-known and widely cited shopper typologies is that developed by Sproles and Kendal in the mid-1980s.[62][63][64] Sproles and Kendall's consumer typology has been shown to be relatively consistent across time and across cultures.[65][66] Their typology is based on the consumer's approach to making purchase decisions.[67]


Some researchers have adapted Sproles and Kendall's methodology for use in specific countries or cultural groups.[68] Consumer decision styles are important for retailers and marketers because they describe behaviours that are relatively stable over time and for this reason, they are useful for market segmentation.

regulatory

local governments

unfavorable , especially those designed to penalize or keep out "big box" retailers (see "Regulatory" above)

taxation structures

absence of developed supply-chain and integrated IT management

inventory

educational infrastructure

direct (for example, through the Internet) and direct delivery to consumers from manufacturers and suppliers, cutting out any retail middle man.[73]

e-tailing

To achieve and maintain a foothold in an existing market, a prospective retail establishment must overcome the following hurdles:

Enhance marketing by Personalizing customer experience

Optimize supply chain management

Adjust prices to maximize profits

When discussing the impact of technology on shopping and retail, e-commerce is often the first thing that comes to mind for retailers. However, technologies such as big data, artificial intelligence, computer vision and the Internet of Things have used data to transform every part of the shopping experience, from browsing to checkout.[74]


It is important for organizations to embrace digital disruption in order to gain a competitive advantage. When an industry experiences digital disruption, it typically signals that consumer needs are shifting. Retailers enhance their analytics process and make better informed decisions thanks to big data, artificial intelligence, computer vision, and the Internet of Things. The use of data by retailers is mostly evident in the following aspects, based on the above-mentioned new technologies:


Many leading brands choose to target tourists who specifically travel to shop or spend money while on vacation. According to the Global Retail Tourism Market Report 2019-2023,[75] the value of the global shopping tourism market was estimated to be around $1.2 trillion in 2018. The report also forecasts that the market will grow at a compound annual growth rate (CAGR) of 6.7% from 2019 to 2023. In 2023 Kogan Page published a critically acclaimed[76] book "Leading Travel and Tourism Retail", which researched in depth the travel retail sector post COVID.

Adburgham, A., Shopping in Style: London from the Restoration to Edwardian Elegance, London, Thames and Hudson, 1979

Alexander, A., "The Study of British Retail History: Progress and Agenda", in The Routledge Companion to Marketing History, D.G. Brian Jones and Mark Tadajewski (eds.), Oxon, Routledge, 2016, pp. 155–72

Feinberg, R.A. and Meoli, J., [Online: Brief History of the Mall"], in Advances in Consumer Research, Volume 18, Rebecca H. Holman and Michael R. Solomon (eds.), Provo, UT: Association for Consumer Research, 1991, pp. 426–27

"A A Brief History of the Mall

Hollander, S. C., "Who and What are Important in Retailing and Marketing History: A Basis for Discussion", in S.C. Hollander and R. Savitt (eds.) First North American Workshop on Historical Research in Marketing, Lansing, MI: Michigan State University, 1983, pp. 35–40.

Jones, F., "Retail Stores in the United States, 1800–1860", Journal of Marketing, October 1936, pp. 135–40

Krafft, Manfred; Mantrala, Murali K., eds. (2006). Retailing in the 21st Century: Current and Future Trends. New York: . ISBN 978-3-540-28399-7.

Springer Verlag

Kowinski, W. S., The Malling of America: An Inside Look at the Great Consumer Paradise, New York, William Morrow, 1985

Furnee, J. H., and Lesger, C. (eds), The Landscape of Consumption: Shopping Streets and Cultures in Western Europe, 1600–1900, Springer, 2014

MacKeith, M., The History and Conservation of Shopping Arcades, Mansell Publishing, 1986

Nystrom, P. H., "Retailing in Retrospect and Prospect", in H.G. Wales (ed.) Changing Perspectives in Marketing, Urbana: University of Illinois Press, 19951, pp. 117–38.

Stobard, J., Sugar and Spice: Grocers and Groceries in Provincial England, 1650–1830, Oxford University Press, 2016

Underhill, Paco, Call of the Mall: The Author of Why We Buy on the Geography of Shopping, Simon & Schuster, 2004

ECRoPEDIA – Free Global Collection of Retail/FMCG Best practices by ECR Community

Investopedia.The Industry Handbook: The Retailing Industry

(U.S.-based trade association)

National Retail Federation