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