What is Retail?

Retail is the process where goods are exchanged for currency, in small quantities, to the intended consumer. Traditionally done in brick and mortar locations, there has been an increase trend in recent years to incorporate online sales as well. Retail occurs as the last step in the sales process. Initially a product is produced, and sold in bulk quantities to a wholesaler. The wholesaler then turns around and sells the product in large quantity to a few retailers (those who participate in retail), who in turn sell the product in small quantities to a large number of consumers – the end point in the retail process.

How did modern retail evolve?

Retail originated as a form of trade. In early civilizations people would come together in unofficial market places to exchange and sell goods. These market places eventually became more formal, with set times and vendors paying a fee to rent out a location. Producers of textiles and metal working would place their workshops near the market, so they would be able to produce goods to sell in the market place while the market was closed, but also make it easy for potential customers to find them for orders. Eventually customers started going to larger farms directly. Eventually these small market places and farm direct sales gave way to store fronts, which later begat department stores and mail order sales, and finally gave way to mall-based retail and e-commerce.

What types of retail are there?

While e-commerce and brick and mortar stores are commonly recognized forms of retail, there are other forms out there as well. They include types of store retailing as well as non-store retailing.

Store retailing may consist of places like: Drug stores, Convenience stores, Boutiques, Catalog showrooms, Discount stores, and Department stores.

Non-store retail may include types of retail that look like:

  • Direct Marketing: Targeted sales by a retailer that includes catalogs and online sales.
  • Direct Sales/Party Plans: A form of retail that involves selling directly to the consumer through door to door sales, and through friends and acquaintances. Sometimes through parties where the hostess invites her friends and family members.
  • Automatic vending: no longer limited to drinks and snacks, retailers have modified this platform to incorporate skin care products, electronics, and more.

Why do we need retail?

Retail is important because it keeps the cost low for consumers. Manufacturers only have to focus on production. They are able to sell to their wholesalers in bulk at a low cost because they don’t have to worry about expenses like advertising, hiring sales people, and getting the product in front of customers. They only have to worry about production. Because they spend their time on one thing, they are able to produce products quickly. In contrast, goods purchased directly from the craftsman are typically more expensive. The craftsman has to manage logistics, production, advertising, customer service, and sales on their own. This limits the amount of time they are able to spend on production and increases the amount that they need to charge their customers in order to make a living wage.

Learn more from other feature courses

Learn more about eCommerce