Product Code Database
Retail is the sale of goods and services to , in contrast to wholesaling, which is the sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturing, directly from 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.
Retail markets and shops have a long history, dating back to antiquity. Some of the earliest retailers were itinerant . Over the centuries, retail shops were transformed from little more than "rude booths" to the sophisticated shopping malls of the modern era. Retail operations center on obtaining goods in the needed quantities and placing them where customers will buy them, which makes purchasing and supply management core parts of retail strategy. Retail strategy is often supported by periodic environmental scanning and structured analysis of markets, customers, internal capabilities, and competition. Day-to-day decisions are often described using the retail marketing mix, commonly summarized as six “Ps”: product, place, promotion, price, personnel, and presentation (physical evidence). Place decisions include location, operating hours, and access, and many retailers have expanded into multichannel models that combine physical and online retail. Pricing strategy and tactics can include discounts, everyday low pricing, high-low pricing, loss leaders, bundling, and psychological pricing, alongside planning for customer payment modes that carry handling costs. Retail labor needs often vary by time and season, which has supported flexible scheduling; one cited estimate is that in 2012 about 70% of United States retail workers were part-time. Over time, many retailers have emphasized longer-term customer relationships rather than one-time transactions, while also investing in store design (layout, lighting, music, signage, and “decompression” areas) to shape the shopping experience. 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 shopping. Digital technologies are also affecting the way that 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.
The retail sector is economically significant and employs large workforces. 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. Retailers also expanded omnichannel capabilities such as buy online and pick up in store, and some firms tested automation such as cashierless store formats.
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 directly 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. A common way to distinguish wholesale from retail is by the main customer:
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."
In retailing, the strategic plan is designed to set out the Vision statement 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 the following elements:Lambda, A.J., The Art Of Retailing, McGraw-Hill, (2003), 2008, pp. 315–26
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. Retail research studies suggest that there is a strong relationship between a store's positioning and the socio-economic status of customers.Fill, C., Marketing Communications: Framework, Theories and Application, London, Prentice Hall, 1995, p. 70 In addition, the retail strategy, including service quality, has a significant and positive association with customer loyalty.Yu-Jia, H. (2012). "The Moderating Effect of Brand Equity and the Mediating Effect of Marketing Mix Strategy On the Relationship Between Service Quality and Customer Loyalty". International Journal of Organizational Innovation, 155–62. 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.Morschett, D., Swoboda, B. and Schramm, H., "Competitive Strategies in Retailing: An Investigation of the Applicability of Porter's Framework for Food Retailers Journal of Retailing and Consumer Services, Vol. 13, 2006, pp. 275–87
Customer service is the "sum of acts and elements that allow consumers to receive what they need or desire from the retail establishment." Retailers must decide whether to provide a full service outlet or minimal service outlet, such as no-service in the case of vending machines; self-service with only basic sales assistance or a full service operation as in many boutiques and speciality stores. In addition, the retailer needs to make decisions about sales support such as customer delivery and after sales customer care.
Site selection are primarily concerned with consumer access and may involve location, space utilisation and operating hours. Retailers may consider a range of both qualitative and quantitative factors to evaluate to potential sites under consideration. Macro factors include market characteristics (demographic, economic and socio-cultural), demand, competition and infrastructure (e.g. the availability of power, roads, public transport systems). Micro factors include the size of the site (e.g. availability of parking), access for delivery vehicles. A major retail trend has been the shift to multi-channel retailing. To counter the disruption caused by online retail, many bricks and mortar retailers have entered the online retail space, by setting up online catalogue sales and e-commerce websites. However, many retailers have noticed that consumers behave differently when shopping online. For instance, in terms of choice of online platform, shoppers tend to choose the online site of their preferred retailer initially, but as they gain more experience in online shopping, they become less loyal and more likely to switch to other retail sites.Verhoef, P., Kannan, P.K. and Inman, J., "From Multi-channel Retailing to Omni-channel Retailing: Introduction to the Special Issue on Multi-channel Retailing", Journal of Retailing, vol. 91, pp. 174–81. Online shopping are usually available 24 hours a day, and many consumers across the globe have Internet access both at work and at home.
The broad pricing strategy is normally established in the company's overall strategic plan. In the case of chain stores, the pricing strategy would be set by head office. Broadly, there are six approaches to pricing strategy mentioned in the marketing literature: operations-oriented,Dibb, S., Simkin, L., Pride, W.C. and Ferrell, O.C., Marketing: Concepts and Strategies, Cengage, 2013, Chapter 12 revenue-oriented, customer-oriented, value-based,Nagle, T., Hogan, J. and Zale, J., The Strategy and Tactics of Pricing: A Guide to Growing More Profitably, Oxon, Routledge, 2016, p. 1 and 6Brennan, R., Canning, L. and McDowell, R., Business-to-Business Marketing, 2nd ed., London, Sage, 2011, p. 331 relationship-oriented,Neumeier, M., The Brand Flip: Why customers now run companies and how to profit from it (Voices That Matter), 2008, p. 55 and socially-oriented. When decision-makers have determined the broad approach to pricing (i.e., the pricing strategy), they turn their attention to pricing tactics. Tactical pricing decisions are shorter term prices, designed to accomplish specific short-term goals. Pricing tactics that are commonly used in retail include discount pricing,Rao, V.R. and Kartono, B., "Pricing Strategies and Objectives: A Cross-cultural Survey", in Handbook of Pricing Research in Marketing, Rao, V.R. (ed), Northampton, MA, Edward Elgar, 2009, p. 15 everyday low prices, high-low pricing,Kaufmann, P., "Deception in retailer high-low pricing: A 'rule of reason' approach", Journal of Retailing, Volume 70, Issue 2, 1994, pp. 115–1383. , product bundling,Guiltnan, J.P., "The Price Bundling of Services", Journal of Marketing, April 1987 promotional pricing, and psychological pricing.Poundstone, W., Priceless: The Myth of Fair Value (and How to Take Advantage of It), New York: Hill and Wang, 2011, pp. 184–200 Two strategies to entice the buyer, money back guarantee and buy one get one free, were devised by 18th-century retail entrepreneur Josiah Wedgwood. Retailers must also plan for customer preferred payment modes – e.g. cash, credit, lay-by, Electronic Funds Transfer at Point-of-Sale (EFTPOS). All payment options require some type of handling and attract costs.Barr, A., "PayPal Deepens Retail Drive in Discover Payments Deal", Technology News. 22 August 2012 Contrary to common misconception, price is not the most important factor for consumers, when deciding to buy a product. Retailers can employ different techniques to enhance sales volume and to improve the customer experience, such as Add-on, Upsell or Cross-sell; Selling on value;Hee, J.K., "Stand-alone Sale of a Free Gift: Is it effective to accentuate promotion value?" Social Behavior & Personality, Vol. 43, no. 10, 2015, pp. 1593–1606 and knowing when to close the sale.
Transactional marketing aims to find target consumers, then negotiate, trade, and finally end relationships to complete the transaction. In this one-time transaction process, both parties aim to maximize their own interests. As a result, transactional marketing raises follow-up problems such as poor after-sales service quality and a lack of feedback channels for both parties. In addition, because retail enterprises needed to redevelop client relationships for each transaction, marketing costs were high and customer retention was low. All these downsides to transactional marketing gradually pushed the retail industry towards establishing long-term cooperative relationships with customers. Through this lens, enterprises began to focus on the process from transaction to relationship. While expanding the sales market and attracting new customers is very important for the retail industry, it is also important to establish and maintain long term good relationships with previous customers, hence the name of the underlying concept, "relational marketing". Under this concept, retail enterprises value and attempt to improve relationships with customers, as customer relationships are conducive to maintaining stability in the current competitive retail market, and are also the future of retail enterprises.
Presentation refers to the physical evidence that signals the retail image. Physical evidence may include a diverse range of elements – the store itself including premises, offices, exterior facade and interior layout, websites, delivery vans, warehouses, staff uniforms. The environment in which the retail service encounter occurs is sometimes known as the retail servicescape."The Impact of Retail Servicescape on Buying Behaviour", BVIMSR's Journal of Management Research, Vol 6, No. 2, 2014, pp. 10–17 The store environment consists of many elements such as aromas, the physical environment (furnishings, layout, and functionality), ambient conditions (lighting, air temperature, and music) as well as signs, symbols, and artifacts (e.g. sales promotions, shelf space, sample stations, visual communications). Retail designers pay close attention to the front of the store, which is known as the decompression zone. In order to maximize the number of selling opportunities, retailers generally want customers to spend more time in a retail store. However, this must be balanced against customer expectations surrounding convenience, access and realistic waiting times.Wakefield, L.K. and Blodgett, G J., "The Effect of the Servicescape on Customers' Behavioral Intentions in Leisure Service Settings", The Journal of Services Marketing, Vol. 10, No. 6, pp. 45–61. The way that brands are displayed is also part of the overall retail design. Where a product is placed on the shelves has implications for purchase likelihood as a result of visibility and access.Hall, C.M. and Mitchell, R., Wine Marketing: A Practical Guide, pp. 182–83 Ambient conditions, such as lighting, temperature and music, are also part of the overall retail environment.Bailey, P. (April 2015). Marketing to the senses: A multisensory strategy to align the brand touchpoints. Admap, 2–7. It is common for a retail store to play music that relates to their target market.
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.
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.Durvasula, S., Lysonski, S. and Andrews, J.C. (1993), "Cross-cultural generalizability of a scale for profiling consumers' decision-making styles", The Journal of Consumer Affairs, Vol. 27 No. 1, pp. 55–65Sproles, G.B. (1985), "From perfectionism to faddism: measuring consumers' decision-making styles", in Schnittgrund, K.P. (Ed.), American Council on Consumer Interests (ACCI), Conference Proceedings, Columbia, MO, pp. 79–85.Sproles, G.B. (1983). Conceptualisation and measurement of optimal consumer decision making. Journal of Consumer Affairs, Vol. 17 No. 2, pp. 421–38. Sproles and Kendall's consumer typology has been shown to be relatively consistent across time and across cultures.Jain, R. and Sharma, A., "A Review on Sproles & Kendall's Consumer Style Inventory (CSI) for Analyzing Decision Making Styles of Consumers", Indian Journal of Marketing, Vol. 43, no. 3, 2013 Their typology is based on the consumer's approach to making purchase decisions.Sproles, G.B., & Kendall, E.L., "A methodology for profiling consumers' decision-marking styles", Journal of Consumer Affairs, Vol., 20 No. 2, 1986, pp. 267–79
Some researchers have adapted Sproles and Kendall's methodology for use in specific countries or cultural groups.Bauer, H.H., Sauer, N.E., and Becker, C., "Investigating the relationship between product involvement and consumer decision-making styles", Journal of Consumer Behaviour. Vol. 5, 2006 342–54. 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.
Retail stores may be classified by the type of product carried. Softline retailers sell goods that are consumed after a single-use, or have a limited life (typically under three years) in they are normally consumed. Soft goods include clothing, other fabrics, footwear, toiletries, cosmetics, medicines and stationery. , including supermarkets and hypermarkets, along with convenience stores carry a mix of food products and consumable household items such as detergents, cleansers, personal hygiene products. Retailers selling consumer durables are sometimes known as hardline retailers – automobiles, Home appliance, electronics, furniture, sporting goods, lumber, etc., and parts for them. Specialist retailers operate in many industries such as the arts e.g. green grocers, contemporary art galleries, bookstores, handicrafts, Music store, gift shops.
A special retail format is home shopping. There are three main types of it: mail or telephone ordering from mail order; telephone ordering in response to advertisements in print and electronic media (such as periodicals, TV shopping channels and radio); and online shopping.
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 actively target tourists who travel specifically to shop or allocate a significant portion of their spending to retail while on vacation. According to the Global Retail Tourism Market Report 2019–2023, the global shopping tourism market was valued at approximately $1.2 trillion in 2018. The report projected steady growth, with a compound annual growth rate (CAGR) of 6.7% between 2019 and 2023. Building on this trend, Kogan Page published the book Leading Travel and Tourism Retail in 2023, offering an in-depth analysis of the travel retail sector and its evolution in the post-COVID era.
Research from July 2008 suggests that China exhibited a rich history of early retail systems. From as early as 200 BCE, Chinese packaging and branding were used to signal family, place names and product quality, and the use of government imposed product branding was used between 600 and 900 CE.Eckhardt, G.M. and Bengtsson. A. "A Brief History of Branding in China", Journal of Macromarketing, Vol, 30, no. 3, 2010, pp. 210–21 Eckhart and Bengtsson have argued that during the Song dynasty (960–1127), Chinese society developed a consumerist culture, where a high level of consumption was attainable for a wide variety of ordinary consumers rather than just the elite.Eckhardt, G.M. and Bengtsson. A. "A Brief History of Branding in China", Journal of Macromarketing, Vol, 30, no. 3, 2010, p. 212
In Medieval England and Europe, relatively few permanent shops were to be found; instead, customers walked into the tradesman's workshops where they discussed purchasing options directly with tradesmen.Thrupp, S.L., The Merchant Class of Medieval London, 1300–1500, pp. 7–8 In the more populous cities, a small number of shops were beginning to emerge by the 13th century.Pevsner, N. and Hubbard, E., The Buildings of England: Cheshire Penguin, 1978, p. 170 Outside the major cities, most consumable purchases were made through markets or fairs. Market-places appear to have emerged independently outside Europe. The Grand Bazaar in Istanbul is often cited as the world's oldest continuously operating market; its construction began in 1455. The Spanish conquistadors wrote glowingly of markets in the Americas. In the 15th century, the Mexica (Aztec) market of Tlatelolco was the largest in all the Americas.
By the 17th century, permanent shops with more regular trading hours were beginning to supplant markets and fairs as the main retail outlet. Provincial shopkeepers were active in almost every English market town.Cox, N.C. and Dannehl, K., Perceptions of Retailing in Early Modern England, Aldershot, Hampshire, Ashgate, 2007, p,. 129 As the number of shops grew, they underwent a transformation. The trappings of a modern shop, which had been entirely absent from the 16th- and early 17th-century store, gradually made way for store interiors and shopfronts that are more familiar to modern shoppers. Prior to the 18th century, the typical retail store had no counter, display cases, chairs, mirrors, changing rooms, etc. However, the opportunity for the customer to browse merchandise, touch and feel products began to be available, with retail innovations from the late 17th and early 18th centuries.Cox, N.C. and Dannehl, K., Perceptions of Retailing in Early Modern England, Aldershot, Hampshire, Ashgate, 2007, pp. 153–54
By the late 18th century, grand shopping arcades began to emerge across Europe and in the Antipodes. A shopping arcade refers to a multiple-vendor space, operating under a covered roof. Typically, the roof was constructed of glass to allow for natural light and to reduce the need for candles or electric lighting. Some of the earliest examples of shopping arcade appeared in Paris, due to its lack of pavement for pedestrians.Conlin, J., Tales of Two Cities: Paris, London and the Birth of the Modern City, Atlantic Books, 2013, Chapter 2 While the arcades were the province of the bourgeoisie, a new type of retail venture emerged to serve the needs of the working poor. John Stuart Mill wrote about the rise of the co-operative retail store, which he witnessed first-hand in the mid-19th century.Mill, J.S., Principles of a Political Economy with some of their Applications to Social Philosophy, 7th ed., London, Longman, 1909, Section IV.7.53 of France, appeared from the mid-19th century.]]
The modern era of retailing is defined as the period from the industrial revolution to the 21st century. Reshaping Retail: Why Technology is Transforming the Industry and How to Win in the New Consumer Dr In major cities, the department store emerged in the mid- to late 19th century, and permanently reshaped shopping habits, and redefined concepts of service and luxury. Many of the early department stores were more than just a retail emporium; rather they were venues where shoppers could spend their leisure time and be entertained.Howard Moss, M., Shopping as an Entertainment Experience, Plymouth, Lexington Books, pp. 35–39 Retail, using mail order, came of age during the mid-19th century. Although catalogue sales had been used since the 15th century, this method of retailing was confined to a few industries such as the sale of books and seeds. However, improvements in transport and postal services led several entrepreneurs on either side of the Atlantic to experiment with catalogue sales.Goldstein. J., 101 Amazing Facts about Wales, Andrews, UK, 2013
In the post-war period, an American architect, Victor Gruen developed a concept for a shopping mall; a planned, self-contained shopping complex complete with an indoor plaza, statues, planting schemes, piped music, and car-parking. Gruen's vision was to create a shopping atmosphere where people felt so comfortable, they would spend more time in the environment, thereby enhancing opportunities for purchasing. The first of these malls opened at Northland Mall near Detroit in 1954. Throughout the twentieth century, a trend towards larger store footprints became discernible. The average size of a U.S. supermarket grew from square feet in 1991 to square feet in 2000.Byrne-Paquet, L., The Urge to Splurge: A Social History of Shopping, ECW Press, Toronto, Canada, p. 83 By the end of the twentieth century, stores were using labels such as "mega-stores" and "warehouse" stores to reflect their growing size. The upward trend of increasing retail space was not consistent across nations and led in the early 21st century to a 2-fold difference in square footage per capita between the United States and Europe.
As the 21st century takes shape, some indications suggest that large retail stores have come under increasing pressure from E-commerce and that reductions in store size are evident. Under such competition and other issues such as business debt, there has been a noted business disruption called the retail apocalypse in recent years which several retail businesses, especially in North America, are sharply reducing their number of stores, or going out of business entirely.
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