What is Retail?

Retail Definition

Retail involves the sale of goods from a single point (malls, markets, department stores, etc.) directly to the consumer in small quantities for his end use. Retailing is nothing but the transaction of goods between the seller and the end-user as a single unit (piece) or in small quantities to satisfy the needs of the individual and for his direct consumption.

The term ‘retail’ is derived from the French word ‘retailer’ which means to ‘cut-off a piece’ or to break the bulk’. Hence the above definition. Retailing is seen as the final step in the distribution of products for consumption of end-users. Therefore, it includes all the activities involved in the marketing of goods and services directly to the consumers for their personal or household consumption.

In simple words, any organization selling to final consumers whether it is a manufacturer, wholesaler or retailer is doing retailing. It does not matter how goods or services are sold – in a store, on the street, or through internet. Retailing thus may be understood as the final step in the distribution of merchandise, for consumption by the end-users. In easy terms, any individual or firm that sells products to the final consumers is performing the function of retailing.

Retail Value Chain

Manufacturers - Manufacturers are the ones who are involved in production of goods with the help of machines, labour and raw materials.

Wholesaler - The wholesaler is the one who purchases the goods from the manufacturers and sells to the retailers in large numbers but at a lower price. A wholesaler never sells goods directly to the end-users.

Retailer - A retailer comes at the end of the supply chain who sells the products in small quantities to the end-users as per their requirement and need. The end-user goes to the retailer to buy the goods (products) in small quantities to satisfy his needs and demands. The complete process is also called as Shopping.

Shopping - The process of purchasing products by the consumer is called as shopping.

Retail 4 P’s

This is a very old principle but still has validity. These are the foundations of a successful retail business.

Product: You need products that your customers want to buy and a product range that will satisfy your customers’ needs and desires. The products must also deliver a profit for you to have a successful business.

Price: Price must be consistent across the marketing mix and meet all requirements for your business. You need to price your product range at the correct level for the customers to be able to buy your products, and for them to gain value from your products. This could mean pricing high or low — this very much depends upon your customer offering.

Place: You must provide somewhere for your customers to purchase your product, be that a physical store, a catalogue or an e-commerce website.

Promotion: Once you have a product — at the right price, in a place where the customer can access it — you need to tell them about this and promote your business and your products; make sure your customers know that you and your products exist and are available for them to enjoy.