Retail Industry / What is Retail?:
Retail is the sale of goods and services from individuals or businesses to the end-user. Retailers are a part of an integrated system called the supply chain. A retailer purchases goods or products in large quantities from manufacturers directly or through a wholesale, and then sells smaller quantities to the consumer for a profit. Retailing can be done in either fixed locations like stores or markets, door-to-door or by delivery. In the 2000s, an increasing amount of retailing is done online using electronic payment and delivery via a courier or postal mail. Retailing includes subordinated services, such as delivery. The term "retailer" is also applied where a service provider services the needs of a large number of individuals, such as for the public. Shops may be on residential streets, streets with few or no houses, or in a shopping mall. Shopping streets may be for pedestrians only. Sometimes a shopping street has a partial or full roof to protect customers from precipitation. Online retailing, a type of electronic commerce used for business-to-consumer (B2C) transactions and mail order, are forms of non-shop retailing.
Shopping generally refers to the act of buying products. Sometimes this is done to obtain necessities such as food and clothing; sometimes it is done as a recreational activity. Recreational shopping often involves window shopping (just looking, not buying) and browsing and does not always result in a purchase.
A marketplace is a location where goods and services are exchanged. The traditional market square is a city square where traders set up stalls and buyers browse the stores. This kind of market is very old, and countless such markets are still in operation around the whole world.
In some parts of the world, the retail business is still dominated by small family-run stores, but this market is increasingly being taken over by large retail chains. Most of these stores are called high street stores. Gradually high street stores are being re-grouped at single locations called malls. These are more defined and planned spaces for retail stores and brands.
Types by products
Retail is usually classified by type of products as follows:
Food products — typically require cold storage facilities.
Hard goods or durable goods ("hardline retailers") — automobiles, appliances, electronics, furniture, sporting goods, lumber, etc., and parts for them. Goods that do not quickly wear out and provide utility over time.
Soft goods or consumables — clothing, other fabrics, footwear, cosmetics, medicines and stationery. Goods that are consumed after one use or have a limited period (typically under three years) in which you may use them.
Arts — Contemporary art galleries, Bookstores, Handicrafts, Musical instruments, Gift shops, and supplies for them.
Types by marketing strategy:
There are the following types of retailers by marketing strategy:
Department store:
Department stores are very large stores offering a huge assortment of "soft" and "hard goods; often bear a resemblance to a collection of specialty stores. A retailer of such store carries variety of categories and has broad assortment at average price. They offer considerable customer service.
Discount store:
Discount stores tend to offer a wide array of products and services, but they compete mainly on price offers extensive assortment of merchandise at affordable and cut-rate prices. Normally, retailers sell less fashion-oriented brands.
Warehouse store:
Warehouses that offer low-cost, often high-quantity goods piled on pallets or steel shelves; warehouse clubs charge a membership fee.
Variety store:
Variety stores offer extremely low-cost goods, with limited selection.
Demographic:
Retailers that aim at one particular segment (e.g., high-end retailers focusing on wealthy individuals).
Mom-And-Pop:
A small retail outlet owned and operated by an individual or family. Focuses on a relatively limited and selective set of products.
Specialty store:
A specialty (BE: speciality) store has a narrow marketing focus - either specializing on specific merchandise, such as toys, shoes, or clothing, or on a target audience, such as children, tourists, or oversize women. Size of store varies - some specialty stores might be retail giants such as Toys "R" Us, Foot Locker, and The Body Shop, while others might be small, individual shops such as Nutters of Savile Row. Such stores, regardless of size, tend to have a greater depth of the specialist stock than general stores, and generally offer specialist product knowledge valued by the consumer. Pricing is usually not the priority when consumers are deciding upon a specialty store; factors such as branding image, selection choice, and purchasing assistance are seen as important. They differ from department stores and supermarkets which carry a wide range of merchandise.
Boutique
Boutique or concept stores are similar to specialty stores. Concept stores are very small in size, and only ever stock one brand. They are run by the brand that controls them. An example of brand that distributes largely through their own widely distributed concept stores is L'OCCITANE en Provence. The limited size and offering of L'OCCITANE's stores are too small to be considered a specialty store proper.
General store:
A general store is a rural store that supplies the main needs for the local community;
Convenience store:
A convenience store provides limited amount of merchandise at more than average prices with a speedy checkout. This store is ideal for emergency and immediate purchases as it often works with extended hours, stocking everyday;
Hypermarkets:
Provides variety and huge volumes of exclusive merchandise at low margins. The operating cost is comparatively less than other retail formats.
Supermarket:
A supermarket is a self-service store consisting mainly of grocery and limited products on non food items. They may adopt a Hi-Lo or an EDLP strategy for pricing. The supermarkets can be anywhere between 20,000 and 40,000 square feet (3,700 m2). Example: SPAR supermarket.
Mall:
A shopping mall has a range of retail shops at a single outlet. They can include products, food and entertainment under one roof. Malls provide 7% of retail revenue in India, 10% in Vietnam, 25% in China, 28% in Indonesia, 39% in the Philippines, and 45% in Thailand.
"Category killer" or specialist:
By supplying wide assortment in a single category for lower prices a category killer retailer can "kill" that category for other retailers. For few categories, such as electronics, the products are displayed at the centre of the store and sales person will be available to address customer queries and give suggestions when required. Other retail format stores are forced to reduce the prices if a category specialist retail store is present in the vicinity.
E-tailer:
The customer can shop and order through the internet and the merchandise is dropped at the customer's doorstep or an e-tailer. Here the retailers use drop shipping technique. They accept the payment for the product but the customer receives the product directly from the manufacturer or a wholesaler. This format is ideal for customers who do not want to travel to retail stores and are interested in home shopping. However, it is important for the customer to be wary about defective products and non secure credit card transaction. Examples include Amazon.com, Pennyful, and eBay.
Vending machine:
A vending machine is an automated piece of equipment wherein customers can drop the money in the machine and acquire the products. Some stores take a no frills approach, while others are "mid-range" or "high end", depending on what income level they target.
Staffing:
Because patronage at a retail outlet varies, flexibility in scheduling is desirable. Employee scheduling software is sold, which, using known patterns of customer patronage, more or less reliably predicts the need for staffing for various functions at times of the year, day of the month or week, and time of
day. Usually needs vary widely. Conforming staff utilization to staffing needs requires a flexible workforce which is available when needed but does not have to be paid when they are not, part-time workers; as of 2012 70% of retail workers in the United States were part-time. This may result in financial problems for the workers, who while they are required to be available at all times if their work hours are to be maximized, may not have sufficient income to meet their family and other obligations.
Challenges:
To achieve and maintain a foothold in an existing market, a prospective retail establishment must overcome the following hurdles:
Regulatory barriers including:
Restrictions on real estate purchases, especially as imposed by local governments and against "big-box" chain retailers;
Restrictions on foreign investment in retailers, in terms of both absolute amount of financing provided and percentage share of voting stock (e.g., common stock) purchased;
Unfavorable taxation structures, especially those designed to penalize or keep out "big box" retailers (see "Regulatory" above);
Absence of developed supply chain and integrated IT management;
High competitiveness among existing market participants and resulting low profit margins, caused in part by
Constant advances in product design resulting in constant threat of product obsolescence and price declines for existing inventory; and
Lack of properly educated and/or trained work force, often including management, caused in part by
Lack of educational infrastructure enabling prospective market entrants to respond to the above challenges.
Sales techniques:
Behind the scenes at retail, there is another factor at work. Corporations and independent store owners alike are always trying to get the edge on their competitors. One way to do this is to hire a merchandising solutions company to design custom store displays that will attract more customers in a certain demographic. The nation's largest retailers spend millions every year on in-store marketing programs that correspond to seasonal and promotional changes. As products change, so will a retail landscape. Retailers can also use facing techniques to create the look of a perfectly stocked store, even when it is not.
A destination store is one that customers will initiate a trip specifically to visit, sometimes over a large area. These stores are often used to "anchor" a shopping mall or plaza, generating foot traffic, which is capitalized upon by smaller retailers.
Customer service
Customer service is the "sum of acts and elements that allow consumers to receive what they need or desire from your retail establishment." It is important for a sales associate to greet the customer and make himself available to help the customer find whatever he needs. When a customer enters the store, it is important that the sales associate does everything in his power to make the customer feel welcomed, important, and make sure he leaves the store satisfied. Giving the customer full, undivided attention and helping him find what he is looking for will contribute to the customer's satisfaction. For retail store owners, it is extremely important to train yourself and your staff to provide excellent customer service skills. By providing excellent customer service, you build a good relationship with the customer and eventually will attract more new customers and turn them into regular customers. Looking at long term perspectives, excellent customer skills give your retail business a good ongoing reputation and competitive advantage.
Shopping generally refers to the act of buying products. Sometimes this is done to obtain necessities such as food and clothing; sometimes it is done as a recreational activity. Recreational shopping often involves window shopping (just looking, not buying) and browsing and does not always result in a purchase.
A marketplace is a location where goods and services are exchanged. The traditional market square is a city square where traders set up stalls and buyers browse the stores. This kind of market is very old, and countless such markets are still in operation around the whole world.
In some parts of the world, the retail business is still dominated by small family-run stores, but this market is increasingly being taken over by large retail chains. Most of these stores are called high street stores. Gradually high street stores are being re-grouped at single locations called malls. These are more defined and planned spaces for retail stores and brands.
Types by products
Retail is usually classified by type of products as follows:
Food products — typically require cold storage facilities.
Hard goods or durable goods ("hardline retailers") — automobiles, appliances, electronics, furniture, sporting goods, lumber, etc., and parts for them. Goods that do not quickly wear out and provide utility over time.
Soft goods or consumables — clothing, other fabrics, footwear, cosmetics, medicines and stationery. Goods that are consumed after one use or have a limited period (typically under three years) in which you may use them.
Arts — Contemporary art galleries, Bookstores, Handicrafts, Musical instruments, Gift shops, and supplies for them.
Types by marketing strategy:
There are the following types of retailers by marketing strategy:
Department store:
Department stores are very large stores offering a huge assortment of "soft" and "hard goods; often bear a resemblance to a collection of specialty stores. A retailer of such store carries variety of categories and has broad assortment at average price. They offer considerable customer service.
Discount store:
Discount stores tend to offer a wide array of products and services, but they compete mainly on price offers extensive assortment of merchandise at affordable and cut-rate prices. Normally, retailers sell less fashion-oriented brands.
Warehouse store:
Warehouses that offer low-cost, often high-quantity goods piled on pallets or steel shelves; warehouse clubs charge a membership fee.
Variety store:
Variety stores offer extremely low-cost goods, with limited selection.
Demographic:
Retailers that aim at one particular segment (e.g., high-end retailers focusing on wealthy individuals).
Mom-And-Pop:
A small retail outlet owned and operated by an individual or family. Focuses on a relatively limited and selective set of products.
Specialty store:
A specialty (BE: speciality) store has a narrow marketing focus - either specializing on specific merchandise, such as toys, shoes, or clothing, or on a target audience, such as children, tourists, or oversize women. Size of store varies - some specialty stores might be retail giants such as Toys "R" Us, Foot Locker, and The Body Shop, while others might be small, individual shops such as Nutters of Savile Row. Such stores, regardless of size, tend to have a greater depth of the specialist stock than general stores, and generally offer specialist product knowledge valued by the consumer. Pricing is usually not the priority when consumers are deciding upon a specialty store; factors such as branding image, selection choice, and purchasing assistance are seen as important. They differ from department stores and supermarkets which carry a wide range of merchandise.
Boutique
Boutique or concept stores are similar to specialty stores. Concept stores are very small in size, and only ever stock one brand. They are run by the brand that controls them. An example of brand that distributes largely through their own widely distributed concept stores is L'OCCITANE en Provence. The limited size and offering of L'OCCITANE's stores are too small to be considered a specialty store proper.
General store:
A general store is a rural store that supplies the main needs for the local community;
Convenience store:
A convenience store provides limited amount of merchandise at more than average prices with a speedy checkout. This store is ideal for emergency and immediate purchases as it often works with extended hours, stocking everyday;
Hypermarkets:
Provides variety and huge volumes of exclusive merchandise at low margins. The operating cost is comparatively less than other retail formats.
Supermarket:
A supermarket is a self-service store consisting mainly of grocery and limited products on non food items. They may adopt a Hi-Lo or an EDLP strategy for pricing. The supermarkets can be anywhere between 20,000 and 40,000 square feet (3,700 m2). Example: SPAR supermarket.
Mall:
A shopping mall has a range of retail shops at a single outlet. They can include products, food and entertainment under one roof. Malls provide 7% of retail revenue in India, 10% in Vietnam, 25% in China, 28% in Indonesia, 39% in the Philippines, and 45% in Thailand.
"Category killer" or specialist:
By supplying wide assortment in a single category for lower prices a category killer retailer can "kill" that category for other retailers. For few categories, such as electronics, the products are displayed at the centre of the store and sales person will be available to address customer queries and give suggestions when required. Other retail format stores are forced to reduce the prices if a category specialist retail store is present in the vicinity.
E-tailer:
The customer can shop and order through the internet and the merchandise is dropped at the customer's doorstep or an e-tailer. Here the retailers use drop shipping technique. They accept the payment for the product but the customer receives the product directly from the manufacturer or a wholesaler. This format is ideal for customers who do not want to travel to retail stores and are interested in home shopping. However, it is important for the customer to be wary about defective products and non secure credit card transaction. Examples include Amazon.com, Pennyful, and eBay.
Vending machine:
A vending machine is an automated piece of equipment wherein customers can drop the money in the machine and acquire the products. Some stores take a no frills approach, while others are "mid-range" or "high end", depending on what income level they target.
Staffing:
Because patronage at a retail outlet varies, flexibility in scheduling is desirable. Employee scheduling software is sold, which, using known patterns of customer patronage, more or less reliably predicts the need for staffing for various functions at times of the year, day of the month or week, and time of
day. Usually needs vary widely. Conforming staff utilization to staffing needs requires a flexible workforce which is available when needed but does not have to be paid when they are not, part-time workers; as of 2012 70% of retail workers in the United States were part-time. This may result in financial problems for the workers, who while they are required to be available at all times if their work hours are to be maximized, may not have sufficient income to meet their family and other obligations.
Challenges:
To achieve and maintain a foothold in an existing market, a prospective retail establishment must overcome the following hurdles:
Regulatory barriers including:
Restrictions on real estate purchases, especially as imposed by local governments and against "big-box" chain retailers;
Restrictions on foreign investment in retailers, in terms of both absolute amount of financing provided and percentage share of voting stock (e.g., common stock) purchased;
Unfavorable taxation structures, especially those designed to penalize or keep out "big box" retailers (see "Regulatory" above);
Absence of developed supply chain and integrated IT management;
High competitiveness among existing market participants and resulting low profit margins, caused in part by
Constant advances in product design resulting in constant threat of product obsolescence and price declines for existing inventory; and
Lack of properly educated and/or trained work force, often including management, caused in part by
Lack of educational infrastructure enabling prospective market entrants to respond to the above challenges.
Sales techniques:
Behind the scenes at retail, there is another factor at work. Corporations and independent store owners alike are always trying to get the edge on their competitors. One way to do this is to hire a merchandising solutions company to design custom store displays that will attract more customers in a certain demographic. The nation's largest retailers spend millions every year on in-store marketing programs that correspond to seasonal and promotional changes. As products change, so will a retail landscape. Retailers can also use facing techniques to create the look of a perfectly stocked store, even when it is not.
A destination store is one that customers will initiate a trip specifically to visit, sometimes over a large area. These stores are often used to "anchor" a shopping mall or plaza, generating foot traffic, which is capitalized upon by smaller retailers.
Customer service
Customer service is the "sum of acts and elements that allow consumers to receive what they need or desire from your retail establishment." It is important for a sales associate to greet the customer and make himself available to help the customer find whatever he needs. When a customer enters the store, it is important that the sales associate does everything in his power to make the customer feel welcomed, important, and make sure he leaves the store satisfied. Giving the customer full, undivided attention and helping him find what he is looking for will contribute to the customer's satisfaction. For retail store owners, it is extremely important to train yourself and your staff to provide excellent customer service skills. By providing excellent customer service, you build a good relationship with the customer and eventually will attract more new customers and turn them into regular customers. Looking at long term perspectives, excellent customer skills give your retail business a good ongoing reputation and competitive advantage.
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