Retailing
Meaning and Definitions
Retailing is a set of activities performed in selling the goods and services
directly to the end users. The goods and services sold to the consumers are
meant for their personal use and not for resale or business activity. Retailing is
the last activity conducted in the chain of product distribution down to the
consumers.
In principle, retailing is a business activity which involves the sale of goods
and services to a large number of consumers spread in a large area. The retailer
or a retail store is like any business enterprise whose sales volume comes
primarily from retailing. There are different forms of retailing. Many of the
forms keep emerging according to the convenience of the buyers and retailers.
In large towns, retailing is organised and mostly performed through stores and
automatic vending machines. However, in the rural areas, the retailing of goods
and services are conducted through a traditional pattern by displaying the goods
in mobile vans, carts and on footpaths. For understanding the types of retailers
and their functions, we can broadly classify the retailing network into two
categories – (i) store retailing and (ii) non-store retailing.
Like the growth cycle of business firms, the retailing activity also passes
through the stages of embryonic, growth, maturity and decline. A retail store
observes the period of accelerated growth, reaches the stage of maturity and
starts declining. It has been observed that the retail stores of older fashion took
more than five decades to reach the stage of maturity in terms of the volume of
sales, coverage of consumers and expansion of the chain of retail stores.
However, in the modern era, the store retail types reach their maturity very fast
due to the organised retailing management.
According to Cundiff and Still, “Retailing consists of those activities involved
in selling directly to ultimate consumers.”
Thus, Retailing includes all the activities involved in selling goods or services
directly to final consumers for personal, non-business use. A retailer or retail
store is any business enterprise whose sales volume comes primarily from
retailing.
“A set of business activities carried on to accomplishing the exchange of goods
and services for purposes of personal, family, or household use, whether
performed in a store or by some form of non-selling.” – American Marketing
Association
“Retailing includes all the activities involved in selling goods or services to the
final consumer for personal, non-business use.” – Philip Kotler
From the above definitions, the followings important features of retailing
come into light:
i. Retailing is essentially an economic activity.
ii. It includes sales of goods as well as services.
iii. It involves earning profits through customer satisfaction and retention.
iv. It aims at increasing the number of customers.
v. It is very dynamic by nature.
vi. It is customer oriented.
vii. It involves lesser quantity in terms of the goods sold.
viii. It involves personal touch with the customer.
ix. It is the last link in the distribution channel.
x. It attracts customers by using various methods such as discounts, vouchers,
lucky draw schemes, coupons, etc.
xi. It includes the customers who buy the articles for non-business purposes.
Characteristics of Retailing and Retailers
1. There is direct end-user interaction in retailing.
2. It is the only point in the value chain to provide a platform for promotions.
3. Sales at the retail level are generally in smaller unit sizes.
4. Location is a critical factor in retail business.
5. In most retail businesses services are as important as core products.
6. There are a larger number of retail units compared to other members of the
value chain. This occurs primarily to meet the requirements of geographical
coverage and population density.
Characteristics of Retailing and Retailers:
1. Retailing brings goods and services closer to the consumers
2. A Retailer is the last link in the distribution channel
3. Retailers buy in large quantities but sell in individual units
4. There are large number of retailers as compared to manufacturers and
wholesalers
5. Retailing can be organised (branded chain stores) or un-organised (that is
normal stores that we find in our neighbourhood)
6. Retailing provides a direct contact with the customers
7. Retailing is the function that keeps an eye on the pulse of the customers
8. Retailing can also be done through online stores, and
9. Provides a variety of products at a single place.
Features
1. Sale to the final consumer – The most important characteristic of retailing is
that it involves the sale of the product or service to the final consumer.
2. Various channels – In retailing the goods and services can be sold either in
person, through mail, through telephone, through vending machines or the
internet.
3. Small order size – The order size handled by a retailer is much smaller as
compared to the wholesaler.
4. Large number of orders – The retailer handles a large number of orders.
5. Wide variety of customers – The retailer handles a wide variety of
customers.
6. Keeps a large assortment of goods – The retailer keeps a wide variety of
goods.
Importance to the National Economy (Global Importance)
Sales figures give the impression that giant companies dominate the field of
retailing. However, small retail companies can and do fare very well. Such
success requires careful selection of target market segments that can be better
served by smaller companies, along with the development of an appropriate
marketing mix.
Retailers are a diverse group of businesses. In the distribution of food there are
supermarkets, convenience stores, restaurants, and various specially outlets.
Merchandise retailers may be department stores, apparel stores, consumer
electronics stores, home improvement stores, specially retailers, or various
types of retailing systems for home shopping. Service retailers, such as movie
theatres and barber shops, are as diverse as the, types of services offered for
sale.
Furthermore, some retailers, like Sears, bridge several categories. Sears is both
a merchandise retailer with department stores and a service retailer with
financial services such as Allstate Insurance. Identifying retailers by industry or
type of merchandise is useful. However, several other classifications help us
better understand the nature of retailing.
Some More Importance of Retailing:
Retailing occupies a key role in the world economy today. The importance of
retail as an industry can be understood from the fact that the fortune 500 list of
companies is headed not by a manufacturing firm but a retail major. The 2010
fortune 500 list of America’s largest corporations is headed by the retail firm
Wal Mart.
And in the Global Fortune 500 list of 2009 Wal Mart has the 3rd place. In fact
the fortune 500 list has about 50 retail organisations on its list. As an industry
retailing not only contributes to the GDP, but it also employs a large number of
people. In India retailing is believed to employ nearly 8% of the total workforce
of the country.
Retailing is important to the national economy for the following reasons:
1. A big part of our personal income is spent on retail goods.
2. It is a major source of employment.
3. In the distribution system, retail is the link to the ultimate consumers.
4. The level of retail sales indicates the consumer’s purchasing power, thus it
becomes the basis for determining the economic status of the people of a
country.
5. It adds value to the product because it creates time, place and possession
utility.
6. It accounts for a major portion of marketing costs.
7. Taxes from retail store add income to our national treasury.
