Content
- What is a retailer?
- How a retailer works
- Types of retailers
- What retail formats do retailers use?
- The role of retailers in business and the economy
What is a retailer?
A retailer is an entrepreneur or organization engaged in purchasing goods from manufacturers, distributors, and wholesalers, and subsequently selling them at retail to end consumers for personal use. It is important to note that there are two variations of the term: "retailer," which is more commonly used in spoken language and media, and "retailer," the normative spelling that we will rely on in this article.
How a retailer works
The operation of a retailer is based on a simple markup model. Retailers purchase goods at cost, add labor, equipment, and distribution costs along with the desired profit margin, and then sell at a higher price. They serve as intermediaries between wholesalers and end buyers. The main stages of a retailer's operations include:
- Searching for and purchasing goods. At this stage, the needs of the target audience are analyzed, demand and trends are researched, helping to determine the necessary categories of goods. Retailers then find suppliers with whom they negotiate delivery terms.
- Storage and inventory management. After receiving goods, the retailer organizes their storage and inventory management to minimize losses.
- Selling goods. Retailers choose sales channels, form their assortment, and set prices. They also engage in product promotion and customer service.
- Financial accounting and management. They monitor income and expenses, analyze financial indicators to assess performance.
- Development and optimization. Retailers collect data on sales and competitors to identify new growth opportunities.
Types of retailers
Retailers are classified based on various criteria, including product category, assortment, and sales format. The main types of retailers include:
- By product category:
- Grocery — supermarkets specializing in food sales.
- Non-food — stores offering electronics, stationery, and other goods.
- By assortment:
- Specialized — stores with a narrow assortment (e.g., clothing stores).
- Universal — hypermarkets and supermarkets with a wide assortment.
- By sales format:
- Physical retail — brick-and-mortar stores.
- Online retail — e-commerce stores.
- Omni-channel sales — a combination of online and offline formats.
- By business size:
- Small — small stores with a limited assortment.
- Medium — stores with a larger assortment and a limited number of branches.
- Large — chains with many branches and a wide selection.
- Corporations — international retail chains.
- By geographic presence:
- Local — stores focused on the local market.
- Regional — chains covering several regions.
- National — stores present throughout the country.
- International — chains operating in several countries.
What retail formats do retailers use?
Retailers apply various business models based on assortment and pricing policy. Popular formats include:
- Discounters — stores with low prices.
- Supermarkets — a wide assortment of food and household goods.
- Hypermarkets — multi-functional stores with a wide selection of goods.
- Department stores — stores with a diverse assortment of clothing and accessories.
- boutiques — specialized stores with exclusive products.
The role of retailers in business and the economy
Retailers play an important role in both business and the economy. They:
- Expand the market, helping manufacturers reach more customers.
- Allow manufacturers to focus on production processes, acting as intermediaries.
- Contribute to the economy through taxes, job creation, and supporting production.
Thus, retailers not only provide consumers with goods but also actively participate in shaping demand and developing the market.