What Is Retail: A Comprehensive Guide to Retail Sales
You’ve probably heard of the terms retail store, supply chain, and retail marketing. What is retail and what do these phrases mean?
What is Retail, Retailer, and Retailing?
What is retail? Retail is the sale of goods or services from a business to an individual consumer for their own use.
A retail transaction involves a small number of goods, while wholesale deals with the purchase of goods on a large scale.
Retail transactions are those that occur when a customer purchases goods from a store. This is in contrast to online transactions, which involve the sale of goods between two businesses or between a business and a customer.
A retailer is a person or business that you purchase goods from. Retailers typically don’t manufacture their own items. Instead, they purchase goods from a manufacturer or wholesaler and sell these items to consumers in small quantities.
The retailing process involves a retailer obtaining goods or services and selling them to customers for use. This process is explained through the supply chain.
What is a Supply Chain?
A supply chain is a process that occurs between companies and suppliers to distribute products to end-users. In other words, it’s how a good or service is delivered to consumers.
To run a successful retail business, you must understand your supply chain.
If there’s a problem somewhere in the supply line, it could result in increased costs or delayed delivery.
This is what a basic supply chain looks like:
1. Manufacturers and Wholesalers.
Manufacturers create products utilizing machines and laborers. Once the production of these items is complete, wholesalers will purchase them, and then they in turn will sell these items to retailers.
Wholesalers provide retailers with quantities of goods at discounted prices.
2. Retailers or Merchants.
Retail stores buy their inventory from wholesalers or manufacturers. From there, they sell those products in smaller quantities to the consumer.
The retailer sells goods to the consumer in small quantities.
What Are the Different Retail Models?
There are many different types of retail businesses, each with its own advantages and disadvantages. The type of business you have will determine which retail model is the best fit for you.
- Independent Retailer: An independent retailer is someone who starts their business from scratch. The owner usually does everything themselves, but they may have assistants or hire someone extra.
- Existing Retail Business: An existing retail business is a business that is already operational and typically involves someone taking over ownership and responsibilities. This could involve inheriting or buying the business.
- Franchise: A franchise is a business plan that includes a trademarked name, products, and established business concepts. If a retailer wants to become part of a franchise, they are granted permission to use all of the elements. The tradeoff for purchasing the rights to a franchise is that there are typically ground rules and processes that must be followed to retain rights to the franchise, as well as fees that must be paid to the franchise owner.
- Dealership: A dealership is a type of retailer that has the license to sell a specific brand of products. There are no fees to the licensor, as opposed to a franchise.
- Network Marketing: Multi-level marketing is a business model in which products are sold through a network of salespeople. This model allows for the recruitment of additional salespeople to sell the same products.
What is Retail Technology?
One of the biggest benefits of cloud-based point of sale systems is their increased functionality and access to valuable business data. With these systems, businesses can track their sales and stock, as well as access analytical reports. This can help them make more informed decisions about their business.
The retail industry has changed a lot because of technology. For example, nowadays, you don’t just trade cash for goods. So, if you’re thinking of starting a retail business, there are a few pieces of technology that are essential for its success.
1. Retail Hardware
Hardware refers to the physical components, machines, or wiring that is installed in the retail store. Unlike software, hardware is tangible and is used to support and store the retail software used by a retailer.
Retail outlets traditionally process payments through hardware such as cash drawers, receipt printers, and cash registers.
However, there has been a recent trend of people using credit card readers and payment terminals for cashless payments in retail. This is becoming increasingly popular.
Hardware that supports cashless payments is not only more secure but also makes the payment process much smoother.
2. Point of Sale
A point-of-sale, or POS, is the moment at which a transaction is completed. The customer brings their items to the counter and the transaction is finalized.
Point of Sale (POS) systems are evolving to be more than just a way to complete a transaction. Now, retailers rely on their POS systems for tracking inventory and managing customer loyalty programs.
The right point of sale software makes it easy for retailers to manage their businesses. With this type of software, retailers can process payments and refunds and set up contactless payment options. This type of software is essential for any retail business that wants to be successful.
The point of sale market is growing quickly and is expected to reach $163 billion by 2027. The growth is likely due to the many advantages of using a point of sale system.
As the world increasingly moves towards digital payments, retailers must adapt to stay ahead of the curve. Having a retail-specific POS system like Square for Retail can help them do just that. Not only does it make transactions more efficient, but it also provides valuable insights that can be used to improve the overall shopping experience.
3. Online Retail Stores
An online store, also known as an e-commerce store, is a virtual storefront. This virtual space allows customers to browse and purchase products online.
Selling online is a great way to increase sales and give your customers 24/7 access to your products.
An e-commerce store can be a great way to expand your business and reach more potential customers.
Not only will customers that buy from your store be much more likely to leave contact information, but it’ll also be easier for you to follow up with them.
An online shop allows you to display all of your products, accept online payments, and coordinate pick-ups and drop-offs all from the comfort of your home. Customers can browse your selection of products and purchase them without ever having to leave their homes.
E-commerce sales are expected to hit $8 trillion in 2024.
The days of people being suspicious of purchasing items over the internet are long gone, as customers now appreciate the convenience and comfort of doing so.
The retail industry is always changing, and it’s important to be aware of the new trends, as well as the bad and the ugly.
How to Run a Successful Retail Store
Listening to your customers is one of the best ways to optimize sales. By giving them what they want, you can stay ahead of the competition. This proactive approach will keep your customers coming back for more.
Even something as simple as changing your store’s layout and design can have a huge impact on your business. And more sales and customers are always a good thing.
Other factors to consider include:
- Attractive product displays
- Test samples
- Loyalty schemes
- Points cards
- Retail fairs
The right software can make or break retail success. Cloud-based point of sale (POS) systems offer many advantages over traditional cash registers and sales hardware.
POS systems can help streamline the checkout experience by providing detailed analytics, customer insights, inventory management, accuracy, and security.
What is the Future of Retail?
No one can predict exactly how retail will change in the future, but it will certainly keep evolving.
Here are five things to keep an eye on:
- Centralization and integration: As technology advances, retailers will increasingly look to centralize data and operations by integrating systems and information. This will give them greater control over their business.
- Data protection and privacy: As retailers collect more and more customer data, privacy concerns will become increasingly important. With breaches happening to big-name companies, retailers will need to ensure their systems are safeguarded appropriately.
- Global trade: As globalization continues to progress, international policies are increasingly shaping the way retailers do business with overseas suppliers and customers. With laws, regulations, and taxes constantly changing, retailers need to be able to adapt quickly to stay compliant and competitive.
- Artificial intelligence: AI is being used more and more in retail, both in the backend and as part of the customer experience. Chatbots, personalization, virtual try-on, and visual search are just a few of the enhancements made possible thanks to AI technology.
- Robots: Robots are increasingly becoming a staple in the retail landscape, with many stores utilizing them to fulfill orders and aid in tasks such as wayfinding. In some cases, robots are even responsible for managing an entire store.
What is retail in the future? Only time will tell. But it seems like online shopping is here to stay, and that traditional brick-and-mortar stores may become a thing of the past. So if you’re in the retail business, it might be time to start thinking about how to make your business work in an online world.