What is Retailing?

Retailing is the business activity of selling goods and services to the final consumer. Retailing can be defined as the business products and services to consumers for their own use. According to Kotler, “Retailing includes all the activities involved in selling goods or services to the final consumers for personal, non-business use”.

Retailing is the activity of selling goods and services to last level consumers for their use. It is concerned with getting goods in their finished state into the hands of customers who are prepared to pay for the pleasure of eating, wearing or experiencing particular product items. Retailing is all about the distribution of goods and services because retailers play a key role in the route that products take after originating from a manufacturer, grower or service-provider to reach the person who consumes. Retailing is also one of the key elements of a marketing strategy facilitating the targeting process, making sure that a product reaches particular groups of consumers. It is important in a marketing strategy to match the arena in which a product is purchased to the benefits and characteristics of the product itself and its price. Retailers provide a collection of service benefits to their customers such as being located in convenient places, editing product ranges according to shopping tasks, and selling goods in quantities that match personal consumption levels. Ensuring that this process runs smoothly presents a host of managerial challenges. Retailing is therefore a deceptively simple management process – yet fascinatingly complex in its detail.

The term retailing applies not only to the selling of tangible products like loaves of bread or pairs of shoes, but also to the selling of service products.

Companies who provide meals, haircuts and aromatherapy sessions are all essentially retailers, as they sell to the final consumer, and yet customers do not take goods away from these retailers in a carrier bag. The consumption of the service product coincides with the retailing activity itself.

From a traditional marketing viewpoint, the retailer is one of several possible organisations through which goods produced by manufacture flow on their way to their consumer destiny. These organisations perform various roles by being a member of a distribution channel. For example, chocolate producer like Cadbury’s will use a number of distribution channels for its confectionery, which involve members such as agents, wholesalers, supermarkets, convenience stores, petrol stations, vending machine operators and so on. Channel members, or marketing intermediaries as they are sometimes referred to, take on activities that a manufacturer does not have the resources to perform, such as displaying the product alongside related or alternative items in a location that is convenient for consumer to access for shopping.

Retailing consists of the sale of goods or merchandise from a fixed location, such as a department store or kiosk, or by post, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, a retailer buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores.

Retailing is a distribution channel function where one organisation buys products from supplying firms or manufactures the product themselves, and then sells these directly to consumers. A retailer is a reseller (i.e., obtains product from one party in order to sell to another) from which a consumer purchases products. In the US alone there are over 1,100,000 retailers according to the 2002 US Census of Retail Trade.

In the majority of retail situations, the organisation from which a consumer makes purchases is a reseller of products obtained from others and not the product manufacturer. But as we discussed in the Distribution Decisions tutorial, some manufacturers also operate their own retail outlets in a corporate channel arrangement. While consumers are the retailer’s buyers, a consumer does not always buy from retailers. For instance, when a consumer purchases from another consumer (e.g., eBay) the consumer purchase would not be classified as a retail purchase. This distinction can get confusing but in the US and other countries the dividing line is whether the one selling to consumers is classified as a business (e.g., legal and tax purposes) or is selling as a hobby without a legal business standing.

As a reseller, retailers offer many benefits to suppliers and customers as we discussed in the Distribution Decisions tutorial. For consumers the most important benefits relate to the ability to purchase small quantities of a wide assortment of products at prices that are considered reasonably affordable. For suppliers the most important benefits relate to offering opportunities to reach their target market, build product demand through retail promotions, and provide consumer feedback to the product marketer.

Retail companies make up a significant portion of nation businesses. The companies not only create jobs, but also make a direct connection with customers who need the retail products. Whether you plan to seek a job in retail or want to open up your own retail business in the near future, it is helpful to get a clear understanding of what retailing means.

Retailing is the act of selling tangible products to an end user or consumer. The end user is the person who actually uses the product for his personal needs. There are three main parties involved when a product is released. First the manufacturer produces the product, then the distributor or wholesaler distributes it to retailers, and finally the retailer sells the product to an end user. In short, retailers present the products to the public so that everyday people can view and purchase them.

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