Retailing
Retail
Macys dep store.JPG
Comercio en la plaza, Tangiers, Moorocco, 2015
Goods are displayed in a rustic manner in Marrakech's souk (market)
Fresh produce markets have existed since ancient times. Pictured, La Boqueria market in Barcelona

Retail markets and shops have a very ancient history, dating back to antiquity. Retailing involves the process of selling consumer goods or services to customers through multiple channels of distribution to earn a profit. Retailers satisfy demand is identified through a supply chain. Retailers typically make a variety of strategic level decisions including the type of store, the market to be served, the optimal product assortment, customer service, supporting services and the store's overall market positioning. Once the strategic retail plan is in place, retailers devise the retail mix which includes product, price, place, promotion, personnel and presentation. In the digital age, an increasing number of retailers are seeking to reach broader markets by selling through multiple channels, including both bricks and mortar and online retailing. Digital technologies are also changing the way that consumers pay for goods and services. Retailing support services may also include the provision of credit, delivery services, advisory services, stylist services and a range of other supporting services.

The term "retailer" is typically applied where a service provider fills the small orders of a large number of individuals, who are end-users, rather than large orders of a small number of wholesale, corporate or government clientele. Shopping generally refers to the act of buying products. Sometimes this is done to obtain final goods, including necessities such as food and clothing; sometimes it takes place as a recreational activity. Recreational shopping often involves window shopping (just looking, not buying) and browsing: it does not always result in a purchase.

Retail shops occur in a diverse range of types and in many different contexts - from strip shopping centres in residential streets through to large, indoor shopping malls. Shopping streets may restrict traffic to pedestrians only. Sometimes a shopping street has a partial or full roof to create a more comfortable shopping environment - protecting customers from various types of weather conditions such as extreme temperatures, winds or precipitation. Forms of non-shop retailing include online retailing (a type of electronic-commerce used for business-to-consumer (B2C) transactions) and mail order.

China is currently the largest retail market in the world.[1]

Etymology

Retail comes from the Old French word tailler, which means "to cut off, clip, pare, divide" in terms of tailoring (1365). It was first recorded as a noun with the meaning of a "sale in small quantities" in 1433 (from the Middle French retail, "piece cut off, shred, scrap, paring").[2] Like in French, the word retail in both Dutch and German also refers to the sale of small quantities of items.

History

Also see History of merchants; History of the market place ; History of marketing

Retailing in antiquity

Phoenician merchants traded across the entire Mediterranean region
The Grand Bazaar in Istanbul,established in 1455, is thought to be the oldest continuously operating market in existence

Markets have existed since ancient times. Open air, public markets were known in ancient Babylonia and Assyria. These markets typically occupied a place in the town's centre. Surrounding the market, skilled artisans, such as metal-workers and leather workers, occupied premises in alley ways that led to the open market-place. These artisans may have sold wares directly from their premises, but also prepared goods for sale on market days.[3] In ancient Greece markets operated within the agora (open space), and in ancient Rome the forum. In antiquity, exchange involved direct selling, merchants or peddlers.[4]

The Phoenicians, noted for their seafaring skills, plied their ships across the Mediterranean, becoming a major trading power by 9th century BCE. The Phoenicians imported and exported wood, textiles, glass and produce such as wine, oil, dried fruit and nuts. Their trading skills necessitated a network of colonies along the Mediterranean coast, stretching from modern day Crete through to Tangiers and onto Sardinia[5] The Phoenicians not only traded in tangible goods, but were also instrumental in transporting culture. The Phoenician's extensive trade networks necessitated considerable book-keeping and correspondence. In around 1500 BCE, the Phoenicians developed a consonantal alphabet which was much easier to learn that the complex scripts used in ancient Egypt and Mesopotamia. Phoenician traders and merchants were largely responsible for spreading their alphabet around the region.[6] Phoenician inscriptions have been found in archaeological sites at a number of former Phoenician cities and colonies around the Mediterranean, such as Byblos (in present-day Lebanon) and Carthage in North Africa.[7]

In the Graeco-Roman world, the market primarily served the local peasantry. Local producers, who were generally poor, would sell small surpluses from their individual farming activities, purchase minor farm equipment and also buy a few luxuries for their homes. Major producers such as the great estates were sufficiently attractive for merchants to call directly at their farm-gates, obviating the producers' need to attend local markets. The very wealthy landowners managed their own distribution, which may have involved exporting. The nature of export markets in antiquity is well documented in ancient sources and archaeological case studies.[8] Markets were also important centres of social life.[9]

The rise of retailing and marketing in England, the United States and Europe has been extensively studied, but less is known about developments elsewhere.[10] Nevertheless, recent research suggests that China exhibited a rich history of early retail systems.[11] From as early as 200 BCE, Chinese packaging and branding was used to signal family, place names and product quality, and the use of government imposed product branding was used between 600 and 900 AD.[12] Eckhart and Bengtsson have argued that during the Song Dynasty (960-1127), Chinese society developed a consumerist culture, where a high level of consumption was attainable for a wide variety of ordinary consumers rather than just the elite.[13] The rise of a consumer culture led to the commercial investment in carefully managed company image, retail signage, symbolic brands, trademark protection and sophisticated brand concepts.[14]

Northampton market, established in 1255, is one of the oldest produce markets in England.

Retailing in Medieval Europe

In Medieval England and Europe, market towns dotted the landscape. Blintiff has investigated the early Medieval networks of market towns and suggests that by the 12th century there was an upsurge in the number of market towns and the emergence of merchant circuits as traders bulked up surpluses from smaller regional, different day markets and resold them at the larger centralised market towns.[15] The Grand Bazaar in Istanbul is often cited as the world's oldest continuously-operating market; its construction began in 1455. In the 15th century the Mexica (Aztec) market of Tlatelolco was the largest in all the Americas.[16]

In England, provincial shopkeepers were active in almost every market town. These shopkeepers sold general merchandise, much like a contemporary convenience store. For example, William Allen, a mercer in Tamworth who died in 1604 sold spices alongside furs and fabrics.[17] William Stout of Lancaster retailed sugar, tobacco, nails and prunes at both his shop and at the central markets. His autobiography reveals that he spent most of his time preparing products for sale at the central market, which brought an influx of customers into town.[18]

English market towns were regulated from a relatively early period. The English monarchs awarded a charter to local Lords to create markets and fairs for a town or village. This charter would grant the lords the right to take tolls and also afford some protection from rival markets. For example, once a chartered market was granted for specific market days, a nearby rival market could not open on the same days.[19] Across the boroughs of England, a network of chartered markets sprang up between the 12th and 16th centuries, giving consumers reasonable choice in the markets they preferred to patronise.[20] A study on the purchasing habits of the monks and other individuals in medieval England, suggests that consumers were discerning. Purchase decisions were based on purchase criteria such as consumers' perceptions of the range, quality, and price of goods. This informed decisions about where to make their purchases.[21] Today, traders and showmen jealously guard these historic charters.

Braudel and Reynold have made a systematic study of these European market towns between the thirteenth and fifteenth century. Their investigation shows that in regional districts markets were held once or twice a week while daily markets were common in larger cities. Gradually over time, permanent shops that opened daily began to supplant the periodic markets while peddlers filled in the gaps in distribution. The physical market was characterised by transactional exchange and the economy was characterised by local trading. Braudel reports that, in 1600, goods travelled relatively short distances - grain 5-10 miles; cattle 40-70 miles; wool and wollen cloth 20-40 miles. However, following the European age of discovery, goods were imported from afar - calico cloth from India, porcelain, silk and tea from China, spices from India and South-East Asia and tobacco, sugar, rum and coffee from the New World.[22]

The service counter was entirely absent from retail shops prior to the eighteenth century

Luca Clerici has made a detailed study of Vicenza's food market during the sixteenth century. He found that there were many different types of reseller operating out of the markets. For example, in the dairy trade, cheese and butter was sold by the members of two craft guilds (i.e., cheesemongers who were shopkeepers) and that of the so-called 'resellers' (hucksters selling a wide range of foodstuffs), and by other sellers who were not enrolled in any guild. Cheesemongers' shops were situated at the town hall and were very lucrative. Resellers and direct sellers increased the number of sellers, thus increasing competition, to the benefit of consumers. Direct sellers, who brought produce from the surrounding countryside, sold their wares through the central market place and priced their goods at considerably lower rates than cheesemongers.[23]

Retailing in the eighteenth and nineteenth century

Savitt has argued that by the eighteenth century, American merchants, who had been operating as importers and exporters, began to specialise in either wholesale or retail roles. They tended not to specialise in particular types of merchandise, often trading as general merchants, selling a diverse range of product types. These merchants were concentrated in the larger cities. They often provided high levels of credit financing for retail transactions.[24]

Josiah Wedgewood was one of the English entrepreneurs who held expansive displays in his private home or in rented premises

Cox and Dannehl suggest that the seventeenth century's shopper's experience was very different than in later periods. The trappings of a modern shop were entirely absent from the sixteenth and seventeenth century store. There were no counters, display cases, chairs, mirrors, changing-rooms, etc. The opportunity for the customer to browse merchandise, touch and feel products was not available until the eighteenth century.[25] Oustide the major metropolitan cities, few stores could afford to serve one type of clientele exclusively. However, gradually retail shops introduced innovations that would allow them to separate wealthier customers from the "riff raff." One technique was to have a window opening out onto the street from which customers could be served. This allowed the sale of goods to the common people, without encouraging them to come inside. Another solution, that came into vogue from the late sixteenth century was to invite favoured customers into a back-room of the store, where goods were permanently on display. Yet another technique that emerged around the same time was to hold a showcase of goods in the shopkeeper's private home for the benefit of wealthier clients. Samuel Pepys, for example, writing in 1660, describes being invited to the home of a retailer to view a wooden jack.[26] The eighteenth century English entrepreneurs, Josiah Wedgewood and Matthew Boulton, both staged expansive showcases of their wares in their private residences or in rented halls.[27]

Retailing in the modern era

Department stores, such as Le Bon Marché of France, appeared from the mid nineteenth century

The modern era of retailing is defined as the period from the industrial revolution to the 21st century.[28] In major cities, the department store emerged in the middle of the 19th century, and permanently reshaped shopping habits, and the definition of service and luxury. A number of department stores opened across the USA, Britain and England from the mid nineteenth century including; Harrod's of London in 1834; Kendall's in Manchester in 1836; Selfridges of London in 1909; Macy's of New York in 1858; Bloomingdale's in 1861; Sak's in 1867; J.C. Penney in 1902; Le Bon Marché of France in 1852 and Galeries Lafayette of France in 1905. Other twentieth century innovations in retailing included chain stores, mail-order, multi-level marketing (pyramid selling or network marketing, c. 1920s), party plans (c. 1930s) and B2C e-commerce (cyber-peddling).[29]

During this period, retailers worked to develop modern retail marketing practices. Pioneering merchants who contributed to modern retailing practice and retail marketing methods include: A. R. Stewart, Potter Palmer, John Wanamaker, Montgomery Ward, Marshall Field, Richard Warren Sears, Rowland Macy, J.C. Penney, Fred Lazarus, brothers Edward and William Filene and Sam Walton.[30] For example, Edward Filene, a proponent of the scientific approach to retail management, developed the concept of Automatic bargain Basement. Although Filene's Basement was not the first 'bargain basement' in the U.S., the principles of 'automatic mark-downs' generated excitement and proved very profitable. Under Filene's plan, merchandise had to be sold within 30 days or it was marked down; after a further 12 days, the merchandise was further reduced by 25% and if still unsold after another 18 days, a further markdown of 25% was applied. If the merchandise remained unsold after two months, it was given to charity.[31] Filene was a pioneer in employee relations. He instituted a profit sharing program, a minimum wage for women, a 40-hour work week, health clinics and paid vacations. He also played an important role in encouraging the Filene Cooperative Association, "perhaps the earliest American company union". Through this channel he engaged constructively with his employees in collective bargaining and arbitration processes.[32] Montgomery Ward is credited with developing catalog sales and mail-order systems. His first catalog which was issued in August 1872 consisted of an 8 in × 12 in (20 cm × 30 cm) single-sheet price list, listing 163 items for sale with ordering instructions for which Ward had written the copy. He also devised the catch-phrase "satisfaction guaranteed or your money back" which was implemented in 1875.[33]

Retail strategy

Retailers make many strategic decisions - store type, market served, product assortment and customer services

The distinction between "strategic" and "managerial" decision-making is commonly used to distinguish "two phases having different goals and based on different conceptual tools. Strategic planning concerns the choice of policies aiming at improving the competitive position of the firm, taking account of challenges and opportunities proposed by the competitive environment. On the other hand, managerial decision-making is focused on the implementation of specific targets." [34]

In retailing, the strategic plan is designed to set out the vision and provide guidance for retail decision-makers and provide an outline of how the product and service mix will optimize customer satisfaction. As part of the strategic planning process, it is customary for strategic planners to carry out a detailed environmental scan which seeks to identify trends and opportunities in the competitive environment, market environment, economic environment and statutory-political environment. The retail strategy is normally devised every 3- 5 years by the chief executive officer.

The strategic retail analysis typically includes following elements:[35]

The retailer also considers the overall strategic position
* Market analysis
Market size, stage of market, market competitiveness, market attractiveness, market trends
* Customer analysis
Market segmentation, demographic, geographic and psychographic profile, values and attitudes, shopping habits, brand preferences, analysis of needs and wants, media habits
* Internal analysis
Human resource capability, technological capability, financial capability, ability to generate scale economies or economies of scope, trade relations, reputation, positioning, past performance
* Competition analysis
Availability of substitutes, competitor's strengths and weaknesses, perceptual mapping, competitive trends
* Review of product mix
Sales per square foot, stock-turnover rates, profitability per product line
* Review of distribution channels
Lead-times between placing order and delivery, cost of distribution, cost efficiency of intermediaries
* Evaluation of the economics of the strategy
Cost-benefit analysis of planned activities

The retail strategy, including service quality, has a significant and positive association on customer loyalty.[36] A marketing strategy effectively outlines all key aspects of firms' targeted audience, demographic and preference. In a highly competitive market, the retail strategy sets up long-term sustainability. It focuses on customer relationships, stressing the importance of added value and customer satisfaction.

The retail mix

The retail mix

See also product management; promotion mix; marketing mix; price; servicescapes and retail design

Once the strategic plan is in place, retail managers turn to the more managerial aspects of planning. A retail mix is devised for the purpose of coordinating day-to-day tactical decisions. The retail mix typically consists of six broad decision layers including product decisions, place decisions, promotion, price, personnel and presentation (also known as physical evidence).[37] The retail mix is loosely based on the marketing mix, but has been modified in line with the needs of the retail context and is often called the 6 Ps of retailing.[38][39]

Product

See Product management

The primary product-related decisions facing the retailer are the product assortment (what product lines, how many lines and which brands to carry); the type of customer service (high contact through to self-service) and the availability of support services (e.g. credit terms, delivery services, after sales care). These decisions depend on careful analysis of the market, demand, competition as well as the retailer's skills and expertise.

Product assortment

A typical supermarket carries an assortment of between 30,000 and 60,000 different products

The main characteristics of a company's product assortment are:[40] The term product assortment refers to the combination of both product breadth and depth.

(1) the length or number of products lines
the number of different products carried by a store
(2) the breadth
refers to the variety of product lines that a store offers. It is also known as product assortment width, merchandise breadth, and product line width.:
(3) depth or number of product varieties within a product line
the number of each item or particular styles carried by a store
(4) consistency
how products relate to each other in a retail environment.

For a retailer, finding the right balance between breadth and depth can be a key to success. An average supermarket might carry 30,000 - 60,000 different product lines (product length or assortment), but might carry up to 100 different types of toothpaste (product depth).[41] Specialty retailers typically carry fewer product lines, perhaps as few as 20 lines, but will normally stock greater depth. Costco, for example, carries 5,000 different lines while Aldi carries just 1,400 lines per store.[42]

Discount grocery retailer, Aldi, has successfully trimmed the number of product lines it carries to about 1,400

Large assortments offer consumers many benefits, notably increased choice and the possibility that the consumer will be able to locate the ideal product. However, for the retailer, larger assortments incur costs in terms of record-keeping, managing inventory, pricing and risks associated with wastage due to spoiled, shopworn or unsold stock. Carrying more stock also exposes the retailer to higher risks in terms of slow-moving stock and lower sales per square foot of store space. On the other hand, reducing the number of product lines can generate cost savings through increased stock turnover by eliminating slow-moving lines, fewer stockouts, increased bargaining power with suppliers, reduced costs associated with wastage and carrying inventory, and higher sales per square foot which means more efficient space utilisation.

When determining the number of product lines to carry, the retailer must consider the store type, store's physical storage capacity, the perishability of items, expected turnover rates for each line and the customer's needs and expectations.

Self-service is a more cost efficient way to deliver goods

Customer service and supporting services

Customer service is the "sum of acts and elements that allow consumers to receive what they need or desire from [the] 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. Retailers must decide whether to provide a full service outlet or minimal service outlet, such as no-service in the case of vending machines; self-service with only basic sales assistance or a full service operation as in many boutiques and specialty stores. In addition, the retailer needs to make decisions about sales support such as customer delivery and after sales customer care.

Retailing services may also include the provision of credit, delivery services, advisory services, exchange/ return services, product demonstration, special orders, customer loyalty programs, limited-scale trial, advisory services and a range of other supporting services. Retail stores often seek to differentiate along customer service lines. For example, some department stores offer the services of a stylist; a fashion advisor, to assist customers selecting a fashionable wardrobe for the forthcoming season, while smaller boutiques may allow regular customers to take goods home on approval, enabling the customer to try out goods before making the final purchase. The variety of supporting services offered is known as the service type. At one end of the spectrum, self-service operators offer few basic support services. At the other end of the spectrum, full-service operators offer a broad range of highly personalised customer services to augment the retail experience.[43]

When making decisions about customer service, the retailer must balance the customer's desire for full-service against the customer's willingness to pay for the cost of delivering supporting services. Self-service is a very cost efficient way of delivering services since the retailer harnesses the customers labour power to carry out many of the retail tasks. However, many customers appreciate full service and are willing to pay a premium for the benefits of full-service.[44]

A sales assistant's role typically includes greeting customers, providing product and service-related information, providing advice about products available from current stock, answering customer questions, finalising customer transactions and if necessary, providing follow-up service necessary to ensure customer satisfaction.[45] For retail store owners, it is extremely important to train personnel with the requisite skills necessary to deliver excellent customer service. Such skills may include product knowledge, inventory management, handling cash and credit transactions, handling product exchange and returns, dealing with difficult customers and of course, a detailed knowledge of store policies. The provision of excellent customer service creates more opportunities to build enduring customer relationships with the potential to turn customers into sources of referral or retail advocates. In the long term, excellent customer service provides businesses with an ongoing reputation and may lead to a competitive advantage. Customer service is essential for several reasons.[46] Firstly, customer service contributes to the customer's overall retail experience. Secondly, evidence suggests that a retail organization which trains its employees in appropriate customer service benefits more than those who do not. Customer service training entails instructing personnel in the methods of servicing the customer that will benefit corporations and businesses. It is important to establish a bond amongst customers-employees known as Customer relationship management.[47]

Counter service is associated with full service retail outlets and allows the salesperson to provide expert advice
Types of customer service

There are several ways the retailer can deliver services to consumers:

  • Counter service, where goods are out of reach of buyers and must be obtained from the seller. This type of retail is common for small expensive items (e.g. jewellery) and controlled items like medicine and liquor. It was common before the 1900s in the United States and is more common in certain countries like India.[which?]
  • Click and Commute, where products are ordered online and are picked up via a drive through.
  • Ship to Store, where products are ordered online and can be picked up at the retailer's main store
  • Delivery, where goods are shipped directly to consumer's homes or workplaces.
  • Mail order from a printed catalog was invented in 1744 and was common in the late 19th and early 20th centuries. Ordering by telephone was common in the 20th century, either from a catalog, newspaper, television advertisement or a local restaurant menu, for immediate service (especially for pizza delivery), remaining in common use for food orders. Internet shopping -- a form of delivery -- has eclipsed phone-ordering, and, in several sectors -- such as books and music -- all other forms of buying. There is increasing competitor pressure to deliver consumer goods- especially those offered online- in a more timely fashion. Large online retailers such as Amazon.com are continually innovating and as of 2015 offer one-hour delivery in certain areas. They are also working with drone technology to provide consumers with more efficient delivery options. Direct marketing, including telemarketing and television shopping channels, are also used to generate telephone orders. started gaining significant market share in developed countries in the 2000s.
  • Door-to-door sales, where the salesperson sometimes travels with the goods for sale.
  • Self-service, where goods may be handled and examined prior to purchase.
  • Digital delivery or Download, where intangible goods, such as music, film, and electronic books and subscriptions to magazines, are delivered directly to the consumer in the form of information transmitted either over wires or air-waves, and is reconstituted by a device which the consumer controls (such as an MP3 player; see digital rights management). The digital sale of models for 3D printing also fits here, as do the media leasing types of services, such as streaming.

Place

Place decisions are primarily concerned with consumer access and may involve location, space utilisation and operating hours.

Location

Also see Site selection

Retail stores are typically located where market opportunities are optimal - high traffic areas, central business districts. Selecting the right site can be a major success factor. When evaluating potential sites, retailers often carry out a trade area analysis; a detailed analysis designed to approximate the potential patronage area. Techniques used in trade area analysis include: Radial (ring) studies; Gravity models and Drive time analyses.[48]

In addition, retailers may consider a range of both qualitative factors to evaluate to potential sites under consideration:

* Macro factors
Macro factors include market characteristics (demographic, economic and socio-cultural), demand, competition and infrastructure (e.g. the availability of power, roads, public transport systems)
* Micro factors
Micro factors include the size of the site (e.g. availability of parking), access for delivery vehicles

Pricing strategy and tactics

A price tag is a highly visual and objective guide to value

The broad pricing strategy is normally established in the company's overall strategic plan. In the case of chain stores, the pricing strategy would be set by head office. Broadly, there are six approaches to pricing strategy mentioned in the marketing literature:

Operations-oriented pricing: where the objective is to optimise productive capacity, to achieve operational efficiencies or to match supply and demand through varying prices. In some cases, prices might be set to de-market.[49]
Revenue-oriented pricing: (also known as profit-oriented pricing or cost-based pricing) - where the marketer seeks to maximise the profits (i.e., the surplus income over costs) or simply to cover costs and break even.[49]
Customer-oriented pricing: where the objective is to maximise the number of customers; encourage cross-selling opportunities or to recognise different levels in the customer's ability to pay.[49]
Value-based pricing: (also known as image-based pricing) occurs where the company uses prices to signal market value or associates price with the desired value position in the mind of the buyer. The aim of value-based pricing is to reinforce the overall positioning strategy e.g. premium pricing posture to pursue or maintain a luxury image.[50][51]
Relationship-oriented oricing: where the marketer sets prices in order to build or maintain relationships with existing or potential customers.[52]
Socially-oriented pricing: Where the objective is to encourage or discourage specific social attitudes and behaviours. e.g. high tarrifs on tobacco to discourage smoking.[53]

The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup amount (or percentage) to the retailer's cost. Another common technique is suggested retail pricing. This simply involves charging the amount suggested by the manufacturer and usually printed on the product by the manufacturer.

Pricing tactics

See also Pricing

Retailers must also plan for mode of payment

When decision-makers have determined the broad approach to pricing (i.e., the pricing strategy), they turn their attention to pricing tactics. Tactical pricing decisions are shorter term prices, designed to accomplish specific short-term goals. The tactical approach to pricing may vary from time to time, depending on a range of internal considerations (e.g. such as the need to clear surplus inventory) or external factors (e.g. a response to competitive pricing tactics). Accordingly, a number of different pricing tactics may be employed in the course of a single planning period or across a single year. Typically store managers have the necessary latitude to vary prices on individual linnes providing that they operate within the parameters or the overall strategic approach.

Retailers must also plan for customer preferred payment modes - e.g., cash, credit, lay-by, Electronic Funds Transfer at Point-of-Sale (EFTPOS). All payment options require some type of handling and attract costs. If credit is to be offered, then credit terms will need to be determined. If lay-by is offered, then the retailer will need to take into account the storage and handling requirements. If cash is the dominant mode of payment, the retailer will need to consider small change requirements, the number of cash floats required, wages costs associated with handling large volumes of cash and the provision of secure storage for change floats. Large retailers, handling significant volumes of cash, may need to hire security service firms to carry the day's takings and deliver supplies of small change. A small, but increasing number of retailers are beginning to accept newer modes of payment including PayPal and Bitcoin.[54] For example, Subway (US) recently announced that it would accept Bitcoin payments.[55]

A discount is any form of reduction in price

Pricing tactics that are commonly used in retail include:

Discount pricing

Discount pricing is where the marketer or retailer offers a reduced price. Discounts in a variety of forms - e.g. quantity rebates, loyalty rebates, seasonal discounts, periodic or random discounts etc.[56]

"Everyday Low Prices" are widely used in supermarkets
Everyday low prices (EDLP)

Everyday low prices refers to the practice of maintaining a regular low price-low price - in which consumers are not forced to wait for discounting or specials. This method is used by supermarkets.[57]

High-low pricing

High-low pricing refers to the practice of offering goods at a high price for a period of time, followed by offering the same goods at a low price for a predetermined time. This practice is widely used by chain stores selling homewares. The main disadvantage of the high-low tactic is that consumers tend to become aware of the price cycles and time their purchases to coincide with a low-price cycle.[58][59]

Loss leader

A loss leader is a product that has a price set below the operating margin. Loss leadering is widely used in supermarkets and budget-priced retail outlets where the store as a means of generating store traffic. The low price is widely promoted and the store is prepared to take a small loss on an individual item, with an expectation that it will recoup that loss when customers purchase other higher priced-higher margin items. In service industries, loss leadering may refer to the practice of charging a reduced price on the first order as an inducement and with anticipation of charging higher prices on subsequent orders.

Xbox price bundle price
Price bundling

Price bundling (also known as product bundling) occurs where two or more products or services are priced as a package with a single price. There are several types of bundles: pure bundles where the goods can only be purchased as package or mixed bundles where the goods can be purchased individually or as a package. The prices of the bundle is typically less than when the two items are purchased separately.[60]

Price lining

Price lining is the use of a limited number of prices for all product offered by a business. Price lining is a tradition started in the old five and dime stores in which everything cost either 5 or 10 cents. In price lining, the price remains constant but quality or extent of product or service adjusted to reflect changes in cost. The underlying rationale of this tactic is that these amounts are seen as suitable price points for a whole range of products by prospective customers. It has the advantage of ease of administering, but the disadvantage of inflexibility, particularly in times of inflation or unstable prices. Price lining continues to be widely used in department stores where customers often note racks of garments or accessories priced at predetermined price points e.g. separate racks of men's ties, where each rack is priced at $10, $20 and $40.

Promotional pricing

Promotional pricing is a temporary measure that involves setting prices at levels lower than normally charged for a good or service. Promotional pricing is sometimes a reaction to unforeseen circumstances, as when a downturn in demand leaves a company with excess stocks; or when competitive activity is making inroads into market share or profits.[61]

Extensive use of the terminal digit 'nine' suggests that psychological pricing is at play
Psychological pricing

Psychological pricing is a collective term that refers to a range of tactics designed to have a positive psychological impact. Price tags using the terminal digit "9", ($9.99, $19.99 or $199.99) can be used to signal price points and bring an item in at just under the consumer's reservation price. Psychological pricing is widely used in a variety of retail settings.[62]

Personnel and 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.[63]

Selling and sales techniques

Also see Personal selling

One of the most well-known cross-selling sales scripts comes from McDonald's. "Would you like fries with that?"

Retailers can employ different techniques to enhance sales volume and to improve the customer experience:

Add-on, Upsell or Cross-sell.
Upselling and cross selling are sometimes known as suggestive selling. When the consumer has selected their main purchase, sales assistants can try to sell the customer on a premium brand or higher quality item (up-selling) or can suggest complementary purchases (cross-selling). For instance, if a customer purchases a non-stick frypan, the sales assistant might suggest plastic slicers that do not damage the non-stick surface.
Selling on value
Skilled sales assistants find ways to focus on value rather than price. Selling on value often involves identifying a product's unique features. Adding value to goods or services such as a free gift or buy 1 get 1 free adds value to customers where as the store is gaining sales [64]
Know when to close the sale
Sales staff must learn to recognise when the customer is ready to make a purchase. If the sales person feels that the customer is ready, then they may seek to gain commitment and close the sale. Experienced sales staff soon learn to recognise specific verbal and non-verbal cues that signal the client's readiness to buy. For instance, if a customer begins to handle the merchandise, this may indicate a state of buyer interest. Clients also tend to employ different types of questions throughout the sales process. General questions such as, "Does it come in any other colours (or styles)?" indicate only a moderate level of interest. However, when clients begin to ask specific questions, such as "Do you have this model in black?" then this often indicates that the prospect is approaching readiness to buy.[65] When the sales person believes that the prospective buyer is ready to make the purchase, a trial close might be used to test the waters. A trial close is simply any attempt to confirm the buyer's interest in finalising the sale. An example of a trial close, is "Would you be requiring our team to install the unit for you?" or "Would you be available to take delivery next Thursday?" If the sales person is unsure about the prospect's readiness to buy, they might consider using a 'trial close.' The salesperson can use several different techniques to close the sale; including the 'alternative close', the 'assumptive close', the 'summary close', or the 'special-offer close', among others.

Presentation

See Merchandising ; Servicescapes; Retail design

The way that products are displayed is part of the store's presentation

Presentation refers to the physical evidence that signals the retail image. Physical evidence may include a diverse range of elements - the store itself including premises, offices, exterior facade and interior layout, websites, delivery vans, warehouses, staff uniforms.

Designing retail spaces

Simplified servicescapes model

The environment in which the retail service encounter occurs is sometimes known as the retail servicescape. [66] The store environment consists of many elements such as smells, the physical environment (furnishings, layout and functionality), ambient conditions (lighting, temperature, noise) as well as signs, symbols and artifacts (e.g. sales promotions, shelf space, sample stations, visual communications). Collectively, these elements contribute to the perceived retail servicescape or the overall atmosphere and can influence both the customer's cognitions, emotions and their behaviour within the retail space.

Retail designers pay close attention to the front of the store, which is known as the decompression zone.[67] This is usually an open space in the entrance of the store to allow customers to adjust to their new environment. An open-plan floor design is effective in retail as it allows customers to see everything. In terms of the store's exterior, the side of the road cars normally travel, determines the way stores direct customers. New Zealand retail stores, for instance, would direct customers to the left.

In order to maximise the number of selling opportunities, retailers generally want customers to spend more time in a retail store. However, this must be balanced against customer expectations surrounding convenience, access and realistic waiting times. The overall aim of designing a retail environment is to have customers enter the store, and explore the totality of the physical environment engaging in a variety of retail experiences - from browsing through to sampling and ultimately to purchasing. The retail service environment plays an important role in affecting the customer's perceptions of the retail experience.[68]

The retail servicescape includes the appearance, equipment, signage, layout and functionality of a retail outlet

The retail environment not only affects quality perceptions, but can also impact on the way that customers navigate their way through the retail space during the retail service encounter. Layout, directional signage, the placement of furniture and ambient conditions all affect patron's passage through the retail service system. Layout refers to how equipment and furnishings are placed and the relationship between them. In a retail setting, accessibility is an important aspect of layout. For example, the grid layout used by supermarkets with long aisles and gondolas at the end displaying premium merchandise or promotional items, minimises the time customers spend in the environment and makes productive use of available space.[69] The gondola so favoured by supermarkets is an example of a retail design feature known as a merchandise outpost and which refers to special displays, typically at or near the end of an aisle, whose purpose is to stimulate impulse purchasing or to complement other products in the vicinity. For example, the meat cabinet at the supermarket might use a merchandise outpost to suggest a range of marinades or spice rubs to complement cuts of meat. As a generalisation, merchandise outposts are updated regularly so that they maintain a sense of novelty.[70]

Navigational floor signs are commonly used in complex environments such as shopping malls and department stores

According to Ziethaml et al., layout affects how easy or difficult it is to navigate through a system. Signs and symbols provide cues for directional navigation and also inform about appropriate behaviour within a store. Functionality refers to extent to which the equipment and layout meet the goals of the customer.[71] For instance, in the case of supermarkets, the customer's goal may be to minimise the amount of time spent finding items and waiting at the check-out, while a customer in a retail mall may wish to spend more time exploring the range of stores and merchandise. With respect to functionality of layout, retail designers consider three key issues; circulation- design for traffic-flow and that encourages customers to traverse the entire store; coordination - design that combines goods and spaces in order to suggest customer needs and convenience- design that arranges items to create a degree of comfort and access for both customers and employees.[72]

The way that brands are displayed is also part of the overall retail design. Where a product is placed on the shelves has implications for purchase likelihood as a result of visibility and access. Products placed too high or too low on the shelves may not turn over as quickly as those placed at eye level.[73] With respect to access, store designers are increasingly giving consideration to access for disabled and elderly customers.

Through sensory stimulation retailers can engage maximum emotional impact between a brand and its consumers by relating to both profiles; the goal and experience. Purchasing behavior can be influenced through the physical evidence detected by the senses of touch, smell, sight, taste and sound.[74] Supermarkets offer taste testers to heighten the sensory experience of brands. Coffee shops allow the aroma of coffee to waft into streets so that passers-by can appreciate the smell and perhaps be lured inside. Clothing garments are placed at arms' reach, allowing customers to feel the different textures of clothing.[74] Retailers understand that when customers interact with products or handle the merchandise, they are more likely to make a purchase.

Within the retail environment, different spaces may be designed for different purposes. Hard floors, such as wooden floors, used in public areas, contrast with carpeted fitting rooms, which are designed to create a sense of homeliness when trying on garments. Peter Alexander, retailer of sleep ware, is renowned for using scented candles in retail stores.

Ambient conditions, such as lighting, temperature and music, are also part of the overall retail environment.[75] It is common for a retail store to play music that relates to their target market. Studies have found that "positively valenced music will stimulate more thoughts and feeling than negatively valenced music", hence, positively valenced music will make the waiting time feel longer to the customer than negatively valenced music.[76] In a retail store, for example, changing the background music to a quicker tempo may influence the consumer to move through the space at a quicker pace, thereby improving traffic flow.[77] Evidence also suggests that playing music reduces the negative effects of waiting since it serves as a distraction.[78] Jewellery stores like Michael Hill have dim lighting with a view to fostering a sense of intimacy.

The design of a retail store is critical when appealing to the intended market, as this is where first impressions are made. The overall servicescape can influence a consumer's perception of the quality of the store, communicating value in visual and symbolic ways. Certain techniques are used to create a consumer brand experience, which in the long run drives store loyalty.[79]

Shopper profiles

Many different shopper profiles can be identified. Retailers develop customised segmentation analyses for each unique outlet. However, it is possible to identify a number of broad shopper profiles. One of the most well-known and widely cited shopper typologies is that developed by Sproles and Kendal in the mid 1980s.[80][81][82] Sproles and Kendall's consumer typology has been shown to be relatively consistent across time and across cultures.[83][84] Their typology is based on the consumer's approach to making purchase decisions.[85]

People who shop for pleasure are known as recreational shoppers
  • Quality conscious/Perfectionist: Quality-consciousness is characterised by a consumer's search for the very best quality in products; quality conscious consumers tend to shop systematically making more comparisons and shopping around.
  • Brand-conscious: Brand-consciousness is characterised by a tendency to buy expensive, well-known brands or designer labels. Those who score high on brand-consciousness tend to believe that the higher prices are an indicator of quality and exhibit a preference for department stores or top-tier retail outlets.
  • Recreation-conscious/ Hedonistic: Recreational shopping is characterised by the consumer's engagement in the purchase process. Those who score high on recreation-consciousness regard shopping itself as a form of enjoyment.
  • Price-conscious: A consumer who exhibits price-and-value consciousness. Price-conscious shoppers carefully shop around seeking lower prices, sales or discounts and are motivated by obtaining the best value for money
  • Novelty/fashion-conscious: characterised by a consumer's tendency to seek out new products or new experiences for the sake of excitement; who gain excitement from seeking new things; they like to keep up-to-date with fashions and trends, variety-seeking is associated with this dimension.
  • Impulsive: Impulsive consumers are somewhat careless in making purchase decisions, buy on the spur of the moment and are not overly concerned with expenditure levels or obtaining value. Those who score high on impulsive dimensions tend not to be engaged with the object at either a cognitive or emotional level.
  • Confused (by over-choice): characterised by a consumer's confusion caused by too many product choices, too many stores or an overload of product information; tend to experience information overload.
  • Habitual / brand loyal: characterised by a consumer's tendency to follow a routine purchase pattern on each purchase occasion; consumers have favourite brands or stores and have formed habits in choosing, the purchase decision does not involve much evaluation or shopping around.

Some researchers have adapted Sproles and Kendall's methodology for use in specific countries or cultural groups.[86] Consumer decision styles are important for retailers and marketers because they describe behaviours that are relatively stable over time and for this reason, they are useful for market segmentation.

Types of retail outlets

Food retailer - A Fruit shop in Naggar, Himachal Pradesh, India

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 in condensed geographical areas along specific streets or districts such as the Magnificent Mile in Chicago, Illinois or at single locations called malls. These are more defined and planned spaces for retail stores and brands.

Retail type by product

Furniture and homewares retailers are said to be hardline retailers. Pictured Furniture retailer in Hong Kong

Retailers may be classified by the type of product carried:

Food retailers

Retailers carrying highly perishable foodstuffs such as meat, dairy and fresh produce typically require cold storage facilities. Consumers purchase food products on a very regular purchase cycle - e.g. daily, weekly or monthly.

Softline retailers[87][88]

Softline retailers sell goods that are consumed after a single use, or have a limited life (typically under three years) in they are normally consumed. Soft goods include clothing, other fabrics, footwear, toiletries, cosmetics, medicines and stationery.

Grocery/ Convenience Retail

Grocery stores, including supermarkets and hypermarkets, along with convenience stores carry a mix of food products and consumable household items such as detergents, cleansers, personal hygiene products. Consumer consumables are collectively known as fast-moving-consumer goods (FMCG) and represent the lines most often carried by supermarkets, grocers and convenience stores. For consumers, these are regular purchases and for the retailer, these products represent high turnover product lines.

An art gallery is a specialist retailer
Hardline retailers

Retailers selling consumer durables are sometimes known as hardline retailers[89] -- automobiles, appliances, electronics, furniture, sporting goods, lumber, etc., and parts for them. Goods that do not quickly wear out and provide utility over time. For the consumer, these items often represent major purchase decisions. Consumers purchase durables over longer purchase decision cycles. For instance, the typical consumer might replace their family car every 5 years, and their home computer every 4 years.

Specialist retailers

Specialist retailers operate in many industries such as the arts e.g. contemporary art galleries, bookstores, handicrafts, musical instruments, gift shops.

Retail types by marketing strategy

Types of retailers by marketing strategy include:

Australia's Officeworks is a category killer, retailing everything for the home office or small commercial office - stationery, furniture, electronics, communications devices, copying, printing and photography services, coffee, tea and light snacks
Boutique

A Boutique is a small store offering a select range of fashionable goods or accessories. The term, 'boutique', in retail and services, appears to be taking on a broader meaning with popular references to retail goods and retail services such as boutique hotels, boutique beers (i.e. craft beers), boutique investments etc.[90]

Category killer

By supplying a wide assortment in a single category for lower prices a category killer retailer can "kill" that category for other retailers.[91] A category killer is a store that dominates a given category. Toys "R" Us, established in 1957, is thought to be the first category killer, dominating the children's toys and games market.[92] For a few categories, such as electronics, home hardware, office supplies and children's toys, the products are displayed at the centre of the store and a sales person will be available to address customer queries and give suggestions when required. Rival retail stores are forced to reduce their prices if a category killer enters the market in a given geographic area. Examples of category killers include Toys "R" Us and Australia's Bunnings (hardware, DIY and outdoor supplies) and Officeworks (stationery and supplies for the home office and small office).

The Apple concept store in San Francisco immerses consumers in the Apple user experience with 6K Video Wall, user stations, free wi-fi, tech desk and more
Chain store

Chain store is one of a series of stores owned by the same company and selling the same or similar merchandise.[93] Chain stores aim to benefit from volume buying discounts and achieve cost savings through economies of scope (e.g. centralised warehousing, marketing, promotion and administration) and pass on the cost savings in the form of lower prices.

Concept store

Concept stores are similar to specialty stores in that they are very small in size, and only stock a limited range of brands or a single brand. They are typically operated by the brand that controls them. Example: L'OCCITANE en Provence. The limited size and offering of L'OCCITANE's stores is too small to be considered a specialty store. However, a concept store goes beyond merely selling products, and instead offers an immersive customer experience built around the way that a brand fits with the customer's lifestyle.[94] Examples include Apple's concept stores, Kit Kat's concept store in Japan

Co-operative store

co-operative store; also known as a co-op or coop is a venture owned and operated by consumers to meet their social, economic and cultural needs.[95]

Convenience store

A convenience store provides limited amount of merchandise at above average prices with a speedy checkout. This store is ideal for emergency and immediate purchase consumables as it often operates with extended hours, stocking every day.[96]

A department store has multiple floors and multiple spaces and are said to be 'elaborate' servicescapes
Department store

Department stores are very large stores offering an extensive assortment of both "soft" and "hard" goods which often bear a resemblance to a collection of specialty stores. A retailer of such store carries a variety of categories and has a broad assortment of goods at moderate prices. They offer considerable customer service.[97]

Destination store

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.[98]

Demographic

Retailers that aim at one particular segment (e.g., high-end retailers focusing on wealthy individuals or niche market).

Discount department store Target, Charters Towers, North Queensland, Australia
Discount store

Discount stores tend to offer a wide array of products and services, but they compete mainly on price. They offer extensive assortments of merchandise at prices lower than other retailers and are designed to be affordable for the market served. In the past, retailers sold less fashion-oriented brands. However, in more recent years companies such as TJX Companies (Own T.J. Maxx and Marshalls) and Ross Stores are discount store operations increasingly offering fashion-oriented brands on a larger scale.[99]

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. In some cases, e-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.[100]

General Store at Scarsdale, Victoria, Australia
Hawkers

Hawkers also known as a peddler, costermonger or street vendor; is a vendor of merchandise that is readily portable. Hawkers typically operate in public places such as streets, squares, public parks or gardens or near the entrances of high traffic venues such as zoos, music and entertainment venues.[101] Hawkers are a relatively common sight across Asia.

Hypermarkets

A hypermarket (also known as hypermart) provides variety and huge volumes of exclusive merchandise at low margins. The operating cost is comparatively less than other retail formats; may be defined as "a combined supermarket and discount store, at least 200000 square feet (18580 square meters) or larger, that sells a wide variety of food and general merchandise at a low price." [102]

General store

A general store is a store that supplies the main needs of the local community and is often located in outback or rural areas with low population densities. In areas of very low population density, a general store may be the only retail outlet within hundreds of miles. The general store carries a very broad product assortment - from foodstuffs and pharmaceuticals through to hardware and fuel. In addition, a general store may provide essential services such as postal services, banking services, news agency services and may also act as an agent for farm equipment and stock-food suppliers.[103]

Mall

A shopping mall has a range of retail shops at a single outlet. Retail outlets can include food and entertainment, grocery, electronics and fashion located 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.[104]

Mom-And-Pop store

A small retail outlet owned and operated by an individual or family. Focuses on a relatively limited and selective set of products.

Retail market

retail market is defined as the retail sales of all products, packed and unpacked where the sale is to end users.[105] Globally, different terms may be used to refer to a retail market. For instance, in the Middle East, a market place may be known as a bazaar or souq/souk

A store in Brazil specialises in walnuts
Specialty store

A specialty (BE: speciality) store has a narrow marketing focus -- either specializing on specific merchandise, such as toys, footwear, or clothing, or on a target audience, such as children, tourists, or plus-size women.[106] 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.[106] 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.[106] They differ from department stores and supermarkets which carry a wide range of merchandise.[107]

Inside a supermarket in Russia
Supermarket

A supermarket is a self-service store consisting mainly of grocery and limited products on non-food items.[108] 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.

Variety store

Variety stores offer extremely low-cost goods, with a vast array of selection. The downfall to this is that the items are not very high quality.[109]

NESCAFE vending machine
Vending machine

A vending machine is an automated piece of equipment wherein customers can drop the money in the machine which dispenses the customer's selection. The vending machine is a pure self-service option. Machines may carry a phone number which customers can call in the event of a fault.[110]

Some stores take a no frills approach, while others are "mid-range" or "high end", depending on what income level they target.

Warehouse club

Warehouse clubs are membership-based retailers that usually sell a wide variety of merchandise, in which customers may buy large, wholesale quantities of the store's products, which makes these clubs attractive to both bargain hunters and small business owners. The clubs are able to keep prices low due to the no-frills format of the stores. In addition, customers may be required to pay annual membership fees in order to shop.[111]

Warehouse store

Warehouse stores are retailers housed in warehouses, and offer low-cost, often high-quantity goods with minimal services, e.g. goods are piled on pallets or steel shelves.[112]

Other retail types

Other types of retail store include:

  • Automated retail stores -- self-service, robotic kiosks located in airports, malls and grocery stores. The stores accept credit cards and are usually open 24/7. Examples include ZoomShops and Redbox.
  • Big-box stores -- encompass larger department, discount, general merchandise, and warehouse stores.
  • Second-hand retail

Some shops sell second-hand goods. In the case of a nonprofit shop, the public donates goods to the shop to be sold. In give-away shops goods can be taken for free.

  • Pawnbrokers Another form is the pawnshop, in which goods are sold that were used as collateral for loans. There are also "consignment" shops, which are where a person can place an item in a store and if it sells, the person gives the shop owner a percentage of the sale price. The advantage of selling an item this way is that the established shop gives the item exposure to more potential buyers. E-tailers like OLX and Quikr also offer second-hand goods.

Retailers can opt for a format as each provides different retail mix to its customers based on their customer demographics, lifestyle and purchase behaviour. A good format will lend a hand to display products well and entice the target customers to spawn sales.

Global top ten retailers

Worldwide Top Ten Retailers[113]
Rank Company Country of Origin 2015 revenue ($US million) Dominant format 2015 Number of countries

of operation 2015

1 Walmart  United States $482,130 Hypermarket/Supercenter/Superstore 30
2 Costco  United States $116,199 Cash & Carry/Warehouse Club 10
3 Kroger  United States $109,830 Supermarket 1
4 Schwarz-Gruppe  Germany $94,448 Discount Store 26
5 Walgreens  United States $89,631 Drug Store/Pharmacy 10
6 The Home Depot  United States $88,519 Home Improvement 4
7 Carrefour  France $84,856 Hypermarket/Supercenter/Superstore 35
8 Aldi  Germany $82,164 Discount Store 17
9 Tesco  United Kingdom $81,019 Hypermarket/Supercenter/Superstore 10
10 Amazon  United States $79,268 Non-Store 14

Competition

Retail stores may or may not have competitors close enough to affect their pricing, product availability, and other operations. A 2006 survey found that only 38% of retail stores in India believed they faced more than slight competition.[114] Competition also affected less than half of retail stores in Kazakhstan, Bulgaria, and Azerbaijan. In all countries the main competition was domestic, not foreign.[115]

Country  % of retail stores facing competition[116]
India 38%
Kazakhstan 44%
Bulgaria 46%
Azerbaijan 48%
Uzbekistan 58%
Armenia 58%
Georgia 59%
Kyrgyzstan 59%
Russia 62%
Belarus 64%
Croatia 68%
Romania 68%
Ukraine 72%
Turkey 73%
Serbia 74%
Tajikistan 74%
Slovenia 77%
Latvia 78%
Bosnia and Herzegovina 79%
Moldova 79%
Czech Republic 80%
Slovakia 80%
Poland 83%
Hungary 87%
Estonia 88%
Lithuania 88%
Macedonia 88%
Albania 89%

Retail trade provides 9% of all jobs in India and 14% of GDP.[117]

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 loss in Business.

Statistics for national retail sales

United States

The United States retail sector features the largest number of large, lucrative retailers in the world. A 2012 Deloitte report published in STORES magazine indicated that of the world's top 250 largest retailers by retail sales revenue in fiscal year 2010, 32% of those retailers were based in the United States, and those 32% accounted for 41% of the total retail sales revenue of the top 250.[118]

U.S. Monthly Retail Sales, 1992-2010

Since 1951, the U.S. Census Bureau has published the Retail Sales report every month. It is a measure of consumer spending, an important indicator of the US GDP. Retail firms provide data on the dollar value of their retail sales and inventories. A sample of 12,000 firms is included in the final survey and 5,000 in the advanced one. The advanced estimated data is based on a subsample from the US CB complete retail & food services sample.[119]

Central Europe

In 2011, the grocery market in six countries of Central Europe was worth nearly EUR107bn, 2.8% more than the previous year when expressed in local currencies. The increase was generated foremost by the discount stores and supermarket segments, and was driven by the skyrocketing prices of foodstuffs. This information is based on the latest PMR report entitled Grocery retail in Central Europe 2012[120]

World

The two largest supermarkets chains in Switzerland, Migros and Coop, are cooperatives.

National accounts show a combined total of retail and wholesale trade, with hotels and restaurants. in 2012 the sector provides over a fifth of GDP in tourist-oriented island economies, as well as in other major countries such as Brazil, Pakistan, Russia, and Spain. In all four of the latter countries, this fraction is an increase over 1970, but there are other countries where the sector has declined since 1970, sometimes in absolute terms, where other sectors have replaced its role in the economy. In the United States the sector has declined from 19% of GDP to 14%, though it has risen in absolute terms from $4,500 to $7,400 per capita per year. In China the sector has grown from 7.3% to 11.5%, and in India even more, from 8.4% to 18.7%. Emarketer predicts China will have the largest retail market in the world in 2016.[121]

In 2016, China became the largest retail market in the world.[122]

Retail trade, wholesale, hotels and restaurants (data from the United Nations)[123]
Economy As % of GDP, 1970 As % of GDP, 2012 1970 Value per Capita (2012 Prices) 2012 Value per Capita
Afghanistan 13.1 8.4 $140 $58
Albania 11.5 22.5 $188 $858
Algeria 17.3 11.9 $572 $639
Andorra 40.5 26.5 $17,532 $10,915
Angola 12.6 15.0 $513 $839
Anguilla 33.9 27.8 $2,166 $5,577
Antigua and Barbuda 26.4 26.8 $1,081 $3,540
Argentina 15.4 15.7 $1,041 $1,825
Armenia 15.2 $510
Aruba 26.9 19.1 $1,140 $4,757
Australia 11.4 11.7 $3,736 $7,960
Austria 17.4 18.8 $3,281 $8,782
Azerbaijan 9.0 $668
Bahamas 28.0 24.5 $5,335 $5,299
Bahrain 12.5 6.4 $3,046 $1,478
Bangladesh 15.9 15.1 $61 $124
Barbados 26.1 24.3 $2,879 $3,890
Belarus 16.8 $1,127
Belgium 12.9 14.2 $2,606 $6,189
Belize 17.0 20.3 $297 $972
Benin 17.7 17.4 $89 $131
Bermuda 17.6 11.2 $8,907 $9,648
Bhutan 8.2 8.2 $30 $205
Bolivia 9.1 11.1 $168 $286
Bosnia and Herzegovina 17.9 $807
Botswana 9.2 16.8 $60 $1,206
Brazil 16.4 21.3 $756 $2,413
British Virgin Islands 19.7 27.2 $2,178 $8,821
Brunei Darussalam 1.0 3.7 $495 $1,536
Bulgaria 14.6 13.8 $272 $966
Burkina Faso 14.9 14.2 $46 $92
Burundi 8.1 18.9 $16 $43
Cambodia 16.6 14.5 $86 $137
Cameroon 27.0 20.4 $270 $245
Canada 13.6 13.0 $3,586 $6,788
Cape Verde 24.5 18.7 $269 $718
Cayman Islands 12.0 12.2 $3,544 $7,175
Central African Republic 14.0 13.5 $100 $65
Chad 20.5 12.6 $122 $103
Chile 14.9 11.7 $780 $1,801
China 7.3 11.5 $20 $700
China: Hong Kong SAR 19.1 29.3 $1,197 $10,772
China: Macao SAR 8.0 14.9 $592 $11,629
Colombia 13.0 12.4 $439 $959
Comoros 26.2 14.5 $232 $125
Congo 13.2 5.4 $256 $185
Cook Islands 13.7 39.6 $1,069 $5,912
Costa Rica 19.9 16.3 $805 $1,531
Croatia 15.4 $2,012
Cuba 18.4 15.2 $432 $959
Cyprus 13.6 18.8 $958 $4,975
Czech Republic 13.2 $2,429
Czechoslovakia (Former) 8.0 $127
Korea, North D.P.R. 11.7 18.3 $231 $107
Democratic Republic of the Congo
Denmark 20.5 15.5 $6,169 $8,708
Djibouti 45.0 18.6 $1,470 $294
Dominica 9.6 15.0 $163 $1,046
Dominican Republic 17.2 18.7 $270 $1,073
Ecuador 8.3 12.6 $195 $713
Egypt 11.0 14.4 $75 $454
El Salvador 22.6 21.2 $534 $804
Equatorial Guinea 6.4 0.9 $56 $185
Eritrea 19.4 $98
Estonia 14.0 $2,432
Ethiopia 18.6 $84
Ethiopia (Former) 8.4
Fiji 8.3 18.6 $216 $848
Finland 12.3 13.3 $2,268 $6,103
France 14.8 15.0 $2,969 $5,933
French Polynesia 14.7 16.1 $2,142 $4,212
Gabon 28.1 12.1 $2,918 $1,787
Gambia 27.1 28.8 $143 $147
Georgia 18.9 $685
Germany 12.2 11.4 $2,273 $4,736
Ghana 5.3 10.9 $58 $175
Greece 19.6 20.2 $2,469 $4,527
Greenland 14.0 10.5 $2,219 $4,326
Grenada 18.2 12.3 $294 $913
Guatemala 17.5 21.6 $385 $720
Guinea 34.0 16.2 $132 $86
Guinea-Bissau 20.7 19.4 $124 $99
Guyana 18.9 15.1 $388 $543
Haiti 17.4 18.4 $168 $130
Honduras 17.2 17.1 $247 $399
Hungary 9.8 14.1 $531 $1,760
Iceland 11.3 11.0 $1,873 $4,585
India 8.4 18.7 $31 $283
Indonesia 17.7 13.9 $120 $494
Iran (Islamic Republic of) 10.6 11.6 $473 $834
Iraq 8.2 6.4 $215 $290
Ireland 17.6 18.0 $2,293 $8,295
Israel 9.8 10.0 $1,346 $3,145
Italy 16.0 15.0 $2,755 $4,963
Ivory Coast 21.7 14.7 $353 $181
Jamaica 19.4 22.4 $1,056 $1,197
Japan 15.6 13.9 $3,004 $6,525
Jordan 17.9 10.1 $478 $445
Kazakhstan 16.8 $2,086
Kenya 6.8 13.2 $49 $125
Kiribati 12.4 8.6 $439 $150
Kosovo 18.1 $508
Kuwait 8.3 3.2 $13,693 $1,797
Kyrgyzstan 19.7 $233
Laos People's DR 14.2 20.3 $44 $278
Latvia 17.9 $2,467
Lebanon 31.4 27.6 $2,829 $2,522
Lesotho 13.0 9.0 $46 $108
Liberia 11.1 5.0 $106 $18
Libya 2.8 4.9 $543 $763
Liechtenstein 19.9 17.8 $12,763 $28,361
Lithuania 19.9 $2,782
Luxembourg 13.8 13.4 $5,010 $14,141
Madagascar 8.7 11.0 $70 $49
Malawi 3.7 19.8 $10 $70
Malaysia 12.4 16.5 $229 $1,716
Maldives 29.8 30.8 $252 $2,373
Mali 7.3 16.2 $23 $112
Malta 28.7 15.8 $1,104 $3,238
Marshall Islands 24.5 16.1 $531 $607
Mauritania 2.1 7.1 $20 $72
Mauritius 10.0 19.3 $167 $1,782
Mexico 19.3 17.8 $1,063 $1,739
Micronesia 13.1 15.1 $219 $477
Monaco 39.1 30.3 $34,091 $46,027
Mongolia 21.4 11.9 $237 $439
Montenegro 22.6 $1,475
Montserrat 19.4 7.6 $1,051 $974
Morocco 22.5 12.4 $253 $365
Mozambique 12.7 17.6 $31 $102
Myanmar 25.9 20.1 $48 $226
Namibia 8.0 14.7 $326 $832
Nauru 14.8 16.8 $7,812 $2,014
Nepal 4.7 15.4 $14 $101
Netherlands 16.4 15.8 $3,702 $7,283
Netherlands Antilles 16.4 18.2 $1,417 $3,349
New Caledonia 34.7 13.3 $9,624 $5,169
New Zealand 15.5 12.2 $3,607 $4,689
Nicaragua 15.3 16.5 $352 $289
Niger 10.6 14.1 $71 $56
Nigeria 14.6 15.9 $148 $247
Norway 16.7 8.5 $6,109 $8,521
Oman 1.7 7.7 $111 $1,822
Pakistan 18.8 20.6 $99 $248
Palau 16.3 31.2 $1,565 $3,200
Panama 16.8 19.6 $497 $1,864
Papua New Guinea 13.9 9.3 $243 $204
Paraguay 18.3 19.9 $304 $771
Peru 14.2 18.6 $583 $1,271
Philippines 10.7 19.4 $153 $501
Poland 9.2 20.2 $398 $2,590
Portugal 13.7 19.6 $1,119 $3,926
Puerto Rico 16.7 9.4 $2,024 $2,635
Qatar 5.0 5.6 $5,647 $5,208
Korea, South 17.1 11.8 $345 $2,712
Moldova 17.8 $367
Romania 3.1 7.1 $73 $557
Russian Federation 20.7 $2,934
Rwanda 9.9 15.7 $35 $97
Saint Kitts and Nevis 8.4 12.6 $256 $1,800
Saint Lucia 20.6 23.4 $527 $1,707
Samoa 14.8 23.6 $312 $851
San Marino 15.8 12.9 $5,282 $7,643
Sao Tome and Principe 25.5 26.2 $273 $363
Saudi Arabia 4.6 8.2 $799 $2,067
Senegal 22.7 20.4 $218 $207
Serbia 11.0 $582
Seychelles 32.7 29.4 $1,039 $3,285
Sierra Leone 12.9 7.6 $93 $55
Singapore 27.8 19.5 $2,008 $10,179
Slovakia 26.6 $4,470
Slovenia 14.4 $3,155
Solomon Islands 10.2 10.5 $121 $193
Somalia 9.3 10.6 $21 $14
South Africa 14.4 16.0 $847 $1,171
South Sudan 15.4 $143
Spain 15.1 21.4 $1,956 $6,060
Sri Lanka 14.5 20.8 $94 $586
St. Vincent and the Grenadines 12.6 16.5 $231 $1,045
State of Palestine 16.7 18.4 $136 $448
Sudan 16.8 $232
Sudan (Former) 16.8 $0
Suriname 18.3 23.3 $915 $2,183
Swaziland 15.5 9.8 $197 $306
Sweden 12.1 12.8 $3,315 $7,056
Switzerland 19.9 17.8 $10,641 $14,080
Syrian Arab Republic 20.4 22.7 $184 $482
Tajikistan 20.3 $193
Macedonia 16.5 $749
Thailand 24.3 18.0 $239 $1,039
Timor-Leste 4.0 $195
Togo 23.5 8.2 $195 $49
Tonga 12.7 14.6 $214 $646
Trinidad and Tobago 18.9 17.1 $1,323 $2,966
Tunisia 11.7 13.5 $147 $558
Turkey 11.1 16.5 $437 $1,757
Turkmenistan 4.2 $274
Turks and Caicos Islands 38.2 38.0 $1,557 $8,520
Tuvalu 9.5 11.2 $182 $451
Tanzania: Mainland, see also Zanzibar 15.0 15.8 $51 $96
Uganda 11.8 22.3 $50 $133
Ukraine 17.5 $679
United Arab Emirates 15.4 12.1 $24,122 $5,024
United Kingdom 15.3 16.5 $2,662 $6,490
United States 19.0 14.5 $4,488 $7,436
Uruguay 12.9 16.5 $810 $2,419
USSR (Former) 8.1
Uzbekistan 9.9 $178
Vanuatu 18.2 21.4 $266 $651
Venezuela 9.5 16.4 $1,152 $2,099
Vietnam 12.9 16.8 $39 $289
Yemen 16.3 $224
Yemen Arab Republic (Former) 13.7
Yemen Democratic (Former) 21.2
Yugoslavia (Former) 10.4
Zambia 12.6 15.0 $244 $229
Zanzibar 18.2 $119
Zimbabwe 14.9 10.7 $125 $77

Consolidation

Among retailers and retails chains a lot of consolidation has appeared over the last couple of decades. Between 1988 and 2010, worldwide 40,788 mergers & acquisitions with a total known value of 2.255 trillion USD have been announced.[124] The largest transactions with involvement of retailers in/from the United States have been: the acquisition of Albertson's Inc. for 17 bil. USD in 2006,[125] the merger between Federated Department Stores Inc with May Department Stores valued at 16.5 bil. USD in 2005[126] - now Macy's, and the merger between Kmart Holding Corp and Sears Roebuck & Co with a value of 10.9 bil. USD in 2004.[127]

See also

Types of sales person

Types of store or shop:

Influential thinkers in sales and retail [128]

  • Dale Carnegie - author and lecturer; proponent of salesmanship, public speaking and self-improvement
  • Marshall Field - pioneer of quality retailing; retail innovations included unconditional refunds, consistent pricing and international imports
  • Edward Filene (1860-1937) - pioneer of modern retailing methods
  • Fred Lazarus, Jr. - turned his family's small department store into a multimillion-dollar operation; known for a number of retail firsts such as the concept of "one low price" (in which no bargaining was required)
  • E. St. Elmo Lewis - salesmen for NCR and developer of the AIDA model of selling
  • Rowland Hussey Macy - founder of Macy's department store; employed publicity devices such as a store Santa Claus, themed exhibits, and illuminated window displays to draw in customers
  • Walter Dill Scott - psychologist and author; wrote a number of books on the psychology of selling in the early twentieth century
  • William Thomas Rawleigh -founder of Rawleigh's company with one of the largest travelling sales teams in the United States
  • Harry Gordon Selfridge - founder of UK Selfridges; redefined shopping away from essential errand to a pleasurable activity
  • Sam Walton - pioneering businessman; demonstrated that large budget-priced department stores could be profitable in small, rural areas; built the Wal-Mart chain
  • Montgomery Ward - pioneer of mail order retailing
  • Thomas J. Watson -salesman at NCR and CEO of IBM; often described as the "greatest American salesman"
  • John Wanamaker - pioneer of the department store; is credited with innovations in merchandising including the 'White Sale' and the first in-store restaurant; known for his humanist policies on employee relations.

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  127. ^ "Kmart Finalizes Transaction With Sears". Searsholdings.com. 29 September 2004. Retrieved . 
  128. ^ The names cited in this section are based on the names of retailers cited in Tsang, D., Kazeroony, H.H. and Ellis, G., The Routledge Companion to International Management Education, Oxon, Routledge, 2013, pp 119-120

Further reading

  • Hollander, S.C., "Who and What are Important in Retailing and Marketing History: A Basis for Discussion," in S.C. Hollander and R. Savitt (eds) First North American Workshop on Historical Research in Marketing, Lansing, MI: Michigan State University, 1983, pp. 35-40.
  • Jones, F., "Retail Stores in the United States, 1800-1860," Journal of Marketing, October, 1936, pp 135-140
  • Krafft, Manfred; Mantrala, Murali K., eds. (2006). Retailing in the 21st Century: Current and Future Trends. New York: Springer Verlag. ISBN 3-540-28399-4. 
  • Nystrom, P.H., "Retailing in Retrospect and Prospect," in H.G. Wales (ed.) Changing Perspectives in Marketing, Urbana: University of Illinois Press, 19951, pp. 117-138.

External links


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