What is Retail? The following are definitions, types, examples, and retail marketing strategies

 The term “retail” is a broad term that includes large industries that employ hundreds of thousands of people. But how exactly does one define what retail is, and what should individuals understand about the industry in general?

Definition of Retail

Retail is the sale of goods to end users, not for resale, but for use and consumption by buyers. Retail business involves selling merchandise from a point of purchase directly to customers who intend to use that product.

The single point of purchase can be a conventional retail store, an online shopping site or through a catalog listing.

Retail transactions are at the end of the production chain. Producers sell products in large quantities to retailers, and retailers try to sell the same amount of products to consumers.

What is Retail? The following are definitions, types, examples, and retail marketing strategies

Why is Retail Important?

After knowing what retail means, the next step is to find out why the retail business is so important

The retail process is the last link in the supply chain between producers and consumers. Retailers are important because they allow manufacturers to focus on producing goods without having to be distracted by the large amount of effort required to interact with customers and end users who want to buy those goods.

Retailers must make purchasing goods easy for consumers. It's why retail stores have salespeople, or why Internet shopping websites have instant customer service popups, and why catalogs have great descriptions, and photos.

Retail is about displaying products, describing product features and benefits, storing products, processing payments, and doing whatever it takes to get the right product at the right price to the right customer at the right time.

Some retailers offer additional services for retail transactions such as personal shopping consultations and gift wrapping to add something extra to the retail customer experience and go beyond the experience of other retail customers.

Retail Function

Retailers have many important functions that must be performed to facilitate product sales. What are the functions of retail? Here are some of them:


Manufacturers produce large quantities of similar goods and like to sell their inventory to a few buyers who buy a lot.

While customers want many types of goods from different manufacturers to choose from. Retailers balance the demands of both parties by collecting and sorting goods from different sources and placing them according to customer needs.

Buy in bulk

Retailers buy goods from manufacturers and wholesalers in large quantities but sell to customers in small quantities.

Communication Channel

Since retail involves direct contact with end consumers, it forms a very important communication channel for both companies and manufacturers. Manufacturers try to communicate the advantages of their products as well as offers and discounts through retailers.

Retailers also act as mediators between companies and customers and communicate feedback provided by customers back to manufacturers or wholesalers.


Retail store is the final channel where the actual decision is made. Hence, they act as an important marketing channel for brands. Smart placement, banners, advertisements, offers and other strategies are executed by manufacturers to increase their sales in retail stores.

What's the difference between Retail and Wholesale?

retail differences with wholesale

Wholesalers sell in bulk without worrying about many aspects of retail that consumers expect, such as visual merchandising. Wholesalers don't want to deal with a large number of end user customers. Instead, their goal is to sell large quantities of products to a small number of retail establishments.

It is very rare for wholesalers to sell goods directly to end consumers. Usually they sell to retail stores to re-market to end consumers.

Wholesale stores usually sell products in large quantities which allows them to sell at a lower price than retail selling products in small quantities of the merchandise displayed in stores that have high rents.

The big difference between wholesale and retail is the price. Retail prices are always higher than wholesale prices.

The reason for this is because the additional costs of selling merchandise to end-user customers—labor, rent, advertising, and so on are built into the price of the merchandise.

Wholesalers do not have to deal with such expenses, which allows them to sell goods at a lower cost.

Retail Characteristics

Knowing what retail is can actually be differentiated from wholesale or manufacturing clearly because of its different characteristics which include:

1. Direct contact with customers: Retail involves direct contact with end customers and is a mediator between wholesalers and customers or manufacturers and customers depending on the distribution channels used.

2. Relationship with customers: Retailers form bonds with customers and help them decide which products and services they should choose for themselves.

3. Small stock of goods: Retailers or retailers usually keep goods in small quantities compared to manufacturers and wholesalers.

4. Storing goods under different brands: Retailers usually stock different goods under different brands according to the demand in the market.

5. Customer contact with the company: Retail acts as a company representative to the end customers providing them with input and suggestions.

6. Limited shelf space: Retail stores usually have very limited shelf space and only stock items that are in good demand.

7. Selling goods at the maximum price: Since retail involves selling products directly to customers, it also witnesses the maximum price of the product.

Effective Retail Marketing Strategy

Different retail marketing strategies can be planned and used for different types of retail outlets. Elements to consider when developing a retail marketing strategy are:

  •      Target Market: The market segment served by the retail outlets.
  •      Retail Format: This is a retail mix of retailer and store type (ownership-based, franchise-based, discount store, etc.)
  •      Continuous Competitive Advantage: Advantage over competitors.

The main objective of a retail marketing strategy is to differentiate retail stores from the competition by setting up and promoting a sustainable competitive advantage that leads to increased sales like up selling strategy, cold calling, social media and online promotion, etc.

The contours of a retail marketing strategy include:

Retail Branding

Setting up a good brand name, logo and retail store positioning is one of the retail marketer's top priorities. Customers are more motivated to purchase products from branded retail stores than non-branded ones.

Price reduction

The best way to attract customers is to provide goods of the same quality (and quantity) at a lower price than competitors.

Limited Period Discounts & Offers

Limited-period offers and discounts increase sales temporarily and can help word-of-mouth marketing and get more customers (and returning customers).

Strategic Placement

Strategically placing items where customers are most likely to buy them is a great strategy for increasing sales. A perfect example is a small inexpensive product placement on the billing desk.

Attractive Store Design

Store design is the first point of contact for customers. Stores are designed for the people they serve to outperform those they don't. The colorful, kid-friendly product placement is perfect for a toy store while the classy look and colors suit a store selling men's suits.


The better it looks in the store, the more likely the customer will buy it. A clever visual merchandising strategy helps increase sales substantially.

Loyalty Program

Loyalty programs are designed for better company-customer relations. This program involves exclusive discounts and offers for regular customers.

Strategic In-Store Advertising

People often prefer advertised brands over non-advertised brands in stores. The strategic placement of such advertisements can substantially increase the sales of a particular brand or product.

Train Employees to Be Smarter

Retail store employees play a very important role in the customer decision-making process. They can make or break customer product decisions with the help of relationship and selling skills.

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