Retail involves the process of selling consumer goods or services to customers through multiple channels of distribution to earn a profit. Demand is identified and then satisfied through a supply chain. Attempts are made to increase demand through advertising. In the 2000s, an increasing amount of retailing began occurring online using electronic payment and delivery via a courier or via postal mail. Retailing as a sector includes subordinated services, such as delivery. The term "retailer" is also applied where a service provider services the small orders of a large number of individuals, rather than large orders of a small number of wholesale, corporate or government clientele. Shops may be on residential streets, streets with few or no houses, or in a shopping mall. 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.

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 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.

Retail strategy

The retailing strategy is a marketing plan abstractly designed to offer its products and services in a way that will optimize customer satisfaction. Service quality and marketing mix strategy have significant and positive association on customer loyalty. The marketing strategy effectively outlines all key aspects of firms targeted audience; demographic and preference. Throughout 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 is designed to complement the retail strategy through theoretical tools such as the product, its quality and value, the promotions, place, and price.

Retail store design strategy

The design of a retail store is critical when appealing to its intended market, as this is where first impressions are made. It can influence a consumer’s perception of the quality of the store, visually communicating value. Certain techniques are used to create a consumer brand experience, which in the long run drives brand loyalty. The front of the store is paid close attention too, known as the “decompression zone" This is usually an open space in the entrance of the store to allow customers to adjust to their new environment. An open planned floor design is effective in retail as it allows customers to see everything. Depending on what side of the road cars drive on in the country, determines what way the store will direct its customers. New Zealand retailer stores for instances would direct customers to the left. Brands are now recognizing that human nature has a conceptual profile and a sensory profile. Through the notions of sensory stimulation retailers can engage maximum emotional impact between a brand and its consumers by relating to both profiles; the goal and experience. By achieving so it can influence purchasing behavior maximizing outcomes. This is done through the relation of touch, smell, sight, taste and noise. It is common for a retailer store to play music that relates to their targeted market. Jewelry stores like Michel Hill have dim lighting to creating a sense of intimacy. Super markets offer taste testers. Clothing garments are at arms reach, allowing customers to feel the different textures of clothing. Wooden floors also contrast with the carpeted fitting rooms, which is designed to create a sense of homeliness when trying on garments. ‘Peter Alexandra’ is renowned for their scented candles. These aspects outlined add to the sensory experience put in place to strategically achieve customer satisfaction and retention. This will create future opportunity and help a brand stand out in amongst the competitive market.

Types of retail outlets

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.

Types by products

Retail is usually classified by the following type of products:

Types by marketing strategy

These are the following types of retailers by marketing strategy:

Department store

Department stores are very large stores offering a huge assortment of "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 an average price. They offer considerable customer service.

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 affordable and cut-rate prices. 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.

Warehouse store

Warehouses that offer low-cost, often high-quantity goods piled on pallets or steel shelves; warehouse clubs charge a membership fee.

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.


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


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

Specialty store

A specialty (BE: speciality) store has a narrow marketing focus — either specializing on specific merchandise, such as toys, shoes, or clothing, or on a target audience, such as children, tourists, or plus-size women.[6] 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.[6] 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.[6] They differ from department stores and supermarkets which carry a wide range of merchandise.[2]


Boutique or concept stores are similar to specialty stores. Concept stores are very small in size, and only ever stock one brand. They are run by the brand that controls them. An example of brand that distributes largely through their own widely distributed concept stores is L'OCCITANE en Provence. The limited size and offering of L'OCCITANE's stores are too small to be considered a specialty store proper.

General store

A general store is a rural store that supplies the main needs for the local community.

Convenience store

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


Provides variety and huge volumes of exclusive merchandise at low margins. The operating cost is comparatively less than other retail formats.


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


A shopping mall has a range of retail shops at a single outlet. They can include products, food and entertainment 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.[2]

"Category killer" or specialist

By supplying wide assortment in a single category for lower prices a category killer retailer can "kill" that category for other retailers. For few categories, such as electronics, the products are displayed at the centre of the store and sales person will be available to address customer queries and give suggestions when required. Other retail format stores are forced to reduce the prices if a category specialist retail store is present in the vicinity.


The customer can shop and order through the internet and the merchandise is dropped at the customer's doorstep or an e-tailer. Here the 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.

Vending machine

A vending machine is an automated piece of equipment wherein customers can drop the money in the machine and acquire the products. Some stores take a no frills approach, while others are "mid-range" or "high end", depending on what income level they target.

Other 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.

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[8][9]
RankCompanyCountry of Origin2013 revenue ($US million)
1Walmart United StatesDecrease $464,162
2Tesco United KingdomIncrease $120,052
3Costco United StatesIncrease$105,156
4Carrefour FranceIncrease $103,555
5Kroger United StatesDecrease $96,751 United StatesIncrease $88,988
7Lidl GermanyIncrease $87,236
8Metro AG GermanyDecrease $85,832
9The Home Depot United StatesIncrease $74,754
10Aldi GermanyIncrease $73,035


Retail pricing

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.

In Western countries, retail prices are often called psychological prices or odd prices. Often prices are fixed and displayed on signs or labels. Alternatively, when prices are not clearly displayed, there can be price discrimination, where the sale price is dependent upon who the customer is. For example, a customer may have to pay more if the seller determines that he or she is willing and/or able to. Another example would be the practice of discounting for youths, students, or senior citizens.


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.[10] Competition also affected less than half of retail stores in Kazakhstan, Bulgaria, and Azerbaijan. In all countries the main competition was domestic, not foreign.

Country % of retail stores facing competition
Bosnia and Herzegovina79%
Czech Republic80%

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


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.[11]

Transfer mechanisms

There are several ways in which consumers can receive goods from a retailer:

  • 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. jewelry) 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.
  • 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 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.

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.

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,Quikr etc. also working on second hand goods sales.


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.

Sales techniques

Every retail store operates under the goal of overcoming the other competition in the market to create brand dominance and/or large profit. This is done by different sales techniques created and/or adopted by retailers. Techniques include hiring staff which are deemed attractive by the target demographic (Physical appearance, smell, sound and behavior all attribute to a persons attractiveness). other techniques include store location, somewhere easily visible with lots of traffic (Traffic can be but not limited to pedestrians or vehicles). Also stores create custom interior design to suit the stores personality and the target market. Some of the largest retailers spend millions on a stores marketing technique to invite customers in to spend their time and money. . As consumers have grown from the days of wandering in and buying goods or services just for the face value to being informed on products and how they are made companies focus on the values of society such as being sustainable or being fair trade approved. Conscious consumers are attracted by the stores morals of being righteous and thus creating a strong brand image that stands our from the competition. 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

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.

Customer service

Customer service is the "sum of acts and elements that allow consumers to receive what they need or desire from your 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. When a customer enters the store, it is important that the sales associate does everything in his power to make the customer feel welcomed, important, and make sure he leaves the store satisfied. Giving the customer full, undivided attention and helping him find what he is looking for will contribute to the customer's satisfaction. For retail store owners, it is extremely important to train yourself and your staff to provide excellent customer service skills. By providing excellent customer service, you build a good relationship with the customer and eventually will attract more new customers and turn them into regular customers. Looking at long term perspectives, excellent customer skills give your retail business a good ongoing reputation and competitive advantage. Customer service is essential for several reasons.[12] By exemplifying these valued qualities for a customer; companies utilize the experience the customer walks away with. Thus, setting the example for providing "great customer service." An organization who trains their employees about properly servicing the customer will benefit more than those who do not. Customer service training entails about how properly servicing the customer will benefit corporations and businesses. This being said, it is important to establish a bond amongst customers-employees known as Customer relationship management.

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.

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.[15]

Central Europe

In 2011, the grocery market in six countries of Central Europe was worth nearly €107bn, 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[16]


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%.

Retail trade, wholesale, hotels and restaurants (data from the United Nations)[17]
EconomyAs % of GDP, 1970As % of GDP, 20121970 Value per Capita (2012 Prices)2012 Value per Capita
Antigua and Barbuda26.426.8$1,081$3,540
Bosnia and Herzegovina17.9$807
British Virgin Islands19.727.2$2,178$8,821
Brunei Darussalam1.03.7$495$1,536
Burkina Faso14.914.2$46$92
Cabo Verde24.518.7$269$718
Cayman Islands12.012.2$3,544$7,175
Central African Republic14.013.5$100$65
China: Hong Kong SAR19.129.3$1,197$10,772
China: Macao SAR8.014.9$592$11,629
Cook Islands13.739.6$1,069$5,912
Costa Rica19.916.3$805$1,531
Czech Republic13.2$2,429
Czechoslovakia (Former)8.0$127
Korea, North D.P.R.11.718.3$231$107
Democratic Republic of the Congo
Dominican Republic17.218.7$270$1,073
El Salvador22.621.2$534$804
Equatorial Guinea6.40.9$56$185
Ethiopia (Former)8.4
French Polynesia14.716.1$2,142$4,212
Iran (Islamic Republic of)10.611.6$473$834
Ivory Coast21.714.7$353$181
Laos People's DR14.220.3$44$278
Marshall Islands24.516.1$531$607
Netherlands Antilles16.418.2$1,417$3,349
New Caledonia34.713.3$9,624$5,169
New Zealand15.512.2$3,607$4,689
Papua New Guinea13.99.3$243$204
Puerto Rico16.79.4$2,024$2,635
Korea, South17.111.8$345$2,712
Russian Federation20.7$2,934
Saint Kitts and Nevis8.412.6$256$1,800
Saint Lucia20.623.4$527$1,707
San Marino15.812.9$5,282$7,643
Sao Tome and Principe25.526.2$273$363
Saudi Arabia4.68.2$799$2,067
Sierra Leone12.97.6$93$55
Solomon Islands10.210.5$121$193
South Africa14.416.0$847$1,171
South Sudan15.4$143
Sri Lanka14.520.8$94$586
St. Vincent and the Grenadines12.616.5$231$1,045
State of Palestine16.718.4$136$448
Sudan (Former)16.8$0
Syrian Arab Republic20.422.7$184$482
Trinidad and Tobago18.917.1$1,323$2,966
Turks and Caicos Islands38.238.0$1,557$8,520
Tanzania: Mainland, see also Zanzibar15.015.8$51$96
United Arab Emirates15.412.1$24,122$5,024
United Kingdom15.316.5$2,662$6,490
United States19.014.5$4,488$7,436
USSR (Former)8.1
Yemen Arab Republic (Former)13.7
Yemen Democratic (Former)21.2
Yugoslavia (Former)10.4


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.[18] 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,[19] the merger between Federated Department Stores Inc with May Department Stores valued at 16.5 bil. USD in 2005[20] - now Macy's, and the merger between Kmart Holding Corp and Sears Roebuck & Co with a value of 10.9 bil. USD in 2004.[21]

Types of store or shop: