This article is part of a larger series on Retail Management.
Retail is when a business sells (typically physical) products to consumers, with retailing the act of conducting retail business. Ecommerce and omnichannel selling have blurred the lines of physical and online retail, so retail is a term that often encompasses all selling of goods—digitally or in-store.
Despite the growth of online commerce, consumers still demand an in-person experience at some point in their journey. This can be through your own store, at someone else’s store, or even via temporary retail activations like pop-up shops, trade shows, or markets.
Did you know?
The first department store was Bon Marché in Paris, founded in the early 19th century.
How Retail Works
If you’re interested in starting a retail business, it’s helpful to understand how the retail supply chain works at a high level.
Did you know?
The first black-owned retail shopping center was founded in Philadelphia in 1968 when Reverend Leon Sullivan opened Progress Plaza.
Types of Retail
There are many retail types out there, especially as the term has become more flexible and encompasses more things.
However, the following are not considered retail:
- Service-based businesses that don’t sell any products, such as dog grooming, beauty salons, etc.
- Multilevel marketing (MLM) schemes with in-person networking and selling
- Utilities or services such as internet, water, electricity, etc.
Perhaps the most traditional type of retail is the permanent brick-and-mortar store. Businesses may own or even lease the retail space with plans to be there for a long time. Permanent retail shops might sell their own items or sell items from other suppliers—or a mixture of both.
- Store Management: How to Manage a Retail Store for Success
- Retail Store Design Ideas to Increase Sales
Selling wholesale is when a manufacturer or supplier sells its items to a physical retail store, which then sells those items to its customers. Selling wholesale is a nice business model because although you sell your items at a discounted price, wholesale customers place larger orders—the discount is an exchange for high-volume orders. Plus, you don’t have to work to make those sales.
A pop-up shop is a temporary retail activation that may last a single day or for several months. It is an impermanent retail store that allows people to interact with your brand and products in person. Pop-up shops are great for building buzz, testing or entering new markets, and experimenting with retail before investing in a full-blown store.
Markets are also retail opportunities, allowing merchants to set up small tables or booths and sell directly to consumers. They could be regular community-based or farmers markets or one-time special events. The risk is small when it comes to selling in markets, as you typically only need to pay a small vendor fee.
Other events also offer a venue for retailing. You might participate in festivals, fairs, concerts, sporting events, or other occasions allowing vendors. As with markets, you don’t have to worry about marketing to draw foot traffic—the event will do that for you. It’s all about standing out among the other vendors.
Ecommerce, online retail—or “e-tail”—is when you sell products digitally. This could be through your own online store or via third-party marketplaces like Amazon, Etsy, Walmart, or Target. Many retailers sell both online and in person—this is an excellent way to drive more sales.
Did you know?
The first Black Friday wasn’t a retail shopping event. It originally highlighted the financial crisis and crash of Wall Street in 1869. It was reinvented in the 1980s after several attempts. Now, it’s one of the biggest retail sales days of the year.
Explore Black Friday shopping statistics.
Food-based businesses may also be considered retail. Though they’re service-based businesses, they also offer a product: the food. Food service businesses could include sit-down restaurants, quick-service eateries, and even fast-food establishments. Some food-based businesses also sell products in the form of merchandise, condiments made in-house, and other related items.
Current State of Retail
If you’re considering this line of business, it’s helpful to get to know some of the latest retail trends to give you a picture of the current state of the market.
Retail Is Here to Stay
Though the COVID-19 pandemic wreaked havoc on the retail industry, it has bounced back with vigor. While store closures became the norm, new businesses have also sprouted. In fact, there have been twice as many store openings as closings throughout the pandemic.
Consumers crave the in-person experience. Even as online sales continue to grow, in-store sales remain competitive. Plus, most shoppers (around 80%) are comfortable visiting physical retail spaces again. Plus, in-store sales are up compared to pre-pandemic levels—nearly 14%.
Omnichannel Is Important
Omnichannel retailing is when brands focus on creating a consistent customer experience across every single engagement, approaching the experience as a collection of engagements rather than each isolated engagement living on its own.
With so many touchpoints and channels to learn about products, engage with brands, and even make a purchase, retailing requires mastery beyond just in-person selling. Today’s consumers want to connect with you on social media, receive exclusives via email, and find your products in their favorite department stores. In fact, retailers that don’t adopt an omnichannel approach lose out on as much as 30% of sales.
There Are Always New Payment Methods
With technology advancing so quickly, it seems there’s always a new payment method to keep up with. First, it was chip cards, then contactless pay, digital wallets, self-checkout, even bitcoin and cryptocurrency. Now retailers can save payment information so customers don’t even have to pull out a card, phone, or cash—they can just check out on the spot.
Did you know?
The first cash register was invented in 1878 and called “Ritty’s Incorruptible Cashier.” The Ritty brothers invented the register as a solution for their saloon—their employees were having a difficult time managing transactions.
Nowadays, retailers use a point-of-sale (POS) system to manage transactions and other day-to-day business functions.
Our 2022 retail and ecommerce payments trends report found consumer behavior and purchasing shifts that happened during COVID are here to stay. About 70% of shoppers have changed payment preferences forever—and many now prefer online ordering, pickup, and contactless payments.
Retail is a business model that’s been around for a while, and though it’s gone through many changes, it’s not heading anywhere soon. There are plenty of opportunities for small businesses of all types in all kinds of niches. It’s a matter of determining which opportunity is right for you and going for it.