Before understanding the concept of retail, let us first go through few terminologies.
Market - Any system or place where parties are engaged in exchange of either goods or services is called as market. The parties are often called as buyers and sellers. The seller offers his goods or services to the buyer who in return purchases it in exchange of money.
Goods - Tangible (things which can be seen and touched) physical products which are transferred from a seller to the buyer (consumer) to fulfill the latterâ€™s need are called as goods.
Jack owned two laptops which he sold to Mike. In this case Jack is the seller while Mike is the buyer. Laptops are the goods which were earlier in Jackâ€™s custody and now belong to Mike.
What is Retail ?
Retail involves the sale of goods from a single point (malls, markets, department stores etc) directly to the consumer in small quantities for his end use. In a laymanâ€™s language, retailing is nothing but transaction of goods between the seller and the end user as a single unit (piece) or in small quantities to satisfy the needs of the individual and for his direct consumption.
Let us understand the concept with the help of an example.
Tim wanted to purchase a mobile handset. He went to the nearby store and purchased one for himself.
In the above case, Tim is the buyer who went to a fixed location (in this case the nearby store). He purchased a mobile handset (Quantity - One) to be used by him. An example of retail.
The store from where Tim purchased the handset must have shown him several options for him to select one according to his budget and need.
From where do you think the store owner (also called the retailer) purchased all the handsets?
Here the manufacturers and the wholesalers come into the picture.
The retailers purchase goods in bulk quantities (huge numbers) to be sold to the end-users either directly from the manufacturers or through a wholesaler.
The Supply chain
Manufacturers ........................ Retailers ................ End User (Consumer)
Manufacturers - Manufacturers are the ones who are involved in production of goods with the help of machines, labour and raw materials.
Wholesaler - The wholesaler is the one who purchases the goods from the manufacturers and sells to the retailers in large numbers but at a lower price. A wholesaler never sells goods directly to the end users.
Retailer - A retailer comes at the end of the supply chain who sells the products in small quantities to the end users as per their requirement and need.
The end user goes to the retailer to buy the goods (products) in small quantities to satisfy his needs and demands. The complete process is also called as Shopping.
Shopping - The process of purchasing products by the consumer is called as shopping. However there are certain cases where shopping does not always end in buying of products. Sometimes individuals do go for shopping but return home empty handed. Such a shopping is merely for fun and is called window shopping. In window shopping, individuals generally go to the market, check out various options and their prices but do not buy anything. This kind of shopping helps to break the monotony.