What is retail? Definition and examples

Retail is the sale of products to consumers in relatively small quantities. The consumers do not then sell on what they bought. In other words, the buyer does not resell. The buyer, in the retail sector, is the end of the line of the product. Put simply; the purchaser is the ultimate consumer.

In rare cases, in the retail sector, the buyer is not the ultimate consumer. For example, if a man buys a present for his girlfriend, the girlfriend is the ultimate consumer. However, the purchaser did not buy the product to then sell it on. Therefore, the transaction occurred in the retail sector.

The retail sector includes all shops and stores that sell goods to shoppers, i.e., the ultimate consumers. The shoppers buy the products for personal and not business use.

BizFluent.com says the following regarding this sector:

“It encompasses all kinds of shops, from kiosks and small groceries to supermarket chains and large department stores.”

“In addition to traditional bricks-and-mortar shops, the retail sector includes mail-order and online businesses.”

Retailers are involved in B2C transactions. B2C stands for business-to-consumer.

Retail - definition and examples
Howard Schultz, former CEO of Starbucks and former owner of the Seattle SuperSonics, once said: “You walk into a retail store, whatever it is, and if there’s a sense of entertainment and excitement and electricity, you wanna be there.”

The retail sector

The United States

Retailers in the United States employ over fifteen million workers, says Plunkett Research. One in every ten US employees works for a retailer.



In 2017, retail sales reached a total of $5.733 trillion.

The United Kingdom

British consumers spent approximately £406 billion ($530 billion) in retail purchases in 2017, says Parliament.UK. The percentage of money consumers spent was as follows:

– They spent 39% of their money in food stores.

– 42% in non-food stores.

– 10% in filling stations (vehicle fuel).

– They spent the rest of their money via mail-order catalogs, market stores, and at other types of retailers.

Regarding the British electorate choosing to leave the EU, i.e., Brexit, Parliament.UK says the following:

“The vote to leave the EU has had an effect on inflation, with the largest impact being on food prices; however, consumer confidence has remained high, contrary to expectations.”

Most valuable retail brands
Brand value of the leading twenty most valuable retail brands globally in 2018. (Data Source: www.statista.com/statistic)

Retail vs. wholesale

Retailers and wholesalers work in different sectors of the economy.

Retailers

The retailer sells products directly to the ultimate consumer. They sell products individually, i.e., one at a time, to one consumer at a time.



Consumers in the retail sector are not purchasing a product for business use. They are buying it for personal use. In other words, they are not going to resell it.

Wholesalers

The wholesaler sells in bulk quantities to other business entities. The purchasers in the wholesale sector are buying goods for business purposes. They plan to resell those goods. Alternatively, they might use those goods as components for a final product which they then sell.

According to Key Differences:

The word wholesale simply means selling in bulk quantities and retail stands for selling merchandise in small quantities. Wholesale and retail are two distribution arrangement that constitutes a major part of the supply chain.”

Retail – part of the supply chain

The supply chain is the whole network of people, companies, and other entities that take part in getting a product from its origin to the ultimate customer.

The supply chain starts at a mine, the sea, a forest, or a farm. That is where we get the raw material.

Supply chain for a woolen sweater

Let’s look at the supply chain of a 100% woolen sweater (pullover) that we buy in a shop.

The wool begins in the sheep farm, where the farmer shears the wool from his or her sheep. To ‘shear’ means to cut off the wool with a special cutting device (shears).

A transportation company takes the wool to a warehouse. The warehouse belongs to a wholesaler. The wholesaler sells the wool to a sweater factory. The sweater factory is in the manufacturing or industrial sector.



A transportation company then transports sweaters, i.e., finished products, to shops. Some of the merchandise might go to a wholesaler who sells it to small shops.

The shops are in the retail sector. Therefore they are retailers. You walk into the shop and buy the sweater. You are the ultimate consumer.

The whole process, from the sheep farm to your shopping bag is the supply chain.

Online shopping

Since the advent of the Internet at the end of the last century, how we buy and sell goods and services has changed significantly.

Online shopping, i.e., the activity or action of purchasing goods and services over the Internet, is huge today.

The online retail sector, logically, has also grown. Online shopping cannot grow if online retailing doesn’t grow too.

Prof Henry Gao, from Singapore Management University School of Law, says that e-commerce is worth many trillions of dollars globally. E-commerce, which stands for electronic commerce, includes the online retail sector and all other business activities that occur on the Internet.