Purchase and sale of retail goods by customers and businesses is called retail sales. Retail goods are usually comprising of finished goods. Retail goods consist of consumer durables and consumer non-durables. Household goods major part of retail sales.
In most of the countries, retail sales are considered as an indicator of the economic health of the country since retail sales help to understand the consumer buying capacity, which in turn is the economy of the country.
With the boost in e-commerce companies, retail sales have moved from brick and mortar concept to online stores. As a result, the modern definition of retail would include both online and offline purchase in trends of the customer. A part of retailing involves window shopping which does not result in any kind of purchase.
Types of retail outlets for Retail Sales
A) Food retailers
These are the ones who carry perishable foodstuffs such as dairy vegetables and other products which require cold storage facilities. The buying cycle for food retailers is usually regular. It can be either daily or monthly. These may be local producers that serve limited locality.
B) Apparel retailers
These are the retailers that have one-time use goods having a limited life cycle. These are normally consumed over a limited period of time and include products like clothing, footwear, cosmetics, etc. Example Nike, H&M, Louis Philip etc.
C) Grocery retail
Perhaps one of the largest forms of retail is grocery or convenience store retail. These retailers carry a large number of household products food products consumable items such as soaps, hygiene products, packaged fast foods, fast moving consumer goods (FMCG) and groceries that every household requires. For retailers, these products account for high turnover while for customers these are regular purchases and amount to little or the nothing. Walmart is one of the greatest examples of grocery retailer.
D) Hardline retailers
Retailers having automobiles furniture appliances sporting goods etcetera comprise of hardline retailers. For many consumers, this represents a major purchase decision. The buying cycle for hardline retailers is not very regular. For example, one may purchase a tablet PC or an iPad once every three or four years, automobile every 10 years and so on.
E) Specialty retailers
These are specialists in a particular form such as books, music instruments, handicrafts, gift shops, toy store, baby product stores etc. Example Barnes And Noble, Archie’s Gift Shop etc.
F) Online retail
Perhaps one of the largest e-tail stores today is Amazon. These are present only in online formats and serve customers through the orders placed online on their website. The greatest advantage online retail has over other types is the price advantage owing to the bulk purchases. As result customers get heavy discounts from online stores which the offline stores may not be able to provide.
G) Other types
Other types of retailers include service or specialty retailers including hospitality, hotels, restaurants and bars, pawn shop, hawkers, hypermarkets and supermarkets, dollar store, cooperative store, bazaar etc.
Understanding Retail marketing mix for Retail Sales
The retail marketing mix is derived from marketing mix but has been tailored to fit the unique needs of retailers. The 4 P’s of retail marketing include product, place, price, promotion.
The retailers have a huge assortment of product lines depending on the customers they serve. The variations may be in Product length that is a number of different products carried by same store, product breadth which includes different products of the same company, product depth which includes various styles and specialties of the same product in the store.
Managing stocks of products are one of the biggest challenges faced by retailers. Retailers have to keep all sorts of products to serve all kinds of customer. The narrower specialty the retailer serves, the lesser are the products they have to keep a stock of. Customer service is an integral part of retail sales. This may include personnel at the billing, delivery, shopping assistants, salespeople, hospitality and customer relationship management.
Location is of paramount importance in terms of brick and mortar concept of retailers. Retail stores located near localities where opportunities are high get the maximum business. Setting up a retail shop includes the study of the area and the number of retailers present in the given radius. The place is not a concern with the online formats of retailers. But a variant of the place is the visit of the customer on the website. The higher the online store ranks on google search page the better it is.
Retailer pricing includes customer-oriented pricing social oriented pricing value-based pricing etc. Pricing techniques like discounts, offers, buy one get one free etc. are followed almost everywhere. Retail price wars are one of the most intense wars in the sales industry. Special days like Black Friday, Cyber Monday are used to exhausting the stocks. The other most common practice in retail sales is psychological pricing where buy a $10 product would be price does $9.99.
The promotion in retails involves branding of the store and the product range of the retailer. The more common technique of promotion is based on pricing whereby a retailer tries to attract customers based on low prices. The designs of the retail space, presentations and promotional ads featured in daily newspapers are other promotional tools.
Process of Retail Sales
Retail sales are more or less like all the other cells except for the fact that customers are the ones who walk to the stores and not the other way around. The pricing is one of the most attractive features in retail sales.
Prospecting in retail sales involves, judging and analyzing the customer by the salesperson. Not every walk-in customer is going to buy the product and a bunch of them will be interested only in window shopping. The retail salesperson has to analyze and differentiate both.
Once the customer approaches in the shop with the intent of buying the retail salesperson can approach the customer with the sales presentation. The presentation may not be in a formal way but would include defining the characteristics and the highlighting the specialties of the product. Unlike other sales format, the presentation has to be quick and effective for faster customer conversion.
3) Decision making
Once the presentation is given the salesperson may help the customer with decision making. Customers who have made up their mind of purchasing a particular product do not indulge in any other product presentations. But customers who have not made up their mind should be the target customers for the salesperson. The salesperson may help by suggesting a few things and personalizing the message for the customer in order to facilitate the buying process. Care should be taken by the salesperson to not to be too pushy about selling the product as it may drive the customer away.
4) Closing the sale
Once the decision has been made the salesperson bills the product and closes the sale. Few products may require after sales services like electronics and specialty goods.
Challenges in retail sales
- Differentiating prospects from non-customers and lurkers – people only window shopping – can be a very difficult task for the salesperson. Thus, the Salesperson cannot waste his time by giving a presentation to every single person neither can he avoid every customer.
- The retail stores having multiple brands at becomes very competitive the position and set a particular brand to the customer. This is true, special in case of customers who have made up their mind to buy a particular product. Changing their mind is a challenging process in retail sales.
- Stock management is a big issue. Most of the times, demand and supply and never in sync. For perishable items, it becomes very challenging to keep a proper stock. Selling the entire stock in one day is the aim in such cases and if need be, the sale has to be done in a lower value, just to avoid the perishing of the product.
Advantages of retail sales
- Fast consumption of products: retail products are one of the fastest moving products and hence the faster consumption helps in getting quicker profits.
- The conversion of the customer as fast as the decision-making process is fast and the product is consumed regularly. Even if the customer does not get converted the time spent per customer is very less which will help the salesperson to focus on high volume of clients.
- Surprisingly retail sales have gained momentum in terms of tourism. Budget travelers who do not want to splurge inexpensive restaurants prefer buying from retail outlets. This is given rise to few of tourist-oriented retail outlets. These work well in tourist places.
- The profit margin per product in retail sales is low but due to the volume of the business, the overall profit margin is very high. This generates a very good business for a retail store.