Retail house

From CEOpedia | Management online
Retail house
See also

Retail house is form of sale of mainly finished goods, but in today's modern and progressive market we should also classify selling services. Retailing is characterized by trading to the end consumer in small volumes needed for consumption. Retail stores have an important role connecting producers, wholesalers and consumers. They perform various functions in supply chain. Manufacturers often produces only one type of commodity and, the same as wholesalers, they want to trade it in large amounts. On the other hand, consumers demand a wide range of goods at the same time purchasing only small number of them. Because of that retailers take part in sorting process. They gather similar products from many makers what allows customers to compare them and choose desired in one physical place called retail store. Another function is being a channel of communication. Retailers during competition with each other allocate funds in marketing and advertisement. By these behaviour they teach potential buyers about products and services offered (Panda T., 2013, p. 2-3).

Logistics in retail

Logistics in retailing plays very significant role. It is strictly associated with demand. Exemplary, autumn and low temperatures increases requirement for warm clothes or winter tyres in automotive branch. But there are also short-term demands which are not so easy to handle. Sweet teddy bears and cards sold during Valentine's Day will not be the object of interest one day later. Plentiful stock will generate costs of storage for almost one year.

We can distinguish five components of logistics in retail (Fernie J., Sparks L., 2014, p. 3-4):

  • storage facilities - these contain places e.g. within retail stores, where traders keep small stock necessary to ensure continuous sale
  • inventory - retailers purchase goods in large amounts, so they need also bigger warehouses to store their stock
  • transportation - commmodity comes in big quantities, but is disposed in small packets to end customers. This requires usage of many different means of transport
  • unitization and packaging - as above, consumers orders contain vary products in various amounts, what increases costs of packaging and makes difficulties in the field of parcel unification
  • communications - it is a serious challenge to gather all data recommended to accurate prediction of future demand and appropriate allocation of goods in stores

Retail future

Popularization of Internet brings a lot of changes to retail business. Schema of retail house as only physical building disappeared many years ago. Now retailers have to operate in multi channel way. Trade moved to virtual world, which is built from smartphones, computers and tablets. As a result, entrepreneurs extended their activity by remote interaction with customers. In the meantime competition has increased because of geographically wider range of operation. Now Europeans don't have problems with ordering goods directly from American or Chinese retailers. The importance of transport companies has grown significantly. Forecasts indicate, that this trend will continue and superiority in retail branch will be determined by innovations (Sorescu A., Frambach R., Singh J., Rangaswamy A., Bridges C., 2011, p. S3-S4).


Author: Maciej Blak