Retail house

From CEOpedia | Management online

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).

Examples of Retail house

  • Supermarkets: Supermarkets are one of the most common forms of retail house. Supermarkets usually have a wide variety of food, toiletries, household items, and other goods. Supermarkets also often have a bakery, deli, and other services.
  • Pharmacies: Pharmacies are typically found in drugstores, grocery stores, and stand-alone stores. They offer prescription drugs, over-the-counter medications, and other health and beauty products.
  • Department Stores: Department stores are large retail stores that feature a wide variety of products, including clothing, home goods, electronics, and more. Department stores often feature several different departments, such as clothing, home goods, and electronics.
  • Convenience Stores: Convenience stores are small retail stores that provide a variety of products, such as food, beverages, and other items. They are typically found in urban areas and are open for extended hours.
  • Specialty Stores: Specialty stores are retail stores that specialize in a particular type of product. Examples of specialty stores include bookstores, pet stores, and sporting goods stores.

Advantages of Retail house

One advantage of retail is that it allows producers and manufacturers to connect directly with the end user. This relationship often allows for better customer service, as the retailer is able to provide a more personalized experience for the customer. Additionally, retail stores often provide customers with the convenience of being able to shop for different items in one location. Furthermore, retail stores often provide additional services such as product assembly, delivery, and repair services.

Other advantages of retail house include:

  • Easy access for customers to purchase goods and services - Customers can quickly and conveniently purchase items from a retail store without having to travel to a manufacturer or wholesaler.
  • Wide variety of products - Retail stores typically offer a wide variety of products to choose from, allowing customers to easily find the items they need.
  • Opportunity to compare prices and products - Customers can compare prices and products in one physical space, making it easier to make an informed purchase decision.
  • Ability to try products before purchase - Many retail stores allow customers to try products before they purchase them, giving customers the opportunity to make sure they’re satisfied with their purchase.
  • Increased marketing opportunities - Retail stores provide opportunities for increased product promotion, as they are often able to invest in marketing and advertising campaigns.
  • Increased customer service - Retail stores often offer additional services such as product assembly, delivery, and repair services, allowing customers to get the most out of their purchase.

Limitations of Retail house

One of the main limitations of retail house is the cost of setting up and operating. *It requires a high level of capital investment in terms of buying physical premises, stocking goods, paying staff, marketing, and other costs.*Another limitation is the inability to reach customers outside the local area or to customers who are not able to visit the store. *This limits the market potential and can make it difficult to expand the business.*A third limitation is the potential for stock management issues. *Retailers must manage their stock carefully to ensure that they have the right products in the right quantities at the right time. *Finally, retail stores face the challenge of competing with online retailers which often have lower overheads and can offer customers a larger selection of products. *This can make it difficult for physical stores to remain competitive and viable.

Other approaches related to Retail house

Retail house can be approached from multiple angles. Below is a list of other approaches which could be used to assess retail houses:

  • Vertical integration - retailers often seek to extend the number of steps it takes to move a product from its origin to the customer. This allows them to have more control over the whole process, from production to delivery.
  • Location - retailers need to consider the area in which their store is located, both in terms of the physical environment and the size of the local population.
  • Store layout - retailers need to decide how their store is laid out, both in terms of the product displays and customer flow.
  • Merchandising - retailers need to carefully consider what products they stock, how they are displayed, and how they are priced to attract customers.
  • Technology - retailers need to be aware of the latest advances in technology such as e-commerce and mobile commerce, and how they can be used to improve the customer experience.

In conclusion, when assessing retail houses, it is important to consider a range of factors such as vertical integration, location, store layout, merchandising and technology. These factors can have a significant impact on the success of a retail house.


Retail house — recommended articles
Commercial sector — Direct distribution — Mass Merchandising — Types of supply — Sales agent — Distribution policy — Direct export — Reintermediation — Hybrid business

References

Author: Maciej Blak

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