What is a Retailer?

Retail refers to the sale of goods or services by a business to consumers for their personal use. Unlike wholesale transactions, retail deals involve exchanges in small quantities, such as when you buy a pair of shoes at a store. It is the consumer-facing part of the commercial supply chain as it delivers the goods directly to the target market.

Businesspeople who engage in retail are called retailers. You might know them because they are the members of the supply chain that interact most with the consumer. If you don’t or would like to know more, read on to learn what a retailer is.

What Is a Retailer?

A retailer is a business that buys goods from a distributor, wholesaler, or manufacturer and resells it to consumers. Retailers vary in type and size from large outlets like Target and BestBuy to your local pharmacy or shoe store. Typically, the larger retailers buy goods in large quantities straight from the manufacturer, while smaller retailers obtain their stock from wholesalers and distributors.

The most defining factor about retailers is that they sell to the end-user. They make their profit from the difference between the price at which they obtain goods and that at which they sell them. To help you better understand, retailers sell products in the following categories:

  • Art such as art supplies, musical instruments, books, and paints
  • Food, e.g., fruits and vegetables
  • Durable goods like vehicles and furniture
  • Soft goods like shoes and clothes

How Does Retail Work?

A retailer must set up a distribution store, physical or otherwise, from which to sell directly to the public. They must also have a distributor, wholesaler, or manufacturer from whom they can obtain their products. Also, the retailer will need to be strategic about their business location (for a physical store) and how to market their product. Other considerations include:

  • The target market high, e.g., middle, or low-income consumers
  • The store type, e.g., small store, online, or chain stores
  • Market positioning, e.g., conscious budgeters or disposable income consumers
  • Customer service, e.g., in-store rep or toll-free number

What Is a Supply Chain?

A supply chain refers to the process of distributing goods to the end-user through suppliers and companies. Simply put, it is how a product or service is delivered to a consumer. Retailers are at the tail-end of the supply chain because they deliver the products directly to the end-user. To do this effectively, they must understand the supply chain associated with the product they sell so they can get deliveries on time and at reasonable prices.

Different Types of Retailers

When people hear retailers, they immediately picture brick and mortar businesses (businesses run from a physical building). However, retailers come in all shapes and sizes and generally include any business, even home-based, that sells products to consumers for a profit. It is also important to note that retailers can also provide services. Common types of retailers include:

  • Brick and mortar stores
  • Catalogs – businesses run through print or online catalogs
  • Kiosks
  • Online retailers
  • Pop-up retailers – temporary retail spaces mostly set up during events or holidays.
  • Special event retailers like art shows

To cope with changing markets and consumer habits, many retailers now have a physical location and online store. Consider Amazon, which used to be an exclusively online operation but has now opened physical stores.

Retail Industry Standards

Retail industry standards refer to operation standards set forth for retailers to help them operate efficiently. The two most common and widely accepted standards in the world of retail are:

American National Standards Institute (ANSI)

The Accredited Standards Committee sets the American National Standards Institute (ANSI) to inform the emanation of electronic data from industry to industry, which has a direct bearing on retail operating procedures. A common standard within this system, the electronic data interchange (EDI), enables multiple computer programs to interface across different locations. As a result, retailers can transmit ordering information to warehouses and distribution centers.

GS1 Retail Industry Standards

GS1 industry standards are based on the GS1 number system and focus on the management of the supply chain. It works to improve information exchange along the supply chain and promote efficiency in how retailers handle inventory and checkout systems.

Frequently Asked Questions

How do you become a retailer?

Becoming a retailer calls for a lot of preparation. Besides creating a business plan, finding a location, and hiring staff, you need to get the relevant documentation required to operate a business in your state. You must also obtain an Employer Identification Number (EIN) apply on (IRS website), which you can think of as a Social Security number for your retail business.

Once you get an EIN, you should familiarize yourself with the taxation laws in your state. You can do this by contacting your local chamber of commerce for instructions. Finally, you will need a business license, which could be a certificate of occupancy, resale license, or industry-specific certificate. You can get a comprehensive checklist from your local government office.

What are some top 10 US retailers?

According to 2019 sales reports, the 10 biggest retailers in the US are:

  • Walmart
  • Amazon.com
  • The Kroger Co.
  • Costco
  • Walgreens Boots Alliance
  • The Home Depot
  • CVS Health Corporation
  • Target
  • Lowe’s Companies
  • Albertson’s Companies

What is an example of a retailer?

Retailers vary in size from the seller at a small kiosk to traditional brick-and-mortar stores. The most notable large retailers in the United States include Wal-Mart, Best Buy, Target. Because retailers can also operate online, it is necessary to mention online retailers like eBay and Amazon.

How do retailers get their products?

Retailers can source their products from manufacturers, wholesalers, or distributors. Depending on the goods, they can obtain these goods domestically or internationally.

Key Points

As already established, a retailer sells products and services obtained from larger sources and sells them directly to the end-user (consumer). If you are interested in becoming a retailer, you must familiarize yourself with state laws and obtain a business permit. It is also important that you keep up to date with your taxes. Finally, remember that the most proficient retailers are those that make use of both the physical and online selling spaces.

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