With the evolution of businesses over the decades, more categories have emerged. Previously, business was widely categorized as wholesale and retail. However, now business expansion has specified further sub-divisions. Retailing business is a more convenient choice for many people as it does not require a high capital compared to wholesale. There are various types of retailing businesses you can choose from according to your expertise and demand.
Let’s tell you about the five types of retailing with their subtypes.
Store retailing refers to setting up stores to facilitate customers. Store retailers get their products from wholesalers at a lesser cost and sell to consumers with added profit. Store retailing businesses include convenience stores, specialty stores, supermarkets, departmental stores, and discount stores. Drug stores, extreme value stores, and catalog showrooms are also retail stores.
Convenience stores are retailing businesses with daily-use items like grocery and regular-use FMCG products. They are typically present around residential areas for easy access to the customers. It is smaller than a supermarket and departmental store. The common items in a convenience store include groceries, snacks, magazines, confectionery, soft drinks, medicines, etc. Convenient stores offer limited choices. Yet, they are open for extended hours.
Departmental stores are huge stores with departments within them for each goods category. They have a wide range of products from food to skincare and clothes. As departmental stores are massive, you can find a wide variety in every category. They are pretty convenient and the first choice of shopping for many people. You can buy everything under one roof but make sure to stay on budget while shopping grocery or other stuff for home. Each department in a departmental store is treated as an individual business unit. Departmental stores are working to provide better service to compete with other retail stores. Some try telephone selling and partnering with other stores to offer combined discounts.
Supermarkets are even bigger than departmental stores. They offer everything from clothing to electronics to food products. In short, they have everything you need!
Supermarkets made their way into the retailing business in the 1920s, with Piggly Wiggly being one of the earliest supermarkets. Over 37,000 supermarkets run in the United States. They offer various items that you may not find in a convenience or a basic departmental store. Some supermarkets also have self-customer checkout counters. The prices at supermarkets are also mostly quite affordable for everyone.
As the name indicates, specialty stores specialize in one kind of item only. They have their own pros and cons. Specialty stores usually have a small variety of products focusing on one category. While they do not have an assortment of products, the products in specialty stores are believed to be high-quality. Examples of common specialty stores include apparel stores that only sell clothes, perfume stores, candle stores, etc.
While almost all stores offer discounts during a season or festival, discount stores offer low prices throughout the year. They keep lower margins to make more sales. Discount stores are facing competition as other retail stores are also offering discounts frequently to do more business. The early discount stores did not look appealing and only focused on providing low costs. Yet, now they are revamping the stores and advertising heavily to stay in business.
Catalog showrooms provide brand-name products at discounted prices to cut costs and attract more sales. They usually have luggage, appliances, power tool, jewelry, etc. Unlike today, catalog showrooms have been quite popular back in the day. They are working towards improving their service every day not to get overshadowed by departmental stores and supermarkets.
Corporate retailing refers to a single business entity or partnered business operating multiple stores in different locations. Each store is authorized individually yet owned by the same business. Franchises, chain stores, and merchandizing conglomerates are corporate retailing businesses.
Chain stores are two or more stores of the same business at different locations. They typically operate with the same name at all locations. Chain stores could be nationwide or international. All the chains have a mutual voice, promotional objectives, plans, and selling design. Chain stores evolved in the early 20s and expanded widely. They gained popularity because of their discounts and availability in different areas. The best thing about chain stores is that people trust the quality of all stores of the same identity.
A franchise refers to branches of a store sold to individual business owners. Franchises carry the name of a chain store, yet independent business people operate them. Franchising is common in fast-food chains and filling stations where they sell stores at different locations to different people. The franchiser typically receives a royalty on sales, an initial fee, and a share of the profits.
Merchandising Conglomerates comprise various retailing forms having one ownership. Each of the merchandising conglomerates shares management and distribution functions.
Non-store retailing is one of the types of retailing businesses where you do not perform in-store transactions. Non-store retail businesses are of two types; direct selling and automated vending. Direct selling refers to going to people to sell your product instead of the customer coming for the purchase. Point-of-sale kiosks are also a form of direct retailing. Direct selling is becoming an outdated method considering that the world is moving towards automation. Automated vending refers to installing vending machines that do not require a human being for transactions.
Some retail businesses do not sell tangible goods. Instead, they offer services to their customers. Such a retailing business is known as service retailing. These businesses are dependent on expertise, skill, and time. Service retailing includes banks, airlines, hospitals, theatres, restaurants, hair salons, etc.
Online retailing refers to selling products and services through the internet. It could be B2B (business to business) or B2C (business to consumer). Online retails offer better prices and more variety to the customers. Nowadays, many online retailers are offering special discounts to promote online shopping. Often online retailers do not have a physical store and operate solely online. Online retailing offers numerous benefits to businesses and consumers. This type of retailing business saves space, workforce, and power consumption costs. However, one bad customer experience can ruin the company’s reputation.
Other Retailing Businesses
Shopping malls are popular retail businesses that provide multiple options to consumers. Most of the businesses under one roof are independent retailers. They are located in areas with a large population to cater to the needs of the people in one place. They have various shops, including clothing shops for men, women, and children. Shopping malls also usually have a departmental store and food court.
Warehouse retailers provide products at a low cost compared to departmental stores. They work by offering a cost-plus pricing structure to the customers to lessen the prices. Costco and Sam’s Club are the largest warehouse retail chains in the U.S. Costco has seen an incredible hike in sales from 110.2 billion U.S. dollars in 2014 to 192 billion U.S. dollars in 2021.
Factory outlets are one of the top choices in the neighborhood. Factory outlets have the same products as some large brands. However, the prices are low as the manufacturer owns the store. It eliminates a third party (the brand retail store) and offers a better price to customers.
Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.