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Understanding Retail Business: Types, Purpose, and How it Works

Timesofummah.comWe are all familiar with the term retail in the business world. But, does Grameds know what retail really means? What are some examples of retail companies in Indonesia? For Grameds who are curious and curious about this topic, this article will answer all of Grameds’ curiosity about the retail business.

Simply put, retail is a fairly broad term and includes large-scale industries. Where the industry has employed hundreds of thousands of employees. To be clear, here is an explanation about retail that needs to be understood, especially for Grameds who are interested in this one industry.

What is Retail?

Understanding Retail Business Types, Purpose, and How it Works

If defined in general terms, the meaning of retail is a sale of products or services from a business to consumers for their own use or consumption. In terms of business, the meaning of retail is an effort to market goods or services that are carried out in retail or units directly to consumers for their personal and household needs. So the purchases they make are not for resale huh.

This retail business is also often referred to as a retailer or retailer. Where the number of goods sold is usually in small quantities or units. So if a factory sells its products in large quantities to other business owners. So these conditions are not included in retail sales activities. In the implementation process, each retail business owner will buy products or services in large quantities from producers which can then be resold to consumers directly in the form of fewer units. The transaction process will then be explained in more detail in the product distribution supply chain.

Understanding Retail According to Experts

To understand the meaning of retail in more detail, we can take from various opinions expressed by experts such as the following:

1. Understanding Retail According to Barry R. Berman and Joel R. Evans

They both explained that the real meaning of retail is a business activity that seeks to market goods and services to final consumers for personal use or for household needs.

2. Understanding Retail According to Philip Kotler

Here, Kotler explains the meaning of retail, namely the retail sales process which includes all activities involving the sale of goods and services to final consumers for their own personal use.

3. Understanding Retail According to David Gilbert

Gilbert explained that retail is all business ventures that mobilize all marketing expertise of products or services directly in order to satisfy consumers at the final level based on the organization of selling goods and services as a distribution center.

4. Understanding Retail According to Michael Levy and Barton A. Weitz

The two experts agree that the meaning of retail is a series of business activities carried out to increase the use value of a product or service which is then resold to consumers. So that it can be used or consumed personally or for household needs.

History of Retail Development in Indonesia

The retail business was present in Indonesia in the 1960s. Although in this world retail business has grown in big cities in the United States since the 1860s. In Indonesia, the first retail store appeared on April 23, 1963 in the Sarinah Jalan building. M.H. Thamrin, Jakarta. The idea of ​​building the shop was initiated by President Soekarno, who at that time adopted the sales concept from Japanese and Western countries.

Then when entering the 1990s, the development of retail stores began to increase in Indonesia. Since then, many people have started to set up retail businesses by providing various superior products from various countries in the world. Retail business has become one of the new needs for the general public to fulfill their daily needs and lifestyle. Along with the times, retail stores continue to experience development and innovation. Now, many retail stores have appeared on a small to large scale. So that it is easier for people to get the goods or products they need. The existence of retail stores also takes part in the development of the Indonesian economy.

Difference between Retail and Wholesale

Many think that retail and wholesale are the same thing, but in reality they are very different. Where wholesalers usually sell goods in large quantities without worrying about various retail aspects expected by end-level consumers, such as merchandise and others.

Wholesalers also do not deal directly with final consumers. They will actually sell all the goods provided in retail stores only. We will very rarely find wholesalers who sell directly the goods they provide to the final consumer. Because, they will usually only sell it to retail stores so that the store can resell it to final level consumers.

Generally, wholesalers will also sell products or goods provided in large quantities. Where this can allow them to sell it to retail stores at a low price. Compared to retail stores reselling these products in smaller quantities and at higher prices.

From the previous explanation, the main difference between wholesalers and retailers lies in the price of the product. Where retail prices will always be higher than wholesale prices. This occurs because of the additional costs of selling merchandise to final consumers. For example, the cost of renting a shop, labor, and others are charged to the price of merchandise. As for wholesalers, they don’t need to think about it. So they have a relatively lower price.

How Retail Business Works

Generally, retail businesses will use a system that can supply merchandise for them. So that later it can be resold to final level consumers. Therefore, companies engaged in the retail sector will cooperate with various other business owners. The main goal is that the company can supply retail products or goods. The supply chain will start from producers, wholesalers, retailers, to final consumers.

Producer is a party that produces or manufactures goods by relying on machines, labor, and raw materials. While wholesalers act as parties who will buy goods provided by producers, then resell them to retailers or retailers. After that, the retailer or the retailer acts as the party who will resell the goods taken from the wholesaler to the final level consumers. The last chain is consumers who act as parties who will buy goods from retailers and then use them for their own needs.

Why is Retail Important?

As previously explained, retail is the last link in the supply chain that occurs between producers and consumers. Retailers play a role that is quite important, because they will make it easier for producers to stay focused on producing goods without being affected by the amount of effort required to be able to interact with final level consumers who want to buy their products. The retailer or retailer will make the buying process easier for consumers. Therefore, retail businesses usually have a sales workforce and catalogs that contain product photos and attractive descriptions.

Retail business is a business that provides products, product features, benefits, stores these products, provides transaction processing, and also performs other activities in order to obtain the right product and price for the final consumer. Generally, some retail businesses will also provide additional services for various retail transactions. Starting from gift wrapping, personal shopping consultations, payment due, electricity bills, and others. It aims to provide a consumer experience and improve existing retail services.

Retail Function Is

The following are some of the retail business functions in the distribution cycle of marketing goods, namely:

1. Make it easier for consumers to get the products they need

With the retail business, it is easier for end-level consumers to get the products they need. Without a retail business, the final consumer will find it very difficult to meet their needs. Because, they have to buy it directly to the manufacturer or wholesaler and automatically must be in large quantities.

2. Generating Profits For Manufacturers and Wholesalers

In addition to making it easier for end-level consumers to obtain their needs. The retail business is also very beneficial for manufacturers and wholesalers. Because retail will bring financial benefits to producers and wholesalers. Retail parties will usually shop or stock goods in large quantities from wholesalers. Then the wholesaler will take all the goods they provide from the manufacturer. The funds they get can later be used for capital and used again to produce goods.

3. Has an Important Role in Promoting Products Directly

Retailers who have purchased products from manufacturers or wholesalers will usually promote these products directly to consumers using various ways. This activity will certainly be very useful and able to increase the trend of products produced by producers.

4. Can offer various types of goods at varied prices

Generally, retailers will buy various types of goods from a variety of different manufacturers. The prices they offer will also vary. This will later provide market variations that are in line with increasing consumer satisfaction.

Types of Retail Are

The types of retail businesses are distinguished based on the products sold, ownership, and also the location of the sale. Here is a full explanation;

1. By Products Sold

When viewed from the products they sell, the retail business will be divided into three types, namely retail products that provide products or goods, retailers that provide services or services, and non-store retail types that use a medium to market the products they provide. For example, a retail business in the form of a toy store and also an electronic store that markets fewer products than the center. As for examples of retail businesses that provide services or services, namely garden maintenance services, vehicle repairs, child care, and driver services. Meanwhile, non-retail are vending machines and various online stores that are incorporated into the e-commerce system.

2. By Ownership

There are three types of retail based on ownership. The first is independent retail, business groups, and franchises. For independent retailers usually run independently without depending on other parties. Examples of independent retail are grocery stores, shop houses, stalls, and others. As for retail franchises or commonly known as franchises, this is a type of retail that markets similar products and usually consists of a central company and derivative companies. Then the last is the retail business group, this is a group of retail companies that are interrelated or connected in one management. For example, supermarkets and department stores.

3. Based on Sales Location

If based on the location of the sale, this type of retail has direct access to go down directly to public roads. An example of this type of retail is a strip mall retail or other commercial area. In addition, there are also shopping or business centers formed from groups of retail entrepreneurs who provide products and services in the same building and area.

Examples of Types of Retail Stores

The following are some examples of types of retail stores where end-level consumers can buy goods or products for their daily needs and fulfill their lifestyle.

1. Department Store

This type of retail usually provides merchandise that has been organized by category. Then it is distributed to various physical retail spaces in the department store. Some of the categories include clothing, shoes, jewelry, beauty, household appliances, daily necessities, and others. Examples of department stores that we usually visit are Hypermart, Carefour, Matahari, and many more.

2. Grocery Store

Grocery stores are small basic food stalls that are usually present near the house. This type of retail usually sells all beverage and food products, household needs, and others.

3. Warehouse Retailers

This type of retail is a warehouse facility with a large type without any frills filled with various products packaged in large quantities. Then the goods provided will be sold at a lower price than the retail price.

4. Specialty Retailers

These retailers are specialists who provide specific product categories. For example, Victoria’s Secret, Nike, and Toys R are examples of specialty retailers.

5. Convenience Retailer

Generally, this type of retail is part of the retail location at the refueling point. But it also sells a wide variety of merchandise at premium prices and convenience.

6. Mobile Retailers

This type of retail usually uses a smartphone platform to process retail transactions and then they will send ordered products directly to customers.

7. Internet Retailer

This type of retail usually sells online shopping sites and sends orders directly to consumers’ homes or workplaces. This type of retail will usually sell merchandise at a lower price than the retail price.

From the explanation that has been discussed above, it can be concluded that retail is an effort to market a product or service that is carried out in retail to final level consumers in order to meet their needs and not for resale. How, is Grameds interested in this one business?

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