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

Definition of Retail Business – We are all familiar with the term retail in the business world. But, does Sinaumeds know what retail means? What are examples of retail companies in Indonesia? For Sinaumeds who are curious and curious about this topic, this article will answer all of Sinaumeds’ curiosity about the retail business.

Simply put, retail is a fairly broad term that covers large-scale industries. Where the industry has employed hundreds of thousands of employees. To make it clearer, here is an explanation regarding retail that needs to be understood, especially for Sinaumeds who are interested in this one industry.

What is Retail?

If defined in general, the meaning of retail is the 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 in units directly to consumers for their personal and household needs. So the purchases they make are not for resale.

This retail business is also often referred to as a retailer or retail seller. Where the number of goods sold is usually in small quantities or units. So if a factory sells its goods in large quantities to other business owners. Then these conditions are not included in retail sales activities. In the process of implementation, each retail business owner will buy products or services in large quantities from producers which can then be resold directly to consumers in smaller 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 as follows:

1. Definition of 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 end-level consumers for personal use or for household needs.

2. Definition of 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 end-level consumers for use for their personal needs.

3. Definition of Retail According to David Gilbert

Gilbert explained that retail is all business ventures that direct all product or service marketing expertise directly so that they can satisfy consumers at the final level based on the organization selling goods or services as a distribution center.

4. Definition of 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. Even though in this world retail business has developed in big cities in the United States since the 1860s. In Indonesia, the first retail store appeared on April 23, 1963 at the Sarinah Jalan building. MH Thamrin, Jakarta. The idea of ​​building the store was initiated by President Soekarno, who at that time adopted the sales concept from Japan 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 a variety of superior products from various countries in the world. Retail business has also become one of the new needs for the general public to meet their daily needs and lifestyle. Along with the development of the times, retail stores continue to experience development and innovation. Now, many retail shops have appeared on a small to large scale. So that it is easier for people to obtain 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 people 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 aspects of retail that are expected by end-level consumers, such as merchandise and others.

Wholesalers also do not deal directly with end-level consumers. Instead, they will sell all the goods provided at retail stores only. It is very rare to find wholesalers who sell directly the goods they provide to the final level consumers. Because, usually they will only sell it to retail stores so that these stores can resell to end-level consumers.

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

From the previous explanation, the main difference between wholesalers and retailers lies in product prices. Where the retail price will always be higher than the wholesale price. This occurs because of the additional costs of selling merchandise to end-level consumers. For example, the costs of renting a shop, labor, and others are charged to the price of merchandise. As for the wholesalers, they didn’t need to think about that. 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 end-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 products or retail items. The supply chain will start from producers, wholesalers, retailers, to the final consumer.

A producer is a party that produces or manufactures goods by relying on machinery, labor and raw materials. While the wholesaler acts as a party that will buy the goods provided by the manufacturer, then resell them to the retailer or retailer. After that, the retailer or retailer acts as the party that will resell the goods taken from the wholesaler to the final level consumers. The last chain is consumers who play the role of 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 act as quite an important party, because they will make it easier for producers to stay focused on producing goods without needing to be affected by the amount of effort needed to be able to interact with end-level consumers who want to buy their products. Retailers or retailers will make the buying process easier for consumers. Therefore, retail businesses usually have a sales force and catalogs that contain product photos along with attractive descriptions.

Retail business is a business that presents 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, due payments, electricity bills, and more. 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 goods marketing distribution cycle, namely:

1. Make it easy for consumers to obtain the products they need

With the retail business, it is easier for end-level consumers to obtain the products they need. Without a retail business, it will be very difficult for end-level consumers to meet their needs. This is because they have to buy it directly from manufacturers or wholesalers and automatically have to buy it in large quantities.

2. Bring 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 producers and wholesalers. This is because retail will bring financial benefits to producers and wholesalers. Retailers will usually shop or stock goods in large quantities from wholesalers. Then the wholesalers will take all the goods they provide from the producers. The funds they get can later be used for capital and used again to produce goods.

3. Have 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 means. 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 Various Prices

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

Retail Types Are

The types of retail businesses are differentiated based on the products sold, ownership, and also the location of sales. The following is a complete explanation;

1. Based on 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 utilize 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, babysitters, and driver services. Meanwhile, for non-retail, there are vending machines and various kinds of 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 retail usually run independently without depending on other parties. Examples of independent retail are grocery stores, shop houses, stalls, and others. As for franchise retail, or commonly known as a franchise, is a type of retail that markets similar products and usually consists of a central company and subsidiary companies. Then the last one 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 Locations

Based on the sales location, this type of retail has direct access to go directly to public roads. Examples of this type of retail are retail strip malls or other commercial areas. Apart from that, there are also shopping or business centers which are 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 the types of retail stores where end-level consumers can buy goods or products for their daily needs and fulfill their lifestyle.

1. Department Stores

This type of retail usually provides merchandise that has been arranged by category. Then it is distributed to various physical retail spaces in department stores. 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 food stalls that are usually located 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 large type of warehouse facility without any frills that is filled with various products packaged in large quantities. Then the goods provided will be sold at a lower price compared to the retail price.

4. Specialty Retailers

These retailers are specialists who provide certain product categories. For example, Victoria’s Secret, Nike, and Toys R are included in the specialty retailer example.

5. Convenience Retailers

Generally, this type of retail is part of a retail location that is at a gas station. But it also sells a wide variety of merchandise at premium prices and comfort.

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 Retailers

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 discussed above, it can be concluded that retail is an effort to market a product or service that is carried out in retail to end-level consumers to meet their needs and not for resale. How, is Sinaumeds interested in this one business?