We know what the oldest profession is… And the second oldest. But up with them, dating back to the earliest times in human history is the business of retail.
When Ug sold an arrowhead to Og, he became a retailer. And when Ig bought goods from Ug to sell, rather than make them himself, he moved sales from the factory gate to the retail market.
We may not all work in retail, but I’m prepared to bet that every reader of this article has experienced it as a customer. It is so pervasive, that one has to wonder: do we really need an article about it?
My answer is a question:
‘What bigger management idea could there be?’
Why do we Need Retail?
We need retail for two reasons:
- For individual consumers (Og), it would be too time consuming to go to different manufacturers for each product we need. So we want someone (Ig) to do that for us and gather lots of the things we may want to buy, in one place.
- For manufacturers (Ug), it can’t be cost effective to sell small quantities of goods to each of many thousands of individuals. They need someone (Ig) to buy larger quantities, and relieve them of the duty to serve small buyers.
What is Retail?
Retail is selling goods directly to the consumer or user of those goods.
You can compare it to wholesale, which takes large quantities of goods direct from the manufacturer, and supplies small retail businesses. The rise of the giant retailers means they can cut costs (and therefore prices), by acting as their own wholesaler.
The Origin of the Word Retail
Think of a gigantic roll of cloth, made by a textile manufacturer. They may sell whole rolls to clothes manufacturers. But your small local haberdashery shop only needs a small roll. So they buy a part of the big roll that they cut off.
Tailler is the French word meaning ‘to cut’. It also gives us our word ‘tailor’. To tailor is to cut. A tailor cuts clothes.
So, now your shop has a small roll of cloth.
You want to make your own clothes, but you don’t need a whole small role. You need to shopkeeper to cut again. to re-tailler. Your shopkeeper is a retailer.
How to Set up in the Retail Business
Woo. Hold on! That’s far too big a topic for this article.
But what we can offer is a listing of some of the key strategic choices retail businesses need to make.
What do you sell?
This is the first logical question. While it is possible to retail a single product, most retailers offer a range of products. So, what products will you offer, and how broad will your range be?
Whom do you serve?
The other big question is about your target market. Start with demographics: gender, socio-economic group/affluence, age, etc. Then look at market segments within these. Ultimately, you need to know your customers well, and provide them with products and an experience that they will value. Digital technologies are making astonishing strides in this. Early shopkeepers may have known their customers intimately, as members of the same small community. Now, giant retailers can know their millions of customers just as well, as members of a shared online community.
How do you serve them?
How will you and your customers do business. They need to see your goods, pay you money, and get those goods. And there are very many solutions to these problems. Some of the most common are: market stall, town centre shop, out of town warehouse, department store, small boutique, direct mail, online service, door-to-door, vending machines and more.
Where do you serve them?
Having decided on the type of store (or not) you’ll use, you need to think about where to locate your store. You’ll be balancing convenience for your customer, against operational efficiency for you.
What experience do you offer them?
This is a big topic, taking in the quality of products you offer, the customer service standards you work to, and all the feelings you create in your customers, when they do business with you. ‘Experience Shopping’ is one response that ‘bricks and mortar’ retailers are making to counter the cost competitive dominance of online retailers.
How will you price your products?
This is linked both to the quality of those products, and the competitive edge you want to promote. Are you in a price sensitive niche? Or are you in a niche where high prices are tolerated, or even desired.
How do you promote yourself to them?
- Estee Lader and Modern Marketing
- Philip Kotler and Modern Marketing
- Seth Godin and Permission Marketing
- Jean-Claude Larréché and Marketing Momentum
- Theodore Levitt and Marketing Myopia
How can you control costs and maximise revenue?
Retailing is a commercial endeavour with a cut-throat competitive environment. Retailers need to maximise profit, by either cutting costs, competing on price, or offering a product range or buying experience that few can match.
Are you a Retailer?
What is Your experience of Retail?
We’d love to hear your experiences, ideas, and questions. Please leave them in the comments below.