The process of selling goods directly to the customers is called retail. The customers can buy one or many products from a particular retail store.
The importance of Retail industry self-established in the life of customers. Right from accessibility to convenience, retail has different levels of importance in the life of the customer.
Why Retail industry is Important?
#1 Retailer is a valuable middleman in the supply chain
The retailer is a middleman in the process of delivering the goods from the factory to the customers. They also form a part of the system current supply chain, which is integrated into nature.
The primary function of the retailer is to purchase the merchandise or products or goods in large quantities from a wholesaler or directly from the manufacturer and then as per the convenience of the customers sell smaller quantities of the same product by adding a profit of his own.
It is very important that it is as such choose the right quantity and right variety of the products from the available assortment to make it available for the customers.
This requires the retailer to understand his particular area and needs of the customer regularly visiting him so that the goods and the varieties of the goods that are kept satisfy the customers. It is because of these functions that retailer forms a valuable middleman or a penultimate point in the process of retailing.
#2 Benefits to the shopper
Customer is the ultimate king. All the processes that are carried out in order to sell are made so that they are convenient for the final element in the retail selling chain that is customer or Shopper.
The goods that are manufactured elsewhere are made available at the nearest place to the shopper by supply chain management. Shopper convenience or shopper benefit is one of the primary advantage and huge importance of the Retail industry.
The retailer also helps to enhance the image of the product and the brand value to the customer with the help of merchandising appropriately.
Right from maintaining the stock of the goods to replacing the stock as well as making availability of new varieties of products launched in the market, house of it is taken care of by retailer.
This benefits exclusively for the shoppers.
#3 Reach
Having a huge stock of products in the warehouse and in the written stories of no value unless and until customers know about it and buy it. Retailers ensure to open different branches of their shop in order to cater to customers present in different parts of geography.
For example, an Apple store will be present in multiple parts of the same city in order to serve the customers of that city. In the case of smaller cities, there was even the Apple Store in the central place, which will be convenient for all the people living in the city as well as the visitors visiting the city.
Having a good reach is very crucial for retail business because the shorter the distance of the shop from the shopper, the more is the chance of having a repeat purchase.
The reach has now changed the conventional definition, and instead of customers going to the retail shop, it is the retail shop that is approaching the customers by the method of home delivery.
In this case, mobile applications such as Zomato has surpassed the expectation of customers and has formed the new standard in providing reach to customers. Food delivery applications are being popular these days because of the fact that the product or the services are delivered directly to the doorstep of the customer.
In this case, reach would be translated as the amount of area created by the delivery people. The more areas they reach, the more possibility of getting orders and having a good business there will be from the customers.
#4 Bulk Breakdown
One of the best advantages of retail stores is that retail stores do bulk buying and the storage of that bulk. Customers do not have to buy in bulk and store it. The sizes and the quantities which are desired by the customer can be purchased as and when required.
For example, customers do not have to buy 50 packets of biscuits. Instead, they can buy one packet every week and also have different combinations as per their liking. This advantage can only be offered by retail stores.
#5 Retail services
The associated services with retail provide a lot of benefit to the customers adhering to flexibility. Many ancillary services such as delivery, faster checkout, assisted services in shopping are provided by retail stores which differentiate them from the competitors.
Along with the services, some retailers provide additional customer convenience services such as lavatories and washrooms changing rooms for men and women and even emergency rooms. The services do not go unnoticed in the eyes of the customer and the remember next time before choosing their retailer.
Walmart is known to have almost everything under one roof, including customer convenience services, which makes it a big pull for the customers.
#6 Stock maintenance
Retail store is also an important factor in maintaining the stock of necessary items.
Customers do not need to buy in large quantities since the retail store maintains the stock, and as soon as the stock is exhausted due to the supply chain management, the retailer ensures that the stock is refilled.
#7 Utilizing finance
Retail store as a business which can be set up with a minimum amount of investment as compared to a company or a factory. The retail store can specialize in providing services only to specialized customers. This way, the retail business can be that specific more can cater to the general population.
The business setup of retail utilizes this finance and is comparatively faster in generating income as compared to other businesses.
In fact, the retail store starts giving business from day one as opposed to other sectors. This is my finance management important because if the customer needs more items, the retailer can either choose to stay where is and keep providing to specific customers only, or we can expand and cater to large customers.
Expansion of the business is entirely the choice of a retailer which will get affected by the changing trends in the market and the needs of the customer.
Role of retail in the economy
The retail industry has gone transformation in recent times, and clearly, the customer is a demanding position. Owing to the magnanimous growth of digitalization, the Retail industry has transformed the experience of customer drastically.
Traditional Business models are changing and giving way to a new model which require digitalization or a combination of digitization with traditional models.
The magnitude of transformations and innovations have increased and which are presenting a challenge for existing retailers who are accustomed to conventional business forms of profitability, growth, and productivity.
The drastic change in the retail sector has definitely changed the economy of the country. Here are a few ways in which it has affected the economy:
#1 Combination of clicks and bricks
Retaining is not simply about watching E-Commerce take over the existing brick and mortar stores, but it is competing with them in their own way. Initially, many of the traditional retailers were not able to keep up with the drastic changes in the market, but they are not making up for the lost time and lost business in a huge way.
The recent trends show that sales via E-Commerce have hugely increased. Countries like Japan, US, UK, France, China, and South Korea are few of the dominant players in e-commerce.
Walmart which is one of the world’s largest retailer has clarified that more than 25% of its business will be based on e-commerce and it is ensuring that a lot of money is pumped into introducing online grocery.
Currently what the world is saying right now is forging of e-commerce with the traditional stores and both of it has its own distinct advantages. Many of the companies which are purely traditional and purely digital are merging together in order to combine their assets and grow in a magnanimous way.
For example, the merger of Amazon and whole foods has helped everyone in the US. Other examples would be Instacart which has gone to Canada from the US and made a merger with e-commerce company of Canada, Loblaw.
All of this mergers has not only benefited customers but also has benefited the economy of the US.
#2 Top-notch customer experience
More than 90% of worldwide retail sales are carried out in a retail store, which is of brick and mortar type. So it looks like traditional retail stores are not going anywhere in the near future.
However, to compete with the online business and to provide a meaningful experience to the customers, the traditional stores have to be upgraded.
The importance of a unique offering of merchandise and an exciting atmosphere like concierge services, which the customers cannot find online is increasing amongst traditional retailers. Countries like India, which are the biggest hub for mobile business, have seen an increasing number of Apple stores and Nike stores opening up in the past five years.
This itself says that the advantage of e-commerce is not affecting traditional retailers if the store is managed properly.
Apple has, again and again, confirmed that more of its business comes from Apple store rather than online shopping because customers want to feel the premium product and when they see it and touch it the conversion rate is much higher.
Even in the case of the medical industry, the combination of e-commerce and traditional techniques have picked up perfectly. Dietitians have now started collaborating with fitness centers as gym specialists and also with the wrist band and smartwatch companies which collect the data from the users.
They further provide their clinical analysis for the individual for a fee. Research has shown that the combination of both E-Commerce and traditional retail store has provided an outstanding customer experience, and Nike and Apple stores have proved it again and again.
#3 Revenue Generation
Data shows that the top 10 retailers of 2016 from the USA, have contributed major income to the economy of the US.
WalMart remains of the top position with retail revenue of 480K million dollars.
Following Walmart, there is Costco with revenue of 118K million dollars 2016 show Amazon jump four positions up and recording the highest growth among retail sector with whooping 19.5% and revenue of 94K million dollars.
Companies like these have shown that there is huge potential in the retail market as well as in combining resources of E-Commerce with regular retail businesses, and this way, the customer can experience the best of both worlds. This revenue certainly helps the US economy to boost and will continue to do so.
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