Retail – What is it, definition and concept

Retail, in some Spanish-speaking countries, is the expression used to refer to the retail sector, also known as retail trade.

Therefore, when we say “retail sale” or use this expression, we refer to the retail sector. This sector, in addition to the retail sector, is also known as “retail sector” or “retail trade”, or, as we say in this article, “retail”.

For this reason, retailing refers to an economic sector. Specifically, it refers to the economic sector that is responsible for providing goods and services to the final consumer.

Thus, we speak of one more economic sector. However, we are talking about a sector that presents a great dimension. Since we are talking about the sector that brings together all those goods and services that are purchased by the final consumer, which is why it integrates a large number of companies, very diverse from each other.

Any business that we are used to seeing on the street, any store, be it toys, food or other types of goods, is part of this sector, that is, it is retail. In other words, we can say that we are talking about any establishment that offers direct sales to the public.

A supermarket, for example, is the best example of what “retail” means. Well, we are talking about an establishment that buys food from wholesalers to later make it available to the final consumer.

Characteristics of retail

To understand this concept well, let’s see the main characteristics of this type of economic sector:

  • When we talk about retail, we talk about the retail sector or retail trade.
  • Therefore, the opposite would be the sector that integrates wholesale trade, also known as the wholesale sector.
  • It is the last link in the value chain. You should also know that we are talking about a sector that is solely responsible for trading, not producing.
  • It is the sector that makes products available to the final consumer, but is not responsible for manufacturing.
  • This sector encompasses all kinds of products and services, since it does not distinguish between them, but in the way of distributing them.
  • The retail sector buys the product from the wholesaler, and makes it available to the final consumer.
  • To understand this, let us think of any establishment that we see in an urban center.
  • Lastly, it should be pointed out that the profits obtained by the retail sector come from the margin between the price at which these stores buy the finished product and the sale price at which it is offered to the final consumer.
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As we can see, the main characteristic, this being the fundamental one and with which we must stay, is that we are talking about a sector that only markets the product, but at no time is in charge of manufacturing. In other words, its main and essential function is to buy the product from wholesalers to make it available to the final consumer.

Difference Between Retail and Wholesale

In this classification, on the opposite side we would find wholesale trade or what we commonly call “wholesale”. That is, the sector that provides goods and services to the retail sector so that, later, the latter makes them available to the final consumer.

Consider a company that supplies electronics to a chain of electronics stores.

The company that supplies the electronic devices, as well as all those that supply something, is part of the wholesale sector. While the chain of electronics stores, which offers its product on the shelf waiting for a consumer to buy it, would be part of the retail sector.

In summary, the difference is that the wholesaler distributes among the retailers, and the retailers make the goods available to the final consumer.

In the supermarket example, the wholesaler, for example, could be the farmer who produces and distributes the lettuce, and the supermarket would be the retailer, who buys the lettuce from the wholesaler and makes it available to the end customer.

Retail Examples

We have seen the example of electrical appliance stores, supermarkets, and, in order to fully understand the concept that concerns us here, we add two other examples: bookstores and pharmacies.

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In the case of libraries:

In this example, the publishers distribute the books they publish among the bookstores. When these books are in bookstores, they are available to the end customer on shelves and in shop windows.

Publishers would be the wholesalers, while bookstores would be the retail trade.

Another example is pharmacies.

The pharmaceutical industry manufactures medicines and distributes them to pharmacies. These, subsequently, offer the medicines to the final customer, who can take them at the establishment.

In this example, the pharmaceutical companies would be the wholesaler, while the pharmacies, which sell the product to the end customer, would be the retailers.

As we can see in these examples, we are talking about a fairly simple concept.

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