Retailing is the set of business activities that adds value to the products and services sold to consumers for their personal or family use.
A Retailer's Role in Distribution Channels
A retailer is a business that sells products and services to consumers for their personal of family use. Retailers are the final businesses in distribution channels that link manufacturers with consumers.
Manufacturers typically make products and sell them to retailers or wholesalers. When manufacturers like Dell Computer and Mary Kay Cosmetics sell directly to consumers, they are performing both the production and retailing business activities. Wholesalers buy products from manufacturers and resell these products to retailers, while retailers resell products to consumers. Wholesalers and retailers may perform many functions.
FUNCTIONS PERFORMED BY RETAILERS
1. Providing an assortment of products and service. Supermarkets typically carry 15,000 different items made by over 500 companies. Offering an assortment enables their customers to choose from a wide selection of brands, designs, sizes, colors, and prices in one location. Manufacturers specialize in producing specific types of products.
All retailers offer assortments of products, but they specialize in the assortments they offer. Supermarkets provide assortments of food, health and beauty care (HBC), and household products, while The Gap provides assortments of clothing and accessories. Most consumers are well aware of the product assortments retailers offer. Even small children know where to buy different types of products.
2. Breaking bulk. To reduce transportation costs, manufacturers and wholesalers typically ship cases of frozen dinners or cartons of blouses to retailers. Retailers then offer the products in smaller quantities tailored to individual consumers’ and households’ consumption patterns.
3. Holding inventory. A major function of retailers is to keep inventory so that products will be available when consumers want them. Thus, consumers can keep a small inventory of products at home because they know the retailers will have the products available when they need more. By maintaining an inventory retailers provide a benefit to consumers – they reduce the consumer’s cost of storing products. The investment to store products ties up consumers’ money that could go into an interest-earning bank account or some other use.
4. Providing services. Retailers provide services that make it easier for customers to buy and use products. They offer credit so consumers can have a product now and pay for it later. They display products so consumers can se and test them before buying. Some retailers have salespeople on hand to answer questions and provide additional information about products.
5. Increasing the value of products and services. By providing assortments, breaking bulk, holding inventory, and providing services, retailers increase the value consumers receive from their products and services.