If you compare the retail scenario now to that of the early 80s and 90s, you will notice a considerable difference in the type of retail stores that exist. One of the main reasons for this change is the rise of the marketing era. Retailers began to realize that giving customers differential experiences and offerings is a great way to increase profits. This gave rise to different types of retail establishments that we see today that depend on the consumers’ behavior and manufacturers’ abilities. Each of them differentiates themselves from the rest based on the products they offer and the manner in which it is offered.
What is a Retail Store?
A retail store is a business enterprise that sells goods directly to ultimate consumers for non-business use. The goods are generally sold at marked-up prices. There are different types of retail stores that cater to different consumer types and employ different sales techniques.
Retail Mechanism – How does Retail Work?
The first step in the retail mechanism is constituted by the manufacturers. The manufacturers produce goods from raw materials with the help of tools, processes, and labor. On completion of the production of goods, they are sold to wholesalers. Wholesalers sell goods in large quantities to retailers at low prices. Retailers have the option of purchasing the goods from wholesalers or directly from the manufacturers. The retailers then sell these goods to the end consumers at marked-up prices.
Types of Retail Stores
1. Department Stores
This type of retail outlet is one of the most complex types of establishments that offer a wide range of products. It can be compared to a collection of smaller retail stores managed by one company. Department stores are well-known for offering products at different pricing levels and for the variety of products that they offer. Some of the common examples of department stores include Macy’s, Shoppers Stop, and Kohl’s.
2. Specialty Stores
Specialty stores are retail establishments that focus on one or two specific categories of products. They are known for having a very narrow product line. A characteristic trait of customers of specialty stores is that they are generally less price-driven. These outlets specialize in a given type of merchandise like men’s clothing, children’s clothing, and sporting goods.
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Supermarkets are one of the most common types of retail outlets. They are large, departmentalized, self-service stores that specialize in food and some non-food items. FMCG products are the main focus in such stores when compared to consumer durables. The product assortment is given great importance in supermarkets as the products need to be displayed in a manner such that customers get attracted to them, and they sell faster.
4. Convenience Stores
Usually located in residential areas, convenience stores offer a limited range of products at premium prices due to the added value of convenience. They are generally small establishments that have limited depth in their product line. Such outlets are known for giving super-fast service with a focused approach.
5. Discount Stores
As the name clearly suggests, discount stores give considerable discounts on the products that they sell. Discount stores compete on the basis of low prices, high turnover, and high volume. One of the best examples of this type of retail format is Walmart whose tagline boasts of saving money.
6. Hypermarkets or Super Stores
Hypermarkets are one step ahead of supermarkets. These stores are huge in size and have many different categories under their belt. These stores are generally not found in malls, rather they are the size of malls themselves. Popular examples of this format of stores are Tesco, Asda, and Costco.
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7. Warehouse Stores
A retail store that sells limited stock in bulk at discounted rates is called a warehouse store. Warehouse stores do invest heavily in visual merchandising and rely on lower prices attracting customers instead.
8. E-Commerce Stores
Virtual stores that enable customers to shop from anywhere at any time are called e-commerce stores. The order is placed through the store’s online portal, and products are delivered to the customer’s given address.
9. Dollar Stores
Dollar stores are a type of discount store. They offer products at meager rates. The only difference is that their prices are fixed.
10. Drug Stores
Drug stores are specialized stores that sell medicines. The newer drug stores though often sell many other things apart from pharmaceuticals, forming their own niche of specialized stores.
For a visual explanation of the types of retail stores, check out this video on YouTube:
Today’s retail world is changing more rapidly than ever before. The new generation of customers prefers digital shopping over offline. While a greater percentage of retailers have only offline presence today, the future of retail is a combination of offline and online. The global coronavirus pandemic has accelerated this paradigm shift, pushing retailers to rapidly adopt new technologies, develop digital platforms, implement digital modes of payment, and more.