Reading: Define Retailing

A lit-up storefront for Powell's Books bookstore. Large windows show tall shelves full of books and tables where people are sitting, eating, and reading.

Introduction

Retailing involves all activities required to market consumer goods and services to ultimate consumers who are purchasing for individual or family needs.

By definition, B2B purchases are not included in the retail channel since they are not made for individual or family needs. In practice this can be confusing because many retail outlets do serve both consumers and business customers—like Home Depot, which has a Pro Xtra program for selling directly to builders and contractors. Generally, retailers that have a significant B2B or wholesale business report these numbers separately in their financial statements, acknowledging that they are separate lines of business within the same company. Those with a pure retail emphasis do not seek to exclude business purchasers. They simply focus their offering to appeal to individual consumers, knowing that some businesses may also choose to purchase from them.

We typically think of a store when we think of a retail sale, even though retail sales occur in other places and settings. For instance, they can be made by a Pampered Chef salesperson in someone’s home. Retail sales also happen online, through catalogs, by automatic vending machines, and in hotels and restaurants. Nonetheless, despite tremendous growth in both nontraditional retail outlets and online sales, most retail sales still take place in brick-and-mortar stores.

The Retail Industry

The retail industry covers an enormous range of consumer needs. The Retail Council of Canada reports on retail sector statistics including the breadth of brands offered through retail chains as shown in the table below: [1].

The retail industry is designed to create contact efficiency—allowing shoppers to buy what they want efficiently with a smaller number of transactions. This design doesn’t come from a master retail plan. It’s driven by market forces. When a retailer sees an opportunity to expand its offering to increase purchases from customers in one location, it will expand its offering to meet the opportunity. When Barnes & Noble adds Starbucks coffee shops to its locations, customers visit more frequently and stay longer, increasing the chance of additional purchases. Costco recognized that busy holiday shoppers would rather buy a Christmas tree as part of a larger convenience purchase than have a focused (and less convenient) buying experience at a Christmas tree lot. Such opportunities cause retailers to expand their offerings, creating greater contact efficiency for consumers.Given this logic and opportunity, why doesn’t every retailer become a Walmart Super Store filled with every possible product? Like all organizations that market effectively, retailers shape their offerings to a target buyer. Retailers must also consider the particular shopping experience a buyer is seeking in that moment or context. One experience isn’t right for everyone at the same time; nor are all “experiences” compatible. For example, a buyer is expecting a different buying experience when she fills her car’s gas tank and when she stays at a luxury resort.Retailers define their target buyer segments, identify the service outputs that those segments require, and match their offerings to provide value to each target segment.

Canada’s top 10 retailers as ranked by total estimated annual retail sales in fiscal 2018/2019.
RANK CAPITAL CONTROL CONGLOMERATE EXAMPLE BANNERS RETAIL SALES SPACE SQUARE FEET NO OF STORES NUMBER OF CHAINS DOMINANT NAICS CODE
1 CAN George Weston Ltd. Shoppers Drug Mart, The Real Canadian Superstore, Loblaws 45,836 66,774 2,609 33 445 – Grocery
2 USA Costco Inc. Costco 26,689 14,477 100 2 452 – General Merchandise
3 CAN Empire Company Ltd. Sobeys, Safeway, IGA, Farm Boy 25,142 41,562 1,994 27 445 – Grocery
4 USA Walmart Stores Inc. Walmart Supercenters, Walmart 24,012 60,402 411 2 452 – General Merchandise
5 CAN Metro Inc. Metro, Food Basics, Jean Coutu Pharmacy 14,384 26,338 1,547 17 445 – Grocery
6 CAN Canadian Tire Corporation Canadian Tire, Mark’s Work Wearhouse, Sport Chek 10,496 33,175 1,425 13 452 – General Merchandise
7 USA McKesson Corporation IDA Pharmacy, Uniprix, Rexall Drug Store 9,192 9,848 2,343 11 446 – Health and Personal Care
8 USA Lowe’s Lowe’s, Rona, Rona Home & Garden 8,418 24,671 649 9 444 – Home Improvement
9 USA The Home Depot, Inc. The Home Depot 8,409 19,110 182 1 444 – Home Improvement
10 CAN Home Hardware Stores Limited Home Hardware, Home Hardware Building Centre 6,100 12,305 1,076 4 444 – Home Improvement

  1. Retail Council of Canada. (2020. March 4). Canada’s top 100 retailers. https://www.retailcouncil.org/community/store-operations/canadas-top-100-retailers/

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Introduction to Marketing II (MKTG 2005) by NSCC and Lumen Learning is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.

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