Retail Business – Definition, Significance

Retail Trade Definition

Considerable consolidation of retail stores has changed the retail landscape, transferring power away from wholesalers and into the hands of the large retail chains. In Britain and Europe, the retail sale of goods is designated as a service activity. The European Service Directive applies to all retail trade including periodic markets, street traders and peddlers.

While this seems as if it might raise prices for consumers, it actually keeps prices lower than if manufacturers had to market their own goods and provide shopping experiences for consumers. Retailing is all about attracting consumers through product displays and marketing. Inventory must be kept, shelves must be kept full, and payments have to be collected. Retailers are more than places to purchase merchandise, however—they provide manufacturers an outlet so that they can focus on creating their products.

The wholesale trade sector contributed $1,044.5 billion (6.0 percent), while the retail trade sector contributed $997.8 billion (5.8 percent) (figure 6-1). Wholesale trade consists of establishments who sell merchandise to other businesses. They arrange the purchase or sale of goods for resale (i.e., goods sold to other wholesalers or retailers), capital or durable nonconsumer goods, and raw and intermediate materials and supplies used in production. Establishments performing these activities may be sales branches maintained by manufacturing, refining, or mining enterprises apart from their plants or mines for the purpose of selling their products. They also may be agents or brokers who arrange for the purchase or sale of goods owned by others, often on a commission basis. For example, new automobile dealers, electronics and appliance stores, and musical instrument and supplies stores often provide repair services.

Depending on the performance of certain product styles, these retailers often make quick changes to their product lines. Second, quantity refers to a range of goods that a store will carry. Department stores like Target or Macy’s have a wide selection that ranges from housewares to automotive. These companies will not only pay attention to stocking, but they also focus on sales. Product categories that sell well will continue to be carried, and those that do not will be discontinued. Quantity of goods doesn’t mean that a retailer must have the most product.

It excludes loan receivables and some receivables from related parties. This percentage represents the total of cash and other resources that are expected to be realized in cash, or sold or consumed within one year or the normal operating cycle of the business, whichever is longer. This percentage, also known as “return on total investment,” is a relative measure of profitability and represents the rate of return earned on the investment of total assets by a business. It reflects the combined effect of both the operating and the financing/investing activities of a business.

A 2006 survey found that only 38% of retail stores in India believed they faced more than slight competition. Competition also affected less than half of retail stores in Kazakhstan, Bulgaria, and Azerbaijan. The word retail comes from the Old French verb tailler, meaning “to cut off, clip, pare, divide in terms of tailoring” (c. 1365).

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