What is a Retailer?

What is a Retailer?

A retailer is a company or any individual who operates the business that buys the products from a manufacturer or wholesaler and sells them to end-users or customers. Retailers typically don’t manufacture their own items. They purchase goods from a manufacturer or a wholesaler and sell these goods to consumers in small quantities.  In a sense, a retailer is a middle person between the customer and the manufacturers.

Retailers are the consumer-facing part of the supply chain, and most people interact with them frequently. They come in all different, types, styles, and sizes.

There are two types of retailers. Small retailers and large retailers. Large retailers such as Walmart and Target purchase goods in huge volumes from manufacturers or wholesalers, but small retailers include family-operated pharmacies or your local grocery store can buy from the same outlets or from smaller vendors.

The main categories of products that retailers sell include:

  • Food
  • Hard or durable goods include furniture or cars
  • Soft goods include clothing or footwear, which have a lifespan
  • Art goods include books, musical instruments, or art supplies

Working of Retailer

Retailers must be set up to sell directly to consumers in some form or another. This involves not only decisions about physical and digital locations but about how to market products and connect with customers.

Some modern retailers strategic decisions based on the following:

  • Type of store: It means whether it will major brand chain or outlet, small stores in select cities and it will be online only
  • Market served: whether you serve high-end product consumer or  cost-conscious consumer
  • Optimal product assortment:  you are like Amazon and where you sell everything
  • Customer service:  an in-store customer relations rep vs. a toll-free 800 number
  • Market positioning: customers with discretionary income vs. those with disposable income

Major Functions of Retailer

  • The retailer has to deliver outstanding services to consumers.
  • The retailer has to sell the goods to the consumer at an affordable and the recommended retail price.
  • The retailer has to arrange the products from the wholesaler or from the manufactures.
  • All the storage of the products or goods has to done by the retailer.
  • They have to outsource the services of global order
  • To gain the buyer’s trust by offering discounts and giving products on credit.
  • the product quality needs to be at the forefront for the retailers
  • The retailers have arranged the new products in the market and reach out to all potential customers to educate them on the same.

Few basic terms used by the retailer

  1. Stock keeping unit– It’s more of an inventory coding system. Each product is given an SKU number to identify the variant, the price, and the brand among other features.
  1. Cash flow– It refers to the liquidity aspect of the business. A retailer needs to keep track of how much money is coming in and the amount coming out of the business. The merchant needs to make a provision for all debts and operating expenses so as to run the business efficiently based on the cash flow.
  1. Depreciation– This is the decrease in the value of the asset one uses to operate the retail business. The merchant sets aside some money to replace the assets once they deplete their lifespan.
  1. Gross Profit– It’s the total amount of money a merchant makes after they deduct all costs attached to making and selling a product. This includes services that come as part of the sale such as shipping if at all it’s the retailer who has to pay for it. It needs to reflect on the income statement and to calculate it, you need to subtract the cost of goods sold from the total sales.
  1. Inventory turnover- It’s a ratio that indicates the total number of times in which the inventory has been used or replaced over a stipulated period of time. This compares the stock levels over the total number of sales in a year. To calculate the Inventory turnover, one needs to divide the total cost of goods sold over the average inventory in a specific time which is usually one year.
  1. Profit & Loss Statement– It’s a report which gives a clear depiction of all the revenues and expenses over a specific period. It’s also referred to as an income statement. It helps to analyze how the business is making its sales, all expenses, and the total revenues.
  1. Selling expenses– These are all the costs that accrue while marketing and distributing a product. The marketing expenses come about due to the advertising fees on social media. If a retailer is selling via a third-party e-commerce channel like Shopify they need to pay for the plan on a monthly basis.

List of top Retailers 

The 10 biggest. retailers run the companies that sell food to those that sell medicine to online storefronts.

  1. Walmart
  2. Amazon.com
  3. The Kroger Co.
  4. Costco
  5. Walgreens Boots Alliance
  6. The Home Depot
  7. CVS Health Corporation
  8. Target
  9. Lowe’s Companies
  10. Albertson’s Companies

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