What is retail? Retail is the process of selling goods and services directly to customers for their personal use. From bustling local bazaars to sophisticated departmental stores, retail brings accessibility and the ease of shopping to customers. There are various types of retail shops in India – from standalone brick and mortar stores to shopping malls and e-Commerce stores. With the growth of digitalisation and need for personalisation, retail meaning and scope has evolved considerably over the years with retailers leveraging modern technology to enhance customer experiences.

Let’s understand in detail about retail business in India – how it works, how retailers make money, what are the trends in retail and more, and their role in influencing economic trends and consumer lifestyles in India.

Recently updated on Sep 2024 – Added current trends in retail running in the industry, to give more insights around retailing.

What is retail?

Retail meaning: Retail can be defined as the process of sale of goods and services directly to the end-customer for their consumption. It can be a large departmental store or an individual store, or a small, home-grown business.

A retailer therefore is a person or business who sells goods and services directly to the end-user or consumer through their retail store business.

Example of Retail stores: In India, retailing can also be through small, local kirana stores, convenience stores, mom and pop stores, specialty stores, super markets and others.

What are the features of a retail shop?

Here are some of the main features of the retail business:

• Connect with the customers: Unlike a B2B business, a retail business has a direct connection with consumers as they sell goods and services directly to end users for their consumption.
• Smaller quantity: As the customer is an end user, they buy only to fulfill their requirements. As a result, quantities sold to each customer are lesser.
• Point of purchase display: Point of purchase displays and promotions are extremely important as it helps customers to find what they are looking for.
• Optimised inventory management: As compared to a wholesaler, a retail store stocks limited amount of goods and hence the scope of inventory management is driven by demand and can be limited.

Examples of retail stores in India

We understood retail meaning. So, let’s take a look at some examples of retail shops in India.

• Avenue Super-markets (DMart)
• Reliance Retail (Reliance Trends, Reliance Digital, Reliance Footwear, etc.)
• Aditya Birla Fashion & Retail Ltd (Louis Philippe, Van Heusen, Allen Solly, Pantaloons, etc.)
• Future Group (Brand Factory, Central, etc.)
• Trent Company (Westside, Zudio, Star Bazar, etc.)
• Titan Company (Titan Watches, Titan EyePlus, Tanishq, CaratLane, etc.)
• Reymond Group (Raymond, Park Avenue, etc.)
• Godrej (Natures Basket, Godrej Interio, etc.)

What are the 4 processes of retail management?

Now that we understand what is retail, let’s take a look at the four pillars or processes of retail management – procurement, inventory management, merchandising and sales and customer support.

• Procurement: The meaning of procurement refers to sourcing and purchasing goods and services from the right suppliers, at the right time, and at the best prices to maximise margins. This enables them to reduce operational costs, provide better prices to customers and improve quality and range of products offered.
• Inventory management: This process balances the level of stocks as per demand, without over or under stocking. Today, businesses often use inventory management software to accuracy, efficiency and to ensure that the right products are available. Many businesses also opt for vendor managed inventory systems for process efficiency.
• Merchandising and store layout optimisation: Planning the store layout optimally and ensuring that the products are easily visible is critical to retail store success. Merchandising done well, attracts and engages shoppers and maximises sales. This can be achieved by improving shelf space, displays, product samples etc.
• Sales and customer service: Designing sales strategies for target audiences and market, training staff on product knowledge and customer interactions, are the crucial steps for successful retail management.

How does a retail store operate?

When we define retail, an obvious question that might come up is – How do retail shops work? Or, how do retail shops make money.

Also read: Role of inventory management in logistics

Operating a retail store involves several steps each essential for successful sales and customer retention.

• Managing inventory: This forms the backbone of retail – effective inventory management. Store get goods from suppliers/wholesalers usually in bulk, to meet existing and anticipated demand. This requires planning as goods should be available when customers need it, without overstocking which can lead to wastage, storage challenges, and even hold up capital.
• Pricing strategically: Pricing products optimally is the secret to retail success. Pricing should cover fixed and variable costs, bring profits to the business, and be attractive to customers. Retailers often have to adjust prices based on demand, competitor pricing, and also feedback from customer.
• Product promotions and sales: Sales and promotions are the secret to operational success for retail stores. Retailers often use different marketing channels for promoting their products and services. There are also store-only offers and discounts, loyalty and referral programmes, bulk purchase offers, and other advertising methods used to incentivise customers. Retailers also use in-store displays, shelf positioning and other techniques to improve product visibility and accessibility to facilitate sales.
• Customer support and service: It goes without saying, but a happy customer is a loyal and returning customer and customer services goes a long way in that. Retail stores often employ trained professionals to help and educate customers on products and services. They can resolve issues, answer queries, provide recommendations, and improve the buying experience.

In brief, retail stores make money by selling in volumes. They have to design a pricing strategy that enables them to earn more profits than their investments from their sales. In general, the profits vary based on the type of retail and the products/services offered. For example, the profits of a clothing store and a grocery store will vary considerably based on the type of goods they are retailing.

Also read: Retail vs Wholesale – Which is more profitable?

What are the three types of retail management?

While we define retail, let us also explore the three main types of retail management – Merchandise management, store management and brand management.

• Merchandise management: Involves selecting goods and managing inventory, forecast trends, and maintaining optimal stock levels
• Store management: Boosts store performance and customer experience through staff management and training, store layout optimisation, and service efficiency and quality
• Brand management: Focuses on enhancing the retailer’s brand, designing of new marketing strategies, brand positioning and more

What are the different types of retail businesses in India?

Broadly speaking, there are two types of retail business in India: Store retailing and non-store retailing.

What is store retailing?

Store retailing means that goods are sold in a physical or brick-and-mortar store. A grocery store around the corner can be a classic example of store retailing. However, that’s not it. Store retailing can further be classified into the following types:

What is non-store retailing?

Non-store retailing is a business model where the retailer does not have any brick-and-mortar stores. These kinds of non-store retail businesses sell their products through the following methods:

Retail e-commerce:

There are quite a few companies that cater to the end consumer through e-commerce. While the universe of e-commerce companies includes B2B as well as retail, examples of e-commerce retail companies include:

• Amazon
• Flipkart
• Urban Company
• FirstCry
• Nykaa
• OLX

Direct sales:

Direct sales usually happen through door-to-door sales, telemarketing or any other method of direct selling. Some examples of direct selling companies include:

• Amway
• Avon
• Tupperware

Other channels

Some of the other methods of non-store retailing include:

• Vending machines
• Catalogue sales
• Sales on social media, etc.

Difference between store retailing and non-store retailing

Here are the key differences between store retailing and non-store retailing.

What are the 5 P’s of retail management?

Any discussion on what is retail is incomplete without looking at the 5 P’s of retail management – product, price, place, promotion, and people.

• Product: At the core of the retail store is the product you are selling. It must meet market needs and demand. Most retailers have a wide product mix and revise it based on feedback and insights.
• Price: What is the price of the goods you offer? Is it value for money? Is it aligned to customer’s spending behaviour or budgets? How competitive is your pricing? Pricing can give retailers competitive edge and enable it to stand out.
• Place: The actual store location and the various distribution channel strategy the retail business has adopted. The right place can attract more customers. However, today e-Commerce stores are redefining the definition of place.
• Promotion: The various marketing campaigns and strategies you have implemented to drive sales, brand awareness and loyalty. It’s essential to use a mix of promotional strategies, evaluate success, and revise based on what is resonating with the target audience.
• People: When we think of people in retail meaning it refers to both the customers and the staff. Quality service from staff can promote customer loyalty and drive sales.

Current trends in retailing  (2024)

• E-commerce growth: Like a rising tide, e-commerce lifts businesses by offering vast opportunities for global reach.
• Mobile shopping: Shopping via smartphones is like having a mall in your pocket, always accessible, anytime, anywhere.
• Sustainable and ethical retail: Sustainability in retail is like planting a tree for the future, focusing on long-term impact and growth.
• AI-powered personalization: AI is like a personal shopper, intuitively knowing your preferences and guiding you to the right products.
• Contactless payments: Contactless payments are like a quick handshake, fast and efficient, making the checkout process seamless.
• Curbside pickup: Curbside pickup is like a drive-through for retail, offering convenience without leaving your car.

Starting a retail business – Tips and things to consider

If you are planning to establish a retail business, you need to consider the following:

• Determine if you want to establish a store retailing business or a non-store retailing business. Both have their advantages and disadvantages.
• Analyse and understand your skills and expertise. For example, if your expertise is in automobiles, you can consider establishing an auto related business such as a dealership for a car company, selling auto accessories, etc.
• Calculate the funds you need for establishing your business. This will be useful in case you are looking for a business loan.
• Create a business plan. This will act as a guide for your business as well as project report can help get a business loan too.
• Decide on marketing channels. In case you plan to establish a store retailing business, marketing efforts need to be more localised while for a non-store retailing business, you need to target the right audience.
• Nowadays, many retailers opt for multi-channel retailing. Meaning you can establish a physical store as well as an online store for the convenience of your customers.

Frequently asked questions

Author: Swati Deshpande

Swati is a passionate content writer with more than 10 years of experience crafting content for the business and manufacturing sectors, and helping MSMEs (Micro, Small and Medium Enterprises) navigate complexities in steel procurement, and business services. Her clear and informative writing empowers MSMEs to make informed decisions and thrive in the competitive landscape.