Retail Trade

views updated May 11 2018

Retail Trade

Retailers are business firms engaged in offering goods and services directly to consumers. In mostbut not allcases, retail outlets are primarily concerned with selling merchandise. Typically, such businesses sell individual units or small groupings of products to large numbers of customers. A minority of retailers, however, also garner income through rentals rather than outright sales of goods (as in the case of enterprises that offer furniture or gardening tools for rent) or through a combination of products and services (as in the case of a clothing store that might offer free alterations with the purchase of a suit).

The retail industry is a massive part of the overall U.S. economy. In 2005, for example, retail establishments accounted for 18 percent of all nonfarm private-sector jobs and had sales of $3.2 trillion. Moreover, many retail niches are characterized by a healthy population of smaller enterprises; indeed, the vast majority of retail employees in the United States work at establishments with fewer than 20 employees.

Retail trade is widely known as a very competitive area of commercial endeavor, and observers note that many fledgling retail establishments do not survive for more than a few years. Indeed, competition for sales has become so great that consumers have seen a marked blurring of product lines among retailers. Increasingly, retailers have taken to stocking a much greater variety of goods than their basic industry classification would indicate (bookstores, for example, increasingly stock music products, while food, liquor, office supplies, automotive supplies, and other wares can all be found in contemporary drug stores). This development further complicates efforts to establish and maintain a healthy presence in the marketplace. But for the small business owner who launches a retail store on an adequate foundation of capital, business acumen, and attractive merchandise, involvement in the trade can be rewarding on both financial and personal fulfillment levels.


Retail enterprises can be either independently owned and operated or part of a "chain," a group of two or more stores whose activities are determined and coordinated by a single management group. Stores that are part of a chain may all be owned by a single company, but in other cases, the individual stores may be franchises that are independently owned by a small businessperson.

Many different types of retail establishments exist, and, as noted above, the overall industry has seen a significant blurring of the boundaries that had long separated the wide range of companies operating under the retail umbrella. Nonetheless, retailing establishments still generally fall into one of the following general categories:

  • Specialty StoresThese establishments typically concentrate their efforts on selling a single type or very limited range of merchandise. Clothing stores, musical instrument stores, sewing shops, and party supply stores all fall within this category
  • Department StoresThese establishments are comprised of a series of departments, each of which specializes in selling a particular grouping of products. Under this compartmentalized arrangement, consumers go to one area of the store to purchase tableware and another area to acquire bedding, for example.
  • SupermarketsThese retail establishments, which are primarily involved in providing food to consumers but have increasingly ventured into other product areas in recent years, account for the vast majority of total food-store sales in America.
  • Discount StoresThese retail outlets offer consumers a trade-off: lower prices (typically on a broad range of products) in exchange for lower levels of service. Indeed, many discount stores operate under a basic "self-service" philosophy
  • Mail-Order Businesses and other Nonstore Retailing EstablishmentsMail-order sales have become an increasingly ubiquitous part of the American retail landscape; indeed, some retail establishments subsist entirely on mail order, forsaking traditional stores entirely, while other companies maintain operations on both levels. In addition, this category includes sales made to end consumers through telemarketing, vending machines, the Internet, and other nonstore avenues.

Electronic retail has been growing at a significantly higher rate than retail trade as a whole. The subject is covered in some detail in this volume under Dot-Coms.

see also Dot-coms


Alexander, Tierney. The Retail Life: A Store Manager's Companion. iUniverse, 2002.

Barnes, Nora Ganim. "The Restructuring of the Retail Business in the US: The fall of the shopping mall." Business Forum. Winter 2005.

Burstiner, Irving. "How to Start and Run Your Own Retail Business." Citadel Press. 2001.

Heard, Geoffrey, and Gordon Woolf. Success in Store: How to Start Or Buy a Retail Business, Enjoy Running It and Make Money. The Worsley Press, 2003.

Koch, Lambert T. and Kati Schmengler. "Entrepreneurial Success and Low-Budget Internet Exposure: The case of online-retailing." International Journal of Technology Management. 13 March 2006.

U.S. Census Bureau. "Estimated Annual Retail and Food Service Sales by Kinds of Business: 1992 Through 2005." Available from Retrieved on 16 May 2006.

                                Hillstrom, Northern Lights

                               updated by Magee, ECDI

retail trade

views updated May 18 2018

retail trade. Until the late 18th cent. selling directly to consumers was largely conducted from domestic premises or market stalls, and augmented by visits from travelling traders with pack-horses. Items sold were mostly local and seasonal, farm produce or locally made artefacts. In England places with a market were usually not more than 15 miles apart, the distance a horse and cart could travel and return the same day. Only at fairs did vendors come from long distances.

In most towns the principal thoroughfares were the favoured locations for shops with living accommodation. Purpose-built shops, separate from the producer's home, with extensive displays and facilities for customers, emerged only in the later 18th cent. The ‘Wedgwood Room’ concept of space set aside to sell specialist items to better-off customers was a major innovation.

During the 19th cent. increasing population produced more purchasing power, with consequences for the organization and development of retailing. Markets and fairs became less important as a wide range of products, carried by regular and reliable transport, became available in established shops. Most towns by the middle of the century supported at least one shop specializing in the sale of ‘ironmongery’. Some of these businesses became the core of department stores.

Department stores with purpose-built premises are said to have started with Joseph Whiteley's in Bayswater (London). All cities saw the development of similar shops which met the needs of various social classes. From its beginnings, Harrods (1849) sought upper-class trade whilst others such as Marshall & Snellgrove concentrated on middle-class customers. Many of these department stores developed into chains and all large cities had several of these stores by the end of the 19th cent.

Consumers seeking an alternative to commercial retailing supported the self-help model pioneered in Rochdale (Lancs.) of a retail co-operative shop. Beginning in 1844 the concept spread rapidly throughout the British Isles. Co-operatives sold quality-guaranteed produce at affordable prices mainly to the urban working class. Commercial shops selling a limited range of groceries of low price and standard quality were begun by David Greig and Thomas Lipton in Glasgow. Their chains spread rapidly after the mid-1870s to most towns. They were so successful that other firms imitated their methods, not only in groceries but in butchery and other products. Shops, such as F. W. Woolworth and Marks & Spencer, which sold a variety of products were further examples of retailing success in the 20th cent.

In recent decades, consumer choice has expanded with the goods available unconstrained by locality or season. At the same time independently owned retail outlets have declined. Private car ownership stimulated the development of supermarkets and hypermarkets from the late 1950s, adding to the retail competition in food, home improvement equipment, and household goods and furniture. Since the early 1980s some stores have been relocated in large purpose-built shopping malls and, whilst providing choice for consumers, they have caused a decline of the traditional urban shopping centre. ‘Internet shopping’, introduced in the 1990s, has not expanded as fast as anticipated.

Ian John Ernest Keil