A merchant, also known as a retailer is an organization that sells products such as clothing grocery items, food items, or automobiles directly to consumers via different distribution channels, with the aim of making a profit. The retailer can be located in a physical location or on the internet.
Retailers are the consumer-facing component in the chain and the majority of consumers are in contact with them regularly. They come in many different designs, types, and sizes.
What Is a Retailer?
The majority of retailers purchase goods from a wholesaler, manufacturer, or another distributor, and then sell them to the general public. Major retailers like Walmart and Target buy goods in huge quantities from wholesalers or manufacturers however, smaller, family-owned pharmacies or your neighborhood grocery store can purchase products at the same stores or through smaller vendors.
In either case, the retailer is able to sell the products to the consumer at a markup – the difference between the price they paid for the item and the price of resales. This is how retailers earn profits.
The most popular categories of goods that retailers offer include:
- Durable or hard-wearing goods (such as furniture and cars)
- Soft products (such as footwear or clothing with a long-lasting life)
- Art products (such as books, musical instruments, or art materials)
How Retailers Work
Retailers have to be established to direct sell to consumers in one form or another. This includes not only making decisions regarding physical and digital stores but also the way to promote products and communicate with customers.
The majority of modern retailers make strategic decisions based on the following factors:
- The kind the store (e.g. large national chain in contrast to. smaller stores in specific cities or. exclusively online)
- The market it serves (e.g. the high-end product consumer in contrast to. price-conscious consumers)
- A wide selection of products is optimal (unless you’re sure it’s Amazon with everything)
- Service to customers (e.g. the in-store customer service rep as opposed to. an 800 toll-free number)
- Positioning in the market (e.g. customers who have discretionary income vs. those who have disposable income)
Types of Retailers
Brick-and-mortar stores aren’t all the retailers. There is a myriad of small businesses that are solely owned by one person selling their products online, such as bath oil and Bermuda shorts.
The less traditional companies can also be classified as retailers. For instance, an artisan who sells handmade jewelry at a fair for crafts is considered to be a retailer in the event that the individual is selling products to customers to make a profit.
Retailers aren’t just in the business of selling items but they also serve as service suppliers. For instance, the retailer of consumer electronics Best Buy has a Geek Squad department within its retail stores that provide repair services for the items it sells. In addition, Geek Squad provides house calls and Geek Squad makes house calls and also has an online customer service service. 1
Here is a listing of the most common retail formats, or kinds:
- Mortar and brick (i.e. it is a physical structure)
- Special occasion (refers to shows like fairs, art shows, or art shows)
- Catalog (refers to any business that is exclusively conducted via a printed catalog or an online one)
- Pop-up (temporary brick-and-mortar storefront that’s particularly well-known during the holiday shopping season)
Nowadays, retailers must be multichannel that is, they need to offer their services in multiple types of stores (or the retail channels) for them to achieve success. For instance, Amazon has added brick-and-mortar stores to complement its online operation. Customers today want several options to shop with their preferred brand.
The standards for the retail industry are the established standards that are used to run retail businesses. They are a great resource in helping both ongoing and new retailers perform more effectively. There are two essential rules that retailers should be aware of.
GS1 Retail Industry Standards
GS1 is focused on the management of supply chains it is built around its GS1 number system that is used for Universal Product Codes (UPC). This method improves efficiency by making it possible for retailers to manage their inventory and checkout processes electronically. The GS1 assists in other important information exchanges across the supply chain, from the manufacturing process to sales.
American National Standards Institute (ANSI)
The Accredited Standards Committee of the ANSI defines the standards for the exchange of digital data in a vast variety of industries. These standards are used to guide the operational procedures of a variety of retail companies. For instance, electronic data exchange (EDI) is an electronic document standard that permits the exchange of data between two or more computer programs on multiple sites. 3 This allows a retailer to transfer order data from a web-based store to warehouses or distribution centers. Retailers should be aware of different ANSI standards.
Top 10 U.S. Retailers
The 10 largest U.S. retailers (based on sales for the year 2019) span from companies selling food to those selling medicine and online stores.
- The Kroger Co.
- Walgreens Boots Alliance
- The Home Depot
- CVS Health Corporation
- Lowe’s Companies
- Albertson’s Companies
How to Become a Retailer
Making the decision to open selling retail businesses requires an extensive amount of planning and organizing starting with research on your market, creating your company strategy to hiring employees. Before you begin selling, ensure that you have all the required documents, legal or otherwise necessary. You’ll require an Employer Identification Number (EIN), which is akin to the Social Security number for your company. Many of the companies you deal with will require an EIN before they can do business with them. It’s easy to request an EIN through the IRS website.
Being a registered EIN signifies that you’re in charge of a range of taxes such as sales tax. Be aware of what your state and local taxes are. Also, become acquainted with the amount you’ll be required to pay local and federal government agencies. Contact the chamber of commerce in your area for guidance on how to proceed.
Retailers also require business licenses. These differ based on the products you’re selling as well as the regulations in your town or state. Contact your local government office to learn what you’ll need. State and local laws will determine if you require a resale permit or an industry-specific certification, or a certificate of occupancy for your brick-and-mortar stores.