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What is retail and how it works?

Amadeo Tusell - january 30 of 2023

Retail can be defined as the direct sale of products in small quantities. In this sense, it is a term that is used to describe direct sales to a customer for own consumption and not for resale. It is the trade called retail.


Associated with this concept is that of retailers, which are nothing more than merchants who purchase products that they then sell in small quantities to a final customer for consumption.


It is interesting to determine, then, the concept of what is not retail and what would define wholesale sales. It means that it is a merchant, who sells in very large quantities, but few customers, generally to retailers.


Who interacts in the retail process?

It means that the merchant who sells to the wholesaler offers the merchandise to the retailers and they sell it to the final consumer. It assumes that it is a process or a distribution chain where access to the merchandise is guaranteed at all times.


The distribution chain we can mention that it is made up of a manufacturer, a wholesaler and the retailer or retailers. Its operation begins with the manufacturer that is in charge of distributing to the wholesaler, and this in turn markets to the retailer.


For the perfect functioning of this process, the four main actors must interact. These are the manufacturer who is in charge of producing the goods, for which he must use machinery, raw materials and various types of labor.


In the next link we find the wholesaler, who buys the finished products in large quantities from the manufacturer to be later distributed.


To carry out this distribution objective, he must execute various trade marketing actions that monitor sales.


Third, there is the retailer. This is in charge of selling the products to the end customer, who is the one who consumes or uses the products.


Finally, there is the consumer, who is the one who buys only the amount of a product that he needs to consume.


Characteristics of the different types of retailers

Department stores

Its main characteristics are based on the management, control and centralization of sales.

On the other hand, they try to have a strategic location that is a point that guarantees the success of the chain, in such a way that it offers the greatest convenience of access to people.

It is usually a chain of stores, which has several branches, which strive to attract customers through permanent advertising.



In this case, they are self-service stores, offering a wide variety of food and non-food products with a central checkout. Its main objective is to offer very assorted merchandise at affordable prices.

The wide variety of items, with modern packaging and labeling devices, are some of its main features.

In this type of establishments, self-service is promoted, which means that they strive to have efficient tactics to promote their products, compared to the competition.


Specialty retailers

They dominate a specific category and single-brand products. In these cases, they only market the merchandise that bears their brand or that is directly associated with it. Shoe companies like Adidas is a clear example of this segment.


Retailers without a physical store

Within this category we find websites dedicated to electronic purchases, which send purchases directly to customers' homes, without incurring the expenses of traditional retailers.


Common characteristics of retailers

They supply final consumers with the products that the manufacturer makes or produces.

They reduce the cost of goods and use various trade marketing tools to generate a steady increase in sales.

They offer the customer different experiences, according to the sector.

In this sense, the use of the tools available to trade marketing to improve billing plays a fundamental role.

On the other hand, they design and implement promotional campaigns, aimed at boosting sales.

Additionally, merchandising is increased with promotions, positioning and branding of the product.


How to improve trade marketing in terms of achieving success in retail?

From trade marketing, valuable information is generated that is directly related to the product, sales and market conditions in general.

The information emanating from these tools can be segmented into specific demographic data, for proper management in decision making. The challenge, in any case, is determined by the immediate compendium of comprehensive information, in real time.

To achieve this, it is essential to have sufficient technology and constant supervision, which allows the use of data in decision-making.