Retail formats are classified into 2 types – Store-Based Retailing and Non Store Retailing. In them, there are multiple types of retailers which are discussed in this article.
Stores based retailing is when the customers purchase products after practically seeing it in stores. Tangibility plays a major role here. Customers often like to understand, feel, and touch the offering before procurement.
Store-based retailing is additionally classified based on two parameters:
Store-Based Retailing: A. Form of Ownership
An Independent retailer possesses and administers only one retail outlet. The members of a family tend to operate such stores and are passed from one generation to the other. Retailers in this category have healthy relations with their customers and have restricted bargaining power with the supplier.
- Easy market penetration.
- Good customer relations.
- Individually determine the product mix and retail strategy.
Example – Mom & Pop Store
2. Chain Retailer
Chain retailers are people who own and manage two or more outlets where they retail the same products or brands and typically have standardized business processes and practices.
They have influential bargaining power with the supplier
3. Franchise Stores
When one party grants permission to another party to use its trademark or trade-name to produce and market a commodity or service according to some stipulations is called franchising.
In this arrangement, the party that grants permission is called a franchisor, and the other is called a franchisee. The franchisee normally gives a one-time payment including a certain percentage of sales income as royalty.
Franchisor – the proprietor of the brand.Franchisee – the one that buys a brand outlet for a fee [Royalty].
Example – McDonald’s franchises and manages its restaurants which offer a locally-relevant menu of quality food and beverages in 119 countries. 36,059 restaurants out of 38,695 were franchised by the end of 2019, which is about 93% of McDonald’s restaurants.
Store-Based Retailing: B. Merchandise Offered
1. Convenience Stores
These are small stores generally found near residential areas.The Food Marketing Association defines them as “small local store selling mainly groceries open until late night or even 24 hours per day”.
The size of convenience stores ranges from 500 to 1,500 sq. feet and targets at customers who require to make a quick purchase.
Example – Stores at Gas Stations
Supermarkets are huge, low cost, low margin and large volume stores.Having self-service processes, they are intended to meet the needs for groceries and items apart from food Their store size ranges from 800 to 5,000 sq. feet.70% of the goods that are stocked are food-related.
3. Department Stores
Huge stores that sell several product lines with each serving as a separate department is called as a department store. The product mix is mostly non-edible items such as apparels, accessories, books, footwear etc. They have a high service level.Size of such stores ranges from 5,000 to 40,000 sq. feet.
Example – M&S
A combination of a supermarket and a departmental store is known as a hypermarket. The size of such stores ranges from 40,000 to 1,00,000 sq. feet. They provide with different types of food items and non-food related products.
Products here normally are at discounted prices and can also be termed as one-stop shopping.
5. Specialty Stores
These type of stores concentrate on one particular brand or a specific category. Speciality stores provide a restricted product line but have good depth in the lines they provide. It has a high service level. Their store size ranges from 2,000 to 5,000 sq. feet
- THE HOME DEPOT
6. Factory Outlets
In Factory Outlets, the products are invariably sold at a rate lesser than retail prices. Off-Price retailers generally obtain manufacturer’s seconds, overruns and off seasons at deep discounts. Manufacturers could also own such retail stores. Such outlets are normally seen by the parent company to improve business.
Non-Store Based Retailing:
1. Direct Selling
In direct selling, retailers make personal contact with the customers either at home or place of work.
Commodities such as cosmetics, accessories, food, nutritional products and educational materials are some of the products sold in such a format.
The salespeople or consultants require training for such a type of selling.
2. Television Shopping
Specifications of the product are given through television.In this medium health-related products, kitchen appliances, artificial jewellery etc. are sold. After purchase, the products are delivered at the customer’s doorstep.
3. Automated Vending Kiosks
Automated vending kiosks offer convenience to the customers due to its accessibility. This popular form of retailing is used to sell items like chocolates, soft drinks, tea, coffee, cigarettes
- ATM by banks
- Gold ATM in DubaiVending Machines
4. E-tailing, also known as the Click and Mortar model
E-tailing is when products are offered to the customers online with the use of the internet. The model proves to be successful depending on the range of the products offered and the retailer’s ability to deliver them on time. Several retailers follow this model simultaneously with the brick and mortar strategy.