The retail industry is gigantic. It consists of many different products and services offered through an array of different business structures. From department stores to vending machines to online retailers, the diversity of retail businesses is one of the driving forces that has made it as successful as it is.
Let’s delve a little deeper to look at the 9 various types of retail structures are out there and how they work.
1. Department Stores
Department stores are known for their vast range of different product offerings. They often present a mix of different merchandise and can include anything from clothing to make-up, kitchenware and even food. These items are typically presented in different categorised sections within the store, each with their own department manager.
Various department stores will have different mixes of products and brands, but they all share the same goal of being able to provide a selection of items all under the one roof. Some department stores may focus on more high-end brands and labels while some may be more affordable in their ranges.
2. Supermarkets
The birth of the supermarket occurred around the 1920’s, making shopping easier, with all the typical grocery items all under the one roof. With the constant increase in new technology, more and more supermarkets have self-checkout facilities installed.
The structure of supermarket generally consists of:
- Large scale stores
- Low-costs involved
- Low-margins
- High-volume of customers
- Customers can use self-checkout facilities
3. Chain Stores
Another retail structure to emerge from the 1920’s is the chain store. Chain stores are a large retail structure that can buy vast amounts of a variety of merchandise at a large discount. Because chain stores can purchase items at a cheaper rate, they are then able to pass this saving onto the customer.
Chain stores have always been a popular choice with customers not just because of their pricing but because they are usually located in central locations. This is a strategy made possible by the financial backing and resources behind them.
The structure of chain stores usually comprises of two or more stores. Due to their large scale of stock specialised staff are employed to manage the buying, monitoring, sales forecasting and inventory control areas of the business.
4. Discount Stores
As the name suggests, discount retailers focus mainly on offering products at a cheaper price. The range of products is often varied and can include a mix of anything from laundry powder to batteries and tools. The variety of products available to purchase are often limited without a great range of colours and sizes to select from and can frequently change depending on availability.
Discount stores are typically:
- Large in size
- Offer self-check out facilities
- Minimal in their design
- Stock may change regularly depending on what is available
- Standard merchandise sold at lower prices with lower margins and higher volume
5. Warehouse Retailers
These are the bare-bones, no-frills, retail set-ups where items are generally much cheaper than other retailers. Costco is a prime example of a warehouse retailer that provides a wide variety of items, often sold in bulk for a discounted price.
The structure of a warehouse retailer involves a streamlined operational process and cost-plus pricing to help pass on the savings to the customers.
6. Franchise retail opportunities
The franchise retailer structure involves a national brand that offers business opportunities for people to own locally based branches. The process involves a business owner (franchisee) purchasing a franchise which allows them the right to use the franchisers business model and brand for a certain period of time.
Franchise agreements often outline how the business is to be managed in-line with the overarching franchise business model. Training and on-going support is also provided to help the owner build, grow and manage their local business.
Some examples of retail franchise businesses within Australia include Subway, Coffee Club and Mad Mex.
7. Shopping Centres
Providing a space for multiple types of retailers all under the one-roof, shopping centres have always been a prime choice for retail businesses. Providing an assortment of products and services, customers can explore different options without needing to travel to far.
Setting up a retail business in a shopping centre involves a fixed retail location structure. These kind of retail stores operate separately than other stores and are unlike the structures of supermarkets and chain stores. These kind of stores can offer anything like clothing, homewares and specialty items and usually pay rent to the landlord of the shopping centre premises.
8. Online Retailers
One of the more modern kinds of retail structures, the world of online retailing is growly rapidly. Amazon is one of the first online retailers who have been providing customers with the option to select their products online and have them delivered straight to their home or office.
Because there is no physical store for customers to visit, online marketing plays a big role in managing and driving business. The scale and size of an online business can vary greatly from home-based businesses selling items on eBay to global giants like Alibaba.
9. Non-store retail businesses
The non-store retailer structure offers an opportunity for retail businesses to really get creative with their approach to the market. These are a few examples of non-store retailing that you are probably already familiar with:
- Direct Sales– one of the oldest methods of selling is the door-to-door salesman. Making cold calls to homes and offices, the salesman provides information about the business’ products and services.
- Vending machines– these days vending machines are more than just soft drinks and chips. It’s not uncommon to now find items like make-up, mobile phone chargers and even a pair of thongs available to purchase.
- In-home sales– Tupperware parties are a famous example of in-house retail selling. These often involve someone hosting a gathering with their friends and family with a representative from the retail business selling their products and services, usually with some kind of discount and incentive for the host.
There are many different retail business structures available each with their own style to cater to the specific needs of their target market. With the increased use of technology, the future of retail is one that is exciting, with new and inventive methods of retailing constantly emerging.
