A product usually goes through different intermediaries before it is available to the end consumers. It is almost impossible for manufacturers to sell their products directly to customers. For example, a bread manufacturer cannot expect people to travel miles just to get a pack of bread.
This is where retail stores come in a place that makes a product available to the end consumer. For example, a pharmacy or drug store that sells hundreds of products from multiple manufacturers under one roof is a typical example of a retail store. But do you know there are numerous types of retail stores?
The Marketing Tutor has prepared a detailed list of the most common types of retail stores all over the world.
What is a Retail Store?
A retail store, in simplest words, is a form/type of business that directly sells goods to the end consumers. In other words, retail stores are the sales point where consumers can buy products for non-business use.
As far as the prices are concerned, retail stores sell products at marked-up prices because they stand last in the supply chain. The manufacturer sells the product to wholesalers, who then distribute them (at an increased price) to the retail stores. Retail stores then sell products to consumers after keeping a profit margin of their own.
Types of Retail Stores
Currently, there are 12 common types of retail stores, including;
Specialty stores, as the name suggests, have a relatively narrow product line. They usually sell one or two products or multiple products of similar nature. Generally, specialty stores sell products to a group of customers that are not really price-driven.
For example, an electronics retail store may sell air conditioners, water purifiers, refrigerators, etc. Similarly, a sports store may specialize in equipment related to a particular sport or multiple sports.
In a broader sense, company franchises or independent agencies selling products of one company can also be categorized as specialty stores. For example, a retailer may sell multiple products of Pel or Dawlance Company.
Departmental stores are generally bigger retail units where you can find a wide array of products. These stores are generally located in shopping malls, but some retailers may have their own separate spaces. Department stores may sell garments, beauty products, toys, FMCGs, eatable items, etc. Moreover, department stores usually have different sections for different types of products.
However, it is important to note that department stores don’t cover as many categories as hypermarkets or supermarkets. Common examples include Kohl’s, Macy’s, Pantaloons, etc.
Convenience stores basically provide commonly or routinely used goods to customers near their doorsteps. These stores have a narrow product line and may not have much of variations in the products they sell. Convenience stores have smaller stocks, and their prices are higher than departmental stores or hypermarkets.
Convenience stores are successful in attracting customers because people usually avoid traveling miles just to buy a few regular-use products. You can find these types of stores on every other street or block.
Supermarkets are probably the most comprehensive and highly categorized form of retailing. Supermarkets mostly target FMCGs such as eatables, groceries, laundry, bakery products, detergents, soaps, shampoos, etc. Supermarkets have less focus on durable consumer goods, but the best thing about supermarkets is the amount of variations/options available.
Unlike convenience stores, you can find multiple varieties of a single product, and prices are also lower. Supermarkets pay attention to segmentation/categorization to attract customers. Common examples include Costco, Whole Foods, and Big Bazaar.
Discount stores, as the name suggests, attract customers by selling products at discounted prices. These stores earn profits by lowering prices and increasing sales volume. Walmart is a classic example of discount store retailing. Although Walmart can be categorized as a supermarket, its marketing model is based on attracting customers by offering huge discounts.
Basically, discount stores buy products from manufacturers in massive quantities and at lower prices. Then, even after offering discounted prices to customers, discount stores can still make high profits due to greater sales volume.
Drug stores/medicine stores
Traditionally, medical stores used to sell medicines and basic medical apparatus, but things have changed now. Drug stores have widened their product line by adding cosmetics, beauty products, common eatable items, healthcare products, basic-to-advanced medical apparatus, personal care products, and groceries as well. In fact, drug stores in many countries are offering basic medical checkups/consultations.
Hypermarkets are basically a broadened form of supermarkets with more variation and diverse product lines. Hypermarkets basically provide you FMCGs and durable consumer products under one roof. From electronics to clothing to footwear to cosmetics, you can find almost every product you need as a “residential consumer.”
Another good thing about Hypermarkets is you can find products with different qualities. You can find low, medium, high, and premium quality products of the same category. Common examples include Tesco, Walmart, Sainsbury, Costco, and Asda.
Used goods store
Selling used or second-hand products have been a common practice for decades, but it was limited to occasional or seasonal selling. Mostly, sellers used to arrange infrequent stalls to sell their used products, but it is now becoming a widely recognized form of retailing. In fact, many renowned brands like Audi are endorsing used goods consumption to normalize it in the communities.
Off-price stores sell products that are either damaged during transportation or had minor defects during production. Manufacturers or wholesalers sell these products to off-price stores for considerably low prices. However, these products may be cheaper, but they usually don’t last long. Alibaba and Amazon have really promoted the sale of off-price goods.
Extreme discount stores
Extreme discount stores are one step ahead of discount stores in terms of product prices and discount percentages. These stores usually purchase inventory from local and private label brands at meager costs and sell at lower prices. However, extreme discount stores often find it difficult to get a regular stock supply and may face interruptions in sales.
People generally think that extreme discount stores sell low-quality products, which is not true. In fact, many local brands start promoting their products through extreme discount stores. Common examples include Lidl and Aldi.
E-commerce retailing is the latest addition to the retailing business, and it indeed is the future. Ecommerce stores don’t have to bear distribution and storage costs, thus making it easier for them to sell products at amazingly low prices.
Buyers book their orders on sellers’ websites or social media outlets and make payments online. The company then delivers the product to the given address. E-commerce retailing is becoming a global practice because of changing consumer behavior. Common examples include Amazon, Etsy, Alibaba, eBay, Macy’s, etc.
Dollar stores are another category of discount stores where you can buy routine-use products are meager rates—usually one dollar or less. Common examples include Family Dollar, Dollar Tree, Dollar General, etc.
The future of retailing is constantly changing, and businesses are trying to maintain a balance between online retailing and physical retailing. However, millennials are more inclined toward online shopping, and that is why online retailers have gained immense fame worldwide.
Let us know if we missed any type of retail stores!