Detailed Explanation of Retail Types and Pricing Strategies

Retailers are the stores that sell products directly to the consumers or end users, the regular people who buy and use the items. There are different kinds of retailers. A department store is a large store containing many different areas, departments such as clothing, electronics, household goods, food, etc. A boutique is a small shop selling fashionable items, especially clothes, jewelry and accessories. Some stores are part of a chain or franchise. This means multiple stores, restaurants or hotels in various locations such as McDonald's or Hilton hotels. The difference is that all the stores in a chain are owned by a single large central company. Whereas in a franchise, each store is owned by an individual owner who pays a fee to use the brand and business concept. You can also shop at a mall or shopping center, a large building containing many different individual stores. If you're looking for discounts, check out an outlet. These are stores that sell items, often from famous brand names, at a lower price, sometimes because they are extra items that weren't sold in regular stores. If you want to buy second hand, used items, you can go to a thrift shop. Another place to buy used things is at a tag sale or garage sale. Individuals and families have these sales to sell items in their houses that they don't want or use anymore. Things that have a physical building in a particular location are called brick and mortar stores. This is in contrast to online stores which sell things on the internet. The practice of selling things online is called e-commerce.

Many stores distribute flyers, pieces of paper for mass distribution to advertise their merchandise, products. They might also arrange a nice window display in the store front. That's the side of the store facing the street in order to attract customers. Stores usually keep a certain quantity of identical items available inside the store for customers to buy. This is called stock or inventory. If so many people buy the same item that eventually there are no more available inside the store, then the item is said to be sold out or out of stock. Inside a store the items can be arranged on racks for clothing or shelves or put inside bins.

How much should a product cost? There's a lot of strategy that goes into the number that eventually ends up on the price tag. Some products are high end products. That means they are higher quality, more sophisticated and more expensive. The opposite is a low end product which is cheaper and made of more basic materials with fewer features. Products that fall in between these two categories are mid-range products. When a company starts to focus more on high end products, it is moving up market. If it starts to focus more on low end products, it is moving down market. Both strategies can be successful because although high end products sell for higher prices, low end products appeal to a larger number of average people. The difference between the cost to make a product and the final selling price is called the markup. For example, if it costs $10 to manufacture a product and the customer buys it for $15, then the markup is $5. It's necessary for markup to be added so that the retailer can make a profit. The word profit margin refers to the percentage of the sales price that consists of profit. In the previously mentioned example, the profit margin would be 33%. $5 of profit on a $15 sale.

Sometimes retailers offer discounts for a wholesale or bulk orders. That means if you buy a very large quantity of the product. For example, if you buy a thousand or more units of the product, then you might be able to get a discount of 20%. Stores can do a number of special promotions to encourage customers to buy. They can offer discounts, marking down, reducing the price, usually for a limited time. They can provide coupons, small pieces of paper providing a discount. If a product is available at a reduced price, then it is on sale. Another common strategy is to encourage customers to buy more. Stores can do this by bundling products, offering several items together such as a camera and camera case, as well as upselling, offering customers additional or more expensive related products after they have already bought something. A loyalty program can also be an incentive for customers to come back to the same store again and again.

When customers are ready to buy, they take the items to the checkout. The person who works there is the cashier. The cashier will ring up the products, scan them and calculate the total amount to be paid. And after the customer pays, he or she will get a receipt, a piece of paper proving the items were bought. Nowadays, an increasing number of people are shopping online. After the customer purchases, buys a product on the website, the retailer packs the item, discovers it with protective material, and ships the item, sends it through the mail, so that it will be delivered directly to the customer's house. The retailer may also give the customer a tracking number, which tells the customer exactly where the package is during the process of delivery. Unfortunately, sometimes the product does not arrive in perfect condition. If it got broken during transportation, then it was damaged. And if the product does not function correctly, it is said to be defective. If you receive a damaged or defective product, you can usually exchange it for a new product, or return it for a refund. Get your money back.

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