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Defining the Essentials of the Retail Industry

Objectives

After completing this lesson, you will be able to:

Define industry characteristics, challenges, and opportunities faced by a business in the Retail industry.
Review a Retail Organizational Structure

What is Retail?

Retail is the sale of goods to the public in relatively small quantities for use or consumption rather than for resale.

The goal of retail is to connect people to products and make money from it. Retail can be defined as "the sale of goods to the public in relatively small quantities for use or consumption rather than for resale mainly focusing on B2C. "

The retail industry is incredibly competitive with new disruptors coming in almost daily. Consumers are looking for instant gratification and flawless customer service and if they can’t get it at their favorite retailer, they will look somewhere else. Let’s have a look at some 2024 sales figures.

Global retail sales are expected to reach $32.8 trillion by 2026. In 2024, Global eCommerce is projected to reach $6.3 trillion.

In 2024, retail e-commerce sales are estimated to exceed USD 6.3 trillion worldwide, and this figure is expected to increase in the coming years.

Global retail sales are projected to be around USD 32.8 trillion by 2026, up from approximately USD 26.4 trillion in 2021.

Note

For more statistics, visit:

https://www.statista.com/statistics/443522/global-retail-sales/

Let’s look at a common retail sector organizational structure.

Organizational Structure

Corporate organization chart. The Chairman sits at the top, followed by the Board and the CEO/President. Reporting to the CEO/President are Buying and Merchandising, Logistics/Supply Chain, Sales Channels, Finance & Control, HR and Support Functions. Buying and Merchandising is broken down into two sub-departments: Planning and Logistics. Sales Channels is broken down into Digital and Store Operations.

The top of the structure is similar in most organizations, with areas such as finance, marketing, and HR. The biggest difference in a retail organization is buying and merchandising, logistics/supply chain, and sales operations areas.

Buying and Merchandising

These are the teams who decide what products get sold in stores, in which stores and channels, and make sure the company keeps their margins at a profitable rate. These teams often carry a lot of decision-making power as they are the teams that get products on shelves to sell.

Logistics / Supply Chain

The Supply Chain team runs a company’s warehouse or distribution centers and transportation. They are responsible for getting the products to the right place on time – whether that is to the store for the customer to buy in store, or getting the product to the consumer's house when promised. With consumers shopping online more, and expecting their products faster, this area is becoming increasingly important and a differentiator in the market.

Sales Operations

Sales Operations run different channels on which the products are sold. The head of store operations runs the stores and all store managers and store employees report up through this chain.

Marketing

Marketing works closely with the merchandising teams to plan the promotion calendar and events in addition to being the custodian of the brand. Years ago, e-commerce was handled in separate departments. Today, there are often components of the digital marketing team spread throughout an organization. There is also a growing need for positions such as chief digital officer. Marketing goes far beyond just selling items online - they own the company’s entire digital strategy.

Lesson Summary

Definition and Scope of Retail: Retail is the sale of goods to the public in small quantities for use or consumption, not resale. It is a highly competitive industry with a focus on B2C, aiming to connect people to products and generate profit. The retail industry is challenging, with intense scrutiny and fickle customers, and it's tough to enter and succeed in this market.

Retail Industry Growth and Potential: Retail e-commerce sales are projected to surpass USD 6.3 trillion worldwide by 2024, and global retail sales are expected to reach around USD 32.8 trillion by 2026. This indicates substantial growth and potential in the retail industry. The industry is highly competitive with new disruptors entering daily, and consumers demanding instant gratification and excellent customer service.

Retail Organizational Structure and Strategies: Retail Organizational Structure and Strategies: The organizational structure of a retailer typically includes: Buying and Merchandising (deciding products and managing margins), Logistics/Supply Chain (managing warehouses and delivery), Sales Operations (overseeing sales channels), and Marketing (collaborating on promotions and branding). Retail strategies involve decisions about store types, target market and pricing, product selection, customer interactions, and market positioning. These strategies evolve as market conditions change and disruptors enter the market.

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