7 things you didn't know about Retail business economics
Retailers play a crucial role in the product distribution supply chain. Retailing means selling out a good or service to a customer to earn the profit and strategically running this business to earn profits on the sales of a good or a service is known as retail business economics. It won’t be wrong to say that retailers are ubiquitous since a manufacturer can be a retailer but vice versa is not always true.
1) How retail business economics works and how retailers earn profits?
Retailers invest their time and money to research and understand consumer needs and strategically promote, market, and sell the goods and services to their customers. They raise their prices above the manufacturers and wholesalers in the supply chain and make profits. This increase in the price is also called markup or simply the retailer’s profit margin.
2) Retailing is a billion-dollar industry
It is one industry that overlaps many industries and the business can be done in many industries be it automobile, food, clothing, kitchenware, luxury, and the list goes on. Retaining has its roots in ancient history with small physical brick and motor shops which evolved to new big malls attracting the customers because of its aesthetic beauty and leisure activities. Online retailing business is the future of retailing as customers prefer comfort in shopping online. Online retaining requires less labour force and the profit can be maximized and many entrepreneurs are contributing to the retail business economics and earning huge profits.
3) The retail business helps in the economic development of a country
It is an important driver of the economy. Retailing has a great impact on the economic development of a nation. Economy development and retail business growth go hand in hand. It is seen that the most developed nation has an active retail sector. When consumers spend on the products and services, it adds to the GDP index of the country.
4) Changing trends
For sure, the prediction that online retailing will grow to eclipse the offline physical stores relates to the customer's buying habits. Nowadays, we can order products from our home with the click of a button avoiding long queues at the overcrowded stores. The physical retail industry is transforming into a virtual online retail industry with the growth of digitalization. E-commerce and M-commerce are expected to overtake 80 per cent of the physical stores in the next decade.
The trend relates to the increasing size of the screens of our mobile phones. Amazon is the leading online retailer contributing the maximum to the retail business economy. Many small retailers are now affiliating with Amazon to share the profit earned by the giant retailer. Many housewives are also seen to be a part of the trend.
5) Personalized retailing and the festive season
Personalized retailing is the top trend nowadays as every individual is unique with different preferences and tastes. The customer retention rate depends on this trend and the concept relates to the study of such preferences and offering services on such goals. This ensures the sales and profits. Concept stores and the pop-up stores are the speciality stores build to offer customers with custom made customer-centric experiences as they are designed to cater preferences. Sometimes, they will accommodate single brands but ensure customer retention. The customer retention rate also depends on emotions attached to brand loyalty.
Online retailing masters this art as they will show new products based on history and past preferences. Smart retailers will earn a greater profit margin on the cost by forecasting the new patterns and trends in retail business economics. The festive season is the golden period when retailers can skyrocket their revenues through customer-centric targeting sales even after giving discounts and great offers.
6) Analytics and tricking customers to notice maximum products
Window shopping grew as retailers decided to offer a glimpse into the stores for the passersby by cleverly using glass for their stores. Another few strategies adopted to attract customers to buy more stuff is by designing the stores in such a way that a customer will be forced to lose track of time. This can be done by changing the place of items from time to time. Also, applying the analytics to place items to allow customers to notice maximum items.
7) Government Initiatives and Taxes to help increase retail business economics in India
The Government of India has introduced new retail reforms for both multi-brand stores and single-brand stores such as foreign direct investment provided, the state approves it. This allows the investment by the foreign players into the Indian business companies. The Government of India may amend the Foreign Direct Investment (FDI) laws in food processing, and Government of India has permitted 100 percent Foreign Direct Investment (FDI) in the online retailing business economics. The adoption of GST ensures a significant reduction of burden on the retailers as they no longer need to pay and lodge long indirect taxes invoices.
Overall, the retail industry is positively sustainable, supported by rising incomes and sales of goods and services including luxury items and entry of foreign players. Retailers need to adapt to the changing trends to earn maximum profits. The overall retail business economy is going to be transformed due to changing lifestyles and customer’s buying habits.
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