Retail is a principle of organizing trade, according to which supermarkets, hypermarkets, online stores buy goods in bulk and then sell them at a premium in their outlets. Retail is synonymous with retail.

In this video, Dmitry Potapenko talks about how to manage retail sales.

Let’s look at the features of retail.

Retail Features

1. Placement of a retail outlet in a favorable location
2. Easy search for the necessary goods
3. The use of commercial equipment
4. Using Marketing Techniques
5. Self service
6. Automation of accounting, procurement and storage of goods

The main sign of retail is a wide variety of goods and services that can be purchased in one place. Often people buy more products at one outlet than they planned due to sales promotion techniques . For buyers, retail is attractive due to the fact that in such stores you can find many options for goods, make a more informed choice and purchase exactly what you want.

Retail differs from other principles of organizing trade in the following ways, which allow you to sell large volumes of goods at retail prices.

• Placement of a retail outlet in a favorable location . In retail, the choice of the location of the outlet is made with high accuracy and calculation. For example, jewelry stores or points where expensive goods are sold are located in the city center and in areas where the wealthiest people live.
• Easy search of necessary goods . In supermarkets, products are placed by categories, groups and brands, which makes navigation through the outlet intuitive for customers. Online stores use similar techniques: convenient filtering and searching for goods by a word.
• The use of commercial equipment . Special equipment that is used in retail allows you to combine several functions. For example, refrigerators maintain the required temperature for storing drinks, ice cream, dairy products and convenience foods and at the same time serve as a showcase.
• Using marketing techniques . Retailers effectively use promotions and discounts, as well as promotional materials – price tags, shelf talkers , wobblers and other POS materials to draw attention to certain products.
• Self-service . Through the use of marketing techniques, customers can serve themselves. This speeds up the buying process and requires less staff.
• Automation of accounting, procurement and storage of goods . Computer programs allow you to save time and money on accounting and warehouse accounting. In this way, companies optimize their business processes and simplify logistics.

Let’s look at the varieties of this type of trade.

Retail types

1. Grocery retail
2. street retail
3. Non-grocery retail
4. Online retail
5. Network retail

There are the following main types of retail.

• Grocery retail . Trade in a variety of foodstuffs over a large area, such as supermarkets and hypermarkets. This is the most stable retail area, which works even in a crisis, because food products are essential goods. During the lockdown associated with the coronavirus pandemic, almost all retail outlets were closed, except for pharmacies and stores that sell food products (including for animals).
• Street retail . Markets and small, highly specialized shops, which are often located on the first floors of busy city streets. They compete with supermarkets due to exclusive products, breadth of assortment and proximity to customers.
• Non-grocery retail . Stationery, sports, cosmetics and other non-grocery stores. However, large grocery stores often include such products in their assortment as related products.
• Online retail . Retail trade is carried out on the Internet. A point of sale can be an online store or a page on social networks, where the buyer chooses the product he is interested in, pays for it, and receives it by mail.
• Network retail . Chains of stores that are united by a single trading concept and owner. Often, the system for purchasing and accounting for goods, together with logistics, is the same for all outlets, which makes it possible to reduce costs and sell similar goods at a price lower than that of competitors.

Congratulations, you have become familiar with the concept of retail and know what types of retail exist.

Although about 13 thousand new products enter the market every year, only 40% of them remain on the market in 5 years. In order for a new business to “shoot”, it is not enough to come up with a product and determine the price for it. It is also important to prepare the soil well.

In addition to a good business idea, a quality product and the best price, there are a lot of important things that are very easy to overlook, especially if you are new to the business world.Here are 10 tips from successful entrepreneurs to help you get started smartly. 

1. Find a smart accountant or outsource your bookkeeping Conducting competent calculations, legislative and tax base – you yourself will have to understand this information for years. 

A professional in his field will quickly give order to your papers, so the money spent on accounting services will certainly not be wasted. 

2. Know your target market To make sure you’re bringing people what they want, not you, conduct a focus group survey of the target audience for the product or service. This can be done independently and without attracting serious funds. Such a mini-study will give an idea about your client, and also save a lot of money wasted on subsequent experiments.

3. Get Legal Advice Proactive legal support can be the best way to secure long-term success for your business. After all, if you call a lawyer after you have encountered a 

problem , it may be too late to do something. And this, in turn, can have a critical impact on the business in both the short and long term. 

4. Think ahead for the future of your business When starting a business, it is important to see how the business will develop after the date of its launch. That is, you need to plan how you are going to make a profit for at least two to three years. Determine the worst and best business scenarios based on sales and revenue forecasts. It is also very important to have such a plan in order to convince the people you need that it is safe to work with you.

5. Connect with other entrepreneurs Before you open your business, and even after that, it is incredibly important to have a number of sorts of mentors, that is, professionals who have already eaten a dozen elephants in this business and will willingly share their secrets. Advice, mentoring and communication are an essential part of starting a new project. Of course, you won’t be able to learn everything all at once, but a good sensei in this area will certainly help. 

6. Create a decent website Often, a novice entrepreneur does not pay attention to the planning of maintaining a website and other platforms. As a rule, a simple site is launched at the beginning, and then you have to make a massive and time-consuming transition to other platforms and hosting. But if you start doing everything right from the very beginning, you can achieve success much earlier.

7. Save enough money It happens that start-up entrepreneurs do not have enough money to work for them for a while to become profitable. Therefore, successful businessmen recommend having an annual reserve for operating expenses in the bank on the day of the grand opening of your company. It also implies that you also have a solid business plan and a strategic growth plan in place from day one.

8. Know Your Tax Liability You must clearly know all the taxes and fees that are required of you, and also be very organized in terms of their payment. Calculate how much money will be spent on timely payment of tax payments. Also find out what taxes exist in another business, in other cities, regions and countries. Delays can very quickly turn into penalties, which will lead to new expenses.

9. Think about an exit strategy It is important that in addition to faith and perseverance, you have another exit strategy . Regardless of whether the main business idea works, you must be sure that you can sell the business and not lose all the capital in the process. Knowing that you have an exit option that won’t be very painful, it will be easy enough to keep moving forward at full speed. 

10. Ask yourself “why?” Seems like a simple question, but there will inevitably come a time when things don’t go as planned, hope for improvement will increasingly diminish, and you’ll need to remind yourself why you’re in this business. For an entrepreneur, development and growth are processes that never fully end. Therefore, it is very important to formulate a mission. This approach allows you to constantly keep the focus on the goal of the project, as well as keep in mind personal expectations from the business.For business success, it is important to have a good idea, perseverance and knowledge. And these 10 tips will increase your chances of long-term success when starting a new business.

Trade occupies an important place in the organization of human life. The first markets began to appear long before our era. Sales technologies are constantly evolving and becoming more complex. Today, trade has become an independent sphere of market relations and represents a system of commodity-money relations.

Retail today: a buyer for the market or a market for the buyer?

Modern retail  is not just retail on a wholesale scale. This is a whole system of trade turnover, based on certain principles of work organization. The concept itself has an English origin (“retail” – “retail trade”); some sources point to a borrowing from the old French language (“tailer” – “cut off, cut off in terms of clothing design”).

The retail market today is the process of selling goods and services from individual entrepreneurs or companies to the final consumer. Retailers thus become part of an integrated system called the “supply chain”.

Retail trade has been subject to certain laws throughout its existence from the formation of the first market areas in ancient societies, which are considered to be classical market places (market place).

Retail technologies: to attract attention

There are a number of technologies on the basis of which the process of selling goods and services is built:

• using a location approach to organizing outlets
• effective assortment grouping
• use of specialized trading equipment
• application of trade marketing technologies
• minimal presence of sales personnel
• self-service
• automation of accounting, procurement and storage of goods (or the procurement department as a whole)
• optimization of the logistics department

This is not a complete list of technologies used, however, the above points demonstrate that it is incorrect to consider retail only trade: rather, it is a whole organizational system of working with many customers at the same time. This includes banking structures (credit products, plastic cards, transfers), large retailers that are engaged exclusively in wholesale.

Retail: sources of efficiency

The key principle on which retail trade is based is general availability, that is, the organization of unlimited access for consumers to use (purchase) goods and services. In addition, the success of a business is determined by the purchasing power of the population. The efficiency of retail is due to the fact that consumers are not accustomed to creating large cash reserves, since inflation does not allow creating the necessary base for income capitalization. At the same time, purchasing power is growing, therefore, retail profitability is also growing with the proper use of technology.

Tasks of modern retailing

The key goal of retailing is to reduce the cost of serving an individual client, which allows minimizing the costs of economic activity, maintaining attractive prices for goods and services, and, therefore, attracting new customers. As a rule, special divisions are created to develop marketing strategies, which are led by a purchasing director. Therefore, there are certain features of doing business online and offline.

Retail online and offline: difference of approaches

It is generally accepted that online and offline retail is divided according to the principle of organizing a platform for trading operations. The difference lies in determining the degree of direct interaction between the buyer and the seller. Naturally, this requires different approaches to the organization of trade operations.

The factors by which the specifics of business processes in retail are determined are as follows:

• Price. Online stores need to be able to correctly and correctly argue it. For example, the high price, compared to offline stores, can be explained by more reliable guarantees. This is important because otherwise the customer will move to another store;
• Range. The online sphere deprives the consumer of the opportunity to “touch the product with his hands”, so the main element is the catalog and information card. The seller’s ability to motivate a purchase depends on its content and content. Traditional stores in this regard allow you to evaluate the technical characteristics on the spot, directly interacting with the product;
• Laying out. If offline stores perform zoning and follow the principle of product display priority, then sites should have intuitive and easy navigation. Of course, the presentation of the goods (visualization) is also taken into account;
• Communications. In offline stores, the elements of effective communication include a sign, window dressing, price tags, flyers, catalogs (POS). Online environment — banners, teasers, cross-links, price tags, postcards, expert advice (POSM);
• Stock. They work in a similar way both online and offline. All that is required is a difference in approaches to organizing advertising campaigns.

The future of retail

Retail news testifies to the constant growth of the online segment, which is far ahead of the growth of the traditional sector and is, according to various estimates, from 30 to 40% per year. In 2010, the volume of the Internet retail market reached 240 billion rubles. At the same time, in the overall structure of retail trade turnover it amounted to only 1.6%. This is less than in the UK (10%), Germany (8%) and the US (6.5%), but more than in Italy (1.2%) and Spain (1.3%).

The high growth rate and low share in the turnover structure is explained by the fact that Internet technologies are spreading across the country quite quickly, but in the regions, however, traditional stores are more trusted. There are a number of reasons for this, the main of which is the low level of service in regional branches. Therefore, the key task of online retail in the next few years, according to experts, is to create a unique shopping experience in the regions.

At the present stage of development of retail trade, the extensive development of the market ends and passes into an intensive stage. Retailers now have to offer not only a wide range of quality products, but also create systems of services and services in order to retain old and attract new customers.

According to McKinsey & Company , in 2021, 80% of US retail sales will still come from physical stores.

Pure Play online stores (retailers who sell only through their online store) are starting to make a name for themselves in traditional retail. Many of the biggest online brands have gone offline by opening showrooms and stores, from French fashion retailer Spartoo to socially conscious eyewear brand Warby Parker to menswear retailer Bonobos.

The real acceleration of this trend came when Amazon opened its first physical store. The Amazon bookstore in Seattle, USA may look like a simple store, but it’s actually a very important first step into an omnichannel for the world’s largest online retailer.

Online + offline = more profit

The transition to opening offline stores does not mean that online trading is dying. On the contrary, online and offline synergy will be the key to retail success in the near future. Experts agree that online stores that open outlets will be more successful than their purely online competitors. We have selected the 7 most important reasons for success.

If people can evaluate your product in person, they are more likely to buy it.

According to the State of Retail Report published by TimeTrade, 85% of consumers prefer to shop in physical stores because they like to see, touch and test products in person before buying them. Touching the product can also dispel doubts and convince the person that it is the right product.

Customers who pick up or exchange goods in a physical store are prone to additional purchases

Click & Collect (buy online and pick up in store) is very popular with both buyers and sellers. People like the convenience of choosing an item in an online store at any time and the ability to pick it up themselves. Retailers love it because it’s good for business: According to UPS Pulse of the Online Shopper , 45% of shoppers who use Click & Collect end up buying additional items when they pick up an order in store.

Return to store is also popular with customers and retailers. A UPS study shows that 3 out of 5 shoppers would rather return to a store than mail or courier back an item. At the same time, 70% of shoppers who return items in a physical store end up buying something else instead.

Personal customer service increases sales

It is difficult to offer a personalized user experience online; at least that’s what buyers agree with. The TimeTrade State of Retail Report shows that a third of shoppers prefer to get advice from real consultants, and 90% of shoppers are more likely to buy a product after receiving help from experienced in-store staff.

Despite the popularity of online shopping, human attention and communication are still important to businesses.

An offline store will help create a brand atmosphere

There are many competitors in retail, and the brand is difficult to distinguish, especially online. By switching to offline mode, online stores get this opportunity. Promising retailers are not opening physical stores just to sell. Their showrooms and concept stores are primarily places where customers can immerse themselves in the brand’s culture. In-store ambiance is a key differentiator for a brand, and if done right, it can be a great way to make a lasting impression and engage shoppers.

A physical store improves logistics – it saves time and money

Online retailers use physical stores as part of their supply chain to reduce inventory management costs and speed up shipping. Logistics costs are the Achilles’ heel of e-commerce retailers as they tend to drive down profits significantly. By using stores as warehouses and distribution centers, online retailers can improve their supply chains and deliver goods faster and more efficiently to more regions.

Possibility of free research of preferences and habits of your customers

While data collected from an online store can be useful in understanding shoppers, retailers have the ability to learn a lot about their customers simply by observing their purchases and product interactions. The amount of market research you get just by watching people is equivalent to 100 focus groups.

Real stores will help increase traffic to your online site

As L2 reports in their Death of Pureplay Retail report , when retailers open physical stores, traffic to their online stores skyrockets. As stores open, online traffic grows, and the number of people mentioning the brand and searching for it on the Internet increases. According to L2, this online buzz is accompanied by an increase in financial returns, making the physical store a good investment in terms of both popularity and profitability.

Single-channel retail is doomed to disappear, whether it’s pure e-commerce or pure offline. Retailers who keep an eye on their customers and aren’t afraid to innovate will thrive. Retailers stuck in their “good old ways” will slowly but surely disappear from the scene.

“Every evening, 95% of all my company’s assets are driven home by car. My task is to create such working conditions that the next morning all these people have a desire to return back. The creativity they bring to a company creates a competitive advantage,” said James Goodnight, who in 2010 was named “Top Employer” by Fortune magazine.

Do you think that your company has problems with personnel? Frequent conflicts, layoffs, lack of discipline? Or maybe customers started complaining more or even worse, they just leave forever? Business does not tolerate mistakes. If you really want to identify existing problems, and not get “excellent” for a tick, then you need to be prepared for the fact that an HR audit can point to problems that you do not want to believe. If it turns out that the HR strategy has not worked, you need to accept this fact without panic and find ways to correct the mistakes. An HR audit is not a way to embarrass yourself, but a tool for an objective assessment of a company’s human resources potential, which is a normal practice, especially in large companies. This information will help improve the atmosphere in the company, and as a result, take your business to a new level.

HR audit will show not only hidden errors, but also potential

In finance and accounting, auditing is commonplace. However, in personnel management this is a relatively new process and therefore undeservedly overlooked by many companies. When we invest in something, we want to see results immediately. However, effectively conducting such an audit will still take time, but the results of the work done will certainly open your eyes to the bottom of the iceberg.

A couple of years ago, you hired a human resource specialist because business trends demanded it. The specialist began his work. At first, you tried to follow his actions, but soon the busyness took over and the field of personnel management was left to chance. Then there were problems. Employees and their managers do not interact properly, disagreements break out between employees every now and then. Perhaps the HR strategy implemented by your specialist is not working?

HR audit, as a tool for measuring performance, examines the processes in the field of personnel management. These studies cover not only the verification of regulatory documents required by law, they also address all questions regarding who implements the personnel management processes, to what extent they are developed, what is worth paying attention to.

The main goal of an HR audit is to identify the strengths and weaknesses of the HR department, it will also help you find out where improvements are needed and how to achieve them in the shortest possible time and with the maximum result. For example, by analyzing reports and making a selection of documents, you can make recommendations for changing business processes, and by observing how meetings or reviews are going, you can evaluate whether time is spent efficiently and how productive the results are.

To give an objective assessment of the unit, a thorough review of the personnel, budget, and whether the expected results correspond to reality is carried out. For example, in the process of HR audit, it is analyzed how the search for employees takes place, how they are trained and how much it costs; whether it is possible to reduce or vice versa, whether it is necessary to increase the cost of training; what motivates employees? The processes of personnel office work are also studied.

Results depend on your goals

An audit may have several objectives, but all of them must be clearly defined. For example, specific objectives may sound like this:

1. Determine whether established rules and company policies are in practice.
2. Learn how best to meet the needs of departments and employees.
3. Streamline work processes (recruiting, training, compensation, etc.).
4. Establish an “early warning system” to identify problems before they turn into a crisis.
5. Measure the effectiveness of improvements – to understand whether it became better or worse as a result of changes.

You may have other goals, but they must have a clear framework and the expected result, otherwise you risk wasting time and money.

Depending on the purpose, the process and methodology for performing an audit will be different. For example, if goal number 1 from our list involves only checking existing rules, then for goal number 4 this will not be enough, you need to create a completely new system. And this is a more laborious process.

With a high-quality implementation of an HR audit and the elimination of problems identified as a result of its implementation, you can achieve the following results:

• improvement of the recruitment procedure system;
• reduction of staff turnover;
• reducing the level of job dissatisfaction;
• continuous training and effective motivation of employees;
• increase in sales due to improved relations in the team and much more, depending on which direction you consider it necessary to make maximum efforts.

Before we move on to whether or not to outsource services, let’s figure out what it is. Outsourcing is delegating to someone outside of your organization a process that you cannot or do not have time to complete on your own.

In everyday life, every person uses outsourcing. A trip to a restaurant, a trip to a service station or a visit to a hairdresser is all delegating processes for which you do not have the time or necessary skills. You should also do the same at work – delegate routine processes in order to free up your time for solving more important tasks.

When is financial outsourcing needed?

Financial services are vital for any business where there is a salary, annual reports. However, internal bookkeeping is often costly and time consuming.

One of the main reasons companies choose to outsource is to improve efficiency. How much time do you spend on finance and accounting weekly? A better solution is to spend your time on improving work, customer interaction and growing your business. And the transfer of accounting and financial tasks to outsourcing will help you with this. In addition to saving valuable time for CFOs and other executives, financial and accounting outsourcing has a number of other benefits.

Cost reduction

Outsourcing your reporting eliminates all taxes and additional costs associated with full-time or part-time employees. You pay one fixed monthly fee for everything except salary, taxes, vacation pay, sick pay.

Reduced risk of fraud and errors

In order to detect fraud in accounting, it is necessary to reconcile reports on a monthly basis. Although reconciliation is a complex process, it helps to detect fraudulent transactions and reduce errors. And the involved experts will help you with accurate reports.

Highly qualified and experienced staff

With an outsourced team of accountants and consultants who work together to take care of your reporting, you can benefit from their expertise in accounting, taxation and compliance. Through outsourcing, you will automatically comply with numerous changes in the tax code, as well as comply with reporting laws.

Scalability

With finance and accounting outsourcing, scaling your business becomes easier. You are not distracted by hiring additional financial staff, and outsourcing grows with your business. And you can focus on hiring the best people to sell your products and serve your customers.

If these benefits have convinced you of the need to resort to financial outsourcing, the next step is to choose a reliable company.

When a business is doing great, it still requires investment: new equipment or more space is needed to grow and develop, increased sales can create a cash flow deficit while you are waiting for bills to be paid, etc.

Difficult times can also bring back the issue of raising finance: sales have fallen, seasonality has affected the business, or perhaps the equipment needs to be replaced.

When is funding needed?

“Funding” is not the same as “cash”, so it is important to first determine if the business really needs funding. There are a few situations that do require funding. Let’s consider them.

Lack of funds

For example, you have to pay employees every two weeks, but customers have 30 days to pay bills – this creates an imbalance in cash flow. If your business is growing and prospering, funding may be available to cover this short term cash flow shortfall. However, if your business is struggling, don’t seek funding as a preventive measure. 

Large purchases that contribute to a new stage of development and growth

Sometimes you have to spend money to earn it. But as with a cash crunch, take this step to accelerate growth, not make up for failures. As the business grows, you may need new equipment, larger facilities, etc. Or you may have the opportunity to acquire another business. Your financial records will help determine if the business is in a situation that requires (and allows) funding.

Emergencies

Equipment gets old and breaks down, employees make mistakes, and at some point you will be faced with the fact of a major purchase that you did not count on (at least in the near future). If this is critical to your business, sometimes outside funding is the only option.

Determine the nature of the deficit 

Once you understand that funding is needed, the next step is to determine the nature of the deficit. Is the need short term or long term? Short-term cash shortages may be the result of recurring seasonal fluctuations. If you need to make a large investment in October to purchase inventory that you will sell in November and December, you have a short-term need. If you need to buy equipment to increase production by 10% over the next five years, this is a long-term need.

Match needs with the right type of funding

Try to cover short-term needs with a short-term loan and long-term reserve debt for investments that will add value to your business over time.

When comparing financing options, consider repayment terms, any required guarantees, loan terms and relative interest rates. Learn about financial reporting requirements , the need for an audit , and any special additional information you must disclose to a lender. Be sure to ask about any other fees that may apply.

Collection of documents for the lender

Different banks and lenders will ask for different documents, but most of them will want to see this combination:

• tax returns
• Bank statements
• cash flow statement
• report about incomes and material losses
• sales forecasts
• legal business documents

If your business is healthy and you just need a little boost to get it moving forward, start exploring financing options that are right for you.

The COVID-19 pandemic has changed the lives of retailers in just a few months. Experts note that the e-commerce market is growing and will continue to grow. An increase in the volume of online purchases has been noticed in all areas of retail, including business from the fashion industry.

Online is here to stay

Large clothing and footwear retailers that already had the tools to trade online had an easier time weathering the coronavirus crisis and offline store closures. For example, the world leader in clothing retail Inditex (owner of the brands Zara, Pull&Bear, Bershka, Massimo Dutti, Stradivarius, Oysho) noted a 50% increase in sales through e-commerce channels in the first months of 2020 and 95% at the peak of the pandemic in April . On average, other retailers in the industry saw a 14-25% increase in online sales.

The COVID-19 crisis has hit hard for manufacturers and brands that do not have an online presence or have a weak online sales channel. These retailers have realized that running a profitable business as before, without the introduction of tools for online trading, will no longer work even after all the restrictions caused by the pandemic are lifted.

The priority tasks for both categories of companies are the promotion of e-commerce platforms, the adaptation of the warehouse and offline stores for the sale of goods via the Internet. It is possible that e-commerce may become a key sales channel for fashion retailers in the near future.

Returns – the main “headache” of retailers

The main advantage of offline clothing and footwear stores is the ability to try on things and buy only what exactly fits. There are also returns in offline trading, but their number is not as large as in online trading.

Consultants of the audit company KPMG note that about 25% of goods purchased in online stores are returned to the seller for one reason or another. In the field of fashion retail, this figure reaches 30%. Some companies have their own warehouses dedicated exclusively to incoming returns.

Providing a return option on the one hand is beneficial for the retailer. A customer is more likely to make a purchase if they know that an item that doesn’t meet expectations or doesn’t fit can be returned. On the other hand, reverse logistics adds complexity to business management.

Tools like Generic E-logistics Pack help entrepreneurs manage returns efficiently and avoid risks that reduce the profitability of online sales. The solution has functions that provide fulfillment for an online store of clothes, shoes, accessories. It combines the features of the classical WMS and additional options focused on e-commerce: integration for master data, orders, balances, etc.

COVID-19 has shown that during a crisis, only those companies that easily adapt to changes and quickly implement innovative solutions win. Logistics automation solutions from Generix Group help to rebuild business processes in accordance with external factors, improve the quality of order picking and service. All this has a positive effect on consumer activity, reduces logistics and operating costs.