What is Retail? Retail Industry Overview | Retail Dogma (2024)

Retail is the sale of goods and services in small quantities to the consumers for use or consumption.

A retailer is a person or business who buys goods from manufacturers or wholesalers in large quantities, and sells them in small quantities to the end consumer at a higher unit price.

Due to the retail industry’s importance, economists always keep an eye on its quarterly sales reports, because it is one of the most vital sectors of the economy.

Not only do theseretail salesmeasure consumption and demand, but this sector is actually the largest private-sector employer in the U.S; supporting 1 in 4 U.S jobs directly and indirectly, including self-employment and part-time jobs.

• Retail trade contributed 5.8% to U.S GDP in Q4 2022 (U.S. Bureau of Economic Analysis)
• Total U.S retail sales for Q4 2022 were estimated at $1,785.8 billion (U.S. Census Bureau)
• There are 1,069,010 private retail establishments in the U.S, as of Q4 2022 (U.S. Bureau of Labor Statistics)
• There are 15.5 million retail employees on payroll in the U.S, as of July 2023 (U.S. Bureau of Labor Statistics)
• The average hourly earnings of U.S. retail employees is $23.93 , as of July 2023 (U.S. Bureau of Labor Statistics)
• See more industry statistics

From a customer’s point of view, the importance of the retail industry lies in the convenience it provides customers while fulfilling their daily shopping needs through the different channels. In the absence of retailers, customers would have to source products directly from manufacturers and producers, which means multiple trips to different locations to get everything they need.

Convenience and a curated product assortment are actually the main value propositions offered to the market by retail businesses.

Retailers operate the business through different functions to deliver this final service of making merchandise available to the end consumer to buy through a convenient channel at a profitable margin for the business.

For the big picture, read our articles in Retail Business Model and Retail Value Chain

The North American Industry Classification System (NAICS) categorizes retail stores into the following segments:

1. Clothing & accessories stores
2. Furniture & home furnishings stores
3. Building materials & garden equipment and supplies dealers
4. Electronic & appliance stores
5. Food & beverage stores: grocery stores, supermarkets, hypermarkets, convenience stores, specialty food stores..
6. Health & personal care stores: Pharmacies, beauty supplies, cosmetics, optical goods..
7. Sporting goods, hobby, book and music stores
8. General merchandise stores: Department stores, warehouse clubs and superstores..
9. Gasoline Stations
10. Motor vehicle & parts dealers
11. Miscellaneous store retailers: Florists, office supplies, gifts, used merchandise
12. Non-store retailers: Electronic shopping, mail orders, vending machine businesses, direct selling.

A retail business has core functions and support functions, and these include:

Buying: Involves choosing theproduct assortmentsanddealing with suppliers
Merchandising: Ensures products are available at the stores in the right quantities, at the right time
Visual Merchandising: Determines how products are displayed in the stores to drive sales of merchandise
Operations: Ensures stores are operating on a daily basis according to company’s standards & procedures
Sales: The sales team on the floor that serves the customers
Warehousing & Logistics: Deals with receiving goods, storage of goods and delivering goods to the stores or final customers (in ecommerce)
Marketing: Promotes the company’s products through different channels and drives traffic to the stores
Audit: Ensures stores are following the company’s guidelines to prevent stock loss or financial loss.
Finance & Accounting: Deals with all thefinancial aspects of the businessfrom budgeting to final reporting.

Read more on the different types of functions at our article on retail managementand our article on Retail Organization Structure.

Whether you are starting a retail business, or want to work as a retail professional, we encourage you to browse our vast library of resources. This in-depth library provides with resources that let you connect the dots and see the big picture, as well as get into the fine technicalities of the industry.

You can start with our free materials from here, and then move into a more detailed and structured learning experience at the academy.

The Professional Retail Academy (PRA)™offers a unique curriculum ofonline retail management courses, that teach you what you need to start and run a retail business end-to-end.

Every educational resource on our website and academy has been authored by a professional retailer with corporate experience.

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