Retail is an industry that involves selling consumer products or services to consumers either directly or indirectly. Retailers meet demand identified by a supply chain beginning with the manufacturer. The products are supplied by wholesalers and retailers with whom they establish a business relationship to sell the product to the end-user. Retail locations may be privately owned stores, franchises, kiosks, or outlet centers. In today’s retail environment, there is an increasing trend for companies to open stores from the convenience of the internet or other technologically savvy locations.
As retail growth has increased, several types of retailers have emerged. One such type is the traditional brick and mortar retailer, also referred to as the traditional retail store. This includes department stores, discount supercenters, strip malls, shopping centers, shopping malls, hotels, motels, offices, and condos. These companies use a standard supply chain system in which the retailer submits the purchase order to a wholesaler or manufacturer who delivers the merchandise to the end-user.
The supply chain system is based upon many different factors. These factors include the type of merchandise, the location of the store, inventory levels, and sales levels, among others. Many manufacturers and wholesalers are willing to provide retail stores with merchandise on consignment. In some cases, retailers negotiate directly with manufacturers and wholesalers to obtain specific merchandise. The arrangement depends on the specific needs of each retailer, and the amount of leverage they possess.
Distribution is another important factor affecting the retail supply chain system. Many manufacturers and wholesalers have multiple distribution channels, including truckload and palletized stock. These channels often differ in cost and delivery time. The cost of truckload distribution is generally less than that of palletized stock, and the delivery time for both can vary. Direct wholesalers and manufacturers may provide the retail chain with merchandise for inventory, but these suppliers do not provide retail locations with displays or floor space.
In addition to purchasing from distributors and wholesalers, retailers can also purchase merchandise in bulk. This process allows retailers to control their inventory requirements. Depending on their specific needs, retailers can purchase from a variety of different types of vendors. Department stores and independent specialty stores may rely on in-store inventory or online inventory. Major discount retailers may carry a wide range of merchandise, from common brands to name brand products.
With a strong relationship with a manufacturer or distributor, retailers can obtain nearly any type of merchandise they need. The advantage of working with a wholesaler or manufacturer is that retailers know exactly what they are purchasing and usually have the product quality or quantity that customers need. In addition to providing retailers with a flexible supply list, wholesalers and manufacturers offer a variety of financing options. Some wholesalers and manufacturers will work through third party finance companies with retail locations. Many manufacturers and wholesalers also offer installment financing, debt consolidation loans, and retail credit. This gives customers many options when looking for the merchandise that best meets their individual retailing needs.