What Is Retail? Definition & navigator (2025)

People often contrast retail to ecommerce with a “this or that” way. But if you desire to open a retail store, it’s significant to recognize that lines have blurred, and consumers no longer differentiate between them. 

Instead of choosing one or the other, successful retailers are both. 

Below, discover more about retail and how it can fuel your business in 2025. 

Ready to commence your business? make your website today or discover more about Shopify’s tools for selling online and in person.

What is retail?

Retail describes selling products or services to person consumers for personal use. Retail transactions occur through sales channels such as the internet, brick-and-mortar storefronts, direct sales, or by mail. The defining characteristic of a retail deal is that the complete user is the buyer.

Retailer vs. retailing

In straightforward terms, “retailing” is a verb that describes the act of selling goods to complete users, and “retailer” is a noun that describes who performs the sales. Here are two ordinary types of retailers:

Independent retailer

Independent retailers are entrepreneurs who construct retail businesses from the ground up. They may juggle multiple roles, including buyers, salespeople, or brand marketers.

Franchise

A franchise is a ready-made retailer with an existing revenue strategy and trademarked names and products. Retail establishments can pay a fee to advantage from the franchisors’ established economy positioning.

Types of retail businesses

Retail is the largest employment sector in the US, with more than three million retail trade businesses directly employing 9.8 million people.

Walmart, Amazon, and Costco are some of the largest retail companies in the globe.

Retailers can be described by the types of goods they sell:

• Hardline retailers sell long-lasting products such as appliances, cars, and furniture.
• Soft goods or consumables retailers sell items like clothing, shoes, and toiletries.
• Food and grocery retailers sell produce and baked goods.
• Art retailers sell fine art, books, and/or musical instruments.

Within the retail categories, you’ll discover different types of retail stores. Some of the most ordinary are:

Department stores

Department stores are the oldest and often largest places for consumers to shop for various products under one roof. Department stores like Target, Nordstrom, and Macy’s typically organize layouts by product category.

large-box stores

large-box stores are major retailers that specialize in one product category, such as electronics. Best Buy, Home Depot, and Bed Bath & Beyond are examples of large-box stores.

Discount stores

Discount stores are essentially department stores that ownership discounted items and worth brands. Some examples of discount stores include Dollar General, Aldi, and Ross.

Mom-and-pop stores

Mom-and-pop shops are tiny, often niche stores run by independent business owners—ponder corner stores and local storefronts. 

Ecommerce stores

Retail doesn’t require a physical storefront. Online retailers sell over the internet and then deliver products to customers’ doors. PlanToys and Stellar Eats are examples of ecommerce stores.

Key components of the retail supply chain

The retail supply chain consists of four players, often identified in a retail roadmap:

1. Manufacturers who produce goods
2. Wholesalers or distributors who buy goods from manufacturers
3. Retailers who purchase goods from wholesalers
4. Consumers who buy goods from retailers

1. Manufacturers

Manufacturers kickstart retail supply chain operations by transforming raw materials into finished goods. For example, a toy manufacturer might use plastic, paint, and other materials to make a line of action figures.

2. Wholesalers

Wholesalers buy goods in bulk from manufacturers at lower prices before selling them to retailers. For instance, a book wholesaler might buy thousands of copies of a recent novel from a publisher, and then distribute them to bookstores.

3. Retailers

Retailers buy goods in large quantities from wholesalers or directly from manufacturers, then sell those goods to complete users, a revenue strategy known as direct-to-customer (DTC or D2C). A local hardware store, for example, might buy pallets of paint cans from a wholesaler and then sell the cans directly to person shoppers.

4. Consumers

The customer is the last link in the retail supply chain. They purchase relatively tiny quantities of goods or services from retailers to satisfy personal needs or wants. customer retail purchases cover a broad range, from buying snacks at a convenience store to hiring landscaping teams for your backyard.

How do retail markups and returns margins work?

At each step along the chain, manufacturers, wholesalers, and retailers add a boost or returns spread to the purchase worth. For instance, manufacturers compute production costs and add a returns percentage before selling to wholesalers.

Wholesalers do the same thing, adding a returns percentage to the worth they pay for products. Retailers then add their own returns margins before selling to customers.

A product that costs $1 to make might sell to wholesalers for $2. Wholesalers could then sell it to retailers for $4, who sell it to buyers for $8.

Why a point of sale is essential for retail businesses

A point of sale is where retail transactions happen. In a physical store, this could be a liquid assets register or a self-checkout lane. For ecommerce, it’s the online checkout where customers input loan card information to complete purchases.

Retailers with points of sale across multiple platforms, such as online and in-store, are known as omnichannel retailers. 

To propose a seamless shopping encounter, many omnichannel retailers use Shopify POS, which integrates online and in-store sales for real-period inventory tracking.

Making commerce better

Retailers aim to source high-standard products from wholesalers at competitive prices; they also compete to provide the best customer service. achievement in the retail industry requires more than selling the correct products—it’s also about creating a shopping encounter to meet consumers’ evolving demands.