Retail Market is referred to the market where goods or products are sold in small quantities for the direct consumption of the purchaser, from a fixed location like Departmental Stores or Specialty Stores or the Retail Shops. The owners of Retail Business purchase the goods in large quantities from the producers and sell them in small quantities to the ultimate consumers. These large quantity purchases by the retailer can be from the producers or manufacturers of the product or can be from the importers of the products. The Retailers sometimes procure the goods directly from the manufacturers and sometimes through a Wholesaler.
Market Places of Retail Market
Departmental Stores, Specialty Stores are the most common marketplaces of retail market. Retail Shops are also commonly seen which can operate from any shopping mall or can be situated on any street. But other than these physical marketplaces there also exists a virtual marketplace for Retail Business. This concept of virtual marketplace is the contribution of E-Commerce. This gives the facility of online retail marketing or non-shop retail marketing. Here, the consumers do not go to the retail shops physically, they just place the order by mailing or online booking and receive the products at home. So, the subsidiary services like the delivery of the products are also part of Retail Market activities.
Pricing in the Retail Market
There are two techniques, which are used to determine the prices in the Retail Market.
Cost Plus Pricing- This technique is the one, which is used most frequently. This technique involves simple calculation and requires little information. Under this technique. Firstly the unit cost of the product is estimated and then a particular amount is added which represents profit per unit.
Suggested Retail Pricing- Under this technique a price level is suggested by the producers or manufacturers of the products. The manufacturers recommend that the retailer should sell the products at the prices suggested by them. Adaptation of this technique can help in standardizing the price of the retail products among different locations. But, in reality it is found that many retailers sell the products at a price level below the suggested retail price.
Special Features of Retail Market
Price Discrimination is a dominant feature of Retail Market. This generally does not happen in the Departmental Stores or Specialty Stores but do happen in the small retail shops. The owners of the retail shops often charge high price from some customers and low prices from some. They involve in such price discrimination considering the differences in customers that is according to their financial status, lack of knowledge and keenness to buy the product.
This feature of price discrimination leads to another important feature of Retail Market, which is Bargaining. Bargaining refers to the negotiation about price, which takes place between the customers and the retailer. Bargaining actually determines the distribution of the total surplus into consumers’ surplus and producers’ surplus.
Another feature of Retail Market is “Sale” or “Discount”. The retail shops and departmental stores offer “Sale” or “Discount” that is offer products at a price below the mark at different times. “Discount’ is given at some particular occasions, at fixed times of the year and also given at usual times just to win the competitive advantage over the other retail stores.