Foundations of Retailing
1. Concept of Retailing
● Definition: Retailing is the process of selling goods/services directly to the end
consumer for personal use.
● Nature:
○ Small quantities.
○ Direct consumer contact.
○ Value-added services.
● Role in Supply Chain: Retailing is the final step in distribution — bridging
producers and consumers.
Supply Chain Flow: Raw materials → Manufacturer → Distributor → Wholesaler → Retailer
→ End User.
2. Importance of Retailing
● Economic Role: Contributes to GDP, generates employment, and drives consumer
behavior.
● Bridge Function: Connects producers with consumers, ensuring accessibility.
● Market Driver: Shapes trends, influences demand, and reflects cultural practices.
3. Evolution of Retailing
● Traditional Markets:
○ Public markets/bazaars (palengke, tiangge, bagsakan).
○ Transactions: face-to-face, cash-based, haggling.
● Mom-and-Pop Stores (Sari-sari):
○ Family-run, located near homes.
○ Built on personal trust and utang (informal credit).
○ Limited variety but highly accessible.
● Modern Retail Formats:
○ 1900s: Department stores (variety under one roof).
○ 1930s–1950s: Supermarkets (self-service, fixed pricing).
○ 1960s–1980s: Shopping malls (retail + leisure).
○ 1990s: Big-box stores/hypermarkets.
○ 2000s: E-commerce (Amazon, eBay).
○ 2010s–present: Omnichannel, mobile commerce, social selling.
4. Functions of Retailing
● Buying & Assembling: Retailers curate products from multiple suppliers.
● Selling: Facilitate final transaction; persuade and assist customers.
● Storage & Warehousing: Maintain inventory, cold storage, avoid
stockouts/overstock.
● Risk Bearing: Absorb risks (demand, perishability, theft, damage, trends).
● Transportation & Logistics:
○ Inbound: Supplier → Retailer.
○ Outbound: Retailer → Consumer (last-mile delivery).
● Grading & Standardization: Sort, classify, and label products for consistency.
● Financing: Installment plans, loyalty programs, BNPL options.
● Information Dissemination:
○ Downward: Promotions, signage, social media.
○ Upward: Feedback, sales data, analytics.
○ Modern: Data-driven insights via loyalty cards, POS, browsing history.
5. Retail Formats & Types
By Ownership
● Independent retailers: Single-owner (sari-sari, local bakeries).
● Chain stores: Multiple outlets under one brand (SM, Puregold).
● Franchises: Operated under established brand systems (Jollibee, 7-Eleven).
● Cooperatives: Member-owned, profits shared (vendor cooperatives).
By Merchandise
● Specialty stores: Focused categories (Mercury Drug, Fully Booked).
● Department stores: Wide variety under one roof (SM, Robinsons).
● Supermarkets: Large self-service food/household stores (Puregold, Waltermart).
● Convenience stores: Small, long hours, everyday items (7-Eleven, FamilyMart).
● Hypermarkets: Supermarket + general merchandise (SM Hypermarket).
● Superstores/Warehouse clubs: Membership-based bulk shopping (S&R, Landers).
By Price Strategy
● Discount stores: Low-cost, high-volume.
● Off-price retailers: Branded goods at reduced prices (outlets, surplus).
● Luxury retailers: High-end, status-driven (LV, Hermes, Rolex).
Non-Store Retailing
● Direct selling: Avon, Boardwalk.
● Vending machines: Automated product dispensing.
● TV shopping/home shopping: OShopping, Q Home Shop.
● E-commerce/social commerce: Shopee, Lazada, TikTok Shop, Facebook
Marketplace.
6. Retailing Channels
● Brick-and-Mortar: Physical stores; tactile experience but high overhead.
● Online/E-Commerce: 24/7, wide reach, lower costs.
● Omnichannel: Integrated physical + online + mobile (click-and-collect, unified
inventory).
● Mobile Commerce (M-Commerce): Shopping via apps; enabled by GCash, Maya.
● Social Commerce: Selling via social media; influencer marketing, live selling.
✨ Key Takeaways
● Retailing is the final link in the supply chain, shaping consumer access and
behavior.
● It has evolved from traditional markets to omnichannel ecosystems.
● Functions of retailing go beyond selling — they include logistics, financing, risk
management, and information flow.
● Retail formats are diverse, serving different consumer needs and economic contexts.
● The future of retail is hybrid: blending physical, digital, and social channels.