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What Is the Retail Industry?

The retail industry makes a profit on unredeemed gift cards.
Retail clerks often operate cash registers.
Household furniture, such as a dining room table set, is one type of durable good.
The retail industry typically offers back-to-school deals in late summer to parents and students buying school supplies.
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  • Written By: Nicholas K.
  • Edited By: R. Halprin
  • Last Modified Date: 22 July 2014
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The retail industry features small businesses and chain stores that sell products directly to individual consumers. These businesses can be categorized based on their signature products into "hard" and "soft" retailers. Industry experts also classify retailers as department stores, discount stores, and niche businesses. Businesses in the retail industry generally rely on seasonal and holiday sales to bolster annual profits. This industry could change significantly in the 21st century due to the rise of electronic commerce and increasing concerns over product quality.

Retailers offering hard products for sale focus on durable goods built from plastic, metal, and wood. Hardline retailers range from locally owned stores selling sporting goods to retailers selling refrigerators and ovens. This retail segment often relies on brick-and-mortar stores to sell their products due to consumer interest in hands-on testing. Another segment of the retail industry is “soft” retailers that carry goods made from cloth, leather, and other soft materials. Soft retailers include shoe stores and clothiers who employ sales people to assist customers with product fit, color, and style.

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Another viewpoint on the retail industry uses product variety and price as a filter. Consumers often shop at department stores to take advantage of reasonable prices on hard and soft products. Department stores compete with discount retailers that focus on generic versions of popular products and bulk products sold at low per-unit prices. The niche business remains on the outskirts of the retail industry as department and discount stores head toward lower prices. Niche businesses include jewelers, organic food markets, and independent bookstores that appeal to narrower groups of consumers.

Many types of retailers focus on a handful of high-volume periods each year to improve their profits. The period between Thanksgiving and Christmas, for example, features an influx of sales as consumers shop for holiday gifts. Couples look for chocolates, greeting cards, and flowers around Valentine’s Day on February 14th. Consumers flock to department stores and gift shops in the weeks leading to Mother’s Day and Father’s Day. The retail industry also offers back-to-school deals in late summer to parents and students looking for school supplies.

The future of the retail industry could feature a shift from traditional stores to online retailers selling to national and international consumers. The early 21st Century included the continued growth of virtual discount stores and niche retailers offering products at below established store prices. These discounts are possible due to reduced operational costs for online stores as well as increased sales volumes that allow for deeper price cuts. This trend could extend from consumer electronics and clothing to appliances, groceries, and household goods due to an expanding community of product review websites. Consumers are able to search for reviews on products sold by online retailers to avoid inferior goods and find the best deals.

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