Key Functions of Retailing in Modern Business Operations
Published on April 17, 2025
• 7 min read
Retailers are essentially a link between wholesalers and the final consumers. They are a crucial part of a supply chain that facilitates the distribution of goods and services to customers. Retailing involves all the activities involved in selling goods and services to customers, whether for personal or business use. There are various functions like promoting products, product assortment, offering customer service, and so much more.
In today’s article, we will explain the scope and functions of retailing and the challenges faced in retailing.
What Is a Retailer?
A retailer is a business or an individual who purchases products or services from wholesalers or manufacturers and then directly sells them to customers. Retailers are a significant supply chain link connecting producers and customers.
Several types of retailers exist depending on their size, product range, and target market. Common types of retailers include departmental stores, supermarkets, stores, online retailers, luxury retailers, and franchisee retailers. Irrespective of the type of retailer, the functions and role of the retailer remain the same.
Learn more – Wholesale vs Retail
Key Functions of Retailing in Modern Business Operations
Retailing is more than just selling the product to customers; there are many functions in retail management. The key functions of retailing are explained below:
Purchasing and Arrangement
The first function of a retailer is purchasing large quantities of goods from manufacturers or distributors. It also involves negotiating with suppliers to obtain the goods and services at a favourable price. To perform this function, a business needs to understand the target audience and their requirements.
Breaking Bulk
Manufacturers or producers produce goods in bulk to meet the masses’ demand. Either wholesalers purchase a large number of goods and sell them to retailers, or retailers themselves purchase them from the manufacturer. Retailers then sell them to customers, who buy these products in smaller quantities. Hence, breaking bulk in retailing is one of the core functions.
Offering a Variety of Products
Retailers often purchase smaller quantities of multiple products. They take these different types of products from one manufacturer or different manufacturers. Since a customer can find a different variety of products in one place, it reduces the customers’ effort and time and brings in revenue for the retailer.
Offering Convenience
Retailers offer convenience to their customers in terms of location and shopping hours. A physical retail store is always located near a residential area so customers can easily find it. When it comes to online retail stores, they primarily work 24 x 7 and provide product deliveries at any time that the customer orders. This enhances customer convenience.
Providing Additional Services
To increase the sales of a product or service, retailers often provide extra services like product demonstrations or installation of equipment or after-sales support. Additional services increase customer loyalty and increase the customer base.
Promotion and Advertisements
To attract more customers, retailers often promote various products and services, either via advertising campaigns or by providing discounts, sales, etc. Promotions and advertisements are important functions of retailers in marketing, especially when a new product is introduced in the market.
Financing
Retailers sometimes provide credit facilities as well to build a strong customer base. Some retailers have a store credit option or an installment plan in place, depending on the customer’s financial situation. This fosters customers’ faith in the retailer.
Provide Information
Retailers are like a communication channel between the producer and the end customer. They provide information to the customer about the product, its features, and its benefits. Similarly, they provide information to the producer about the customer’s likes, dislikes, reviews, and feedback.
Improving Customer Experience
With time, retailers have understood the importance of customer satisfaction. Hence, retailers now focus on providing customers with the best experience by offering loyalty programs or personalised services.
Providing Employment Opportunities
Whether it is a convenience store or an online retail business, the retail sector offers a significant number of jobs at various designations, such as associates, managers, cashiers, customer support, warehouse managers, etc.
Adapting New Technologies
Adapting new technologies is essential for retailers to optimise operations and increase customer satisfaction. There are various ways through which retailers can adapt to new technologies, such as inventory management tools and software, predictive analysis via artificial intelligence, and increased operational efficiency with the help of data analytics.
Taking Risk
When a retailer purchases bulk from a manufacturer or a producer, it is a risk as they don’t know if the customers will purchase the products. The fluctuating prices and the market’s volatility are risks that a retailer has to bear. However, these risks can be managed with inventory management practices and insurance to keep financial stability intact.
Ethical and Sustainable Practices
More and more retailers are now moving towards sustainable or ethical practices to reduce their carbon footprint. Having sustainable practices in place, like using paper bags or avoiding plastics, can also help retailers improve brand awareness.
Check – How to Choose and Manage Retail Partners
Challenges in Retailing
Several challenges are in retailing, and they are explained below:
- Since innovations occur daily, it can become difficult to keep up with them, and it might also require multiple investments.
- Retailing is quite competitive, and hence, retailers need to be innovative to stay ahead of the competition.
- Customers’ expectations also evolve over time. They now need a personalised experience, which can become a challenge for many retailers.
Suggested – Retail Operations: Meaning, Challenges
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Conclusion
Retailing is the part of the supply chain that will always exist as an intermediary between the manufacturers and consumers and is always needed. The retailer’s function is not simply to sell the products to customers. It involves other functions like inventory management, customer engagement, economic contributions, adapting to new technologies bearing risk, creating employment opportunities, and providing a variety of goods and services along with essential information to the customer.
Also read: Strategies for Retail Supply Chain Management
FAQs About Functions of Retailing
What is the primary function of retailing?
The primary function of retailing is to link product manufacturers to customers by selling goods and services.
What are the different types of retail?
The different types of returns include supermarkets, departmental stores, e-commerce platforms, convenience stores, luxury stores, retail outlets, and franchisee outlets.
How can retailers improve customer satisfaction?
Customers’ expectations have changed over the last few years. They are now on the lookout for personalised services with excellent quality. They are also expecting faster deliveries and smoother customer service. Retailers can enhance their customer satisfaction levels by ensuring these criteria are met.
How does technology affect retailing?
Technology can improve retail functions and streamline operations with the help of data-driven software like CRM, self-checkout systems, and self-payment kiosks.
What are some of the challenges that retailing faces?
The retail business faces multiple challenges, including intense competition, technological advancements, and evolving customer requirements.
