With the advent of technology and the rapid changes in consumer behavior over the past decade, different types of retailers have emerged to cater to diverse markets and unique needs.
Retailers can broadly be categorized by three aspects:
- Ownership
- Product Focus
- Distribution Methods
If you’re looking to start your retail journey, it’s essential to understand these retail types in detail to determine which model aligns best with your goals.
This article breaks down the types of retailers and provides insights to help you identify which type suits your ambitions.
3 Major Types of Retailers
1. Ownership-based retailers
Ownership-based retailers are categorized by their ownership structure. These include the following types:
i) Independent retailers
Independent retail shops are owned and managed by individuals or families, offering products or services to their local communities.
They won’t operate under any big entity to oversee the day-to-day operations as the individuals will be solely responsible.
Starting small doesn’t mean they must stay that way as these retailers can scale it rapidly once they grow.
For example, V-Mart started as a discount retail chain offering affordable clothing and household goods. Over time, it expanded its footprint across India, becoming a recognized name in the value retail segment with hundreds of stores.
But for this to happen, you need to manage, and grow your independent retail business and choose the most profitable location by analyzing footfall, competitor presence, growth potential, location demographics, etc.
Examples:
- Kirana stores
- Local bakeries
- Independent electronics shops
Consider this retail type if:
You want to start small, maintain control over operations, and build personal connections with your customers.
ii) Retail Chains
Retail chains are multiple outlets operated by a single organization. These stores offer consistent product selections and services across locations, benefiting from brand recognition and operational efficiency.
As same as independent retailing, you can start this business on your own but the initial and operational costs would be on the higher side depending on the merch mix you choose.
These retail chain stores are usually operated by well-known names in the local communities in Tier II and Tier III cities.
However, in Tier I cities, retail chain stores are dominated by big names such as Reliance Trends, DMart, Croma, etc while there are many well-known local chain stores that are present, and run independently.
Consider this retail type if:
Aim to scale operations and reach a wider audience while maintaining uniformity in product offerings and customer experience.
iii) Franchise stores
Franchise stores operate under the guidelines and branding of a parent company.
Franchisees benefit from an established brand and operational blueprint, reducing the risks of starting a business from scratch.
There are many low-cost franchises you can look out for and as a franchisee, you will benefit when it comes to brand awareness and managing day-to-day activities as there’s a standard guideline laid out by the franchisors.
Some of the popular franchises in India:
- Zudio
- McDonald’s
- KFC
- Amul Parlors
Consider this retail type if:
You want to own a business with a proven model and brand backing. It’s particularly attractive to those who are new to retail but looking for strong operational support.
2. Product-focused retailers
Product-focused is a type of retailing concept that specializes in particular product categories or offers an extensive range of goods tailored to their local customers’ needs.
i) Department stores
Department stores are large-scale establishments organized into sections or departments, offering diverse products such as apparel, electronics, and home goods. They are known for their wide selection and one-stop shopping experience.
The definition of department stores varies, with Tier I cities focusing on premium experiences and global brands, while Tier III cities prioritize affordability and regional products.
Consider this retail type if:
Aim to attract middle-to-upper-class customers who value variety and a curated shopping environment under one roof. But the size of the store you should be going for solely depends on the location demographics.
ii) Specialty stores
Specialty stores focus on a single product category, offering expertise and an exclusive range.
Customers often visit these stores for quality and tailored services, making them ideal for niche markets and enthusiasts.
Consider this retail type if:
You have deep knowledge or interest in a specific niche. Also, It’s ideal for markets where customers prioritize quality and specialized products over variety.
iii) Supermarkets and hypermarkets
Supermarkets primarily focus on groceries, fresh produce, and daily household essentials, catering to everyday needs.
Hypermarkets go beyond groceries to include electronics, clothing, home goods, and more, providing a comprehensive one-stop shopping experience.
Also, hypermarkets tend to provide cafeterias and entertainment zones to improve the shopping experience and attract families.
For example, DMart in India focuses on offering a wide range of products under one roof, often including facilities like snack counters.
Consider this retail type if:
You’re looking to serve high-foot traffic areas and cater to a diverse customer base. It’s also effective for locations where consumers value affordability and convenience.
3. Non-store retailers
Non-store retailers operate outside traditional brick-and-mortar locations, using the Internet to reach their customers.
i) E-commerce retailers
E-commerce retailers operate online, offering products directly to consumers through websites or apps.
You can build and sell products online by using platforms like Amazon or Flipkart, by paying a fee for listing and transaction services.
E-commerce retailing growth is fueled by advancements in technology and increasing internet penetration.
Consider this retail type if:
You wish to expand your reach without investing heavily in physical infrastructure. It works best for tech-savvy entrepreneurs and markets with high internet penetration.
ii) Direct-to-Consumer (D2C) retailers
D2C retailers bypass intermediaries, selling products directly to consumers through their own channels, such as websites or brand-owned stores.
As this model eliminates third-party selling platforms, you can save on fees. However, you must ensure you have a properly functioning website and effective marketing strategies to grow your brand online.
Examples of successful D2C brands:
- Lenskart
- Nykaa
- BoAt
Consider this retail type if:
You are looking to maintain control over your supply chain and build direct relationships with customers who benefit most from this mode.
How GeoIQ can help with your retail journey?
GeoIQ’s location intelligence platform can assist in identifying profitable store locations, analyzing footfall trends, and predicting consumer demand to maximize your retail potential.
While e-commerce businesses operate online, location still plays a key role in optimizing supply chains, targeting the right customer segments, and improving delivery logistics.
Whether you’re considering independent retail, chain stores, or e-commerce platforms, GeoIQ’s insights can guide you in selecting the most profitable areas to expand or open your very first business!
Conclusion
The retail landscape is vast and varied, with each type of retailer catering to specific market needs.
By understanding the characteristics and suitability of different retailer types, you can make decisions based on what interests you to dominate your local market.
