Retail format refers to the overall makeup, design, and function of a given retail store. You likely already have a decent idea of some of the most popular retail formats around — even if you don’t know them by name.
Case in point, compare the following businesses:
Though each of the above can be categorized as retail businesses, there are a number of differences between them.
In some cases, the differences may be obvious; in others, they may be a bit more nuanced. That being the case, let’s take a closer look at the various retail formats in existence today.
While other sources offer expansive lists of retail formats, we’re going to focus on five of the more popular and common formats used by successful businesses:
Department stores sell a variety of products within a variety of niches — with each of these niches being a “department” within the overall store.
Kohl’s, Nordstrom, and Macy’s are all examples of department stores, as they each sell a broad spectrum of products under one roof, albeit in many different sections.
Though each department offers different types of products (i.e., clothing, electronics, toys, home decor, etc.), a department store’s entire catalog is typically aimed at audiences of similar backgrounds, incomes, and general needs.
There are many benefits to running a department store, such as:
However, there are a few challenges inherent to opening a department store:
Specialty stores, also known as “category killers,” major on a singular niche. Some examples:
The nickname “category killer” comes from the notion that specialty stores often become the go-to store within their respective niche (leaving less-successful companies to all but disappear). If a department store is a “jack of all trades,” specialty stores can be considered masters of their singular domain.
The benefits of running a specialty store are as follows:
On the downside:
Supermarkets are retail stores that typically focus on selling consumer packaged goods (CPGs) and similar consumable products. In general, CPGs are more necessities than desires.
Typically, supermarkets offer many different “versions” of a single type of product. Some supermarkets’ product catalogs may go beyond CPGs, including anything from clothing items to patio furniture, handheld tools to appliances. However, these items typically aren’t the major focus of supermarkets, and are often offered on an as-needed basis.
The key benefits of operating a supermarket are:
However, operating a supermarket is not without its downsides:
Discount stores are those that focus on selling quality products at lower-than-expected prices.
It’s worth noting that certain department stores, specialty stores, and supermarkets can also be considered discount stores. For example, Walmart and Target are department stores that offer their products at prices that low to middle-class customers can afford. Similarly, supermarkets like Aldi and Lidl sell quality produce and groceries at bargain-basement prices.
Some of the benefits of operating a discount store include:
That isn’t to say you shouldn’t strive to provide a positive experience for your customers. Still, a consumer walking into Walmart almost certainly isn’t expecting the same experience as they would from a Macy’s retail store.
As for the downsides of running a discount shop:
eCommerce stores are retail companies that operate primarily — if not entirely — online. Retailers belonging to any of the previously mentioned categories may also operate online. For example:
Source: Target’s website offers deals to online shoppers as well as bridging the gap between online-and-offline (O2O) commerce
The benefits of operating online include:
On the other hand, eCommerce companies face certain challenges, such as:
The retail format your store takes on depends on the products you intend to sell and the experience you want to provide.
With a clear idea of what to expect (both good and bad), you’ll be that much more prepared to take advantage of the opportunities that present themselves and to weather any storm that may come your way.
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