Retail has been around since early human history, evolving into what we know it as today. Now, there are more than 1 million retail businesses in the U.S. alone, and sales in the industry have grown about 4% each year since 2010. And though empty malls and bankruptcies litter headlines, there are 5.2 new store openings for each one that closes its doors.
Below, let’s look at the definition for retail, how it’s evolved over centuries, and where the future of retail is headed.
What is retail?
Retail is when there is an exchange of goods for money between a business and a consumer. A consumer pays money in the form of cash, credit/debit card, check, or alternate payment method, while the business provides a product(s) in return.
According to Merriam-Webster, retail is a noun, verb, and adjective (and adverb but we’ll skip that):
Retail is the sale of commodities or goods in small quantities to ultimate consumers, and the industry of such selling. To retail is to sell in small quantities directly to the ultimate consumer. Something with retail qualities is of, relating to, or engaged in the sale of commodities at retail.
A retailer is the business that provides the goods to the customer who pays for the item. In some cases, retailers manufacture their own products, while others use third-party manufacturers and suppliers for their inventory.
Typically, the consumer who purchases the product from a retailer is also the end user. However, there are also times when they’re purchasing for someone else — gifts, for instance.
While traditionally, retail was in a brick-and-mortar store, there are tons of retail channels today.
Retail vs. wholesale
While retail is a transfer of goods from the retailer to the consumer, or end user, wholesale is typically a business-to-business (B2B) transaction.
Wholesalers sell bulk quantities of products, as opposed to a single unit. Pricing for these bulk orders typically work out to a discounted per-unit rate so retailers can add markup and sell it directly to consumers.
Note: Stores like Sam’s Club and Costco offer wholesale products for sale directly to consumers. We’ll get into that a bit more when we discuss the types of retail.
The history of retail
Retail has technically been around since early human history, where people exchanged and bartered animals, produce, and other goods. At that time, goods were currency themselves. The ancient Mesopotamians are credited with inventing the first form of money, the shekel, whose value was based off weight.
During the Medieval times, merchants credited the first version of the credit card. They used notches on a wooden stick to keep track of accounts receivable and accounts payable. The system lasted until 1826.
In the 7th century Tang Dynasty, China introduced the first paper money. The currency remained in circulation for 200 years, until inflation from overproduction and a copper shortage forced merchants to use money backed by gold.
Currency aside, retail has blossomed from a rudimentary system of artisan merchants to a global network of brands of all sizes. Let’s look at a full timeline:
1658. Boston established the first markets in 1658. Merchants would display merchandise instead of in the spaces below their homes, as they did previously. The trend caught on and artisans of all kinds started selling in markets.
1670. The Hudson’s Bay Company trading post was established in Canada. Here, frontier settlers would trade furs with Native Americans. They expanded to a North America-wide operation that did business well into the twentieth century.
1818. Fast forward to April 7, 1818, when Henry Sands Brooks opened H. & D.H. Brooks & Co., the first Brooks Brothers store, in New York City. What started as a “small family haberdasher” has transformed into a global brand that still exists today.
1858. Rowland H. Macy founded what we know today as Macy’s. In 1858, he opened R.H. Macy & Co. dry goods store in New York City, earning $11.06 on their opening day.
1872. America gets its first mail-order retailer. Montgomery Ward founded Montgomery Ward & Co. to sell merchandise to farmers in rural areas who couldn’t access retailers in cities.
1879. 1879 saw James Ritty’s invention of the cash register — the “Incorruptible Cashier.” A “dealer of pure whiskies, fine wines and cigars,” Ritty was a successful saloon owner with a major problem: internal theft. He later sold the patent, which eventually changed hands and led to the establishment of the National Cash Register (NCR).
1879. That same year, Frank W. Woolworth started his five-cent stores with cheap merchandise.
1883. The U.S. gets its first grocery store, Kroger. In 1883, Barney Kroger saved up a whole $372 to open a food store in downtown Cincinnati.
1886. Richard W. Sears founds his mail-order company, the Sears Roebuck Catalog, selling watches to other agents.
1900. With rising tea prices, George Huntington Hartford and George Gilman started importing it directly themselves. They sold it via their Great Atlantic & Pacific Tea Company at a 70% lower cost. The retailer later rebranded as A&P grocery store, the first major chain store organization in the U.S. with 200 stores by 1900.
1902. On April 14, 1902, James Cash Penney opened the first J. C. Penney store in Kemmerer, Wyoming. The retailer grew to 676 locations by 1930 and operates 850 stores today.
1906. NCR employee and inventor Charles F. Kettering builds the first cash register with an electric motor. This sped up the checkout process and helped retailers keep better transaction records. It became commonplace in retail stores by the mid 1900s.
1990. After arriving in London from Chicago, Harry Gordon Selfridge opened the first Selfridges retail store. They opened their doors on March 15, 1909 and the store is one of London’s most well-known retailers today.
1911. The self-service stores started opening. There were all kinds of self-service stores, from fabric and textiles to grocery.
1916. Clarence Saunders opened his Piggly Wiggly store, where he revolutionized the retail experience with shopping baskets, open shelves, self-service, and intentional store layouts.
1927. Convenience stores are introduced to the American public: Southland Ice Company opened its doors in Dallas, Texas. The company later rebranded as 7-Eleven.
1929. The first business census concluded the American retail industry hit $48 billion in annual in-store sales. Chain stores controlled just over 22% of that number.
1929–1934. Retail sales declined during the Great Depression. The National Recovery Act helped reduce supplier prices so retailers could increase profit margins during the economic downturn.
1931. The country’s first shopping mall, Highland Park Village, opened in Texas.
1940. Sylvan Goldman invented the shopping cart.
1946. Southland Ice Company changed their store hours from 7 a.m. to 11 p.m. and changes their name accordingly, to 7-Eleven. The convenience store retailer also expanded to the East Coast in the late 1950s. Today, there are stores all over the world, many of which are open 24/7.
1949. The Vitamix blender infomercial is the first one to grace televisions across the nation.
1950. The Diners’ Club, Inc. became the first universal credit card for consumers to use at multiple businesses.
1950s. In the late ’50s, the supply chain turned their attention to transportation management, using shipping containers on boats, trains, and trucks to move merchandise.
1950s. Though the first shopping mall opened about two decades earlier, they didn’t become mainstream until the 1950s. This was thanks to favorable tax laws, a surge in suburban living, and the construction of the interstate highway network.
1962. On July 2, 1962, Sam Walton opened the first Walmart in Rogers, Arkansas.
1970s. The traditional cash register evolved into the first version of the modern-day point-of-sale system.
1974. NCR made the first UPC barcode scanner. It was used at Marsh’s supermarket in Troy, Ohio to scan a pack of Wrigley’s Juicy Fruit chewing gum on Jun 26, 1974.
1978. Bernie Marcus and Arthur Blank opened the first two Home Depot stores in Atlanta, Georgia.
1979. Michael Aldrich invented electronic shopping, connecting a television to a computer via telephone line. The computer processed credit card transactions.
1982. Boston Computer Exchange became the first official ecommerce site, an online marketplace for used computers and related electronics.
1986. Mary T. Schmich references the term “retail therapy” in one of its first uses in a Chicago Tribune article.
1980s. Though earlier iterations of the “holiday” were less savory, retailers worked to rebrand the holiday into what we know it as today. It caught on by the late 1980s and is one of retail’s biggest revenue drivers.
1990s. Discount stores became the most popular and successful retailers in the U.S.
1994. Jeff Bezos launched Amazon as an online marketplace for books on July 5, 1994.
1994. The first-ever ecommerce transaction — with encryption — happened on August 11, 1994. Funny enough, someone sold Sting’s Ten Summoner’s Tales album to a friend. The $12.48 (plus shipping) sale took place in Philadelphia.
1995. Online marketplace eBay launched on September 3, 1995. On it, consumers could bid for items online.
1997. Total retail sales in the U.S. amounted to $2.5 trillion — fifty times the amount from the first census in 1929.
1999. Target debuted its first designer partnership with architect Michael Graves.
2000. Walmart became the world’s biggest retailer and private employer. It hit $200 million in annual sales.
2001. Apple opened its first brick-and-mortar stores in Tyson, Virginia (near Washington D.C.) and in Glendale, California. The first opened on May 15, 2001, and the latter just four days later.
2005. Etsy, an online marketplace for creatives, artists, and makers, went live on June 18, 2005.
2010. Software developer Vaughan Rowsell launched Vend POS.
2010. American Express celebrated the first official Small Business Saturday in November 2010, jumping on the shop local movement.
2014–2015. More than half of U.K. retailers considered mobile point-of-sale (mPOS) the most important in-store technology in 2014. In 2015, the IHL Group found that North America mPOS software installs increased 41% year to year.
2017. There were more than 1 million retail businesses in the U.S., an industry which employed around 29 million people. Sales surpassed $5 trillion.
2018. Well-known retailers like Toys R Us, Nine West, and Claire’s filed for bankruptcy at sky-high rates.
Types of retail stores
Though retail started mainly as brick-and-mortar, it’s a lot more diverse today. Types of retail stores include:
Big box stores: Big box retailers occupy large stores — think IKEA, Lowe’s, and Target types of spaces.
Boutiques: “Boutique” is the French word for “shop” and refers to small retail shops that typically specialize in a niche or unique, luxury jewelry and clothing.
Brick-and-mortar stores: Physical, permanent storefronts where merchants display and sell their wares.
Convenience stores: These retailers are stocked with basic food items and other necessities. They typically have early/late hours and are often connected to a gas station. Special K and Wawa are good examples of convenience stores.
Department stores: Department stores are all-in-one shops that offer a range of products, including but not limited to clothing, home goods, appliances, and more. Examples include Kohl’s and Nordstrom.
Discount stores: These stores offer low-price consumer goods, below the typical retail price. Dollar Tree and Five Below are good examples of discount stores.
Ecommerce stores: Online stores allow consumers to purchase goods online, without visiting a physical location. Fulfillment can happen via shipping, in-store pickup, or even delivery.
Event sales: Event sales include farmers markets, festivals, and any other temporary selling opportunity in conjunction with an event.
Franchise: A franchisor licenses their brand and operational know-how to franchisees. Franchisees benefit from brand recognition, franchisor industry experience, and established processes, while they must abide by their standards and pay licensing fees. This happens often with fast food companies like McDonald’s or Burger King.
Grocery stores / supermarkets: These retailers sell food and other basic items like cleaning products and greeting cards. Aldi and Food Lion are grocery stores.
Indie retailers: Independent retailers are responsible for their own business entirely. They don’t need to worry about abiding by franchisor or brand standards.
Mail order: This is when a retailer sends printed catalog via mail to consumers’ homes. Consumers can then fill out form and mail in their order, or place an order over the phone. Items are typically shipped.
Mobile: Mobile retail can happen on apps or via mobile web browsing. It’s the fastest-growing retail sector.
Local shops: Mom-and-pop shops have made a revival in recent years. The locally owned, independent retailers have benefitted from the shop local movement.
Pop-up shops: Pop-ups have become retail mainstays, temporary retail activations that take place within stores, at dedicated pop-up venues, vehicles, and other unique locations. You might also hear this referenced as flash retailing.
Shopping malls: A shopping mall is a retail center with a collection of stores, restaurants, and/or entertainment options. Shopping malls have been on the decline.
Thrift stores: Second-hand stores sell items that have previously been used. Sometimes these operate as nonprofits and off donations, others will buy used items from people and resell them for a profit.
Vending machines: While vending machines make you think of snacks and refreshments, retailers are revolutionizing vending machines. You can buy electronics in airport terminals or a new car from Carvana’s vending machines.
Warehouse stores: These retailers sell products in bulk at discounted prices. Many direct-to-consumer wholesale stores operate on a membership fee, like BJ’s, Sam’s Club, and Costco.
Note that each retailer can fall into multiple “types” of retail — there is overlap. For example, a boutique could also be a second hand shop, selling only luxury or collectible vintage items. Likewise, an ecommerce store can also have a pop-up shop or engage in event sales for in-person selling opportunities.
How to be a successful retailer
In modern retail, it takes more than offering the best price point to be successful in retail. Today’s consumers are all about connecting with brands that share their values and provide an amazing customer experience. The most successful brands are also data-driven.
Luckily, we talk about how to be a successful modern-day retailer on the Vend blog all the time. Check out these resources:
- How to Create a Retail Business Plan That Can Get Your Store Off the Ground
- Inventory Reporting: What it Is and How to Use it for Your Retail Business
- How to Scale Your Retail Business: A Q&A with Oliver Banks
- 9 Examples of Good Customer Service in Retail (and How to Apply Them to Your Stores)
- 10 Retail Merchandising Best Practices to Follow in Your Store
- 7 Selling Techniques in Retail to Increase Your Revenues and Profits
- How Retailers Can Create an Effective Markdown Strategy
- 8 Ways Retailers Can Increase Word of Mouth and Referrals
- How to Lower Expenses without Compromising Product or Service Quality
- Point of Sale Marketing: How To Optimize Your POS Area For Increased Sales
- 7 Tips to Ensure the Success of Your Multi-Store Retail Business
And that’s just getting started!
The future of retail
The future of retail is unpredictable, but one thing’s for sure: It’s going to continue to evolve.
Here are five trends you’ll want to keep an eye on:
- Tech stack centralization and integration: As technology continues to evolve and become more advanced, retailers will look for ways to continue to centralize data and operations, integrating systems and information for complete control over their business.
- Data protection and security: As retailers collect more and more customer data, privacy concerns will be top of mind. With breaches happening to big-name companies, retailers will need to ensure their systems are safeguarded appropriately.
- International trade: With globalization well under way, international policies are shaping the way retailers do business with overseas suppliers and customers. As laws, regulations, and taxes change, retailers will need to pivot accordingly.
- AI: Artificial intelligence is being used in retail both in the backend and as part of the customer experience. Chatbots, personalization, virtual try-ons, and visual search are just a few enhancements made possible thanks to AI technology.
- Robots: Also powered by AI in many cases, robots are making the rounds in the retail landscape. From warehouse robots who fulfill orders to in-store robots like LoweBot who aide in wayfinding, some stores are even managed completely by robots.
About Francesca Nicasio
Francesca Nicasio is Vend's Retail Expert and Content Strategist. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall. She's also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores. Connect with her on LinkedIn, Twitter, or Google+.