Retail Sales

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21 Aug, 2024

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Retail Sales, an economic metric tracking consumer demand for finished goods, refer to the value of sales transactions between a retail business and its customers during a specified period. This metric is monitored and reported monthly by the US Census Bureau.

The metric also represents that goods and services have reached the supply chain's end. The supply chain is called wholesale sales, from when a product is manufactured until it reaches the retailer. Wholesalers supply the goods to retailers, who sell them to the final consumer.

Retail Sales Meaning

Retail sales represent the total value of sales transactions conducted between retailers and final customers within a specified timeframe.
This metric is utilized in the United States by investors and economists to evaluate the country's economic performance and consumer spending habits.
Retail sales representatives, both online and offline, play a crucial role in assisting customers with product selection, navigating through different categories, and facilitating smooth communication during the purchasing process.
Additionally, retail sales data is commonly employed to compare the current year's sales figures with those of previous years, aiding in trend analysis and decision-making processes.

Retail Sales Explained

Retail sales refer to purchasing and shopping activities between a retailer, store, and the final customer. Retail sales reports are essential indicators that define consumer consumption in the market. It elaborates on consumer buying behavior and purchasing capacity. Every business offers commodities. From when a product is manufactured to when it reaches the final customer after-sales, it goes through many channels for supply chain management.

As a part of the supply chain, a finished product from the manufacturer goes to the wholesaler, the wholesaler connects with the distributors responsible for supplying it to the retailer, and a retail store is a place where customers can visit and buy products physically.

In the US, it is tracked and reported monthly by the US Census Bureau. Conversely, UK retail sales are represented by an index reflecting consumer spending strength and economic performance, produced by the Office for National Statistics and the British Institute for National Statistics. This short-term measure, the retail sales index, highlights the volume and value of goods sold in the UK.

Assessing any nation's consumption and market strength is essential. Not only does this metric help analyze global markets, but it also helps differentiate one market from another. Every nation changes and suffers from external factors that may impact its sales figures. A surge in retail sales typically triggers positive movements in equity markets, benefiting shareholders of retail companies with higher earnings. However, bondholders may exhibit ambivalence, as a contracting economy stemming from lower retail sales could mitigate inflation, potentially leading investors towards bonds and consequent increases in bond prices.

Examples

Let us consider the following instances to understand the concept better:

Example #1

Mason's mother is good at stitching and tailoring handbags. She makes handmade handbags and has offered them to many relatives and friends. Mason sees it as a business opportunity and opens a small business unit in the backyard for her mother to make and sell these handbags. With time, people started liking the product, and Mason's mother could sell a reasonable amount of handbags. She hires two retail sales assistants and rents a shop in the local market. By the end of a year, she had sold bags worth $90,000.

Here, Mason's mother is the manufacturer and retailer and directly sells to the customers through a physical store. With time, Mason's mother can rent two more shops, turning them into complete retail stores where people can come and buy bags and other accessories that Mason is manufacturing. She has now even launched a website and made online retail sales.

Example #2

In the fourth quarter of 2023-2024, Australia's Retail Sales showed a 0.3% increase compared to the previous quarter's 0.2% rise, according to data released by the Australian Bureau of Statistics (ABS) on Tuesday. This exceeded market expectations, which had anticipated a 0.1% increase. Following the announcement, the AUD/USD pair experienced a slight decline of 0.02%, reaching 0.6481.

The Retail Sales Report, compiled by the Australian Bureau of Statistics, surveys goods sold by retailers of various sizes and types. It provides insights into the performance of the retail sector, serving as an indicator of Australia's economic momentum. Positive growth trends are typically associated with a stronger Australian Dollar (AUD), while weaker readings might have a negative impact.

How To Increase?

To increase retail sales -

Every retail store typically deals in a particular product line, but keeping in variety can attract more customers.
Many retailers introduce retail sales training to their employees and staff to ensure they know how to help customers.
Retail stores often work on simplifying the buying process to elevate retail sales and speed up the buying process.
Retail stores must communicate as customers will likely remember good experiences and make people aware of new offers and promotional discounts.
There is a retail sales tax, and if governments can minimize it, it may encourage customers to buy more.
Many retailers offer customized services, membership, and benefits for bulk shopping.

In summary, while these strategies can contribute to increasing retail sales, retailers must tailor their approach based on their unique circumstances, target market, and business objectives.

Retail Sales vs Online Sales vs Fleet Sales

When sales occur, it can be of different types, be it retail, online, or fleet sales. The category is determined, given how and through which mode the sales were facilitated. However, there are multiple other differences that make these sales one of their kinds.

Let us have a look at some of them:

Retail sales refer to purchases between stores, shop owners, and customers. Online sales can be a direct channel between a company and potential customers. Fleet sales are a large volume selling model initially designed for the automobile industry.
Retail sales can be online or offline through physical stores. Online sales is specifically a digital experience of buying products. On the other hand, fleet sales are available for national shipping and local delivery.
There is no associated cost; customers can manually check the product in retail sales. Still, online sales ask for shipping costs, and the risk of not receiving what a customer has ordered is present. In contrast, fleet sales were initially based on leasing cars and vehicles to big corporations, and enterprises later expanded to other industries.

Frequently Asked Questions (FAQs)

1. What is a retail sales associate?

A retail associate is a designation offered at retail stores or shops. The person appointed is responsible for greeting customers, helping them shop, clearing doubts, answering queries, and guiding them throughout the store. As part of the staff, they perform duties like maintenance, payment checks, store operations, and representing the store.

2. How to approach customers in retail sales?

Retail stores are generally large, with multiple products, goods, merchandise, and accessories. The whole process can be both offline and online. A specific staff is present to offer their help when needed and approach with the idea to solve and meet customer needs. A retailer must inform customers about new offers and greet them with a check on their requirements. At the same time, they have a responsibility to make a sale.

3. What percentage of retail sales are online?

In the US, as of 2022, the percentage of online retail sales is 14.8%. With digitalization and online models, most businesses are moving to online retail sales as it offers mobility and reduces the maintenance cost and capital requirement of establishing an offline walk-in store or other traditional direct retail sales method.