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What Are The Four Characteristics Used To Classify Retailers

by Richard

It is crucial to dive into the conception of retailers’ characteristics before going into what are the four characteristics used to classify retailers. Besides big and center department locations, retail chains play a key role in distributing and merchandising finished products directly to the customers.

By defining the main characteristics and classifying retailers, you can determine the small amounts after purchasing with manufacturers and suppliers at a reduced cost. When you link manufacturers to customers, you can increase your customer lifetime value and maximize your profit.  Now, let’s get started!

What Is A Retailer?

A retailer is a business that purchases goods from manufacturers and sells them to customers. In certain ways, a store serves as an intermediate or middleman between customers and manufacturers.

Do you know how retailers work? Retailers are marketing, sales, inventory management, and customer management professionals. They buy things at the lowest cost from producers and sell them to consumers at retail prices. The retail price can be from 10 percent to 50 percent higher than the manufacturer’s pricing.

Large retailers such as Best Buy purchase products from manufacturers like Samsung at the lowest cost and sell them to their customers at a higher price. Seasonally, they launch many marketing campaigns and offer special discounts to attract more customers to increase sales revenues.

Even small businesses have occasional deals like coupons to draw customers’ attention and compete with other larger companies. It is how retailers make their profit and become successful retail platforms.

What Are The Four Characteristics Used To Classify Retailers?

We use four characteristics to classify retailers: ownership, service size, depth of product line, and comparative prices. Retailers often use the first three characteristics below to position themselves in the competitive market. You can associate and utilize these three traits in different ways to produce retail operations particularly.


There are three forms of ownership that retailers can be classified into sole proprietorship, partnership, and joint venture.

When small business ventures start solely, their retailers will need to establish the majority of tasks. Most worldwide retailers operate independently and launch several small stores in their communities. In a sole proprietorship, the business is owned by a single individual, usually, the one who is in charge of daily operations.

A partnership is one of the most prevalent business formats. In this business form, two or more group members will handle tasks together to make the chain work fluently. Its main objective is to expand operations worldwide and maximize the number of customers while selling the same merchandise.

When you mention the joint venture, you are developing a third or new company due to the collaboration between two or more companies with an agreement. This agreement will provide the commercial management in your business operations, specifically in a region, by associating all resources and sharing earnings according to the contract’s distinct terms and clear-cut conditions.

Service Size

Offering several services is the most fundamental characteristic of retailers. To classify retailers, there are four service levels: limited service, self-service, self-selection, and full-service.

In the limited service, customers need additional assurances besides the products they purchase. One example of this type of service is a small electronics store. Here it directly concentrates on its customers and offers them financial benefits to make their purchases easier.

When customers can serve themselves and make their own decisions, it’s referred to as self-service. No involvement is tied with the retail store. Amazon, Walmart, and Tesco are significant examples of this service type. Customers can freely walk in, select the products they want, compare them, and even leave without standing in a queue to pay bills.

Self-selection is a common type in furniture retail outlets. Customers can choose what they like, but they need detailed guidance and information about these products. They’re allowed to consult one executive for each product.

Full service is required when customers buy complicated machines. Besides the machine, they will need a mandatory service requirement. It includes installation, maintenance, warranty, and special care for some specific types of goods.

Depth Of Product Line

When businesses determine the number of products offered under a product line, it’s called the depth of a product line. There are two options for the companies to select: full-line strategy and limited-line strategy. Department stores, supermarkets, convenience stores, etc., are different types of product line merchants.

A full-line strategy provides different categories of items or products from a specific retailer. This strategy’s two main objectives are a large market share and market expansion by increasing the profit of sold goods.

On the contrary, a limited-line strategy offers a fewer quantity of a product’s varieties. When applying this strategy, retailers aim to sell their products as quickly as possible and decrease the number of inventory products.

Department stores hold various products, such as Sears and Macy’s. Supermarkets like Busch’s distribute various products from groceries to household commodities, while convenience stores carry only a limited source of turnover goods. They often open 24/7 to serve nearby residents.

Comparative Prices

The comparative price is the most stimulating factor used to categorize retailers. Off‐price merchants and discount shops are the two categories of retail showrooms. Discount shops provide a larger selection of standard products at lower price ranges than larger department stores.

On the other hand, off‐price merchants offer customers superior products at affordable prices. For example, first-rate goods at off-price merchants are used goods, overrun merchandise, canceled orders, etc.


In this article, we’ve analyzed what are the four characteristics used to classify retailers. Whether you are establishing your future retail business or not, you need to equip yourself with this basic knowledge of retail. Hopefully, all the explanations above will help you decide how to become a successful business retailer!

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