Retail Management explained: meaning and theory

Retail management - Toolshero

Retail Management: this article provides a practical explanation of Retail Management. Next to what is retail management (meaning and theory) highlights this article also the topic of market research and other activities, and the competencies of a retail manager. After reading, you will understand the basics of this business management topic. Enjoy reading!

What is Retail Management? The meaning and background

Retail management is about the process used to meet the needs of customers and improving sales numbers as well as customer satisfaction.

Retail management encompasses all the steps that are necessary to get consumers to a shop and have them make their purchases.

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Good retail management makes shopping a pleasant experience for customers and encourages strong customer relations. That strong relationship ensures that customers will return to the shop in the future.


The goal of the retail industry is to make a profit by selling consumer goods or services using various distribution channels. Retail operations is therefore focussed on effectively managing the organisation and maximising customer satisfaction. Effective retail management benefits both the retailer and the consumer. It helps prevent problems within the organisation, and for the consumer it means less time and effort spent to find the right products at the right time.

Retail management has been around forever. Archaeologists have found evidence for the existence of sales floors even in ancient times. The buying and selling of products and services with money is believed to have started around 7,000 BCE. Several courses and BSC study programmes are offered worldwide to pursue a career in this field, often following a high school diploma.

During the seventeenth century, trade in Europe grew significantly. In the twentieth century, the first large supermarkets were established there; an influential form of retail from the US.

Retail Management and Market Research

Market research is about finding out what customers need and want. It’s an important aspect of retail management. Information is gathered on what customers want and then processed.

The Business Intelligence Model (BIM) explains how those vast amounts of information are processed.  Market research is often conducted for a specific target group, such as a target audience based on cultural, social, geographical, or socioeconomic details.

Another marketing tool that is also useful to do research is to perform a Marketing Analysis. A Marketing Analysis determines the appeal and dynamics in a certain market within a certain industry.

The information that is gathered through market research is valuable for producers.

It can be used to develop products that meet customer requirements or, more importantly, products that solve an issue for the customer. A happy customer will come back. This allows the organisation to grow and improve its chances in the market.

Market research can be divided into two kinds: primary market research and secondary market research. If the market is researched directly, we call it primary market research. Examples of primary research are focus groups, sales data analysis, or customer research through surveys. If the research involves the large-scale gathering of data, such as in the case of surveys, we call it quantitative primary research.

Secondary market research is when the market is investigated using studies carried out by others. That means the market research isn’t carried out by the organisation itself; they use the data and findings produced by others to make decisions about products and processes.

In retail management, market research identifies whether there is demand for a product or service, and how big that demand is. It also involves researching potential customers and their profiles.

Other activities in retail management

Although customer needs should always be paramount in retail management, there are plenty of other aspects that should be addressed effectively to make a retail business successful. Examples are HR, market analysis, customer service and customer experience analysis, inventory management and supply management. Some of these activities are described below.

1. Human Resources

Human resource management refers to strategic planning and managing employees to get motivated and productive workers.

Retail management involves several challenges that HR managers have to deal with.

The retail sector has high employee turnover, meaning employees come and go on a regular basis. One of the challenges this brings is that all those new employees have to be trained and developed every time. At a retail business such as a supermarket, employees directly interact with customers.

It’s therefore important that they have the skills and knowledge necessary to meet the customers’ needs.

One of the driving factors behind this challenge is seasonal demand for certain products. Retailers experience significant highs and lows when it comes to both the demand and the supply of products.

That’s why employees are often hired for a limited time. These employees are often not very skilled because they lack training.

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2. Competitor analysis

The most important question for any business is how they can offer value to their customers. Additionally, the organisation has to know its customers and how to reach them. A lot of valuable information is already available; from the competition. That’s why competitor analysis is also an important aspect within retail management.

In order to be able to identify a competitive advantage, the retailer has to find answers to several questions:

  • Where is the competitor located?
  • What are a competitor’s strengths and weaknesses (SWOT analysis)
  • How well is the competitor doing financially?
  • Are their products comparable? What does their product range look like?
  • What type of customers buy things from the competitor?
  • What kind of value for money do they offer?
  • How does competitor go about the marketing side?
  • What are they doing better?

Retail manager competencies

Retail managers often have to keep a lot of plates spinning at the same time. The key for them is to properly divide their focus over the core tasks of their job. Some important focus areas are:

1. Human resources

Retail managers often spend time among their employees in the shop.The approach they choose there strongly influences the culture and productivity of employees.

Retail managers have to supervise their team, but also keep an eye on the bigger picture. Managers who have strong leadership skills will develop a good relationship with employees, creating a productive work environment with respect and a collective customer focus.

Other aspects retail managers deal with as part of their job are recruitment and selection, payroll, training, and other work arrangements.

2. Shop management

Good retail store managers take the time to see the organisation as a whole from a commercial perspective. This concerns how the organisation makes a profit and boost its retail sales and place in the industry, but also how a shop’s presentation may affect customer buying behaviour.

Managers who are very knowledgeable about this will effectively develop a commercial focus. This translates to a good store layout and strong performance.

Part of shop management is about the retail manager analysing figures related to revenue, profit, and profitability. It also includes the shop’s visual appeal, as well as theft prevention and operating the safe. Shop management also includes customer service.

Supply management

Retail managers also order and procure products. The manager then receives these products to store them or present them in the shop.

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Now it’s your turn

What do you think? Is this explanation of retail management familiar to you? Can you think of aspects of this article that you see in your environment? What do you think contributes to an effective retail management strategy? Do you have any tips or additional comments?

Share your experience and knowledge in the comments box below.

More information

  1. Berman, B. R., & Evans, J. R. (2010). Retail Management: A Strategic Approach (11th edition). Boston, MA: Prentice Hall.
  2. Varley, R. (2014). Retail product management: buying and merchandising. Routledge.
  3. Vedamani, G. G. (2008). Retail management. Jaico, Ed. 3rd.

How to cite this article:
Janse, B. (2019). Retail Management. Retrieved [insert date] from Toolshero:

Original publication date: 03/12/2019 | Last update: 01/07/2024

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Ben Janse
Article by:

Ben Janse

Ben Janse is a young professional working at ToolsHero as Content Manager. He is also an International Business student at Rotterdam Business School where he focusses on analyzing and developing management models. Thanks to his theoretical and practical knowledge, he knows how to distinguish main- and side issues and to make the essence of each article clearly visible.


One response to “Retail Management explained: meaning and theory”

  1. Pratheek says:

    Dear Mr. Ben, Thank you very much for spending your valuable time on Retail Management. Keeping in mind the two important factors Customer satisfaction and sales improvement, you have given us a very good insight on how to set a good base through your words. Appreciating you for also considering writing about the other factors that tender Retail Management.

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