Retail is a type of business model where merchants sell products to consumers for their own personal use. Retailing is the act of conducting retail business.
Retail transactions now happen through a range of “channels”: traditional brick-and-mortar storefronts, brand websites, online marketplaces, social apps, and temporary pop-up stalls.
While the retail landscape makes up a crucial part of the global economy, many business leaders and consumers still don't fully understand what retail means, or how it works. Retail is the largest private sector employer in the United States, and what has changed over the last few years is not the definition, but the number of places a sale can happen.
Below, we cover what a retailer is, how the retail supply chain works, the main types of retail, how retailers make money, and what is changing in 2026.
What is Retail? A Quick Definition
Retail is the process of merchants selling goods to consumers for personal use. Retailers purchase products from a manufacturer or wholesaler, to sell to consumers in smaller quantities, often with a “price markup”.
The simplest boundary to draw is against wholesale. Retail is business to consumer, and the buyer is the person who will use the product. Wholesale is business to business, selling in bulk at a lower price per unit to companies that intend to resell what they buy.
Retail also covers services as well as physical goods. A salon, a repair counter, and a dry cleaner are all retail businesses, because their customer is the end user.
There are many different types of retailers, and different retail sales channels.
What is a Retailer?
A retailer is the person or group responsible for running a retail business and selling products to consumers. A retailer buys goods from a producer or a wholesaler, then sells them on to the end consumer.
Retailers can come in many forms, such as:
- Independent retailers: An individual or group who builds a business from the ground up, handling management themselves. Independent retailers deal with everything from product procurement to marketing, and the local bookshop or hardware store is the classic example.
- Franchise: Franchise owners purchase ready-made retail businesses from an existing company. Franchises have existing product lines, trademarked names, and business models.
- Dealership: A cross between an independent retailer and a franchise. A retailer has a license to sell a specific brand with no fees to the licensor. Car dealerships are the obvious case.
- Direct to consumer (D2C) brands: The manufacturer skips the middle and sells straight to the shopper through its own website and its own stores. Nike still sells close to 40% of its branded revenue direct to shoppers, with NIKE Direct bringing in $17.7 billion in its 2026 financial year. Warby Parker is another D2C name most shoppers know.
How Retail Works: The Retailer Supply Chain
The retail supply chain is the path a product takes from the business that makes it to the person who uses it. It relies on four key players: manufacturers, wholesalers, retailers, and consumers.
Here's how each player contributes to the retail process:
- Manufacturers establish the retail supply chain by transforming raw materials into products that can be sold. For instance, they might create clothing from cotton and polyester, or toys from plastic, paint, and wood.
- Wholesalers or distributors purchase products in bulk from manufacturers at a discounted price, then sell them onto retailers, often at a slightly increased price.
- Retailers purchase the goods from distributors or wholesalers in large quantities, then sell those goods in smaller quantities to end users for their personal use. They're also responsible for marketing the goods, and fulfilling orders. A supermarket chain like Kroger is buying from hundreds of suppliers at once.
- Consumers end the supply chain, purchasing goods from the retailer to satisfy their specific needs and wants.
Not every product travels the full chain. D2C brands collapse the middle two steps by selling from the factory floor to the shopper's door, and that route is now a settled part of the market rather than an experiment. D2C is expected to hold roughly a fifth of US ecommerce through 2028.
The chain also runs backwards. According to the National Retail Federation's most recent annual returns report, dated 2025, US consumers were expected to return $849.9 billion of merchandise that year, a 15.8% return rate, down from 16.9% the year before. Sorting, restocking and scrapping all of that is why reverse logistics is now a planned part of retail operations rather than an afterthought.
The Different Types of Retail
Retail models are usually grouped either by what a business sells, or by where it sells it. There are various types of retail models out there, particularly in today's evolving digital market. According to IBISWorld, there are more than 3.2 million retail trade businesses in the US alone as of 2026, up 1.3% on 2025, each with their own strategy for sales.
Most retailers are defined by the products or goods they sell. For instance:
- Hardline retailers: Companies that sell products designed to last a long time, such as cars, furniture, technology (computers and phones) or appliances.
- Soft goods or consumable retailers: Brands that sell items such as clothing, toiletries, shoes, and other essential items.
- Food and grocery retailers: Which sell produce, baked goods, beverages, and other forms of consumables.
Those categories describe what a retailer sells. The formats below describe where the selling happens.
Permanent Brick and Mortar Stores
Permanent brick-and-mortar stores are considered one of the most traditional types of retailers. They run a physical store, either leasing or purchasing a space where they can store and sell inventory.
These stores can come in a variety of styles, such as:
- Department stores: Large stores where customers can purchase lots of different types of products under one roof. Examples include Target and Macy's.
- Big Box stores: Major retailers that specialize in one type of product, such as home improvement (Home Depot, which runs 2,362 stores on about $162 billion of 2025 revenue), or electronics (Best Buy).
- Discount stores: Department stores that specialize in selling discounted items and value brands, such as Dollar General.
- Mom-and-pop stores: Smaller niche stores run by smaller business owners. These types of stores include local storefronts and corner shops.
Physical retail is not dying. Coresight Research data reported by CNBC puts US retailers on track to open about 5,500 stores in 2026 against about 7,900 closures, the lowest closure count in three years.
Ecommerce or Online Stores
Ecommerce or online retail stores (otherwise known as e-tail stores), are digital environments where companies can sell products through the web.
Ecommerce can take many different forms. You can sell products through your own site, created with a platform like Shopify, Wix, or WooCommerce.
Alternatively, you might sell through an existing third-party marketplace like Amazon, Etsy, or eBay.
In some cases, it's also possible to sell products directly through social media platforms, such as Instagram, Facebook, or TikTok.
Plenty of retailers run more than one of these at once, selling the same stock through a brand site and a marketplace listing.
Pop-Up Shops, Markets, and Resale
With a pop-up shop, you only launch a physical store for a short time, such as a few days or a couple of months. Pop-ups have grown increasingly common, since a temporary space is a low commitment way to test a location or a product without signing a lease.
The impermanent store allows people to interact with your brand and test products in person, while building brand awareness for your social media stores, ecommerce store, or marketplace storefront.
IBISWorld valued the US pop-up shops market at about $16 billion in 2025, up 2.9% on 2024. That makes pop-ups a steady niche rather than a boom, since the same figures show growth of only 0.3% a year since 2020.
Markets are another form of temporary retail opportunity which allow merchants to set up small tables or booths where they can sell their products to consumers.
Sometimes, these markets run on a regular basis, or they might be launched as one-time events.
One-time events are often considered “event-based retail” opportunities. For instance, you might participate in fairs, or festivals that allow vendors to sell their products.
Resale, or recommerce, is the newest format on this list. ThredUp's 2026 resale report finds the global secondhand apparel market was worth about $257 billion in 2025, up 13%, and projects $393 billion by 2030, growing roughly twice as fast as the apparel market overall, with Gen Z and millennial shoppers driving more than 70% of that growth.
How Retail Companies Make Money (Profits)
Retailers make money on the gap between what they pay for stock and what the shopper pays them. Every member of the retail supply chain does the same thing, adding a profit margin into the purchase price for the customer they're targeting.
Manufacturers calculate their profit margin after accounting for the costs of creating and packaging their goods.
Wholesalers and distributors consider the cost of purchasing the product from a manufacturer, then add their own profit margins. Retailers then add another profit margin onto the item before it reaches the end customer.
For instance, if a product costs $1 to make, a manufacturer might sell it to wholesalers for $2, then the wholesaler could sell it to the retailer for $3, and the retailer sells it to customers for $4.
Often, the biggest “price bump” is added by the retailer. That is because retail businesses have to account for costs like shipments, logistics, running a physical store, or paying for ecommerce software. The markup also has to cover the returns above, which cost money to process.
How Retail Is Changing in 2026
The definition of retail has not moved, but where the sale happens, who pays for the attention, and what runs the store behind the scenes all have.
Omnichannel and buy online, pick up in store: Shoppers treat a retailer's website and its shelves as one place. eMarketer estimates US click and collect sales at around $177.9 billion in 2026, up about 15%, and among US grocery shoppers, pickup has now overtaken same day delivery, at 31% against 29%. More than 90% of US consumers buy groceries both online and in store, which puts real pressure on the point of sale system, because it has to see stock in both channels at once.
Social commerce: eMarketer expects US social commerce sales to pass $100 billion for the first time in 2026, at about $101 billion, up 18% on the year. TikTok Shop is the engine. Its US sales hit $15.82 billion in 2025, more than double the year before, and eMarketer expects them to top $20 billion in 2026, roughly a fifth of all US social commerce.
Retail media networks: Retailers are selling advertising space on their own sites, apps and in-store screens. eMarketer expects US retail media ad spend to reach nearly $70 billion in 2026, up roughly 18%, with Amazon and Walmart capturing about 89% of the new spending. We would call this a high margin revenue line layered on top of selling things, and it is concentrated at the very top of the market.
AI in retail: Deloitte's 2026 survey of 200 retail executives found that 75% call AI a top strategic priority and 82% plan to spend more on it, but only about 16.5% can put a number on the return. Salesforce puts the share of retailers using AI in some form at roughly 84%. Adoption is wide, then, and proof of payback is still thin.
The Importance of Retail for Our Economy
Retail is the largest private sector employer in the United States. According to the National Retail Federation, retail supports 55 million American jobs, more than one in four US jobs, and contributes $5.3 trillion to annual GDP. That works out at 26% of total US employment and 20.4% of the country's GDP.
Most of that is not big chains. The NRF counts roughly 4 million small retail establishments, notes that 98% of retailers employ fewer than 50 people, and puts 40% of retail jobs at small businesses. The abstract number is really the shop on your corner, several million times over.
However, the retail landscape is constantly evolving. Just like many industries, retail has been affected by global transformation, digital evolution, and new economic trends.
While the styles of retail store we see in the modern world, and the strategies retailers use may change, retail will always remain a crucial part of our economy. Without retail, and retailers, the world would be a very different place, as would the process we use to access goods.
Frequently Asked Questions (FAQs)
Retail is the sale of a product or service to an individual consumer for their personal use. Doing retail or “retailing” is the act of actually running a retail store. Retailers purchase products from distributors and wholesalers, and sell them to end users for a marked up price.
A retail business is a company that sells items or services specifically to consumers. They don't sell products onto other brands for them to sell for a profit (this is the work of a wholesaler or distributor). Retail businesses can sell products in-person, through brick and mortar stores, through marketplaces and pop-up shops, or online.
Retail is a term that refers to the process of selling consumer goods to the public in small quantities for their direct consumption. Selling or sales, on the other hand, involves any action that exchanges goods or services for monetary payments, in any context including business to business.
Examples of retailers could include everything from huge supermarkets and online marketplaces like Walmart and Amazon, to smaller boutique and mom-and-pop stores, and even speciality stores like Best Buy or Home Depot. A local independent bookshop and an online only clothing brand count too, because in every case the customer is the person who will use what they buy.
Ecommerce is one channel inside retail, the online one, rather than a separate industry. Retail is defined by who buys, a consumer purchasing for personal use, while ecommerce is defined by where that buying happens. Most large retailers now run stores, a website, marketplace listings and social storefronts at the same time, which is why the two words increasingly describe the same companies.
The Bottom Line
Retail is a well-known business model that has had an impact on the world for some time now. The definition has not changed in 2026: retail is still selling to the person who will use the thing.
What has changed is the number of doors into a sale. A store, a website, a marketplace listing, a social feed, a resale rack, all of them count.
Whichever channel a merchant starts with, we would argue the fundamentals still decide the outcome. Margin, stock and service are what make a retail business work.
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