What Is a Mass-Market Retailer?
A mass-market retailer, or mass merchandiser, is a company that affordably sells large quantities of goods that appeal to a wide variety of consumers. Mass-market retailers are not necessarily known for selling durable, high-quality merchandise or for having exceptional customer service, but they do meet consumers' wants and needs at reasonable prices.
Examples of mass-market retailers include big-box stores such as Target, Sam's Club, and Best Buy, as well as brands like Levi Strauss and Gap, and e-retailers like Amazon. Supermarket, drugstore, mass merchandise, and warehouse chains are all considered mass-market retailers.
- Mass-market retailers sell large quantities of a wide variety of consumer goods.
- The products are generally cheap and offered at a discount due to the retailer's bulk purchasing power.
- Examples of mass-market retailers include Target, Walmart, and Best Buy.
Understanding Mass-Market Retailers
Mass-market retailing is one of the diverse subsectors of the retail trade sector in the United States. The retail trade sector is fueled by consumer spending and includes both traditional brick-and-mortar retailers and retailers that exist only online.
Mass-market retailers often operate on slim profit margins. In order to remain in business, mass-market retailers focus on large sales volumes and achieving economies of scale that allow them to charge less than smaller retailers.
Mass-market retailers that have physical locations—such as Costco, Target, and Walmart—operate stores with a large footprint. According to Costco, the average size of one of their warehouse stores is a sprawling 145,000 square feet. This enormous amount of physical space allows retailers the opportunity to offer customers a huge variety of goods. And it's not just merchandise that you'll find in these stores—many retailers have expanded to offer services, such as in-store pharmacies, optometrists, and audiologists.
Excellent inventory control and supply chain management are critical for a mass-market retailer's profitability. Successful companies often rely on a just-in-time (JIT) inventory strategy, which is a system that ensures retailers only have enough inventory on hand to meet their short-term needs. This enables them to eliminate the need to store large amounts of inventory, which is more efficient and reduces the amount of money tied up in products that aren't selling.
Mass-Market Retailers vs. Luxury Retailers
In contrast to mass-market merchandisers, luxury retailers sell products targeted at wealthy consumers who purchase upscale items. These products tend to be out of reach, financially, for the average consumer, although aspirational consumers may purchase them anyway. Luxury retailers are associated with higher quality and superior customer service. Examples of luxury retailers include Bergdorf Goodman, Barney's, Tiffany, and Saks.
Sales of merchandise through mass-market retailers represent a substantial portion of the revenue generated from consumer goods and grocery purchases in the United States. In other countries, there may be a preference for smaller retailers or mom-and-pop stores that serve communities and local regions. However, as more cities worldwide become more densely populated, mass-market retailers may seize the opportunity to establish themselves in such markets.
In the U.S., mass-market retailers are part of the retail trade industry, which in 2020 has an estimated market size of $5.4 trillion.
Benefits of Mass-Market Retailers
Though local merchants in the United States represent a staple part of the economy, mass-market retail chains have established themselves as the predominant sellers of consumer goods in the country. The concentration of a wide variety of goods at discount prices in one location provides convenience for consumers who want to combine different types of purchases into one trip to a store.
Mass-market retailers are often able to sell products at lower prices than small, private retailers because of their bulk buying power. This stems from the volume of goods that mass-market chains move through their channels compared with privately-owned retailers that may only have one location. Furthermore, the size of each mass-market retail store can be significantly larger and sell more volume than a privately owned store.
The product mix is one way for mass-market retailers to be competitive with each other. There may be specific brand items that a mass-market retailer sells that are not available through rival stores.
The dynamics of mass-market retail have evolved with online commerce. Big-box retailers continue to dominate in the overall mass-market retail space. However, the growth and reach of Amazon, in particular, has compelled brick-and-mortar retail companies to become more competitive online, as well.
All the major retailers have invested heavily in expanding their online shopping platforms. In response to consumer demand for more convenience, retailers such as Walmart and Target offer online ordering and delivery, along with online ordering combined with in-store or curbside pickup.