Mass-Market Retailer

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.

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.

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.

Special Considerations

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.