RETAIL TRADE

COMMERCE LECTURE 2

RETAIL TRADE

 

Role of retailer in chain of distributions:

1. Large variety of goods-more choice for customers.
2. Retailers store the product to ensure reliable and continuous supply for customer.
3. The sale in small units and not in bulk so it suits the buyer.
4. Retailer provides personal advice to the customer.
5. Sometime they provide after-sales and repair services.
6. They can even sell on credit to the customer.
7. Some retailers provide home delivery.
8. They pass on information to the manufacturer regarding demand etc.
9. They reduce burden on manufacturer as manufacturer does not need to focus on marketing or selling.

Types of retailers:

 

Large scale	Small scale
Super market	Unit retailer
Department stores	Mobile hawker
Hyper market	Steel vendor
Multiple chain store	Peddler
Variety chain store

 

Large-scale:

Super market:

• Many things under one roof
• For working class
• Located in main city centers
• Competitive prices due to bulk buying
• Suitable for monthly and weekly shopping
• Regular customer ship

Advantages	Disadvantages
Time saving	No personal service
Customers don’t need to memorize what to buy-they buy what they see	Customers are pursued to buy what don’t need so overspending
Competitive prices due to bulk buying	Self service-chances of theft
Self service-less	Difficult to maintain the reader level
Staff needed

 

Department stores:

• Complete range of goods under one roof
• For the elite class- businessmen etc.
• Located in suburban areas.
• Price is not an issue.
• Luxurious attractive goods.
• Huge store.
• Personal service.
• Facilities like play area, parking lot etc.
• Sell international brand names.
• Big shopping mall owned by a single organization.
• Single organization.
• Centrally controlled.
• Different storey’s for different departments.
• Each department has its own central manager.
• Window display with clearly marked prices.

 

Advantages	Disadvantages
Bulk buying favors	No daily use items
A loss in one department can be compensated by profit in another	High investment and expenditure
Economical advertising-one ad for all departments	High rents
	Risk that elite class might shift another place.

 

Hypermarket:

• Mammoth supermarket.
• One stop shopping.
• For motorists who need to buy for whole month or week.
• Located at the edge of the city.
• Competitive buying due to bulk buying.
• All types of goods
• Own parking lot
• Storage sheds
• Self service

Advantages	Disadvantages
Timesaving and convenient	Self service –chances of theft
Competitive prices	Over spending by customer
Congestion free shopping	At the edge of city- non-motorists can’t approach
Self service-less staff needed
No need to memorize list.

 

Multiple chain stores:

• Many similar branch shops distributed all over the country.
• Centrally controlled by one head office.
• Centralized purchasing –head office buys for all braches.
• Regular customers.
• One type of goods is sold.
• Every branch has a similar layout same products and same prices in main city centers.

Advantages	Disadvantages
Competitive prices due to bvulk buying	No personal advice.
Economical advertising-one ad for all branches.	Non-provision of credit facilities.
Loss in one branch can be compensated by profit in another.	Too much centralized control from head office leaves little room for innovation.
Standard layout promotes the identity of whole chain.

 

Variety chain store:

• Multiple department stores.
• Deals in many types of retail goods.
• Cater to the working class.
• Centrally controlled.
• Centrally purchasing by head office.
• Similar layout, products and prices.
• Self service and open counter display.

 

Advantages	Disadvantages
Competitive prices due to bulk buying	No personal advice.
Wide variety of goods	Non-provision of credit facilities.
Economical advertising	Little initiative by branch manager due to too much centralized control
Loss in one branch can be compensated by profit in another
Slow selling lines and surplus stocks can be transferred to a promising branch.
Standard layout promotes identity of the brand.

 

Small-scale retailing:

• Either sole trade or partnership
• Capital is obtained from personal savings or loans from friends and family.
• Usually bought from wholesalers.

why

• Limited capital.
• Limited market.
• Small turnover.
• Need for credit.
• Variety of goods.
• Visits from wholesalers.

Advantages	Disadvantages
Personal advice.	Lower trade discount.
May sell on credit.	Jack of all trades, master of none.
Little investment.
Less expenditure, so less prices.
Small shop is easy to manage.
Convenient for customers.

 

Selling techniques and trends in retailing:

1. Branding:

• Branding is the selling of goods under the trademark or brand name of the manufacturer, the wholesaler or the retailer.
• The aim is to differentiate the goods of one manufacturer from another.
• Branded goods are of uniform size, quality, weight and price.
• Branded goods are easily recognized by the customer.
• More competition due to self service.

Advantages	Disadvantages
Brand loyalty due to monopoly	Expensive advertisement to compete with others.
Increased turnover	To compete with already established brands, manufacturers might produce imitated goods of a known brand.
No need to advertise	New manufacturers find it difficult to obtain share in the market
Easy to handle	Higher prices
Uniformly packed	Confusion
No need to resort to price cutting due to uniform prices	Imitation goods
They can convert their shops into self service shops	Misleading claims
Well informed	More storage place need because of more brands
Uniform quality	If one of the brands sells a lot other will be at loss and the stocks will be wasted.
Wider choice
Lower price due to reduction on economies of larger scale
No need to be an expert in buying

 

2. Self service

• Due to large scale retailing, retailers have enough capital to display large supply of goods of various brands.
• Branding and packaging.
• Emergence of modern working house wife who has little time to shop.

Advantages	Disadvantages
Economical-less staff	Shop lifting-so security needed
Increased turnover-customer pursued to buy the stuff they don’t need.	not suitable for goods where individuality is important.
Quick service	No personal advice
Low price due to bulk buying	No credit
No need to memorize list	No delivery of purchases
No pressure from sales staff	Overspending
	More capital for larger area
	More storage space

 

3. After sales service:

Features:

• An undertaking made by the retailer or manufacturer to repair any faults which occur to the sold article in the given period of time, this could also include a maintenance service at regular intervals for a definite period of time.
• Undertaking is known as warranty.
• Normally provided for permanent or durable goods.

Reasons:

 

• Good will gesture.
• To gain loyalty of customer.
• Customer may need help in handling and maintenance.
• Same parts may have to be replaced.
• Goods may need regular service.
• Some mechanical faults may need to be repaired.

Advantages	Disadvantages
Competitive edge over those who aren’t providing this service.	Increased expenditure on mechanics and workshops.
Convenience	Increased administrative burden
Expert technical advice	Sometimes goods might be repaired at loss
Customers might feel more confident at times of purchases	Only for limited time
	Most of the cost of repairing is included in the selling price those who don’t use this service are at a loss.

 

4. Bar-coding:

• Each product is given a special bar code, which is the same for all the no. of pieces of such product.
• This bar code is saved in the computer of the shop.

Advantages	Disadvantages
Easy to maintain second level	System failure can lead to loss of all the records
Timesaving
Less chances of calculation error
Convenience for storekeeper
Sellers don’t need to memorize prices

 

5. EPOS(electronic points of sales):

• A computer based system in which barcode is used to sell goods the scanner scans the barcode and the price appears on the computer because it is already saved there the computer maintains a record level of the amount of stock.

Advantages	Disadvantage
Centrally controlled-less fraud	Initial investment
Easy to maintain record level	System failure can lead to loss in record
Timesaving
Convenience in store keeping
Convenience for head office-easy information handling

 

 

6. Shopping centers:

Features:

• A large, multi storied building.
• Located in town centers.
• Consisting of many shops units.
• Each owned by different individuals.
• Each shop may sell different types of goods.

Reasons:

• One stop shopping.
• Ample car parking.
• Comfortable and pleasant atmosphere.

 

Reasons for survival of small scale retailing:

• Personal advice
• Credit facilities
• Home delivery of goods e.g. newspaper
• Small amount of investment
• No over head so lower prices
• Small shop is easy to manage
• Close to residential areas – less distance
• Flexible timings