RETAIL TRADE

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    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  

     

    1. 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

     

    1. 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.

     

    1. 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  

     

    1. 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  

     

     

    1. 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