Retail Trade
1st Year POC - Principles of Commerce Notes
Retail Trade
INTRODUCTION
It fulfills the requirements of the final consumer by placing the
goods at his disposal for final consumption. it is the link between the
wholesaler and final consumers. The retailers provide an opportunity of
choices to final consumers amongst the variety of product kept by the
retailer. He can also buy the goods in small quantities nearest to his
door in accordance with his requirements
FUNCTION OF RETAILERS
1. the retailers supply goods at the very door of consumers. The
consumer need not to go far to purchase the good because retailers are
situated at very little distance. He may bring the goods with himself or
he may leave them with the retailers to be delivered at his place as
soon as possible.
2. the greatest advantage of retailer is the stored goods and sell them
in small quantities when the consumer requires. He thus relieves the
consumers from the necessity of storing goods which may of them cannot
do for the lack of resources.
3. he tries to study the taste of the consumers and keeps the goods
likely be in demand. He again keep wholesale merchants in touch with
changing fashion and tastes and thus enables those goods to be produced
which are really in demand.
4. he keeps the large variety of goods manufactured by different
manufacturer with a view to enable his consumer good choice and
selection.
5. if the customer is dissatisfied by the good the retailers quite willingly makes good the complain.
6. he adopts diverse methods for reaching the customers. His beautiful
display and scientific advertisement are very educative.
SMALL SCALE RETAILING
1. HOUSE TO HOUSE RETAILERS:
They are those who wander house to house selling their goods. Hawker
and peddlers go into street, and different parts of the city in an
effect to sell their goods. These person requires little capital and
need no shop.
2. PART-TIME RETAILERS:
They are not regular retailers. They only sell goods from door to door
in their spare time. they sometimes deal only in the seasonal goods and
as soon as the season is over they stop selling the goods.
3. ORDINARY SHOPKEEPERS:
A large volume of retail trade is conducted by ordinary shopkeepers.
They may be divided into small and big according to their scale of
operations. Small shopkeepers require little capital and are
established in lanes , unimportant streets. Big shopkeepers commands
considerable capital and make shop in the most frequent areas in the
heart of the city. Shop may be general or specialized. A general shop is
the one where numerous varieties of goods of every day use are sold. A
specialized shop on the other hand, is specialized in the sale of
certain articles only for example fountain pens, jewelers shop.
LARGE SCALE RETAILING
Now days, as the production of goods is done on large scale , the flow
of good in the market is huge and varied. The distribution is also to
be done on large scale. The flow of good in market is huge and varied.
The distribution is also on large scale so as to reap the higher
profits avoiding competition from small organization. When retailers
purchase goods on large scale they save much as they can get many
advantages from the wholesalers and manufacturers. Beside they can
accumulate variety of commodities and thus attract the buyers. The large
scale retailers are discussed as follows;
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1. DEPARTMENTAL STORES
Such stores requires investment of huge capital and involves
considerable risk. The special features of this store is that they try
to sell almost every considerable commodity of commerce, almost from an
apple to an airplane. The store is divided into number of departments ,
suitated into the same roof, each department specializing in
commodities of the nature. That is why it is known as the departmental
store. it is thus an combination of large number of specialized shops,
under unitary control. An attempt is thus made to supply to the
customer all that he requires from this very place so that he may not
require to visit any other shop.
ADVANTAGES
The advantages of running a departmental stores are as follow;
1. The central side of departmental store gives it more advantages over a small scale retail store.
2. It provides efficient service to the customers like saving of time, car parking, telephone etc.
3. Such stores often create a demand for a commodity. A customer is
sometimes induced to purchase other things also when finds them nicely
placed in various section of store.
4. The price in departmental stores are less than in retailers shops because of the economy of large scale buying.
5. One department advertises for the other department.
DISADVANTAGES
1. The elaborated service provided by the store tends to increase overhead expenses.
2. The location of such stores ia sway from population residential
areas. It is difficult for the large scale retailers enterprises ie
departmental store to take away the share of profit of the small
retailers because they are located in central parts of the city and the
people living in the suburbs and the other parts may not be served.
2. MULTIPLE SHOP/ CHAIN STORE
Sometimes the manufacturer himself wants to eliminate all the
intermediateries and reach consumers directly. This he does by opening
multiple shops. Shops are opened in various parts of big cities and in
all important cities in province or country. These shops are mean to
sell only those goods in which the producer or manufacturer is
interested. The range of commodities kept and sold is thus very narrow.
The advantages accruing as a result of specialization are those of
economy in buying together with speedy and larger turn over at lower
price eg BATA shoe manufacturing company whose multiple shops are spread
all over the big cities of Pakistan.
ADVANTAGES
The multiple shop system enjoys all the advantages which normally
accrue to large scale enterprise namely , economies of buying in larger
quantities, centralized and highly sufficient control and experts
advertising of firm’s special lines. In addition to these there are the
following advantages particular to multiple shops;
1. Shortages of stock at any branch may be made up by transfer from one branch to another.
2. A speedy turnover of stock is attain and be accentuated by studying
sales figures to discover which of the goods are slow moving and then
concentrating advertising effort on these items only.
3. As a result of speedy turnover, multiple shops are able to run their business at slightly lower cost than the other types.
4. As sales are made on cash basis , there are no bad debts and no expense of maintaining a large clerical staff.
5. The multiple stop benefits also from the fact that numerous branches
can cater easily and efficiently for customers at comparatively short
distance from their residence. The total number of its customers is
larger than that of a single store or departmental store.
6. Each branch in itself is an advertisement for other branches and so
long as the goods sold are of good quality in relation to the price,
there is no limit to the number of branches that an efficient concern
my control
LIMITATION
Multiple shops suffer two limitation. Firstly they have to meet heavy
expenses. Much of the difference between their buying and selling
prices is absorbed by high rents of big promises in busy streets, with
rules proportionately higher and by provision for writing off the
initial cost of new shop fronts and new equipment and by the maintenance
of poorly paying branches in places where the trade is not enough.
Secondly many managers and staff do not, without constant supervision,
take the same interest in their duties as the proprietors would be.
3. MAIL ORDER BUSINESS
In mail order business goods are sold and delivered through the post and
not across the counter. From buyers point of view, it may be describe
as shopping by post. Payment is made by several methods, varying with
the type of stores and customers standing. If the customer has an
account, the goods are charged against it. If he is unknown the goods
are supplied either on “ cash with order” basis or the goods are sent
through the post office on cash on delivery basis. In later case the
VPP( value payable post) system is utilized.
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ADVANTAGES
1. Expenses and expensive shop, fronts etc. Are eliminated.
2. The sales in direct touch with the buyers and therefore it is generally to know the demands of customers more easily.
3. Advertising may be more effectively carried out since the results may be checked up with fair accuracy.
4. The actual selling is reduced to routine the work being performed by low grade workers and hence cheaper labour.
The sales appeal may be designed by experts and is not dependent upon
the capacity of individual salesman. The customer buys sitting at his
home and therefore saves himself from botherations of different types.
DISADVANTAGES
1. The small retailer is still able to compete with mail order house in
most lines and ho has “convincing appeal” in his varied shook.
2. All retail shops have the advantage of enabling customer to see and
examine goods but mail order business may not provide the facility to
their customer’s ordinal.
3. Heavy expenses on advertising increase the cost to the customer as compared with normal retailers.
4. Publicity through advertisement also include quality of goods; the
wordings of advertisement often create confusion and also sometimes
mislead the customer.
5. The sales appeal is stereotyped and may not be easily altered.
6. It is not easy to find causes of failure to affect sales nor is it easy to get the orders.
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