Retail Trade | 1St Year Principal of Commerce Notes

Chapter – 11

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;

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 intermediates 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.

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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