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  • An Overview of Retailing

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    Retailing involves the sale of goods and services to ultimate consumers for personal use. Retailers serve as agents for consumers and sales specialists for producers. They perform key activities like anticipating consumer wants, developing product assortments, and providing financing. There are various types of retail stores including department stores, supermarkets, discount houses, chain stores, and multiple shops. Department stores sell a variety of goods under one roof in separate departments. Supermarkets are large self-service stores that carry a broad line of food and non-food products with central checkout facilities. Retailing provides important services to consumers but also involves high costs and overhead expenses for retailers.

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    Retailing involves the sale of goods and services to ultimate consumers for personal use. Retailers serve as agents for consumers and sales specialists for producers. They perform key activities like anticipating consumer wants, developing product assortments, and providing financing. There are various types of retail stores including department stores, supermarkets, discount houses, chain stores, and multiple shops. Department stores sell a variety of goods under one roof in separate departments. Supermarkets are large self-service stores that carry a broad line of food and non-food products with central checkout facilities. Retailing provides important services to consumers but also involves high costs and overhead expenses for retailers.

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    55 views5 pages

    An Overview of Retailing

    Uploaded by

    Anu Amruth
    Retailing involves the sale of goods and services to ultimate consumers for personal use. Retailers serve as agents for consumers and sales specialists for producers. They perform key activities like anticipating consumer wants, developing product assortments, and providing financing. There are various types of retail stores including department stores, supermarkets, discount houses, chain stores, and multiple shops. Department stores sell a variety of goods under one roof in separate departments. Supermarkets are large self-service stores that carry a broad line of food and non-food products with central checkout facilities. Retailing provides important services to consumers but also involves high costs and overhead expenses for retailers.

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    of 5

    AN OVERVIEW OF RETAILING

    Introduction

    The word 'Retail' is derived from a French word with the prefix re and the Verb tailer means "to
    cut again". Evidently, retail trade is one that cuts off smaller portions from large lumps of goods. It is
    a process through which goods are transported to final consumers. In other words, retailing consists
    of the activities involved in selling directly to the ultimate consumer for personal, non-business use. It
    embraces the direct-to-customer sales activities of the producer, whether through his own stores by
    house-to-house canvassing or by mail-order business.

    Importance of Retailing

    The retailer is an intermediary in the marketing channel because he is both marketer and customer,
    who sells to the last man to consume. He is a specialist who maintains contact with the consumer and
    the producer; and is an important connecting link in a complex mechanism of marketing. Though
    producers may sell directly to consumers, such method of distributing goods to ultimate users is
    inconvenient, expensive and time consuming as compared to the job performed by a specialist in the
    line. Therefore, frequently the manufacturers depend on the retailers to sell their products to the
    ultimate consumers. The retailer, who is able to provide appropriate amenities without an excessive
    advance in prices of goods is rewarded by larger or more loyal patronage.

    Economic Justification for retailing

    All middlemen basically serve as purchasing agents for their customers and as sales specialists for
    their suppliers. To carry out those roles, retailers per for many activities, including anticipating
    customer's wants, developing assortments of products, acquiring market information and financing.

    It is relatively easy to become a retailer. No large investment in production


    Equipment is required, merchandise can often be purchased on credit and store space can be leased
    with no 'down payment' or a simple website can be set up at relatively little cost. Considering these
    factors, perhaps it's not surprising that there are just over a 6 million retail outlets operating across
    the Indian cities from north to south and from east to west. This large number of outlets, many of
    which are trying to serve and satisfy the same market segments, results in fierce competition and
    better values for shoppers.

    GENERAL SERVICES

    The general services which a retailer provides are:

    a) The retailer anticipates the wants of the consumers and then supplies them the right kind of
    goods at reasonable price. His job is to make the consumer buying as easy and convenient as
    possible i.e. he acts as a consumers' agent.

    b) He performs the service of bulk-breaking i.e. dividing large quantities into small units, such as
    individual cans, bottles, boxes, wrappers, packages, appropriate for consumer use.

    c) He offers a large assortment of merchandise, of suitable size, color, design, style and seasonal
    items-ranging from domestic utensils, household requisites to specialty goods.

    d) He creates time and place utility by storing the products in off season and by transporting
    these goods to the places where they can be readily available as and when needed by the
    consumer.

    e) He also assumes risks by guaranteeing the goods he sells to the consumer.

    f) He also offers free delivery of goods, credit on open accounts, free alteration, liberal
    exchange facilities, and instructions in the use of goods, revolving credit plans, and long term
    installment programs.

    Overview of Retail Sector

    All over the world, retailing is undergoing a process of evolution and is poised to undergo dramatic
    transformation. With special reference to India, the retail sector employs over 10 percent of the
    national work force but is characterized by a high degree of fragmentation with over 5 million outlets,
    96 percent of whom are very small with an area of less than 50 m . The retail universe doubled
    between 1986 and 2006 and the number of outlets per 1000 people at an All India Level increased
    from 4.9 in 1988 to 14.8 in 2006. Because of their small size, the Indian
    Retailers have very little bargaining power with manufacturers and perform only a few of the flows in
    marketing channels unlike in the case of retailers in developed countries.
    The corner grocer or the 'Kirana' Store is a key element in the retail in India
    due to the housewives unwillingness to go long distances for purchasing daily needs.
    Although convenience and merchandise were the two most important reasons for choosing a store,
    the choice inertia varied across product categories. Convenience was indicated by consumer s as the
    most important reason in the choice of groceries and fruit outlets, chemists and life style items while
    merchandise was indicated as the most important in durables, books and apparel.

    Summary

    Retailing is the sale of goods and services to ultimate consumers for personal, non-business use. Any
    institution may engage in retailing, but a firm engage primarily in retailing is called a retailer. Retailers
    serve as purchasing agents for consumer and as sales specialists for producers and wholesaling
    middleman. They perform many specific activities such as anticipating consumers' wants, developing
    pr0oduct assortments and financing.
    TYPES OF STORES

    Instore-Retaling Non-Store Retailing

    Direct Selling
    Department Stores

    Super Markets Telemarketing

    Discount Houses Online Retailing

    Chain Stores Automatic vending

    Multiple Shops Direct Marketing.


    Department Stores

    These are large scale retail stores selling under one roof and one control a
    Variety of goods divided into different departments, each of which specializes in an individual
    merchandise. Converse is of the opinion that a department store is a retail shop handling several
    classes of goods including fast moving consumer goods, each class being separated from others in
    management, accounting and location. It is viewed by Clarke as that type of retail institution which
    handle a wide variety of merchandise under one roof which the merchandise grouped into well-
    defined departments which is centrally controlled and which caters primarily to women shoppers.

    Merits of Department Stores

    a) Large department stores buy in large quantities and receive special concession or discount in
    their purchases. Many of them purchase direct for manufactures and hence, middleman's
    charges are eliminated.

    b) Department stores are in a position to pay cash on all or most of their


    purchases and this gives them an additional advantage of picking up quality goods at cheaper
    rates and at the same time stocking the latest style and fads.

    c) Customers can do all their purchases under one roof and it appeals to people of all walks of
    life.

    d) The organization is too large to provide expert supervision of various departments for the
    adoption of a liberal credit and delivery service for large-scale advertising.

    e) When customers enter the store to deal with one department they are frequently induced by
    the advertisement which the display of goods offers to make purchases in other departments
    as well.

    Limitations of Department Stores

    Department business organizations are not free from abuses. There are certain specific limitations
    from which such institutions suffer such as:

    a) The cost of doing business is very high due to heavy overhead expenses.

    b) Because of their location in a central shopping area they are of not much advantage to the
    public because goods required at short notice are always purchased from the nearest traders.

    c) There is lack of personal touch and personal supervision which is to be found in single line.

    d) When hired diligence is substituted for the diligence of ownership, loss and leaks are likely to
    occur.

    e) Many customers abuse the liberal services extended and take advantage of the policy of the
    'customers is always right'.

    Super Markets:

    These are large, self-service stores that carry a broad and complete line of food and non-food
    products. They have central check out facilities.

    Kotler defines supermarket as 'a departmentalized retail establishment having four basic
    departments viz. self- service grocery, meat, produce and diary plus other household departments,
    and doing a maximum business. It may be entirely owner operated or have some of the departments
    leased on a concession basis.'

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