Marketing Aptitude: Retailers
A retailer is the last link in the channel of distribution. His business is to sell goods which are assembled at his premises as per the needs and wants of final consumers. The term “Retailers” has been defined by many eminent scholars as under:
- American Marketing Association: – “Retailing consists of the activities involved in selling directly to the ultimate consumer for personal, non-business use. It embraces the direct-to-consumer sales activities of the producer, whether through his own stores by house to house canvassing or by mail order business.”
- Evelyn Thomas: – “The retailer is the last of the many links in the economic chain whereby the consumer’s wants are satisfied smoothly and efficiently by retailers.”
- Larson, Card and Mandell: – “If we think of production and consumption as the two poles of the distribution process, wholesaling would be nearer to the production pole and retailing would be nearer to the consumption pole.
- E W. Cundiff and R. R. Still: – “A retailer is a merchant or occasionally an agent, whose main business is selling directly to the ultimate consumers.”
- James Stephenson: – “Retailer is that trader who resells the goods to the ultimate or final consumers. Different goods are collected at the shop of retailer so that many consumers can buy or collect these goods according to their necessities and convenience.”
- William J. Stanton: – “Retailing includes all activities directly related to the sale of goods and services to the ultimate consumers for personal and non-business use.”
- McCarthy: – “Retailing is selling final consumer products to householders.”
Thus, a retailer may be defined as a dealer in goods and services who purchases from manufacturers / producers and sell to the final consumers in small quantities.
Types of retailers
The retailing institutions are broadly classified into itinerant retailers and fixed shop retailers.
a) Itinerant Retailers (also known as mobile traders): – These traders do not have a fixed business institution from which they can operate. They keep moving with their shops from one location to another, in search of consumers. They deal in low priced articles like toiletry products, fruits, vegetables, fish, glassware, clothing, books, etc. These small traders have very little stock and limited capital. Some of the usual types of itinerant retailers which operate in India are shown below:
- Peddlers and Hawkers: -These are one of the oldest types of traders in the market place. They are small–scale petty traders or producers who carry the products on a bicycle, a hand cart, a cycle-rickshaw or on their heads and move from one place to another to sell their products at the doorstep of the consumers. They normally deal in non-standardized and low cost products such as toys, vegetables and fruits, fabrics, carpets, snacks and ice creams, etc. They uses ordinary methods of attracting attention like addressing the public, using placards, labels, and signs, or displaying merchandise in a public place.
- Street Traders (Pavement Vendors): – These traders carry on their business in busy streets or on the footpath of busy cities and towns. They choose bus stops, railway stations, government and commercial offices and school area and sells products of consumer use such as small bookshops, pen-repairers, leather bag repairers, newspapers, eatables, readymade garments, etc.
- Market Traders: – These traders open their shops in different localities at the weekend or on monthly basis. Most of the big villages and small towns in India have regular market days. For example, Sunday bazaar, Monday bazaar, etc. They deal in one particular line of products, like fabrics or readymade garments, toys or crockery, or alternatively, they can be general merchants. They are mainly catering to lower-income group of consumers and deal in low-cost consumer products which are of daily use.
- Cheap Jacks: – These are petty traders who hire shops in centrally located, residential areas. They also move from one locality to another, depending upon the potential of that place. Though, the speed of change of locality is not as fast as the peddlers and hawkers. They also deal in consumer products and provide service to customers in terms of making the item available where ever required.
b) Fixed shop retailers:- The fixed shop retailers are retail shops who maintain permanent establishment to sell their merchandise. Hence, they do not move from place to place to serve their customers. They have greater resources, greater credibility and operate at very large scale as compared with the itinerant retailers. They are also in a better position to give better services to the consumers such as home delivery, guarantees, repairs, credit facilities, availability of spares, etc. These retailers can be categorized into two different types by comparison of the size of their operations. These are small shop-scale retailers and large-scale retailers.
- Small scale retailers: -These are those traders who have a fixed place of business but due to limited capital they operate at small levels. Some of the small-scale retailers are as follows:
- Street stall holders: – These traders are usually found at busy streets of towns and cities. The stalls are organized on a very small scale and hence, they handle goods on a very small quantity. These traders attract floating people and deal mainly in goods of cheap variety like hosiery products, toys, stationary, cigarettes, soft drinks, cosmetics, The most useful advantage is that they provide convenient service to the customers in purchasing some of the items of their requirements.
- Second hand goods dealers: – These traders are engaged in the sale and purchase of secondhand or used goods such as clothes, books, furniture, automobiles, etc. They receive their suppliers from those who sell these articles after use and also from auctions. The customers of such business are poor people who cannot afford to spend the prices for new products.
- General stores: A general store is owned and managed by a sole proprietor who keeps personal contacts with the customers. These stores are set up in residential areas and they have stock of all kinds of products to satisfy the day-to-day requirements of the customers like drugs, grocery items, soft drinks, toiletry products, cloth, provisions, bakery products, stationery items, and confectionery etc. These stores often provide credit facilities to some of their regular customers. The facilities of free home delivery and exchange of goods are also provided by these shops.
- Specialty shops: – Recently, this type of retail shop is becoming popular in urban areas. Instead of selling products of various types, these retail shops specialize in the sale of a specific type of products like shops selling children’s garments, men’s wear, ladies shoes, toys and gifts, school uniforms, college books or consumer electronic goods, etc. These shops are usually located in a central place where a large number of customers can be attracted, and they provide a wide choice to the customers in the selection of goods.
Large-scale retailers: – In it, the retailer purchases goods from different manufacturers and wholesalers in large quantities and sell these goods to the final consumers in small quantities according to their needs and wants. They maintain large variety of goods and deal in almost all the products of daily and regular use of consumers. This type of retailing requires heavy amount of capital and a big space. The purpose of large-scale retailing is to earn maximum profits through maximum sales and to make available almost all the goods of regular requirements of consumers at a single place. Some of the large-scale retailers are as follows:
a) Departmental Store: – It is a huge retail shop situated at a central place in the heart of the city and has number of small shops or departments under such a store. Each shop deals in a particular line of products. Each specializes in individual merchandise from pin to plane or pen to car. All the departments are housed under one roof and under one unified control and management. In addition to this, a departmental store offers many other facilities also to its consumers such as restaurant, postage, mobile service, internet, café, toilet, etc. It is organized into separate departments for purposes of promotion, service and control. The term “Departmental Store” has been defined by many prominent scholars as under:
- Clark and Clark: “A departmental store is that type of retail institution which handles a variety of merchandise under one roof, with the merchandise grouped into well-defined departments which are centrally controlled, and which caters primarily to women shoppers. “
- Cundiff and Still: “A departmental store is a large retailing unit, handling a wide variety of shopping and specialty goods including women’s ready to wear and accessories, men’s and boys’ ware, piece goods, small wares and home furnishings, and organized into separate departments for the purpose of promotion, service and control.”
- B. Giles: “A departmental store is a collection of shops under one roof and ownership, each shop or department specializing in selling a special ratige of goods.”
b) Chain Shops (or multiple shops): -A chain store is a network of a number of branches situated at different localities in the city or in different parts of the country. All the branches deal only with a particular product line and specialize in the same. This system consists of opening additional branches to increase the sales volume. Examples of these shops are- Bata shoes, C.M., Reliance Fresh, Patanjali, Sri Sri Ravi Shankar Ayurvedic products, Gandhi Ashram, Liberty shoes, and the fast food chains of McDonalds and many more. The term “Chain Shops” has been defined by many prominent scholars as under:
- Clark and Clark: “A chain store system consists of a number of retail stores, which sell similar products, are centrally owned and are operated under one management.”
- Converse: “A chain store system consists of four or more stores, which carry the same kind of merchandise, are centrally owned and managed and usually are supplied from one or more central warehouses.”
- Thomas: – “Multiple shops are one of a chain of similar shops owned and controlled by a single business firm.”
c) Consumers Co-operative Stores (or retail cooperative societies): – It is a type of retail business which is owned and managed by the consumers themselves. These are financed by the members in the form of shares of small denomination. The purpose of these stores is to eliminate middlemen and to supply its members, quality goods at a reasonable price. These stores purchase their requirements in bulk from the producers or wholesalers at wholesale price and sell them to the consumers at cheaper prices. A part of the profit thus earned by the store is passed on to the members in the form of dividend and bonus on purchase. Apart from eliminating middlemen, these stores sell without adulteration, adopt correct measurement and stabilize prices. According to J. Stephenson, “A Co-operative Distributive Society is a combination of persons whose aim is to economize by buying in common and to retain their profits by selling in common.”
d) Mail Order Business Houses: – These are retail-trading houses, which receive orders from the public through post. Under this form of arrangement, the mail order houses give wide publicity through television, radio, newspapers, magazines etc. They invite customers through these advertisements and make further inquiry by post; consumers who want to purchase these goods remit some money in advance through online payment, or Draft etc., to the seller. Now, the seller packs these goods properly and sends these goods to the consumers through V.P.P. or courier services. The consumers make the payment of the price to the postman and get the delivery of goods. So, mail order business is selling and buying of goods through post.
e) Super Market (also called as hypermarket): – It is a big retailing unit selling large variety of consumer products on the basis of low-margin appeal, large variety and assortment and heavy emphasis on merchandising appeal. It combines the features of a supermarket and a general merchandise store. It is a very large store. A large area is needed and as such it is situated at the edge of the city or outside the city. The self-service method is followed. In France, it is known as hypermarket and in Germany it is known as giant store. The products traded are normally food commodities and other low priced, branded and widely used consumer goods such as grocery, utensils, clothes, electronic appliances, household goods, and medicines.
f) Hire-purchase and Installment Payment houses: –
- Hire Purchase system: -It is a system in which a buyer of goods agrees to pay the price in installments, while enjoying the use of it. Though, he gets possession of goods immediately on signing the contract, the ownership does not pass on to him till he pays the last installment. The seller continues to be the owner, even though he has parted with the possession. If the buyer makes any default in remitting the installments due, the possession of goods will be seized by the seller and the amount, paid so far, will be treated as mere hire charges.
- Installment System of selling (or Deferred Payment System): – Under this system title or ownership of articles as well as possession is passed on to the buyer, as soon as the first installment is paid. On default of payment, the seller cannot seize the article but can go to the court of law to recover his dues.
Thus, the fundamental difference between these two systems is that while in the case of hire sale, ownership is not transferred to the buyer till the payment of the last installment; in the case of installment selling, the buyer becomes the owner immediately.