What is Retail Trade?
Retail Trade refers to buying goods on a small scale from the wholesaler and selling them to consumers.
Retail Trade refers to the buying and selling of goods in small quantities for final consumption.
Retail Trade refers to the activity of selling goods or services directly to consumers
A trade, which consists of selling to ultimate consumers of a variety of products in small lots.
A person who engaged in Retail Trade is known as a Retailer. A Retailer acts as a link between the ultimate consumer and the wholesaler. He is the last link in the distribution chain.
Definitions of Retail Trade:
By American Marketing Association: Retailing means the activities involved in selling directly to the ultimate consumer for personal and non-business use. It embraces direct-to-consumer sales activities of the producer, whether through his own store or by house-to-house canvassing or by other business.
According to William J. Stanton: Retail Trade includes all activities directly related to the sale of goods or services to the ultimate consumers for personal non-business use.
According to Philip Kotler: Retailing includes all the activities involved in selling goods or services directly to final consumers for their personal, non-business use.
Features of Retail Trade
- Retailer acts as a link between wholesaler and the ultimate consumer. He is the last link in the chain of distribution.
- Retailer buys goods on a small scale from the wholesaler.
- He deals in large variety of goods.
- He keeps personal contact with his customers.
- He sells goods to the final consumers and not for further reselling.
- He usually operates in his locality.
- He usually buys goods on credit and sells them on cash basis.
- He keeps a limited stock of goods.
- Retailer needs to perform several marketing activities.
- Retail shops are usually located near consumers.
Function of a Retailer
- Selling: Retailer sells goods in small quantities to his customers as per their choices and demands at a reasonable price.
- Buying and Assembling: Retailer buys a large variety of goods from different wholesalers. He keeps good knowledge about the choices and demands of his customers. He buys the best products from each wholesaler and brings them under one roof.
- Storage: Retailer maintains a ready stock of goods and displays them in his store.
- Promotion: Retailer displays goods in his store. He helps in advertising goods through shop decoration, mouth publicity, display, and personal contacts with his customers.
- Services: Some retailers provide facilities of return and exchange of goods, home delivery, and even after-sale services to their consumers.
- Market Information: Retailer has good information about the choices and demands of the customers of his area and he helps manufacturers and wholesalers by providing such market information. Retailer also guides his customers about new products and quality of those products.
Services of a Retailer:
Services to Wholesaler
- Helps in Distribution of Goods: Retailer relieve the wholesaler and manufacturer from the task of selling goods to individuals. They provide access to the market to wholesaler and manufacturer through distribution of goods.
- Planning: Retailers helps wholesaler in planning his next purchase by placing advance orders of the goods.
- Promotion: Retailer helps wholesaler and manufacturer by promoting their merchandise to his customers. They take part in promotional activities and help to make the product more popular.
- Collecting Market Information: Retailer keeps various information like choices, preferences, like-dislikes, and demand of his customers. He passes such information to wholesaler and manufacturing enabling them to make suitable adjustments in their products.
- Personal Contact: Retailers are in direct contact with his customers. They can convince, advise, and guide the consumers in the selection of a product.
Services to Consumers
- Regular Availability of Products: Retailers keeps ready stock of different goods manufactured by different manufacturers. They are always prepared to sell quality products to their customers according to their choices, preferences and demands.
- Large Variety of Products: Retailer keeps a large variety of goods from different manufacturers and customers can choose the product of their choice.
- Convenience in Buying: Retailer generally deals in his locality. He keeps ready stock of items that are required by the consumers of his area.
- After-sales Service: Retailer provides different types of after-sale services like free-installation, exchange, or replacement of products, return and repair etc.
- New Product Information: Retailer helps his customers in the selection of better product. He provides significant information like price, features about new products.
Types of Retailers
Generally, there are two types of Retailers:
1. Mobile Retailer/Itinerant:
Itinerant retailing is a type of small-scale retail trade in which retailers move around and sell a variety of items directly to the consumers. They do not have a fixed shop where they can sell. You must have seen them distributing newspapers early in the morning;
selling peanuts, bangles, toys, etc. in buses and trains; selling fruits and vegetables in
your locality using a cart, selling ice cream, namkeens, etc. on a cycle.
- Hawkers: Hawkers move from place to place while keeping their goods in a wheeled vehicle in order to sell and display their items at the doorstep of their customers. They usually sell inexpensive goods.
- Pedlars: Pedlars are like hawkers, but they don’t keep their goods on a wheeled vehicle. They carry goods on their back or on their head.
Features of Hawkers and Pedlars
- They deal in different variety of goods like fresh fruits, vegetables, and other merchandise.
- They sell local and inexpensive products.
- They do not sell goods at a fixed price. Their price fluctuates depending on their customers.
- They move place to place and sell goods at the doorstep of customers.
- Street Trader: Street Trade arranges their goods on a busy roadside, footpath, and other busy public places like a bus station or railway station. They do not move from place to place and usually set up their arrangement daily.
Features of Street Trader
- They sell small stationery items, eatables, newspapers etc.
- They deal at low prices and do not bargain.
- They do not frequently move from one place to another.
- Cheap Jack: They are a type of retailer who hires a small shop at a particular place for a temporary period.
Features of Cheap Jack
- They generally rent a shop for a small period and use it to display their goods.
- They deal in general household products, stationery, and other ready-made items.
- They do not change their location frequently.
- Market Trader: Market Traders are small-scale retailers who set up their shops at different places on fixed days. They move to different markets on fixed days on a weekly, monthly, and annual basis.
2. Fixed Store Retailer:
They are the type of retailer who operates their business from a permanently established store. They do not move from place to place. There are two types of fixed store retailers-
1. Fixed Shop Small Retailers and,
2. Fixed Shop Large Retailers
1. Fixed Shop Small Retailers :
In every locality you find fixed shop retailers dealing with goods and services on a small
scale. They deal with limited variety and limited quantity of goods and cater to the
needs of a local area. They require less capital and provide goods to a limited number
of customers. The grocery shops of your locality come under the category of small-scale fixed shop retailing. On the basis of the nature of goods they deal in, we can classify these retailing businesses as :
- General Stores: They sell general supplies as per the demands of the local consumers. They keep the variety of goods of daily use like grocery, items, eatables and stationery.
- Single Line Stores: Such type of retail shops deals in a single line such as ready-made garments, shoes, computers, books etc.
- Specialty Shops: These types of retailers deals specific products of product line. For example, a shop selling the garments of a specific brand like Raymonds etc.
- Street Stalls: These types of retailers deal in low price. These types of shops are managed by a single person. They uses stall to display their goods.
They operate their business with a small amount of capital. They deal in inexpensive items like toys, packed eatables, soft-drinks etc.
- Second-Hand Goods supplier: Such type of retailers sells second-hand or used products like sofas, old clothes, books, furniture at low prices. Generally, they receive supplies from auctions.
- Fixed Shop Large Retailers: These types of retailers operate businesses on a large scale. They manage large amounts of stock and purchase goods in bulk.
- Department Store: A Departmental store is a large-scale business premise, that sells a large variety of goods. Such a shop aims to satisfy all of the demands of customers.
Such type of stores are usually divided in several departments under one roof. All the departments of store have professional management and control.
- Mail Order House: Mail Order House refers to the form of retailing business in which all the transactions are conducted through telecommunication. There is no direct and personal contact of retailer with his customers.
- Franchise: Franchise refers to a commercial agreement done by an organisation to permit a retailer to sell its goods or service in its locality. Such type of retailers opens single store based on the name, trademark, and products of a company. In return, the company takes royalty fees.
- Chain Stores: Chain Stores are networks of multiple retail shops, owned by a single business organisation. Such types of shops are widespread located in different localities of the city. They usually deal in a single line, uniform, and branded consumer items.
- Malls: A shopping mall or a shopping centre is a large building which comprises of several retail shops which deal in various variety of products as well as service.
- Consumer Cooperative Store: Consumer cooperative Store is a voluntary association of persons. Such a shop is registered under the Co-operative Society Act. It is established and managed by the consumers with the motive of obtaining good quality products at a reasonable price.
- Super Market: Super Markets are large retail stores that are organised in a departmental pattern. They are managed by a cooperative society or by a private organization.
Unlike departmental stores which deal in all types of items required by consumers, Super Markets generally deals in food products, groceries, etc.
Difference between Retailer and Wholesaler
|Basis of Difference||Wholesaler||Retailers|
|Nature||Wholesaler is the intermediate link between manufacturer and Retailer||Retailer is the intermediate link between consumers and wholesalers.|
|Scale of Operation||Wholesaler operates the business on a large scale.||Retailer operates the business on a small scale.|
|Location||The business of wholesaler is wide-spread.||The business of Retailer is generally limited to his locality|
|Purpose of Selling||They sell goods for the purpose of reselling.||They sell for the purpose of ultimate consumption.|
|Profit Margin||Wholesaler deals at low-profit margin due to fast turnover.||Retailer deals comparatively at higher profit margin.|
|Display of Goods||Wholesaler does not need to display his goods.||Retailer needs to display his products in order to attract customers.|
|Capital Requirement||Wholesale trade requires high amount of Investment and capital.||Retailer can manage his business with low capital.|
|Variety of Items||Wholesaler generally keeps small variety and tends to deal in single line.||Retailer keeps large variety of goods.|
|Setup Cost||The setup cost is high in Wholesale Trade||The setup cost is low in Retail trade.|
|Payment Methods||Dealing is done on a credit basis and advance payments||Dealing is mostly done on cash basis.|