Retailer is an intermediary who sells a wide variety of goods to the ultimate consumer as per the requirements. The term ‘retail’ means sale for the purpose of final consumption and not for resale. He is the last link between the manufacturer and ultimate consumer.
Retailer can be explained as intermediary selling goods in small lots to the ultimate consumer. He is different from wholesaler who buys in bulk quantities from manufacturer and sells it to retailer in small quantity.
Some of the types of retailers are:- 1. Itinerant Retailers 2. Fixed—Shop Retailers 3. Small-Scale Retailers 4. Large-Scale Retailers 5. Manufacturers and Primary Producers 6. Wholesalers 7. Agents.
Types of Retailers: Itinerant, Fixed Shop, Small-Scale and Large-Scale, Manufacturers, Wholesalers and Agents
Types of Retailers – Itinerant Retailers and Fixed-Shop Retailers
Type # 1. Itinerant Retailers:
(a) Hawkers and Peddlers:
With the help of a beast of burden or a hand cart, hawkers carry their goods from place to place and sell them at the very door steps of customers. The same function is performed by peddlers. But the point of difference between the two is that the latters carry their goods on their heads. Both these retailers do not have any fixed place of business; they move from locality to locality depending on their prospects for effecting the sale of their goods.
(b) Cheap Jacks:
The retailer, known as Cheap Jack, has an independent shop in a business locality. The place of business or the shop he has established may not be of a permanent nature; he may shift to some other locality when he finds that the previous location is no longer profitable. But as long as he continues in one particular locality he carries on his business with full vigour by undertaking all possible measures to promote the sales of household articles, readymade garments and other goods of inferior quality.
(c) Market Traders:
Market traders are those retailers who open their shops at different places on fixed days known as market days. Such days may be fixed on weekly or monthly basis, i.e, on every Sunday or on full-moon days. They carry on their business in one locality or at different places on different days when the market is open.
(d) Street Traders:
The very name indicates that this type of retailer carries on business in busy streets or on the foot-paths of busy cities and towns. Bus stops, railway stations, government and commercial offices, schools and college areas are some of the places generally chosen by street traders who handle only light goods that are largely in demand but deal mainly in a particular type of goods at a time.
Type # 2. Fixed—Shop Retailers:
(i) Small Shops:
Street stall-holders have their stalls in a street where there is heavy traffic. While selecting the place, they take very great care, for once it is selected, that location for the stall becomes more or less permanent. These retailers get their supplies from wholesalers as well as local suppliers.
(b) Second-Hand Goods Dealers:
These are dealers who are engaged in the sale and/or purchase of second-hand goods or articles—books, furniture, radios, clothes, etc. They purchase and sell such goods to those customers who cannot buy new goods at higher prices. Sometimes, though not always, some new goods, like books and radios, are kept along with old ones. These dealers mainly get their supplies at private and public auctions. Many a time they send their representatives from door-to-door to buy old articles on their behalf.
In such shops, goods of a particular variety are sold. The dealers specialize and deal only in one line of goods. ‘There might be shops only for books, leather goods, watches, spectacles, drugs, sport goods, etc. Under this arrangement, the customers get a wider choice in the selection of goods; but the danger is that they may get old goods at higher prices.
These shops are established with the intention of supplying goods generally required for day-to-day use. Consumers ordinarily get all their requirements in such general shops. One may feel that, to establish a general shop, it is necessary to invest huge capital. But such shops can be established with a comparatively small capital, although varied goods are sold in the shops. The quantity of goods stored is not large; therefore, the total turnover is small.
(ii) Large Shops:
Under large shops, as stated before, we have:
(a) Departmental Stores;
(b) Multiple shops;
(c) Mail Order Business;
(d) Hire—Purchase Shops;
(e) Consumers Co-operatives; and
(f) One-Price Shops.
(a) Department Stores:
General:
They very name, Department Stores, indicates that there are a number of departments, each dealing in one particular line of goods to provide to customers a large variety of merchandise from a pin to motor car under one roof. All the departments each with its departmental head is to be in the same building under one control and management.
The main idea behind the departmental stores is to supply all the requirements under one roof to the customers. It aims at supplying quality goods and service to richer customers, who generally cannot get the same from smaller retailers.
Thus, a department store is a large retail establishment having a number of departments, each of which confines its activities to one kind of trade. Every department of the store is a complete unit in itself and is centrally controlled. The different departments resemble specialty shops under one roof and one management. Though all the departments are centrally controlled, each department operates as a separate unit in so far as purchases, selling activities, merchandise control and other aspects of administration are concerned.
Generally, department stores are established as limited companies. Each department store has a Board of Directors to frame the general policies of the store. But for a general supervision over the whole concern, the Board delegates its powers to the managing director or general manager, who is the executive head and is in supreme charge of the whole concern.
Departmental heads or section managers are next to the managing director or general manager. A section manager is responsible for his section, and is expected to see to it that the different departments of his section are properly managed and that there is an even distribution of work among all assistants employed in his section. Either for executive purposes or for general administration purposes, he is directly responsible to the managing director or general manager. He is also held responsible for the success of his section.
It is with the idea of coordinating the activities of the different sections that section managers meet at some intervals under the chairmanship of the general manager or managing director. At these meetings the common problems are discussed and common decisions taken to ensure that the department store as a whole runs at a profit.
(b) Multiple Shops Organisation:
The very name, multiple shops, indicates that, under this organisation, similar shops are established in multiples by the same management. Such multiple shops in Europe and America are very popular; particularly in America, where they are known as chain stores. Under the multiple or chain shop arrangement, the main idea is to approach the customers and not to draw the customers to it, as is done by the department stores.
With this idea of approaching customers, attempts are made to open a large number of shops in the same locality at different places. They may extend over every part to the country. They may be constituted as a partnership or a joint stock company; but in many cases, they are formed as joint stock companies, particularly when the need for more capital is badly felt.
Location:
The multiple shops organisation may open shops in a locality which is fairly populous and may bring some business during the best part of the day. Like a department store, it is not necessary that multiple shops must be opened in the heart of the city; nor do such sops require extensive premises.
Mail order trading is mainly done through the post office. In this way personal shopping is avoided. The orders from the public are received through the post office and executed through the post office. Mail-order trading, from the point of view of the buyer, may be described as shopping by p6st, while it is selling by post from the point of view of the seller. This type of business appeals to the public largely on the ground of its convenience.
Under this system, goods are supplied at the very doors of the customers. No help of any middleman is taken; the customers do not have to undertake a journey to the retailer. It is with the help of printed matter—circulars, catalogues, hand-bills, pamphlets, price lists and samples, etc.—that the orders are solicited. The appeal to the customers and the publicity for the goods are made through the press and not face to face. There is no personal contact between the buyer and the seller.
As the mail order business provides all the facilities and conveniences to customers, it flourishes in those areas where there are few large towns or where shopping facilities are limited. Mail order business flourishes in those places where it is not possible to get readily certain articles unless some arrangement is made for procuring them from a large town.
But the mail order trading cannot be successful unless educations widespread for only those who are literate can read the literature made available to the public by the mail order houses.
(d) Hire-Purchase Trading:
Hire-purchase trading is a method by which the seller agrees to sell an article on condition that the buyer shall pay the purchase price in a fixed number of installments spread over a stipulated period determined at the time of the sale of the article. The article is not legally sold, but is hired by the buyer; and he does not become its owner unless all the installments of the purchase price have been fully paid.
When the hirer, i.e., the buyer, enters into an agreement with the dealer to buy an article under the hire-purchase system, he is entitled to possess it and to make full use of it. But he is merely the possessor of the article, while the dealer is the owner, until all the prescribed installments have been paid. Generally, the hirer is expected to pay the first installment while entering into a contract, and the other installments in accordance with the terms of the agreement.
However, a failure on the part of the hirer to pay any installment within the specified period entitles the dealer to take possession of the article and to end the hire purchase agreement. But the hirer, of his own accord, after entering into the hire-purchase agreement, is not allowed to cancel the agreement.
The seller may also demand that the life of the hire-purchaser must be insured as security against the installments to be paid. He may even insure the article sold under this system, for they are subject to return if the hire- purchaser fails to pay any installment. The premium on such policies is sometimes included in the purchase price or paid separately by the purchaser. The articles are insured to protect the interest of the seller.
(e) Consumers Co-Operative Stores:
The fundamental idea of a consumer co-operative society is that a group of people, dissatisfied with the service they receive from retail shopkeepers, decide to take into their own hands the business of supplying themselves with their requirements. A consumer’s co-operative comes into being as a result of the dissatisfaction of consumers with the usual marketing methods.
The idea of a consumers co-operation is based on the conviction that the consumers might get advantage as a result of their joint efforts which would not be possible through individual effort. Joint efforts are put forth in setting up what we call a consumers’ co-operative.
(f) One-Price Shops:
The very name “one price” indicates that in such shops the prices of articles are uniform. It is in such shops that the articles, irrespective of their size and quality, are sold at one common price. The prices are fixed in advance and the buyer gets full choice to select any article at the fixed price. There is no scope for higgling. In fact, the question of higgling or of settling the price at a lower rate than already fixed by the store does not arise in a “one-price shop”.
This type of organisation is also called the Woolworth Chain Store because such stores were first opened by Woolworth. Under this organisation the articles that are in great demand by the masses are sold at one price. Cheap but popular German, Japanese, Chinese and Indian goods like toys and domestic articles required for daily use are selected and sold at one popular price, which may be fixed at such a level as to suit the purse of the common man. The price fixed may vary from two to eight annas, depending on the quality of articles.
Types of Retailers – Small-Scale Retailers and Large-Scale Retailers
1. Small-Scale Retailers:
In India, we have millions of small-scale retailers in rural as well as urban markets, widely scattered all over the country. Mobile retailers and fixed retail Shops are independent retailers usually based on sole trader and partnerships. Mobile retailers are making roaring business in all the metros and cities.
i. Itinerant (Mobile) Retailers:
They are represented by hawkers, peddlers, street vendors, stall holders in fairs and exhibitions. In this form of retail trade, the seller has no fixed locality, but carries his goods from place to place. This form of trade is very old. The hawker is a very familiar figure in our villages and towns, sometimes carrying goods, on a wheeled carriage.
The following are the prominent features of such mobile retailers:
a. No fixed place of business.
b. Require little capital and limited organising effort.
c. Keep limited stocks on hand and yet quick turnover.
d. Offer greatest convenience to consumers by giving delivery of goods at the door of the consumer.
e. Easy to start with minimum establishment expenses.
f. Suitable for the sale of perishable articles such as vegetable, fruits, milk, bread, eggs, etc.
Street and pavement retailers offer a very keen competition to small-scale fixed retail shops who look upon them with disfavour. The hawkers and peddlers will continue to exist as long as they offer – a. local convenience to purchasers, b. charge lower prices as they have no establishment charges and buy from wholesalers at wholesale rates, and c. sell useful goods through house-to-house canvassing and home deliveries.
ii. Convenience Stores:
Convenience stores offer great shopping convenience to customers. They are found in all residential areas as well as in shopping areas. They stay open long hours and have neighbourhood locations. Independent convenient retail stores are usually organised as sole traders or partnerships; grocery shops and provision stores in each locality are convenience stores.
They carry limited line of rapidly turnover items such as food, beverage, common drugs, etc. They are small or medium-size general stores. A store may act as a side business for a family. They charge higher prices and have substantial margins than do supermarkets.
iii. Specialty Store:
It specialises in a single line of goods with a deep assortment to give wider choice to customers. Stores selling ready-made garments, electronic goods, e.g., TV, Freeze, Washing Machines, and Furniture, Books and Magazines, Utensils. Jewellery, are speciality stores.
We may have stores exclusively for men’s clothing or female clothing or only for sports shoes. Specialty stores have a bright future as they can exploit opportunities for market targeting, product specialisation, and market segmentation. They are located in central busy places and shopping centres.
2. Large-Scale Retailers:
The large-scale organisations owned by partnerships and companies are:
i. Super-markets/bazars,
ii. Combination Stores,
iii. Departmental Stores,
iv. Chain/Multiple Shops
v. Hypermarkets,
vi. Discount Stores,
vii. Retail Catalogue Showrooms,
viii. Manufacturer’s Showrooms,
ix. Factory Outlets/Off-price Retailers.
x. Shopping Centres (in Suburban areas).
xi. Consumable Co-Operative Store
We shall now study these large retail organisations:
i. Supermarket Store:
A supermarket is a self-service food store with grocery and produce departments. It may carry a wide assortment of food. Sundry drugs and many convenience items (hosiery, cosmetics, and so forth).We may have even a chain of supermarkets.
A supermarket is a novel form of retail organisation specialising in necessaries and convenience goods. Usually it concentrates on all food articles — groceries, meat, fruits, vegetable and tinned products. Non-food items sold by these stores should satisfy a few conditions. Firstly, it must be widely used and must appeal to general consumers. Secondly, a non-food article must be a branded product, i.e., pre-sold to customers through intensive advertising. Thirdly, it should be a low- priced article.
ii. Combination Stores:
It is a combination of two complementary lines — grocery and drugs. A combination store has a supermarket and also a full line drug store with a common pay counter area. The combination is profitable as drug items offer a higher profit margin than grocery items. A combination store represents a diversification of the supermarket store.
iii. Department Store:
A department store is a huge retail shop situated at a central place in the city, divided into a number of small shops or departments each dealing with one or two lines of goods and specialising in those lines. All such departments or speciality shops are under one roof and under one management and control.
Such a kind of huge retail organisation, many a time looking like a miniature township, is usually owned by a big company as it requires huge capital. Thus, a unit of sales organisation assumes a very big size under a department store.
The department store is, therefore, a mere collection of shops all under the same palatial building, each shop dealing in a particular line of retail trade. This kind of shopping is often referred to as ‘one-stop’ shopping. Instead of increasing sales by opening branches to sell the same goods (Multiple shops), a business can as well sell different kinds of goods in the same building (Department Store).
iv. Multiple Shops and Chain Stores:
A multiple shop system is a network of a number of branches situated at different localities in the city or in different parts of the country. All branches are under central ownership, management and control. It is a compromise between large-scale and small-scale organisation; it tries to secure advantages of both and eliminate their disadvantages. For instance, management, purchases and control are centralised while sales are decentralised and carried on a small- scale.
Organisation, management and governing principles of multiple shops (manufacturer’s organisation) and chain stores (retailer’s organisation) are similar. However, chain stores are strictly the retailer’s enterprise to eliminate the wholesaler; whereas multiple shops are the manufacturer’s enterprise to eliminate all middlemen including the small retailers. In chain stores we have wide variety of goods, whereas, in multiple shops we have only a particular line of goods.
v. Hypermarket (Super-Supermarket):
Hypermarket is the best example of scrambled merchandise or diversification in retail trade. It combines the principles of supermarket, department store, speciality shop and service shop in one giant size store. It has a very broad and deep assortment of goods acting as a shopping mall, becoming the ultimate in ‘one stop shopping’— to buy everything from A to X.
In addition to numerous food products, a hyper market tries to fulfill many other consumer needs, e.g., apparel, housewares, hardware items, photographic materials, sport goods, garden products, electronic goods, hobby items, etc. Even house-hold services such as laundry, shoe repair, beauty parlours are also provided. Middle and upper classes constitute its target market. It emphasises low prices and gives a few services. It has to provide numerous payment counters.
vi. Discount Stores:
Discount retailing depends on price as a Unique Selling Point (USP) by combining low price strategy and lower cost of doing business (offering few customer services). Consumers well come a low price and limited service. They usually prefer less costly location, building and fixture.
National brand, low priced and heavily advertised, is the primary patronage appeal. They have brought about a revolution in retailing since 1960. Discount retailing is not only prevalent in general merchandise, but also found in sporting goods, in electronic goods, in bookselling and in many speciality goods. We also have discount chain stores. Low price and limited services are the two main reasons for their success.
A new class of consumers consisting of large middle-income group of people emerged after the Second World War and these people were price-minded. These people preferred low prices and few services. With so many wants and limited purchasing power, the supermarkets and discount houses were most suitable. Branding, packaging and advertising required little sales efforts and local sales promotion. Thus, the situation after 1950 in many countries was ripe for major changes in retailing.
Discount houses saw great prospects in a low-margin, high turnover type operation, with very few services but big price cuts. They could reduce their operating expenses to about 15 per cent of sales while department stores and limited line stores had operating expenses up to 35 per cent of sales. The advance of discount stores, supermarkets, off price retailers introduced cheap and cheerful retailing. Under inflationary conditions, consumers patronise these retail stores.
Discount houses, supermarkets, hypermarkets have forced independent retailers to specialise, became more efficient, adopt lower mark up in pricing, or go out of business. They have also adversely affected the cartel-like link between manufacturers, wholesalers and retailers resorting to resale price retail price. The pre-set retail price included three or more wholesalers along the distribution line. Discount selling killed this unfair trade practice.
vii. Retail Catalogue Showrooms:
In the showroom a complete catalogue and samples are kept. The catalogue gives a broad but shallow assortment of goods, with low prices and a few services. Shoppers examine samples and make out orders. Order is checked and then sent to the warehouse for filling. The customer is given the delivery at the showroom. Repeat customers may be mailed a catalogue copy, so that they can make out the order at home and pick up the product at the showroom.
The products sold are national brands, high mark up items which can be bought at the show-room at low prices as the marketer has low operating costs. Customer gets well-known brands at discount prices. Products sold are jewellery (including watches), house wares, electronics, small appliances, luggage, toys, sporting goods, power tools, cameras and so on.
viii. Manufacturer’s Showrooms:
Manufacturer’s own outlets and plush, exclusive showrooms, galleries, and arcades ‘constitute an important part of the direct selling or non-store retailing since 1980. In textile industry, in India, this pattern of retailing is now used extensively. For instance, there are more than 1900 authorised Vimal Showrooms in all urban areas across the country. In big cities we have jumbo showroom of “Vimal Fabrics.” The showroom idea also acts as a promotional tool and not merely distribution outlet.
ix. Factory Outlets/Off-Price Retailers:
Factory outlets are owned and operated by manufacturers sell surplus, irregular (seconds) or discontinued goods. These outlet stores offer prices as much as 50 per cent below retail on a broad range of items.
Off-price retailers buy from producers their excess output, or excess stock at the end of a fashion season or irregular goods, of inferior, i.e., 2nd quality rejected under quality control at lower than normal wholesale or regular price. Hence, they can sell below the current prices for regular (1st quality) of in-season goods, sold in other retail stores. We have also retailer’s chain stores to sell such goods at attractive discount prices.
x. Shopping Centres (In Suburban Areas):
Modern trend in retailing is towards increasing decentralisation. A shopping centre is a group of commercial establishments planned, developed, owned and managed as a unit related in location, size, and type of shop to the trade area it serves, and it provides also necessary amenities to the shoppers at one place. Planned shopping centre is an integrated retail unit. Shopping centre concept represents a natural evolution of urban expansion.
We have well-planned and organised shopping centres to offer maximum shopping convenience in the form of one stop shopping. A shopping centre is designed, developed and operated, usually by a company, near about large residential complexes so that shoppers have easy access to it. It may consist of numerous retail stores (small and large). These shopping centres or malls offer very wide variety and assortments of consumer goods.
Such concentration of retail trade makes shopping very convenient particularly to the surrounding ever-growing suburban customers in a big city like Bombay. Shopping centres are responsible for drawing away the retail trade from the central metropolitan cities to suburban regions. The retail shops in the shopping centre evolve a joint promotion campaign to attract suburban customers.
A consumer can save time, energy, and travel costs, and can make all purchases at one place. Shopping centres or regional malls resemble central city shopping districts. They are changing consumer shopping habits as they reduce the need or urgency to go to the central city in order to make their purchases. These new retail units have reduced the importance of the central city’s downtown shopping district or older main street suburban business district.
xi. Consumer Co-Operative Stores:
Just as multiple shop system is an instrument in the hands of a manufacturer to eliminate all middlemen in distribution, similarly, a co-operative store is an organisation owned, managed and controlled by consumers themselves to reduce the number of middlemen and their commission.
Types of Retailers – Itinerant Retailers, Fixed Shop Retailers, Small-Scale Retailers and Large Shops
Type # 1. Itinerant Retailers:
These are retailers who move from one place to another to sell their goods. They do not have a fixed shop or premises. They normally sell in small lots and work with very little capital. They deal in a variety of goods and do not have a fixed line of business.
(a) Hawkers and peddlers – They carry goods from one place to another mostly on carts and sell household items. The price is lower than the market price.
(b) Cheap jacks – They mostly sell their goods at a certain place but if it ceases to be profitable selling there then they move to other localities. The difference between hawkers and cheap jacks is that cheap jacks have a fixed place where they sell their goods but don’t hesitate to change the place if it doesn’t remain profitable.
(c) Market trader – Market traders open their shops on market days. They keep moving from one market to another. Such markets may be opened on weekly or monthly basis.
(d) Street traders – Such retailers carry on their business on busy streets, footpath, railway stations, bus stops etc. They generally sell goods that are in great demand in that locality and deal with few items at a time.
Type # 2. Fixed Shop Retailers:
As the name suggests the shop and premises of such retailers are fixed. They also normally have fixed line of business and have relatively stronger customer loyalty.
(a) Street stallholder – They select the location for their stall very carefully and mostly chooses a locality that is frequently visited by their potential customers. Once a locality is selected it is more or less permanent. They handle goods on a very small scale. Some examples are pen, handkerchief, and fruits etc. stalls.
(b) Second hand goods dealers – These dealers usually sell second hand books, furniture’s, radio, TV etc. They also buy these items from door to door.
(c) Specialty shops – These dealers specialize in only one line of goods like footwear, leather goods, dresses etc. Customers get a wider choice with such dealers.
(d) General shops – They supply goods required for the day-to-day use. They mostly cater to all the needs of people living in the locality. They sell all kind of miscellaneous goods ranging from food items to stationary to cosmetics to medicines etc. They have regular customers and also may provide some credit to them.
Type # 3. Small-Scale Retailers:
They are shops with relatively small capital and small assortment of goods.
(a) Independent store – They are relatively easy to setup. They get supplies from wholesalers and offer liberal credit facility, delivery, service, catering of individual needs etc.
(b) Automatic vending – It is a form of retailing without a salesman. A variety of convenience goods can be bought from automatic vending machines. Goods like colas, chocolates, milk, newspaper, tea, coffee etc. are commonly dispensed through vending machine these days.
(c) Discount house – It handles a large variety of general goods and sells at reduced prices. It offers very few services to its customers except low price.
(d) Syndicate stores – They usually buy unbranded items and sell them under stores’ brand. Ebony, Super Store, Nanz etc. are some such stores.
Type # 4. Large Shops:
They carry a wide assortment of goods and generally involve a large amount of capital. They enjoy a strong customer loyalty and a huge customer base.
(i) Departmental store – Departmental store is a large retailing unit that handles a variety of shopping and specialty goods. There are various departments each specializing in one kind of goods.
It is characterized by:
(a) Wide variety of merchandise line
(b) Department organization
(c) Large size
(d) Horizontally integrated institution
It offers the following advantages to the customers:
(a) Offers shopping convenience
(b) Economies of scale
(c) Locational advantage
(d) Service to customers
(e) Economy in publicity
(f) Lower cost
(ii) Multiple store or chain store – Chain store is a network of a number of branches situated at different localities in the city or in different parts of the country. It is centrally owned and is essentially a group of similar retail stores.
It is characterized by:
(a) Nearer to customers
(b) Large scale retailing
(c) Limited variety of merchandise
(d) Horizontal integration
(e) Specialization
(f) Standardization and uniformity
(g) Centralized buying and decentralized selling
(iii) Mail order retailing – They do not have an elaborate shop floor. Instead they deliver goods on order received through mail.
(iv) Hire purchase and installment – Hire purchase trading is a system by which the seller agrees to sell articles on condition that payment will be made in a fixed number of installments
(v) Cooperative stores – Such a system is generally followed to combat competition. The joint purchase and warehousing by members of the cooperative gives them an added advantage. Also it gives them the advantage of specialized knowledge.
(vi) Supermarkets – Supermarket is a large retailing business unit selling mainly food and grocery items on the basis of low marginal gain. It has a wide variety of assortment of goods. It lays emphasis on self-service.
(vii) Hypermarket – Hypermarket is a recent innovation. It combines the features of a supermarket and a general store. It is a very large store.
(viii) One price store – All items in this store are at the same price.
(ix) Franchising – Franchising is exclusive distribution policies. It is privileged distribution.
Types of Retailers – Itinerant and Small-Scale Retailers
(A) Itinerant Retailers
The term itinerant means travelling or wandering. Itinerants have no fixed place of business. They move from place to place carrying goods on their heads or on the back of animals. They deal mainly in low-priced articles of daily use.
They sell goods in small lots to consumers in residential area. This type of retail trade requires a very small investment of capital. Itinerant traders are found in all cities, towns as well as villages.
The most common types of such traders are the following:
(i) Hawkers and Peddlers:
Hawkers and peddlers usually carry goods themselves either in baskets or in shoulder bags, or on flat trays hanging from strings. Many of them use push carts on wheels, or bicycles or beasts of burden.
They move about in residential areas and call out the names of articles which they are selling. Hawkers can be seen selling their wares in local trains and buses, in front of railway stations, at bus terminals and on busy roads.
Hawkers and peddlers generally deal in ordinary, non-standard articles. They may be vegetables, fruits, ice-cream, lozenges, utensils, toys, bangles, pen, paper, knives, etc. The main advantage derived by customers from this type of retail traders is convenience in buying products.
Housewives in particular, find it very convenient to buy things at their doorsteps. But normally hawkers do not carry different varieties of the same product. Thus, customers have limited choice.
(ii) Market Traders:
Retailers who sell their articles at different places on fixed market dates are called market traders. Weekly markets or ‘hats’ are held customarily in many villages and towns. Market traders also include those retailers who set up stalls at ‘melas’ or fairs and exhibitions which are organised from time to time or on special occasions like Diwali, Christmas etc.
In weekly markets, these traders sell all kind of goods like food grains, vegetables, utensils, toys, cloths, garments, etc. In ‘melas’ or fairs some traders also sell ladies bags, shoes, stationery, toilet articles, etc. Their customers include people from nearby places.
(iii) Street Traders:
Generally, this type of retailers spread their articles on pavements at busy street corners, or near railway stations or bus terminals. Many people find it convenient to buy consumer goods of daily use on their way to work or while returning home.
They stop for a while to make purchases from the pavement traders. These retailers generally deal in low-priced products of common use including stationery, readymade garments, magazines and newspapers, biscuits, confectionery etc.
(iv) Cheap Jacks:
This type of retailers set up their place of business temporarily in a business locality, and keeps on shifting the location from one locality to another, depending upon the potentiality of sale. But change of place is not as frequent as in the case of hawkers, pedlars or market traders. Like street traders, cheap jacks also deal in consumer items and help consumers by making goods available where needed.
(B) Small-Scale Retailers:
The small-scale retail shops are the most common form of selling organisation in retail trade. These shops are opened on either side of the busy streets on a permanent basis. They have their own fixed premises.
These retail shops are usually decorated in a very tasteful manner. By a good window-dressing, they try to attract customers. They try to reach the consumers as near as possible. These shops do not require much capital or very high degree of organising ability.
(i) General Stores:
These are retail stores which deal in different kinds of consumer goods of daily use. The range of articles may include grocery items, stationery, packaged tea, edible oil, soap, toothpaste, hair oil, pen, pencils, confectionery, soft drinks, bread, butter etc. Some of these stores sell a variety of stationery and hosiery goods, toiletries, handkerchiefs, towels, undergarments, etc. Various kinds of standard goods of popular brands are available in a general store.
Thus, customers can purchase most of their requirements at one place and thereby save time and efforts of going to different shops. Sometimes, the stores also offer special facilities to regular customers, like free home delivery, monthly credit, etc. However, only a limited variety of particular goods are available in these stores.
(ii) Single-Line Stores:
This type of retail shops generally deal in a particular line of products, such as readymade garments, books, medicines, watches, shoes, leather goods, etc. Hence, these shops deal in goods of different qualities, size, design, etc., in the same product line to suit the requirements of customers. These shops are usually located in markets or near busy street-crossings of cities and towns.
(iii) Specialty Shops:
Retail shops which specialize in a single type of product instead of dealing in a line of products are known as speciality shops. Shops dealing in children’s books, or ladies garments, instead of all types of books, or garments for all, are typical examples of speciality shops. These shops are located mostly in central places.
(iv) Street Shops:
These are very small retail shops. The stalls are set up by fixing shelves on a wall, or placing a table, or making a platform or stand to display the goods. Low-priced articles such as hosiery, ball-point pens, cosmetics, magazines and story books, and the like are generally sold in these shops. They are usually found to be located at street crossings or on main roads.
(v) Second Shops:
These shops sell second hand goods of different kinds like furniture, books, clothes, and other household articles such as wall clock, table lamps, etc. People who cannot afford to buy new things, generally look for second hand goods. Rare objects of historical value or rare old books are also sold in the seconds shops. Customers looking for such items often pay very high prices to procure them.
Types of Retailers – Itinerant and Fixed shop Retailers (With Characteristics)
The retail trade may be classified into two main categories:
1. Itinerant retailers
2. Fixed shop retailers.
Type # 1. Itinerant Retailers:
Itinerant retailers are traders who keep on moving from place to place to sell their goods. They do not have a fixed place of business to operate from.
Characteristics of Itinerant Retailers:
i. They operate with a very small amount of capital.
ii. They normally deal in consumer products of daily use such as toiletry products, fruits and vegetables, and so on.
iii. They provide greater customer service by making the products available at the very doorstep of the customers.
iv. They carry limited stock as they do not have fixed premises.
v. They mostly sell goods on cash basis.
vi. They generally sell goods at prices lower than charged by fixed shop retail traders because of minimum establishment expenses.
i. Peddlers and Hawkers:
a. They are small producers or petty traders who carry the products on a bicycle, a hand cart, a cycle-rickshaw or on their heads, and move from place to place to sell their merchandise at the doorstep of the customers.
b. They generally deal in non-standardised and low-value products such as toys, vegetables and fruits, fabrics, carpets, snacks and ice creams, etc.
c. They are also found in streets of residential areas, places of exhibitions or meals, and outside schools, during a lunch break.
Advantage – Provision of convenient service at the doorstep of the customers.
Disadvantage – They deal in products which are no reliable in terms of quality and price.
Market traders are the small retailers who open their shops at different places on fixed days or dates, such as every Saturday or alternate Saturdays, and so on.
a. These traders may be dealing in one particular line of merchandise, say fabrics or ready- made garments, toys, or crockery, or alternatively, they may be general merchants.
b. They are mainly catering to lower-income group of customers and deal in low-priced consumers items of daily use.
iii. Street Traders (Pavement Vendors):
Street traders are the small retailers who are commonly found at places where huge floating population gathers.
For example, near railway stations and bus stands, etc.
a. They sell consumer items of common use, such as stationery items, eatables, readymade garments, newspapers and magazines.
b. They are different from market traders as they do not change their place of business so frequently.
Cheap jacks are petty retailers who have independent shops of a temporary nature in a business locality.
a. They keep on changing their business from one locality to another, depending upon the potential of the area.
b. They deal in consumer items as well as services such as repair of watches, shoes, buckets, etc.
Type # 2. Fixed Shop Retailers:
This is the most common type of retailing in the market place. Under this, the retail trader operates their business from permanently established shops. They do not move from place to place to serve their customers.
Characteristics of Fixed Shop Retailers:
i. They have greater resources and operate at a relatively large scale as compared to itinerant traders. However, there are different size groups of fixed shop retailers, varying from very small to very large.
ii. They deal in different products, including consumer durables as well as non-durables.
iii. This category of retailers has greater credibility in the minds of customers as they provide greater services to the customers such as home delivery, repairs, credit facilities, availability of spares, etc.
Types of Fixed Shop Retailers:
The fixed-shop retailers can be classified into two distinct types on the basis of the size of their operations.
These are:
i. Fixed shop small retailers
ii. Fixed shop retailers large retailers.
The different types of retailers falling under the above two broad heads are described below:
i. Fixed Shop Small Retailers:
General stores are most commonly found in a local market and residential areas and deal in different types of goods.
(a) These shops carry stock of a variety of products needed to satisfy the day-to-day needs of the consumers.
(b) Such stores remain open for long hours at convenient timings and often provide credit facilities to some of their regular customers.
Advantage- Providing convenience to the customers in buying products of daily use such as grocery items, soft drinks, toiletry products, stationery and confectionery.
These shops specialise in sale of a specific product under one product line.
For example, garment store dealing in men’s wear only, etc. These are some of the commonly found stores of this type in the market place.
(a) The speciality shops are generally located in a central place where a large number of customers can be attracted.
(b) They provide a wide choice to the customers in the selection of goods.
These small vendors are commonly found at street crossings or other places where flow of traffic is heavy.
(a) They attract floating customers and deal in goods of cheap variety like hosiery products, toys, cigarettes, soft drinks, etc.
(b) They get their supplies from local suppliers as well as wholesalers.
Advantage – Providing convenient service to the customers in buying some of the items of their needs.
These shops deal in second hand or used goods, like books, clothes, automobiles, furniture and other household goods.
(a) The goods are sold at lower prices.
(b) Such shops may also stock rare objects of historical value and antique items which are sold at heavy prices to people who have special interest in such antique goods.
(c) The shops may either be in the form of a stall having very little structure —a table or a temporary platform (in case of books) or may have reasonably good infrastructure (in the case of old furniture or vehicles).
Single line stores are those shops which deal in a single product line such as readymade garments, watches, textiles, shoes, computers, books, etc.
(a) These shops keep the stock of goods of different sizes, qualities, designs etc.
(b) These stores are organised as independent retail outlets in the form of sole traders or partnership firms.
2. Fixed Shop Large Retailers:
i. Departmental Stores:
A departmental store is a large establishment, which sells a wide variety of products and aim to satisfy all needs of the customers under one roof.
(a) It has a number of departments, each one dealing in a particular variety of goods. For example, separate departments for medicines, furniture, groceries, electronics etc.
(b) They satisfy diverse market segments with a wide variety of goods and services.
Types of Retailers – Manufacturers and Primary Producers, Wholesalers, Agents and Other Retailers
A retailer can depend on one supplier or a combination of suppliers. There are a number of alternatives that retailers might consider as a suitable source of supply. Retailers are supposed to select an effective source of merchandise from various existing alternatives.
Some of the options availed of by Indian retailers are discussed in the following sections:
1. Manufacturers and Primary Producers:
This category sells cars, two-wheelers, gasoline and other related products, and consumer durables from company-owned stores (recent phenomenon in India). Large retailers regularly deal directly with a product manufacturer. Manufacturers will normally have a sales office or a showroom, either attached to a production unit or in a location that is convenient for retail customers.
For instance, hosiery and woollen manufacturers from Ludhiana manage sales offices in Ludhiana and Mew Delhi, to cater to the needs of the big retailers and wholesalers directly. At the same time in semi-urban towns most of the small- scale (shoes, cosmetics product, confectionery items) manufacturers approach the retailers to provide the required merchandise at their shop directly, such as bread, local made soaps, and handicraft items. In rural India, the local economy is sustained by direct selling of the produce by the manufacturers or retailers in the local or periodic markets.
2. Wholesalers:
Wholesalers accept small orders from retailers. They actually take ownership of the goods between the producers and the retailer. They supply the retailers from their own stocks rather than from the producer’s stock, acting as agents. They usually make attractive profits from the merchandise they sell to the retailers. There are advantages and disadvantages associated with the use of intermediaries such as wholesalers.
In the Indian context, smaller retailers prefer to deal with the wholesalers dealing in a variety of products as they can purchase most of their merchandise from one shop. Small retailers are also not comfortable in dealing with company people of each product category or brands directly which they consider as a hindrance in their selling activity.
3. Agents:
Agents provide purchasing and delivering facility to the retailers against negotiated commissions on the percentage of the total value of goods purchased. In some cases, product manufacturers also have agents who collect orders from the market. This is a very common source to retailers in the semi-urban areas or in and around major trading centres.
Retailers depend on agents for weekly or fortnightly purchases from the major trading centres. For instance, the entire western Uttar Pradesh retailers buy local-made durables, ready-to-wear garments, decoration material, appliances, utensils, and stationery material from the Delhi markets such as Karol Bagh, Nai Sarak, Gufaar Market, and Chandni Chowk. At the same time, retailers selling ethnic women’s wear such as sarees and salwar suits depend on Surat and South Indian markets.
This is advantageous to retailers on multiple accounts as they do not have to leave their shops to merchandise from different places and arrange for their transport. Agents are responsible for the safe transport of goods. In rural areas and smaller towns, retailers even bank on the informal set-up to acquire merchandise. Here they ask co-retailers to buy for them the required list of items and pay only transportation costs.
No commission is paid for buying the goods. It is based on the mutual understanding among retailers working in proximity. In some cases, product manufacturers also have agents who collect orders from the market. Orders thus collected by multiple number of agents from various markets help manufacturers to effect economics of scale.
They usually work on commission basis and may represent more than one producers. For instance, western UP rice manufacturers largely depend on the network of these agents to secure orders from adjoining cities and states. It saves the permanent cost of the sales force as they work on commission basis during the season.
Other Retailers:
This category comprises retailers who operate on a larger scale. They cater to the needs of the immediate consumers along with the small retailers from contiguous areas, running their stores in interior localities of urban areas or in the rural areas. These retailers locate their shops in the main or central markets of the urban centres.
Government and Semi-Government Source:
Public distribution system acquires its entire stock of goods from the central government of India through various official state bodies such as the Food Corporation of India, Mother Dairy, and Safal. Several other state-specific cooperative societies sell their milk-based products, vegetables, fruits, and packaged processed food items through their own retail outlets and other grocery or supermarket stores.
Criteria for the Selection of Suppliers:
Retailers regularly confront with the issue of locating a new supplier for the existing merchandise or identifying a new supplier for fresh merchandise introduced. A supplier’s initial assessment will be made according to his ability to satisfy retailers in four main areas together with the kind of indicators that would determine the likelihood of supplier meeting criteria. The existing suppliers may be retained because they have given particularly good service in the past, or because there is no identifiable competition.
The main areas of supplier assessment criteria are:
(1) Product Range and Quality:
Retailers will assess the product range available with the supplier and the quality standard maintained while manufacturing or delivering. Retailers will consider the following parameters to judge the standing of a particular supplier – technical capability, design expertise, quality benchmarks, samples, and nil-defect delivery.
Retailers will always have relative assessment of the different suppliers while deciding the purchase. At the same time, retailers as per the norms prevailing in their industry look forward to credit terms, payment options, penalties, and price points. Retailers will also evaluate the offer from the perspective of a consumer in terms of value for money and consistent price policy.
In order to avoid sales loss, a retailer is generally interested in the assessment of a supplier’s capacity to deliver ordered goods in time and as per specification. Retailers also evaluate the performance of the suppliers or gather information on these parameters to ascertain delivery capacity, such as minimum order quantities, lead times, workforce stability and response, and ability to collaborate on consumer-led response initiative.
This encompasses all those facilities and support extended by the supplier to add value to the goods or services, or assistance in the sale of the goods. It includes pre- and post-sales services by the supplier. Retailers will be interested to assess the working of the supplier on parameters such as innovation, speed of new product or variant introduction, sampling service, marketing support (advertising and promotion), and handling queries and complaints.
A list of suppliers should be available and kept fully up to date, showing lines supplied by each. This will aid the process of review of suppliers and lines, so that suppliers performing well may be rewarded with larger orders.