The most efficient classification of retailers can be on the basis of their place of business. The retailer deals in small quantities and his business is usually local in character.
Secondly, retail trade always shows tendency towards variety as it has to satisfy innumerable wants of consumers. A specialised retail shop is for approaching specific target market.
Thirdly, a retailer, by operating near about the residential areas of consumer, sells his wares directly to consumers. Manufactured goods are worthless until they pass acid-test of retail distribution. The retailer alone can offer safe and reliable goods to consumers.
Some of the types of retailers are:-
A. Itinerant Retailers – 1. Hawkers and Peddlers 2. Market Traders 3. Cheap Jacks 4. Street Traders
B. Fixed Shop Retailers – 1. Street Stall Holders 2. Second-Hand Goods Dealers 3. Speciality Shops 4. General Shops 5. One-Piece Shops
C. Small-Sized Retail Shops – 1. Independent Stores 2. Vending Machines 3. Discount Houses 4. Syndicate Stores
D. Large-Scale Retailing Institutions – 1. Departmental Stores 2. Chain Stores 3. Mail Order Retailing 4. Deferred Payment System 5. Cooperative Retailing 6. Supermarkets.
Types of Retailers: Itinerant Retailers, Fixed Shop Retailers, Small-Sized Retail Shops, Large-Scale Retailing Institutions
Types of Retailers – 5 Major Types: General Retailers, Shopping Malls, Organized Retail Shops, Company Showrooms and Franchisee Retailers
A manufacturer has various types of retailers which can be used by him successfully.
We can list these retailers as follows:
(a) General Retailers (Keeping Various Products of Various Manufacturers):
These are entrepreneurs looking for self-employment that will keep them busy and earn them decent livelihood. These retailers are available everywhere and are small in size (normally 200 – 600 sq. ft.), keeping all sorts of products that are needed by consumers in the area of establishment.
They do not have a high capital and mostly hold enough inventories to last 2-8 days. If they are sound financially they are serviced by distributors of various companies once a week or as per the company norm and are not allowed to go out of stock for any product that has fair amount of weekly sale.
If these retailers are not financially sound then distributors do not service them and are serviced by wholesalers (these retailers make daily trips to the wholesale market to get their requirements).
(b) Shopping Malls:
This is fairly new concept in India where a builder constructs a large shopping complex and rents out/sells shops outright to retailers. Many times these shopping malls have restaurants, cinema halls etc., also with large parking area. Consumers can spend their time leisurely, shop and entertain in one place.
Shopping malls have company showrooms/franchisee outlets also. Shopping malls are successful only in some areas of cities (mostly metros) and many of them have failed miserably.
(c) Organized Retail Shops (Mega-Marts, Supermarkets, And Hyper Markets):
This is another recent concept in India. Various private companies like Subhiksha, Food land, More, Spencer’s, Shoppers Stop, Big Bazaar, Central have come with their chain stores all over India with varying degree of success. Organized retailing first came to India when the Central Government came out with various concessions in 1977 for cooperative societies to start such stores first in Delhi (Sahakari Bazar in Connaught Place run by Central
Government Employees Cooperative Society) and then in Mumbai with Sahakari Bhandar and Apna Bazar. These stores in Mumbai with as many as 30 branches of Apna Bazar and 12 branches of Sahakari Bhandar were a great success as they had many concessions from the State Government.
The privately operated organized retail chains like Garware’s, KD’s in 1980s had limited success and the new generation retail chains like Subhiksha, and Spencer’s have failed and others like Reliance, Big Bazaar, More are somehow pulling on without much success.
According to the USA definitions, a mega-mart has a shopping area of 10000 sq. ft. and more, supermarkets have 40000 sq. ft. shopping area and hypermarkets have 1,00,000sq. ft. shopping area and all products are available at much cheaper rates than other shops.
But in India, these kind of shopping areas are unheard of and these organized retailers are unable to provide any kind of discounts to consumers and so are not attractive to consumers at all.
(d) Company Showroom:
Many organizations invest in retail spaces in prime locations and set up company owned showrooms. Customers are attracted to these showrooms because of large artistic displays of products and authentic product quality.
Such showrooms are a drain on the company capital and return on investment in many products is low unless it is considered as advertising expense.
(e) Franchisee Retailers:
Franchisee retailers is an alternative to the company owned showrooms.
Types of Retailers – With Advantages and Disadvantages
Type # 1. Mobile and Stationary Hawkers:
These are small retailers who sell products such as vegetables, fruits etc. on push cart or temporary sheds on the road side.
i. Bring products very close to the customers
ii. Supply fresh products everyday
i. Prices change as per market demand and supply
ii. Bargaining is prevalent
Type # 2. Weekly Market Stalls:
These are temporary stalls put up every week in different localities. Also known as weekly bazaar.
i. Variety of vendors available at one central place
ii. Customers get a wide variety and a wide assortment
iii. Reasonable pricing due to competition
i. Available only once a week
ii. Crowded and parking problems are common
Type # 3. Single Price Shops:
These are retailers who have shops that sell all the products under one blanket price.
i. No bargaining hence saves time.
ii. Value for money.
iii. Low budget customers find these stores very convenient.
i. Less variety and low assortment.
ii. Quality may not be up to the standards for some products.
Type # 4. General Stores:
These are small permanent shops located in localities and towns. The products that they sell range from over the counter medicines to groceries and home cleaning products. They are available on nearly every street of a particular locality.
i. Very convenient for customers.
ii. Sell products at marked prices, therefore no bargaining.
iii. Provide credit to local customers.
i. Store may run out of stock.
ii. Low variety and assortment.
Type # 5. Super Market:
These are stores like general stores, but are more organised and customer focused. The physical appearance is also appealing to the customers. The customers can enter the store and do their transactions. In general stores the customer is usually kept out of the shop at the counter.
i. Very close to customers.
ii. Provides a good shopping experience.
iii. More organised and products are rarely out of stock.
i. Products maybe slightly higher priced than general stores.
ii. These stores are not many in number, maybe one or two in a locality.
iii. Cost of running the store maybe high.
Type # 6. Hyper Market:
These are large stores that have multiple floors with different product categories. Usually a hypermarket caters to every need of the customer, right from a needle to a micro-light plane. Most hypermarkets do not go to such extremes of product offerings, but they do offer a very large variety of products.
A store 5 storeys high, each storey is dedicated to a particular category of products. First floor-groceries, second floor – gift items, third floor – kitchen items, fourth floor – garments, fifth floor-electronic items.
i. These stores offer a large variety and a wide assortment of products.
ii. Customers are happy as they can purchase all their needs at a single place.
iii. Organised billing and payment options.
iv. Good store layout and lighting.
i. Operating costs are high.
ii. Stores are away from most residents.
iii. Parking and air conditioning costs are high.
Type # 7. Second Hand Stores:
These stores are few in number. They offer used products and low prices. Usually the used products are in good condition and economically low customers can be benefitted with such stores.
i. Low priced products.
ii. Is beneficial to a particular category of customers who are economically weak.
i. Product variety and assortment is not fixed, it will vary from time to time.
ii. Many customers may not be attracted to such stores.
iii. Physical setup of the store may also not be appealing to customers.
Type # 8. Drug Stores:
These stores are put under a separate category because they deal only with medicines and medical supplies.
i. Specialist in medicines and medical supplies.
ii. Cater to the medical needs of a particular locality.
i. Offer only medically related products.
ii. Require a doctor’s prescription for most of the products.
Type # 9. Online Retailers:
This type of retail format is very common these days. There are numerous online retailers across industry and product categories. They offer their products and services to customers via the internet.
i. Very convenient for customers.
ii. Reasonable Pricing.
iii. Reduced cost of operations.
iv. Customers do not have to travel to the store, hence reduces time and effort in travelling.
i. Payment modes maybe a concern as internet security can be breached.
ii. Products received may not be as seen on the website.
iii. Severe competition.
Type # 10. Chain Store Retailers:
When two or more outlets are under common ownership, it is called a retail chain. A number of retail stores are under the same ownership and dealing in the same merchandise, branches are opened in different parts of city or even in different parts of country, It is called chain retailing, e.g. Reliance Fresh, More, Big Market etc.
Chain stores have similar setup, like store appearance, merchandise stocking, type of products etc.
i. It is not necessary to advertise in each branch. So, it is cost- effective.
ii. If any branch has a shortage of stock, it can draw from nearest branch. So, it is time-effective.
i. Chain stores deal in the same type of merchandize. As a result they may not attract many customers.
ii. Absence of credit sales in chain stores may sometimes be a barrier to its business.
Type # 11. Specialty Stores:
These retail stores offer a particular type of product line to its customers. They are specialists in that category and therefore they are known as specialty stores. E.g. stores that specialize in suiting and shirting like ‘Raymond Showrooms’ etc.
i. Customers get good quality specialized products and services.
ii. Store focuses only on a particular category and can provide better customer service.
iii. As the store provides specialized services it can price the products slightly higher or sometimes even at a premium.
i. High cost of maintenance.
ii. Majority of the customers may find the pricing high.
iii. New stores find it difficult to survive under this format.
Types of Retailers – 2 Important Types: Small Retailer and Large Retailers
In a small retail business, there is little job specialization. The owner is generally responsible for the overall management and merchandising tasks. He buys, sells, plans sales promotions and secures personnel.
The majority of small retail operations are individual proprietorships. The general store and the specialty store are the typical types of small retail operations. In addition to conventional small retail operations, another type has provided the small business people the opportunity to enter the retail market. It is the stall operation in flea markets.
i. General Store:
The age of specialization, the success of chain organization, the automobile and the movement to urban areas are some of the factors which have led to the decline of the general store.
In rural areas the general store still exists. Management is usually haphazard. The aids of modern retailers are rarely used.
ii. Specialty Store:
The limited-line store or specialty store is an establishment carrying one line of merchandise. Stores specializing in jewellery, shoes, and groceries are examples of specialty store. Factors which have led to the success of this type of operation are:
a. Personalized service
b. Wide assortment of merchandise, and
c. Knowledgeable buying.
The chain organization is the major competitor of the small specialty store. The chain is actually a retail organization, with many units carrying specialty merchandise. The chain’s wider advertising to the consumer and its ability to offer lower prices because of greater buying power pose a great threat to the small retailer.
iii. Flea Market Stall:
Unlike the general store and specialty store, another avenue now available to persons is wishing to pursue business as a retailer.
Flea markets have cropped up, for a very small rental fee people have been able to set up shops to sell their wares. Goods offered at these markets range from inexpensive tools to expensive fashion merchandise. The individual is provided with a space in which he sets up tables, racks and counters, to carry on business. Selling is generally conducted on a cash and carry basis. The retail prices are much lower than those at the conventional stores because the overhead is very low.
Now a days retailing is dominated by the large organization. Department store, chain organizations, supermarkets and mail-order houses are the majority of retail sales.
i. Department Store:
A department store carries a wide variety of product lines — clothing, household goods, toys, accessories, etc., and each line are operated as a separate department. It has huge sales volume and employs a large number of people, specializing in various tasks.
Departmental stores originated in France. Two well-known stores Bon Marche and Louvre were established in Paris in the third quarter of the last century. The leading American retailers of the 1850s and 1860s who used to go to Paris on their buying trips were impressed with these stores and transplanted the idea into USA. By the end of 1870s departmental stores were set up all over USA. Today departmental stores in USA constitute the largest form of retailing.
ii. The Chain Store:
The chain store may be defined as a centrally owned and managed organization with two or similar units, each carrying the same classification of merchandise. The underlying idea of chain store is to get as near the customers as possible and cater to a large number of them. In a sense, chain stores are a sort of geographical extension of the departmental store system.
Merchandise categories carried by chain stores include medicine, hardware, shoes, groceries, etc. Chain stores are widely prevalent in USA. The chain store operates from central headquarters. Large chains have regional offices in addition to central headquarters. The units of the chain are generally charged with the responsibility of selling merchandise whereas the central team is the decision making body of the organization. Store managers usually do not formulate policy. Instead they carry out the policies of the central staff.
A chain store sells standard goods in all its units. But as Stanton has put it, standardization means inflexibility. Often a chain cannot adjust reality to a local market condition.
iii. Multiple Shop:
It is a retail outlet spread throughout the country and organized on the same principles as chain stores, i.e., single ownership and centralized management and location as near to the consumers as possible. It has, however, a fundamental difference from the chain store that it deals only in a particular group of products.
Because of their specialization in a limited group of products, multiple shops are better able to compete with independent retailers. In India the term multiple shop is used to imply the chain of retail shops. Some manufacturers have opened up shops for selling a particular group of their products in different parts of the country.
The main object is to eliminate the middleman and approach their customers direct. The Bata Shoe Company is the pioneer in the field. It runs retail shops throughout the length and breadth of the country. The Delhi Cloth Mills has opened similar outlets all over the country.
The characteristics of these multiple shops are that they are owned by the manufacturers and their management is centralized and under the direct control of the marketing department of the manufacturing organization. The main object of opening multiple shops is to eliminate middleman.
The supermarket is a large departmentalized, self-service retail organization selling primarily food and also other merchandise. It is large, low- cost, low-margin, high volume, self-service stores that carry a wide variety of food and household products.
The first supermarkets introduced the concept of self-service, customer turnstiles and check-out counters. Supermarkets are independently owned and operated individually.
Emphasis on lower prices, parking facilities for customers and the luxury of one-stop food shopping are some of the more important factors that lead to their success.
v. Convenience Store:
Convenience stores are small stores that carry a limited line of high-turnover convenience goods. These stores are located near residential areas and remain open for long hours, seven days a week. Convenience stores charge high prices to make up for higher operating costs and lower sales volume.
But they satisfy an important consumer need. Consumers use convenience stores for ‘Full in’ purchases at off hours or when time is short and they are willing to pay for the convenience. In USA there are 80,000 convenience stores.
The major convenience chains are experimenting with micromarketing— tailoring each store’s merchandise to the specific needs of its surrounding neighbourhood.
vi. Superstore, Combination Store and Hypermarket:
Superstores, combination stores, and hyper markets are all larger than conventional supermarkets. Superstores are almost twice the size of regular supermarkets and carry a large assortment of routinely purchased food and non-food items. Because of their wider assortment, superstore prices are a little higher than those of conventional supermarkets.
vii. Combination Stores:
Combination stores are combined food and drugstores. They are much bigger than superstores.
Are even bigger than combination stores and they combine supermarket, discount and warehouse retailing. As the name suggests, it is an upgraded supermarket. The supermarket is itself a giant store. So the hypermarket is just titanic. A typical hypermarket may have 50 check-out counters.
They carry more than just routinely purchased goods, like furniture, appliance, clothing and many other things. The hypermarket operates like a warehouse. The store gives discount to customers who carry their own heavy appliances and furniture out of the store. Hypermarkets have grown quickly in Europe.
They are not very popular in USA and practically unknown in India. The major advantage of hypermarket —their gigantic size can become a major drawback for some consumers. Old shoppers balk at walking. In spite of their size and volume of sales, most hypermarkets have only limited product variety.
ix. Service Business:
For many businesses, the ‘product line’ is really a service. Service retailers include hotels, and motels, banks, airbuses, hospitals, colleges, repair services, beauty salons, etc. Service retailers are growing faster everywhere than retailers.
x. Discount Store:
One recent development in the field of large retailing is the discount store also called discount house. It originated in USA after World War- II when there was a large demand for many products that could not be had in war time. Discount stores were set up later in UK and other European countries.
A discount store sells standard merchandise at lower prices by accepting lower margins and selling higher volume. The use of occasional discounts or specials does not make a store a discount store. A true discount store regularly sells its merchandise at lower prices.
In recent years facing severe competition from departmental stores and supermarkets, many discount retailers have ‘traded up’. They have improved decor, added new lines and services and opened suburban branches which has led to higher costs and prices. As some department stores have cut their prices to compete with discount stores, the distinction between many discount houses and department stores has become blurred.
Types of Retailers – Departmental Stores, Chain Stores, Super Market, Hyper Market, Mai; Order Shops, Consumer Cooperative Stores, Tele Shopping and a Few Others
Type # 1. Departmental Stores:
A departmental store is a large retail establishment having in the same building a number of departments / counters, each department-dealing in one particular kind of goods and is centrally controlled. Departmental store is of French origin.
(i) Big in size
(ii) Huge Investment
(iii) Specialized departments each dealing with particular type of goods, say, one sells food items, another sells ready – made garments, third deals in electronic items
(iv) Facilities e.g., restaurant, restroom, telephones, ATMs
(v) Urban in character
(vi) Centralized Purchases i.e., through Central Office
(vii) Located at Central Place in city
(viii) Centralized Management i.e., Through Single Management.
Type # 2. Chain Stores / Multiple Shops:
A multiple shop consists of a number of similar shops owned by a single business firm (James Stephenson). Multiple shops made their first appearance in U.K.
(1) Chain store has branches at different places all under the same management
(2) Centralized Buying and decentralized selling are main features
(3) Cash sales (and no credit sales)
(4) Uniform Display
(5) Specialization i.e., it specializes in selling one or a couple of lines of goods
(6) They sell same products at same prices in different localities; Indian Example are Bata, Liberty shoes
Type # 3. Super Market:
(i) Super market is defined as a large size retail store operated on a self-service basis, selling groceries and food items, bakery and dairy products.
(ii) To-day, traditional supermarket has further expanded into non-food items such as clothing, small appliances, cosmetics, perfumes etc.
(iii) First established in 1930s in USA as no-frills retail stores offering low prices, later developed into major food marketing channel in 1950s.
(iv) Super Markets set up in 1960s in Asia, Middle East and Latin America.
(i) Self-service basis – Consumers themselves pick up goods in basket and carry them to counter for payment.
(ii) Displays – Goods are displayed in open racks and shelves. Price and quantity tags enable consumers have information without enquiring from salesmen.
(iii) Goods of daily Needs – for example food items, groceries, cosmetics, fruits and vegetables, stationery etc.
(iv) Low Profit Margins – Large-scale buying enables selling at low profit margins.
Co-operative Stores – Certain super markets in India have been organized in the form of co-operative societies. Such stores are managed by elected members of co-operative societies. Capital is also provided by members of society who also get dividends according to their shareholdings. Members of the society also get goods at a concessional rate.
Type # 4. Hyper Market:
A hyper market may be defined as a superstore combining a super market and a departmental store. Its origin lies in USA.
The outcome is an expansive air-conditioned retail store dealing in a wide range of products under one roof including:
i. Fruits and vegetables
ii. Full grocery lines
iii. General Merchandise
iv. Home Furnishings, kitchenware, utensils, crockery, cutlery
v. Sports Goods
vi. High value Products and fashion items, and
vii. Much more.
Hyper market also provides facilities like:
i. Trial room
ii. Elevators and lifts
iii. Security and baggage counter
v. Car parking
vi. Snack bars etc.
So that one can shop with fun and comfort. These stores have space of about 80,000 to 2,20,000 sq. ft. They are usually situated in big cities and towns near commercial areas and residential complexes. Hypermarkets attract a few thousand customers on any regular day and lot more when they are offered something extra on each day. Hyper markets especially target higher and upper middle class also.
Indian examples are:
i. Biyanis Big Bazar, oldest hyper market
ii. Tata – run Star Bazaar
iii. Aditya Birla’s More
iv. Goenka’s Spencers
v. Bharati’s Easy day and D Mart.
In India, hyper market have come to be organized in the form of “hyper market chains”. For instance, Biyanis’ Big Bazar is being run as a 164 strong hyper market chain.
Type # 5. Mail Order Houses / Shops:
(i) Mail Order Houses are those retail firms which send goods to customer by mail / post.
(ii) No display of goods in showrooms or display windows.
(iii) No face to face contact Retailing is done by post.
(iv) No salesmen.
(v) Goods sent by mail, truck, train or other means of transport
(i) Goods not subject to pilferage
(ii) Goods not perishable such as fruits and vegetables
(iii) Goods not fragile e.g. glassware
(iv) Branded and durable goods
(v) Inexpensive goods
In view above factors, goods such as jewelry, books, cosmetics, dry and canned food items, electronic goods, apparels are becoming more popular for sale through mail-order houses.
Type # 6. Consumer Co-Operative Stores:
It is retail establishment organized by consumers themselves in the form of co-operative societies under that Act. Object is to eliminate middlemen and provide goods of daily needs at concessional, less than market rates.
(i) Voluntary association of consumers under Co-operative Societies Act
(ii) Deals with items of daily consumption
(iii) Sales on cash basis
Type # 7. Tele Marketing/Tele Shopping:
It refers to buying and selling through telephone. Telemarketing involves the use of telephone and call centers to attract prospects, sell to existing customers and provide service by taking orders and answering questions. The use of telephone to attract prospects and to sell to existing customers has become more popular in recent years.
Telemarketing is of two types – Inbound and Outbound calls.
(a) Inbound marketing deals with order taking, customer service, attending to enquiries, complaints etc.
(b) Outbound marketing deals with making phone calls to prospects or existing customers for generating sales leads.
Certain big business houses contact prospective buyers on phone and persuade them to buy their products explaining features. Price and code number of products and telephone number of sellers are often displayed on TV screens and customer is supposed to dial and place orders. Delivery is made at desired place on receipt of payment. Examples are – Asian sky shop, Telebrands, etc.
Type # 8. Automatic Vending Machines:
i. A technique of selling goods.
ii. Provides round the clock facility to buy.
iii. Convenient locations e.g., Terminals, busy shopping centers.
iv. Insert a coin or token in machine and commodity comes out of machine e.g., Parag’s Milk Vending Machines.
v. A very popular retail system in foreign countries to sell milk, ice cream, coffee, tea.
vi. In India, it is yet to be popular. Parag milk Vending Machines are in use. Railways are considering to install them.
Type # 9. Franchise:
A Franchise is a continuing relationship in which franchisor provides licensed privilege to do business plus assistance in organizing, training, merchandising and management in return for consideration from franchisee (International Franchising Association).
Alternatively, a franchise refers to a system whereby owner of a product / service grants the franchisee exclusive right to distribute franchisors products in a specific geographical area on specified terms and conditions. Owner granting such rights is called Franchisor and one who gets such rights is called Franchisee.
Types of Retailers – Itinerant Retailers, Fixed Shop Retailers, Small-Sized Retail Shops, Large-Scale Retailing Institutions
1. Itinerant Retailers:
These traders are mainly dealers in agricultural products. They have no fixed business places and move from place to place as the season changes. Their prices are considered to be the cheapest.
i. Hawkers and peddlers – Sale by hawkers and peddlers is of very old origin. They generally handle cheap goods with low- unit value like pens, handkerchiefs, towels, toys, etc. There cannot be any guarantee about the quality of goods, as they are of inferior quality.
ii. Market traders – Market traders are those retailers who open their shops at different places on fixed days known as market days. The days may be fixed on weekly or monthly basis.
iii. Cheap jacks – The retailer known as a cheap jack has an independent shop in a business locality. The shop may not be permanent and he may shift his shop to some other locality the moment he finds that another locality is more profitable.
iv. Street traders – The very name indicates that this type of retailers carry on their business in the busy streets or on footpaths of busy town roads. They are very often found near railway stations, bus stands and similar places where there is a huge floating population.
i. The street stall holders – The street stall holders have their stalls in streets where they may find heavy traffic. They exercise much care in selecting the location and such a location may be permanent. They sell articles like pens, banians, etc.
ii. Second-hand goods dealers – These dealers deal in secondhand goods like books, furniture, clothes, etc. They purchase and sell such goods particularly to those customers who cannot buy new goods at higher prices. These dealers mainly get their supplies from public auctions.
iii. Specialty shops – In such shops, goods of a particular variety are sold. The dealers specialize and deal only in one line of goods. Shops exclusively meant for books, leather products, drugs and readymade garments are examples.
iv. General shops – These shops sell the entire line of products required for everyday use. These shops, depending upon the amount of capital invested, may assume a large size also.
v. One-price shops – These shops sell all variety of goods at one fixed price. Sometimes they may be seasonal shops also.
3. Small-Sized Retail Shops:
i. Independent stores – These are small, non-integrated retail establishments having a lesser degree of specialization in their management.
ii. Vending machines (Automatic selling) – Vending machines have become big business in recent years. A variety of products are sold through coin-operated machines.
iii. Discount houses – The discount houses grew as a result of the practice of manufacturers giving large discounts to retailers on certain types of goods. Jewellery, household appliances and articles and similar merchandise often carry high percentage of margin for the retailers.
iv. Syndicate stores – A syndicate store is in fact an extension of the chain and mail order house but relatively on a small- scale. One of the chief characteristics of syndicate stores is that while they offer a wide variety of merchandise to customers, they seldom sell known brands.
4. Large-Scale Retailing Institutions:
i. Departmental Stores:
A departmental store is defined as a large-scale retailing business which handles a wide variety of shopping and speciality goods and is organized into separate departments for the purpose of promotion, service and control.
ii. Chain Stores or Multiple Shops:
The name multiple shop indicates that under this organization similar shops are established in multiples by the same management. A chain store system consists of four or more stores which carry the same kind of merchandise and are centrally owned and managed and usually are supplied from one or more central warehouses.
iii. Mail Order Retailing:
This is also referred to as non-store impersonal retailing or shopping by post or selling by post. A mail order house is that type of retail institution which solicits patronage by means of catalogues sent through mail and containing detailed descriptions or merchandise for sale.
iv. Deferred Payment System:
Hire-purchase – Hire-purchase trading is a method by which the seller agrees to sell the article on the condition that the buyer shall pay the purchase price by a fixed number of installments. Under this method the article is not legally sold out but is only hired by the buyer.
Installment selling – It is basically the same as hire-purchase but with certain legal differences. Unlike the hire purchaser, the installment buyer gets legal as well as physical possession rights over the product. This system is also referred to as deferred payment system.
v. Cooperative Retailing:
Severe criticism against wholesalers and various kinds of middlemen gave way to this type of retailing, where the principles of cooperation were extended to the retailing store. There are two types – retailers’ cooperatives and consumers’ cooperatives
Supermarkets are also self-service stores. They concentrate on food and grocery items. They are located in places where consumers are given facilities like parking. No credit facilities are offered.
Types of Retailers – Top 2 Types: Itinerant Retailers and Fixed-Shop 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.
(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.
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:
(i) Departmental Stores;
(ii) Multiple shops;
(iii) Mail Order Business;
(iv) Hire—Purchase Shops;
(v) Consumers’ Co-operatives; and
(vi) One-Price Shops.
(i) Department Stores:
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.
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.
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.
(iv) 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.
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.
(vi) 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.