What is Retail Trade?


Retail Trade:

Retail Trade is the last link in the chain of distribution. The word “retailer” is an adaptation of “re-tailer”, a French word which means ‘to cut again.’

Thus, the term retailing involves cutting off small portions from large lumps of goods. In other words, retailers purchase goods in small lots and sell them to the customer.

Definition of Retail Trade:

  The term ‘retail’ means ‘the sale of commodities or goods in small quantities to ultimate consumers.’

The American Marketing Association defines retailing as “the activities involved in selling directly to the consumers and includes all forms of selling to ultimate consumers.”

Thus, a retailer stands between a wholesaler and the ultimate consumer of goods. Retailers deal with various goods.

They purchase goods from different wholesalers in small quantities so that they may satisfy the wants of the consumers.

They are close to the consumers and keep sufficient stocks of goods to satisfy the household wants.

Types or Forms of Retail Trade:

There are two types of Retail Trade:

A) Itinerant Retailers:

They are retailers who don’t operate from fixed business premises but move place to place for selling goods to the customers in a small lot.

They generally work a small capital investment and may not stick to a particular line of business throughout.

These traders are main dealers in seasonal goods such as fruits, vegetables, goods of common interest such as novels, magazines, newspapers, etc.

Such retailers include hawkers, pedlars, street traders, cheap-jack, and market traders.

(B) Fixed Shop Retailers:

Unlike itinerant retailers, fixed shop retailers operate their businesses from fixed shops.

The choice of such fixed premises depends to a large extent on the immediate vicinity of the customers, convenience points of rush, etc.

The fixed shop retailers also are divided into two sub-groups, according to the scale of operation:

(l) Small-scale fixed shop retailers

(2) Large-scale fixed shop retailers.

Functions of Retailers:

The retailers act as a link between the wholesalers and the final consumers. As an intermediary, they perform the following functions:

1) Buying: Buying from different sources is an important function of retailers. A retailer has to buy a variety of goods and stock them to meet the requirements of a large number of customers.

Hence, he must be cautious about the size, style, types, qualities, and prices of goods to be purchased.

2. Storing: A retailer has also to keep stock of goods for some time. He is to see that goods are stored in adequate quantities to meet consumer demands.

3. Selling: A retailer assembles and stores goods with the aim of selling them to the ultimate users. So, he has to employ efficient methods of selling for quick disposal of goods so as to increase his turnover.

4. Packing: Packing of goods sold is also one of the important functions of a retailer. A retailer packs the goods in small quantities according to their grades

5. Risk-bearing: While storing the goods a retailer has to bear the risk of fall in prices, theft, fire, etc. changes in fashions, tastes, and habits of consumers also have an adverse effect on his sales. He is to bear all such risks.

6. Market Information: The retailers are the persons who have direct contact with the consumers. So, they are in a better position to provide market information to the wholesalers or manufacturers.

7. Financing: The retailers make advance payments against their purchases from the wholesaler or producers. Similarly, they allow credit to consumers.

8. Advertising: Retailers advertise the products Of different manufacturers by displaying them in front of their shops which is known as window dressing.

Services of Retailers:

They are described below :

(A) Services to Wholesalers and Manufacturers:

1. Access to market: A retailer gives the wholesalers or manufacturers access to market their products.

2. Necessary Information: The retailers have full knowledge of fashions, customs, tastes, etc. of the consumers. They communicate such information to the wholesalers.

3. Relieving from retail work: The manufacturers and the wholesalers are relieved of the responsibility of distributing goods in small quantities to a large number of customers.

4. Saving in cost of distribution: The retailers save the wholesalers from difficulties to sell goods in small quantities. This saves the distribution expenses to a considerable extent.

5. Contact with the consumers: The wholesalers are not required to make direct contact with the consumers because of the services of the retailers.

6. Local Advertisement: It is due to the services of the retailers that the wholesalers need not make a local advertisement.

(B) Services to Consumers:

1. Availability of goods: The retailers keep regular stock of goods demanded by the consumers. Thus, consumers need not purchase goods in huge quantities.

2. Providing Information: The retailers provide the consumers the information about the arrival of new products in the market.

3. Relieve from the burden of storing: Retailers relieve the consumers of the burden of storing large quantities of every article of- daily use.4

4. Supply of goods in seasons: The retailers keep stocks of goods in their shops on seasonal variations so that they may supply to the customers to meet demands.

5. Selection of goods: Almost all types of goods are stored by the retailers. So not find difficulty in selecting the goods according to their own choice.

Difference Between Wholesalers and Retailers:

The main differences are:

                     Wholesale Trade                        Retail Trade
1. They establish a link between manufacturers and retailers. They Establish the link between Wholesalers and ultimate consumers.
2. They deal with specific goods. They deal with a variety of goods.
3. They generally do not display the goods. They display the goods and thus perform the function of advertising.
4. They do not provide after-sales service.They provide after-sales service to consumers.
5. They generally do not maintain a direct link between consumers. They maintain direct links with the consumers.
6. They conduct business operations in big towns and cities.They operate both in rural and urban areas.
7. They need a huge amount of capital to store the goods. They usually need less amount of capital/
8. The bulk purchases made by them lead to the economy in operation and transportation etc. They cannot enjoy such benefits because of purchase in small quantities.


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