Introduction
The word 'Retail' is derived from
a French word with the prefix re and the verb tailer meaning "to cut
again". Evidently, retail trade is one that cuts off smaller portions from
large lumps of goods. It is a process through which goods are transported to
final consumers. In other words, retailing consists of the activities involved
in selling directly to the ultimate consumer for personal, non-business use. It
embraces the direct-to-customer sales activities of the producer, whether
through his own stores by house-to-house canvassing or by mail-order business.
Manufacturers engage in retailing when they make
direct-to-consumer sales of their products through their own stores (as Bata
and Carona shoe companies, D.C.M. Stores, Mafatlals and Bombay Dyeing) by
door-to-door canvass, or mail order or even on telephone. Even a wholesaler
engages in retailing when sells directly to an ultimate consumer, although his
main business may still be wholesaling.
A retailer is a merchant or
occasionally an agent or a business enterprise, whose main business is selling
directly to ultimate consumers for non-business use. He performs many marketing
activities such as buying, selling, grading, risk-trading, and developing information
about cusotmer's wants. Aretailer may sell infrequently to industrial users,
but these are wholesale transactions, not retail sales. If over one half of the
amount of volume of business comes from sales to ultimate consumers, i.e. sales
at retail, he is classified as a retailer. Retailing occurs in all marketing
channels for consumer product
The retailer is an intermediary in the marketing
channel because he is both marketer and customer, who sells to the last man to
consume. He is a specialist who maintains contact with the consumer and the
producer; and is an important connecting link in a complex mechanism of
marketing. Though producers may sell directly to consumers, such method of
distributing goods to ultimate users is inconvenient, expensive and time
consuming as compared to the job performed by a specialist in the line.
Therefore, frequently the manufacturers depend on the retailers to sell their
products to the ultimate consumers. The retailer, who is able to provide
appropriate amenities without an excessive advance in prices of goods is
rewarded by larger or more loyal patronage.
Economic Justification for retailing
All middlemen basically serve as purchasing agents
for their customers and as sales specialists for their suppliers. To carry out
those roles, retailers perform many activities, including anticipating
customer's wants, developing assortments of products, acquiring market
information and financing.
It is relatively easy to become a retailer. No large investment in
production equipment is required, merchandise can often be purchased on credit
and store space can be leased with no 'down payment' or a simple website can be
set up at relatively little cost. Considering these factors, perhaps it's not
surprising that there are just over a 6 million retail outlets operating across
the Indian cities from north to south and from east to west. This large number
of outlets, many of which are trying to serve and satisfy the same market
segments, results in fierce competition and better values for shoppers.To enter retailing is easy; to fail is even easier!
To survive in retailing, a firm must do a satisfactory job in its primary role
- catering to consumers. Rama Subramaniam the former head - retail segment
Spensors described a successful retailer as a "merchant who sells goods
that won't come back to customers who will". Of course, a retail firm also
must fulfill its other role - serving producers and wholesalers. This dual role
is both the justification for retailing and the key to success in retailing.
GENERAL SERVICES
The
general services which a retailer provides are:
1.
The retailer anticipates the
wants of the consumers and then supplies them the right kind of goods at
reasonable price. His job is to make the consumers buying as easy and
convenient as possible i.e. he acts as a consumers' agent.
2.
He performs the service of
bulk-breaking i.e. dividing large quantities into small units, such as
individual cans, bottles, boxes, wrappers, packages, appropriate for consumer
use.
3.
He offers a large assortment of
merchandise, of suitable size, colour, design, style and seasonal items-ranging
from domestic utensils, household requisites to speciality goods.
4.
He creates time and place utility
by storing the products in off season and by transporting these goods to the
places where they can be readily available as and when needed by the consumer.
5.
He also assumes risks by guaranteeing the goods he
sells to the consumer.
6.
He also offers free delivery of
goods, credit on open accounts, free alteration, liberal exchange facilities,
instructions in the use of goods, revolving credit plans, and long term
instalment programmes.
7.
He adds to the convenience and
ease of consumer purchasing by offering convenient shopping locations, market
informations and other services such as free parking privileges, lessons on
product use and a multitude of other facilities may be offered and found
sufficiently desired to result in increased patronage.
8.
He helps the producers in
distributing their products by using advertisement display and personal
selling.
9.
The level of retail sales is one
of the most useful barometers of the nations economic health. For example when
sales of cycles pick-up, sales of steel and components also increase, as does
employment and thus increasing purchasing power. But when sales go down,
manufacturers cut back production, unemployment increases and retail sales also
goes down.
Facilitating Services:
In order to carry out functions involving transfer
of ownership and physical supply effectively retailers perform a number of
facilitating functions i.e. functions relating to standardisation and grading,
financing, risk-taking and market information.
A retailer of fresh fruits and vegetables has to standardise and grade
these to make these acceptable to customers. They establish standards, inspect
goods they receive, and sort them in various classifications.Quite often they purchase in
large quantities and then divide them and repack them before selling. When the
retailer sells goods on credit he performs finance function. From the moment he
sells and collects the last rupee from the customer, when goods are sold on
credit, he is said to be performing a financing function.
Another function performed by
retailers is that of risk-taking. During the entire time a retailer holds title
to particular goods, he must inevitably bear a wide variety of risks. Not only
the goods may be destroyed through fire or flood, but also, there is often the
danger of theft, deterioration or spoilage.
Furthermore, such merchants are
also faced with the threat that consumers will not accept their product or will
purchase them only at unprofitable prices. He also undertakes risk in handling
of fashion goods and other items for which consumer demand varies greatly from
time to time.
Since the retailer knows about
the wishes of his customers the price, quality and the kind of merchandise
available in the market as well as the existing and anticipated style trends,
he keeps in stock the goods usually required by customers.
Overview of Retail Sector
All over the world, retailing is undergoing a process of evolution and
is poised to undergo dramatic transformation. With special reference to India,
the retail sector employs over 10 percent of the national work force but is
characterised by a high degree of fragmentation with over 5 million outlets, 96
percent of whom are very small with an area of less than 50 m2. The retail universe doubled
between 1986 and 2006 and the number of outlets per 1000 people at an All India
Level increased from 4.9 in 1988 to 14.8 in 2006. Because of their small size,
the Indian Retailers have very little bargaining power with manufacturers and
perform only a few of the flows in marketing channels unlike in
the case of retailers in developed countries.
The corner grocer or the 'Kirana'
Store is a key element in the retail in India due to the housewifes
unwillingness to go long distances for purchasing daily needs. Although
convenience and merchandise were the two most important reasons for choosing a
store, the choice interia varied across product categories. Convenience was
indicated by consumers as the most important reason in the choice of groceries
and fruit outlets, chemists and life style items while merchandise was
indicated as the most important in durables, books and apparel.
In recent years, there has been a
slow spread of retail chains in some formats like super markets, department
stores, malls and discount stores. Factors facilitating the spread of chains
are the availability of quality products at lower prices, improved shopping
standards, convenient shopping and display and blending of shopping with
entertainment and the entry to industrial houses like Goenkas and Tatas into
retailing.
Thailand is one of the countries whose economy has
developed rapidly in recent years. There has been a tradition of independently
owned outlets called shop houses. These outlets are run by families, with the
shop located on the ground floor and the family's living quarters on upper
floors. Thailand's first departmental store opened in 1956 and the first
shopping centre in (1967). Discounts and super stores were introduced in 1989.
However, the presence of super market format has been low due to ingrained
habit of buying fresh produce. Speciality stores were just emerging in Thailand
in mid 1990s.
Another country where the development of the retail sector has also
followed an interesting path is Brazil. The concept of self service in shopping
was introduced to Brazil in 1953 but until 1972, there was no foreign influence
in the Brazilian retail
sector.
Food retailing especially, contained to be Brazilian owned and managed although
international innovations were adopted. The number of intermediaries in
marketing channels is decreasing as the operation of wholesalers is under
threat from the direct contact between retailers and suppliers, although few
specialised distributors have emerged who provide value added services such as
distribution of frozen and chilled food.
