Retail Trade | Meaning, Characteristics, Functions, Factors, Reasons

Trade, encompassing the buying and selling of goods and services, is categorized into Home Trade and Foreign Trade. Home Trade involves the domestic exchange of goods and services, further divided into wholesale trade and retail trade.   Retail Trade: Involves purchasing in small quantities from wholesalers or manufacturers and selling these units to final consumers. […]

Trade, encompassing the buying and selling of goods and services, is categorized into Home Trade and Foreign Trade.

Home Trade involves the domestic exchange of goods and services, further divided into wholesale trade and retail trade.

 

Retail Trade:

Involves purchasing in small quantities from wholesalers or manufacturers and selling these units to final consumers.

 

Characteristics of the Retailer/Retail Trade:

  1. Sells in units or fractions.
  2. Stocks and sells a wide variety of goods.
  3. Sells directly to ultimate consumers.
  4. Purchases in small quantities from wholesalers or manufacturers.
  5. Deals primarily in fast-selling consumer goods.
  6. Comprises numerous small shops.
  7. Represents the final link in the distribution chain.
  8. Major goods are obtained from wholesalers.

 

Functions of the Retailer:

To the Manufacturer:

  1. Sells the manufacturer’s goods to the final consumer.
  2. Provide feedback on consumer preferences and trends.
  3. Offers advice to the manufacturer.

 

To the Wholesaler:

  1. Share information on consumer needs and market trends.
  2. Provides advice to the wholesaler.

 

To the Consumer:

  1. Offers a variety of goods.
  2. Grants credit to credit-worthy customers.
  3. Provides information and advice.
  4. Sells in smallest quantities (units) to the consumer.
  5. Offers after-sales services.
  6. Provides free delivery to the consumer’s door.
  7. Prepares goods for sale, including packing or re-packing to suit consumer needs.
  8. Gives personal attention to consumers.
  9. Guides consumers in making choices.
  10. Completes the production process, such as branding.
  11. Advertise the goods.
  12. Ensures door-to-door services.

 

Factors to be Considered in Setting Up a Retail Business:

  1. Amount of available capital.
  2. Location of the shop.
  3. Experience and knowledge of the retail job.
  4. Attractive shop layout.
  5. Source of goods supply.
  6. Pricing policy and trade terms.
  7. Type or nature of goods to be sold.
  8. Operating plans details (business hours, opening time, trading days).
  9. Record-keeping methods.

 

Factors a Retailer Should Consider When Making Purchases:

  1. Quantity of goods to be bought.
  2. Available credit facility.
  3. Quality of goods meeting consumer needs.
  4. Terms of payment, including discounts.
  5. Cost of transporting goods.
  6. Method of delivery (road, rail, sea).
  7. Additional charges for packing or off-loading.

 

Reasons Why Retail Businesses May Fail:

  1. Wrong purchases.
  2. Poor record-keeping.
  3. Failure to insure the business.
  4. Extravagance and overspending.
  5. Lack of experience or trade knowledge.
  6. Poor credit administration.
  7. Inadequate capital.
  8. Competition from larger businesses.
  9. Inability to plan and forecast.
  10. Insensitivity to current market trends.

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