��������������

TYPES OF RETAILERS - PART 1

​

​

​

Prepared by-

Savita Mahendru

Assistant Professor

PG Department of Commerce & Management

HRMMV

​

TYPES OF RETAILERS

The types of retailers can be classified on the basis of:-

• 1. Product or Service
• 2. Ownership
• 3. Number of Outlets/Branches
• 4. Variety of Product Sold
• 5. Number of Product Lines Carried

�

TYPES OF RETAILERS

• 6. Level of Services
• 7. Pricing Strategy
• 8. Size of Shop
• 9. Location
• 10. Method of Operation
• 11.Location of Facilities.

TYPE # 1. ITINERANT OR MOBILE RETAILERS

​

• They keep moving from place to place to sell their goods. They do not have any fixed place of business.
• Features of Itinerant Retailers:
• (a) They move from street to street to contact the customers.
• ADVERTISEMENTS:
• (b) They sell low value goods of daily use like toys, fruits, vegetables, etc.
• (c) They mostly sell non-branded and local items.
• (d) They do not sell at fixed prices

​

TYPES OF ITINERANT RETAILERS:

• (i) Hawkers and Peddlers:
• They carry goods themselves in basket or on shoulder bags or on push carts. They move about in residential areas and call out names of articles which they are selling. They are hawkers, they don’t have enough capital and cannot store goods in bulk. Their main advantage is that they provide convenient service to the consumers and the limitation is that they deal in such products which are unreliable in terms of quality, price and durability.
• (ii) Market Traders:
• They sell their goods at different places on fixed market days, e.g., Mondays, Wednesdays. They mainly cater to lower income group of customers and deal in low priced and cheap consumer items of daily use.

​

ITINERANTS RETAILERS

• (iii) Street Traders:
• ADVERTISEMENTS:
• They spread their goods on pavements at busy street corners or near railway stations or bus terminals. They deal in newspapers, magazines, eatables, stationery items etc. They do not move from place to place with their goods.
• (iv) Cheap Jacks:
• They have temporary shop structures. They change their place of business after some time. They remain in one locality for a temporary period only, depending upon the prospects of their business. They deal in consumer goods of daily use as well as services such as repairs of watches, shoes etc.

​

TYPE # 2. FIXED-SHOP RETAILERS:�

• They have permanent establishments to sell their goods either in local markets or in malls.

Features:

• (i) They have greater resources than these of itinerant retailers.
• (ii) They deal in variety of products.
• (iii) They provide better services as compared with those provided by the itinerant to the customers such as providing guarantees, credit facilities and home delivery etc
• (iv) They have greater credibility and goodwill in the minds of customers.

​

​

​

I. FIXED-SHOP SMALL RETAILERS:

• (1) General Stores:
• (a) These are set up in residential areas.
• (b) They stock all kinds of products needed by local residents for their daily use.
• (c) They remain open for long hours at convenient timings.
• (d) They provide credit facilities to regular customers if required.
• (2) Specialty Stores:
• They are located in central place in each locality. They generally specialise in a single type of product instead of dealing in different lines of products.
• A few examples of them are:
• (a) Stores dealing in children’s garments only.
• (b) Stores dealing in educational books only.

​

FIXED SHOP SMALL RETAILERS

• (3) Street Stall Holders:
• (a) They are located at the street crossings or on the main roads.
• (b) They setup their stalls by fixing shelves on a wall or placing a table or making a platform to sell and display goods.
• (c) They sell low priced goods such as pens, magazines, cheap hosiery items etc.
• (4) Second-Hand Goods Shops:
• (a) They deal in used goods like clothes, books, furniture etc.
• (b) Persons with modest means purchase goods from such stores.
• (c) They store rare articles such as old postage stamps and antique items and sell them at higher prices.

�

FIXED SHOP SMALL RETAILERS

• (5) Seconds Stores:
• These shops sell goods which are not according to standards specification. These are sold as seconds. They have some minor defects in them and these defects are not visible. These are sold at a heavy discount. These shops are situated at market places. Even the manufacturers also open retail outlets to dispose of such goods. Readymade garments, sports goods, shoes etc. are sold in these shops. Sometimes these stores are set up temporarily by taking premises, hall or banquets on hire.
• (6) Single Line Stores:
• These stores sell only one line of products. They provide different designs, styles, and sizes of quality of the same product. For example stores selling shoes will have all varieties and sizes of footwear meant for kids, gents and ladies.

​

​

II. FIXED-SHOP LARGE RETAILERS:

• These retailers deal in large stock of goods.
• The characteristics of such stores are:
• (1) They require huge amount of investment.
• (2) They are generally located at a central place or in shopping malls.
• (3) The footfall of customers is very high in such stores.
• The most common type of large scale retailers are as follows:
• (a) Departmental stores
• (b) Multiple shops chains stores
• (c) Mail order retailing
• (d) Consumer Co-operative store
• (e) Super markets

​

(A) DEPARTMENTAL STORES:

• It is a large retail store in which a wide variety of products are sold through separate departments under one roof. ‘Banmarche’ was the first such retail store opened in France in 1852. There are stores like this in India which include ‘Akberally’ in Mumbai and ‘Spencers’ in Chennai.
• Features of Departmental Stores:
• (1) Central location in a big local market.
• (2) Many units or departments in the same shop under one roof.
• (3) Centralised ownership, management and control.
• (4) Different varieties of goods stored and sold. Therefore, customers get a better choice.
• (5) Personal services like telephone booth, restrooms, restaurant etc. are provided.

�

DEPARTMENTAL RETAILERS

• Advantages:
• (i) Centralised Location – People living in different areas of the city can easily reach there for shopping.
• (ii) Convenience in Buying – All goods are available in different sections under one roof.
• (iii) Attractive Services – Services like reading room, free home delivery, restaurant, library, saloons etc. are available.
• (iv) Economies of Large Scale – Benefits of large scale operations in respect of purchase of goods are available to them.
• (v) Heavy Expenditure on Sales Promotion – Due to sound financial position, they can afford to spend liberally on promotion.

​

DEPARTMENTAL RETAILERS

• Limitations:
• (i) Lack of Personal Attention – Employees are appointed on fixed salary. This leads to lack of initiative and personal touch on the part of employees.
• (ii) High Operating Cost – Due to expenses on advertising, window display and showroom, it makes the goods highly expensive.
• (iii) Inconvenient Location – They are situated far away from residential areas. These lose demand of articles required at short notice by customers.
• (iv) High Possibility of Loss – Due to heavy operating costs and large scale operations, there is a possibility of loss.

​

(B) MULTIPLE SHOPS / CHAIN STORES:

• These are retail shops owned and controlled by a single big organisation. Most of them are also the manufacturers. They are located in different parts of the cities throughout the country. They deal in similar products at uniform prices.
• Examples– (i) Bata, (ii) McDonald, (iii) Big Apple, (iv) Reebok, (v) Reliance Fresh, and (vi) Adidas.

​

(B) MULTIPLE SHOPS / CHAIN STORES:

• Features of Chain Stores/Multiple Shops:
• (i) These are located in fairly populous localities, where sufficient number of customers can be approached.
• (ii) All the branches are controlled by the head office which is concerned with formulating the policies and getting them implemented.
• (iii) Manufacturing and procurement of goods is centralised at the head office.
• (iv) Sales are decentralised.
• (v) All sales are strictly made on cash basis.
• (vi) Multiple shops have identical display, decoration, layout plans etc

​

(B) MULTIPLE SHOPS / CHAIN STORES:

• Advantages:
• (i) Economies of Large Scale – They enjoy the advantages of large scale operations specially in purchase and production of goods since a large volume of goods are bought and sold on multiple shops.
• (ii) Standardised Products – The goods are of high quality. The buyers are assured of its quality.
• (iii) No Bad Debts – Goods are sold on cash basis only, so there is no risk of bad debts.
• (iv) Transfer of Goods and Spreading of Risk – Products, which are not in demand in a particular shop, can be shifted to another shop. Thus, risk of staleness is minimised. Total business risk is diffused. The profits at one store can provide a cover to the loss at another store at a different location.

​

(B) MULTIPLE SHOPS / CHAIN STORES:

• (v) Elimination of Middlemen – By selling goods directly to the customers, the multiple shops are able to eliminate middlemen.
• (vi) Lower Cost – It is because of centralised manufacturing and purchasing, elimination of middlemen, centralised advertising etc., that shops have low cost of business operation.
• (vii) Flexibility – The management has an option to close down loss making stores and shift them to another place.

(B) MULTIPLE SHOPS / CHAIN STORES:

• Limitations:
• (i) Limited Variety of Goods – The range of variety is limited and each store keeps stocks of goods manufactured and distributed by its owners only.
• (ii) Lack of Services – Free home delivery and credit facility is not available to customers.
• (iii) Lack of Initiative – The managers have no freedom of making purchases and fixing prices of the goods. Thus, there is lack of initiative on their part to use their creative skills to satisfy customers.
• (iv) Large Capital Investment and Heavy Overheads – These shops require huge capital investment. They spend heavily on shop rent, decoration, administration and supervision.
• (v) Chances of Fraud – Strict supervision and control is not possible because there are many branches; so there are chances of fraud.

​

MAIL ORDER HOUSES:�

These are retail outlets that sell their goods through mail. There is generally no direct contact between the buyers and the sellers in this type of trading.

• Trading Procedure:
• Step 1 – Advertisements to provide information about the products:
• Step 2 – Order receiving and processing of goods

Step 3 – Receiving payments

AUTOMATIC VENDING MACHINE:

• An automatic vending machine sells merchandise when a customer deposits sufficient money into its slot or vent to purchase the desired items. It contains products like beverages, snacks, candies, chocolates, platform tickets etc.
• Examples:
• (a) Mother Dairy sells milk through vending machines.
• (b) ATM (Automated Teller Machine) can be used to withdraw money at any time without visiting any branch of a bank.
• (c) Metro token can be purchased through these machines at Metro stations.

​

��� ���CLASSIFICATION OF RETAILERS :1. BY PRODUCTS OR SERVICES:

• This is the simplest basis for classification of the retailers. Retailers of goods deal with the tangible products. For example, grocery shops, supermarkets, general shops, chemists, ready-made garment shops etc. Services retailers deal with intangible goods, i.e., services. For example, banks, consultants, doctors, tailoring shops, beauty parlours, crèche, garages, maintenance services, transport, etc. As service industry is growing, services retailing has vast scope in the future

2. BY OWNERSHIP:�

• A retailer may be a part of a chain, manufactured- owned, franchise, or he can be an independent retailer.
• (a) Independent Retailer:
• Independent Retailer is the owner of one or multiple stores. It is owned by a single proprietor, two or more partners or a family. Retailer is not the part of any chain or of the large retail organizations. Most of the small retailers in India fall under this category. For example, any general store, grocery shop, corner shops, which may have one or more outlets run by the independent retailer.
• For example, Chitale Bandhu Mithaiwale — the renowned sweets store in Pune operates through two exclusive outlets owned by the manufacturer. As well as, recently it has given franchising rights to many retailers from different parts of Pune city.

​

BY OWNERSHIP:

• (b) Chain Store:
• Chain Store is a part of a group of retail stores owned and operated by a single corporate organization. Chain store can be the part of a corporate or voluntary, cooperative organization. For example, Kamath Restaurant is managed by a single owner but has many outlets in the cities such as Mumbai, Pune, Goa, Hyderabad, etc. Apna Bazaar has the chain of co-operative stores having many outlets in Mumbai. Nalli, a renowned Chennai based silk emporium has opened the outlets in Mumbai.

​

BY OWNERSHIP:

• (c) Manufacturer Owned Outlet/Company Showroom/Factory Outlet:
• Manufacturer or a company undertakes the retailing activity. These outlets are owned and managed by the manufacturer. There can be one or more number of such outlets. This form is largely observed in branded garments, shoes, and food retailers. Even the small manufacturers offer their products in their own outlets such as bakery, dairy, etc.
• For example, branded products like Bata, Nike, Bombay Dying, Sony World, etc. are sold through the exclusive showrooms or factory outlets. These products are also sold by other independent retailers
• (d) Franchise Outlet:
• Manufacturer gives franchise (authority) to a number of independent retailers. But they are not the owners in the real sense. All independent retailers (franchisees) are bound to follow certain rules and regulations laid by the manufacturer (franchiser). For example, McDonald’s, Benetons, Pantaloon, Raymond’s Park Avenue, Dr. Batra’s Clinic, VLCC, Aptech Computer Education Institute, etc.

�

3. BY NUMBER OF OUTLETS/BRANCHES:

• Retailer can operate through a single shop or it can be a part of a chain having multiple outlets. For example, banks are the service retailers; they operate through the number of branches spread over the wide geographical area. The retail outlets run by the small independent retailer such as kirana store, bakery, garages, etc. may have only one outlet. Big retailers under single ownership may open multiple branches in different locations.
• 4. By Variety of Product Sold:

The retail shops can be classified based on variety of products offered. According to this criterion, retail outlet can be a Department Store or a Specialty Store or a Variety Store.

​

BY VARIETY OF PRODUCTS SOLD

• (a) Department Store:
• It is a large retail outlet having different departments or sections for different types of products. It offers a wide variety of general products. Representative merchandises/ samples are displayed in the separate areas, which give idea about the merchandise sold in that particular section.
• For example, The Department Store selling Garments has different departments such as kids’ wear section, ladies’ wear and men’s wear. Or the department stores offering only kids’ wear may have different sections for different age groups. Shoppers’ Stop has many sections such as jewelry, cosmetics and perfumes, garments, in ladies garments — Indian wear and Western wear, etc.

• (b) Specialty Store:
• Such type of retail shop offers only specific category of the product. Specialty retailer deals with limited or even a single product line and focuses more on the depth of the product line carried out by him. For example, Retailers selling Furniture, Paints, Gift Articles, Greeting Cards, Dairy Products, Shoes, Paint, Petrol Pump, Flowers, etc. Pure Vegetarian Restaurants, Chinese Restaurants, Tea Stalls, Bakery. Consultants or the experts who deal in specific area such as Surgeons, Interior Decorators, Insurance Agents, etc.

​

• (c) Variety Store:
• It offers a wide variety of the general merchandise. It focuses more on variety, i.e., width of product mix and less on depth of the product line. Variety stores offer fewer product lines compared to that of the department store but still they can strongly compete with department stores by offering more variety at the lesser prices. Such stores are preferred by the customers looking out for shopping ‘everything under one roof.’
• These customers do not want to visit multiple shops for their different requirements. They are aware about the limited variety available in each category but still they prefer to shop there due to the convenience and time saving.
• For example, Warehouse Club offers a variety of product lines but limited range within each product line (depth) and more discount.

�

5. BY NUMBER OF PRODUCT LINES CARRIED:

• Retailers can be classified on the basis of number of products lines dealt with. Retailer can sell a single line of products or he deals with limited lines or multiple product lines.
• Retail stores can be:
• (a) General Merchandise Stores
• (b) Limited Line Stores
• (c) Single Line Stores
• For example, General store or a typical grocery shop offers many products, i.e., it deals with multiple product lines. Department Store and Variety Stores are the examples of multiple lines. The dairy shop sells only dairy products or the furniture shop offers variety in only furniture, i.e., they deal with single product line but in the great depth. Specialty Store is an example of single line.
• Some retailers offer limited product lines and focus more on depth, e.g., Sports Mart can offer sports shoes, sportswear, sports equipments, nutritious food and heath drinks, health consultancy advice, etc. Generally specialty stores carry limited product lines and products sold are related and supplementary in nature. Specialty Stores, Catalogue Showrooms, and Supermarkets are examples of limited lines.

THANK YOU