What do We Mean by Retailers?
The English word "Retailer" was derived from the French word "Retailer," which means "to cut again." As a result, cutting small pieces from massive masses of merchandise is clearly what selling entails. A retailer is a final link in the chain of goods delivered to customers. He acts as a liaison between wholesalers and customers.
According to the American Marketing Association, retailing is "the act of selling directly to the final consumer for personal and non-business use." It includes all of the producer's direct sales efforts, including those conducted through his retail locations, door-to-door solicitation, and mail-order operations. The retailer acts as a middleman in the marketing channels, a professional who communicates with both the consumer and the producer, and a vital link in the marketing chain.
Classification of Retailers
The more popular classification of retailers is a store and non-store retailing. Below are the different types of classification of retailers -
Store-Based: Store-based formats are further classified into two types based on ownership of merchandise sold.
Non-Store Retail Classification: Non-Store retail businesses prioritise direct contact with customers. This could be non-personal (television, internet, mail, catalogues, or phone) or personal (telephone) (direct personal selling).
Service-based classification: These merchants specialise in providing various services to their customers. Banking services, rentals, electricity, and cooking gas are just a few available services. A service's success is determined by several criteria, including the level of customisation that can be offered to fit the client's requirements, the uniqueness of the service and delivery within the timeframes specified, the use of cutting-edge technology, and so on.
Classification of Retailers
Classification Based on Ownership
Sole Proprietorship: This category includes most small business ventures founded as sole proprietorships. A sole proprietorship is a business owned by just one person who is typically in charge of managing the business's day-to-day operations.
Partnership: A partnership is one of India's most common business structures. A partnership is formed when two or more people share ownership and management of a business.
Joint Venture: A joint venture is the formation of a third or new entity as a result of collaboration between two or more parties who have agreed to manage business operations in a specific area by pooling their resources and sharing profits per the contract's clearly stated terms and conditions.
A Retailer's Essential Job Duties
A retailer is in charge of both the purchasing and the assembly of goods. A retailer must find the most cost-effective way to buy products from suppliers and pass the savings on to customers.
Retailers are responsible for storage and warehousing. They stock the products in bulk and distribute them based on customer demand. Storekeeping and warehousing helps to ensure that items are always available to customers.
A retailer's main job is to sell products to customers; to do so; they employ various strategies and business methods to achieve their strategic goals.
A retailer's main goal is to increase consumer happiness by providing high-quality goods and services on a cash-and-credit basis. As a result, the shop always bears the danger of accruing bad debts due to the customer's failure to pay the due amount.
Retailers play an important role in introducing new products to the market because they serve as the consumer's point of contact and have the opportunity to discuss the benefits and characteristics of new products directly with prospective customers.
Retailers are in charge of creating attractive product displays, visual merchandising, product marketing, and advertising.
Case Study
Taking Best Buy as an example, how has it been raised as a retailer of many of the demanding brands? Explain.
Best Buy is an excellent example of a traditional retailer. It buys products at cost from manufacturers such as Sony and Whirlpool and then charges customers more for them. Most items sold by Best Buy are not manufactured by the company.
Modern companies have chosen to combine the traditional roles of manufacturers and retailers. Apple is an excellent example of a company that manufactures and sells its products. In the 1990s, Apple began building retail stores worldwide to help market and sell its products. Apple cuts out the middleman and, thus, keeps the retail markup money for itself. Since then, Apple has allowed other retailers, such as Best Buy, to sell their products.
Conclusion
The retail industry has significantly changed in recent decades due to the rapidly evolving globalised and technologically driven corporate environment. Walmart, the world's largest retail company at the moment, operates globally by establishing hypermarkets in various countries using modern communication and information systems technology.
FAQs on Classification of Retailers: Types and Examples
1. What is a retailer and what is their role in the business world?
A retailer is a person or business that purchases goods from a manufacturer or wholesaler and sells them in small quantities directly to the end consumer for personal, non-business use. Their primary role is to act as the final link in the channel of distribution, providing consumers with convenient access to a variety of products, offering credit facilities, and gathering valuable market feedback for producers.
2. What are the main ways to classify retailers?
Retailers are primarily classified based on their scale of operations and whether they have a fixed place of business. This leads to two main categories:
- Itinerant Retailers: These are traders who do not have a fixed place of business and move from one location to another to sell their goods.
- Fixed-Shop Retailers: These retailers operate from permanent, fixed premises. They are further divided into small-scale and large-scale retailers.
3. What are itinerant retailers and can you provide some examples?
Itinerant retailers are mobile traders who lack a permanent shop to conduct their business. They typically deal in low-priced, daily-use consumer goods and require minimal capital investment. Common examples of itinerant retailers include:
- Hawkers and Peddlers: Who move through residential streets carrying their goods.
- Market Traders: Who open their shops on fixed market days in different locations.
- Street Traders (Pavement Vendors): Who display their goods on busy street pavements.
- Cheap Jacks: Who hire small shops in residential areas for a temporary period.
4. What are fixed-shop retailers and how are they categorised?
Fixed-shop retailers are the most common type of retail outlet, operating from a permanent physical location. They command greater consumer trust due to their stability. They are broadly categorised into:
- Small-Scale Fixed-Shop Retailers: These include businesses like general stores, single-line stores (e.g., a medical store), and speciality shops (e.g., a shop only for men's clothing).
- Large-Scale Fixed-Shop Retailers: These operate on a large scale with significant capital. Examples include departmental stores, supermarkets, and chain stores or multiple shops.
5. How does a departmental store differ from a supermarket?
While both are large-scale retailers, they differ significantly in their approach and product range. A departmental store aims to satisfy all of a customer's needs under one roof, offering a wide variety of product lines (e.g., clothing, electronics, furniture) organised into separate departments, often with significant customer service. In contrast, a supermarket primarily focuses on food and grocery items, operating on a self-service basis with low profit margins and high sales volume.
6. Why are retailers considered the final and most crucial link in the channel of distribution?
Retailers are the crucial final link because they perform the essential function of placing goods directly into the hands of the final consumer. Unlike manufacturers or wholesalers, retailers have direct personal contact with customers. This allows them to:
- Break down bulk quantities into smaller, affordable units.
- Provide real-time feedback on consumer preferences to producers.
- Offer personalised service and build customer loyalty.
- Use location and display to make products accessible and attractive.
7. What is the key difference between a wholesaler and a retailer?
The key difference lies in who the customer is and the purpose of the transaction. A retailer sells goods in small quantities directly to the final consumer for personal use or consumption. A wholesaler, on the other hand, sells goods in large quantities to other businesses, such as retailers or industrial users, for the purpose of resale or for use in their business operations, not for personal consumption.
8. What are some common examples of small-scale and large-scale retailers in India?
In India, the retail landscape is very diverse. Common examples include:
- Small-Scale Retailers: The ubiquitous Kirana store (general store) in every neighbourhood, local chemists, standalone mobile phone shops, and street-side food stalls.
- Large-Scale Retailers: National chains like Reliance Fresh and More (supermarkets), Shoppers Stop and Lifestyle (departmental stores), and franchise outlets like McDonald's and Domino's (multiple shops/chain stores).
9. How has the rise of e-commerce affected the traditional classification of retailers?
The rise of e-commerce has introduced a new dimension to retail that blurs traditional lines. Online retailers like Amazon and Flipkart are a form of non-store retailing, which is a major departure from the fixed-shop model. They function as massive digital departmental stores or marketplaces. This has forced traditional brick-and-mortar stores to adopt hybrid models (e.g., 'click-and-collect'), integrating online sales with their physical presence, thus evolving the classic definitions of retail trade.
