Retailer
INTRODUCTION
Retailing
is an important service industry, it is the activity involved in the sale of
products to the ultimate consumer.
Retailing
institution exists to ensure that the consumers who are the focus of any productive
activity receive the goods and services at the right time, right place, right
quantity and at the right price. Perhaps, the best known of the marketing institutions
is the retailing outlet. This is largely due to the fact that he is the most
often encountered. He serves as the final link between the manufacturer and the
consumer.
According
to Oladele (2009), he described retailing as one of the crucial functions of
the marketing process. It consists of the activities involved in the sale of
commodities to the ultimate consumer. In other words, the retailer is the last
link in the chain of distribution. Producers generally rely on independent
retailers to sell their products to ultimate consumers.
The
retailer is a specialist in selling and the community looks to him for the
supply of the needed goods at a convenient place, in convenient quantities, at
reasonable prices and at a time when they are wanted.
The
retailer is generally able to ascertain first hand needs and requirements of
consumers. He also exercises a considerable influence on their buying
decisions.
MEANING
OF RETAILING
According
to Kevin et al, (2003), they describe
retailing as all activities involved in selling, renting, and providing goods
and services to ultimate consumers for personal, family, or household use.
By
Kotler (2006), he said retailing includes all the activities involved in
selling goods or services directly to final consumers for personal use. A
retailer or retail store is any business enterprise whose sales volume comes
primarily from retailing. Any organization selling to final consumers whether
it is a manufacturer, wholesaler, or retailer is doing retailing.
A
retailer purchases goods or products in large quantities from manufacturers
directly or through a wholesaler, and then sells smaller quantities to the
consumer for a profit.
Retailing
therefore, involves all activities necessary for the sale of goods and services
to the ultimate consumers and users.
DEVELOPMENTAL
TRENDS IN RETAILING
At
this point, we can summarize the main developments retailers and manufacturers
need to take into account in planning competitive strategies.
i.
NEW RETAIL
FORMS AND COMBINATIONS
Some
supermarkets include bank branches. Bookstores feature coffee shops. Gas
stations include food stores. Loblaw’s supermarkets have added fitness clubs to
their stores. Shopping malls and bus and train stations have peddlers’ carts in
their aisles. Retailers are also experimenting with limited – time – only
stores called “pop-ups” that let retailers promote brands, reach seasonal
shoppers for a few weeks in busy areas, and create buzz. When target launched
its line of clothes designed by Isaac Mizrahi, it setup a temporary target
store at Rockefeller center in New
York City, which sold only the Mizarhi line. The
publicity convinced shoppers to make the trek to the target store in Queens, an
outer borough of New York city.
ii.
GROWTH OF
INTER TYPE COMPETITION
Different
types of stores – discount stores, catalog showrooms, department stores all
compete for the same consumers by carrying the same type of merchandise. Retailers
that have helped shoppers to be economically cautions, to simplify their
increasingly busy and complicated lives and provide an emotional connection,
are the winners in the new retailing landscape of the twenty-first-century. The
biggest winders: supercenters, dollar stores, warehouse, clubs and the
internet.
iii.
COMPETITION
BETWEEN STORE-BASED AND NON-STORE-BASED RETAILING
Consumers
now receive sales offer through direct – mail letters and catalogs, and over
television, computers, and telephones. These non-store-base retailers are
taking business away from store-based retailers. Some store-based retailers
initially saw online retailing as a definite threat. Home Depot shocked its top
vendors (Black and Decker, Stanley
tools, etc) by issuing a memo implying that if they started to sell online,
home Depot might drop them as suppliers. Now Home Depot is finding it
advantageous to work with online retailers. Wal-Mart recently joined with America
online (AOL) so that AOL will provide a low-cost internet access service that
carries the Wal-Mart brand, and Wal-Mart will promote the service and AOL in
its stores and through TV advertising. Stores such as Wal-Mart and Kmart have
developed their own web sites, and some online retailers are finding it
advantageous to own or manage physical outlets, either retail stores or
warehouses.
iv.
GROWTH OF
GIANT RETAILERS
Through
their superior information systems, logistical systems, and buying power, giant
retailers are able to deliver good services and immense volume of product at
appealing prices to masses of consumers. They are crowding out smaller manufacturers
who cannot deliver enough quantity and often dictating to the most powerful manufacturers
what to make, how to price and promote, when and how to ship, and even how to
improve production and management. Manufacturers need these accounts; otherwise
they would lose 10 to 30 percent of the market. Some giant retailers are
category killers that concentrate on one product category, such as Toys (Toys
“R” Us), home improvement (Home Depot), or office supplies (Staples). Others
are supercenters that combine grocery items with a huge selection of non food
merchandise (Wal-Mart). The supercenter is becoming the premier retail format
in the United States:
63 percent of American Women shopped at supercenters in the last 90 days of
2003 compared to only 32 percent in 2003.
v.
DECLINE OF
MIDDLE MARKET RETAILERS
Increasingly,
the retail market can be characterized as being hourglass or dog-bone shaped.
Growth seems to be centered at the tope (with luxury offerings) or at the
bottom (with discount pricing). Opportunities are scarce in the middle where
retailers such as sear and JC Penney have struggled. Montgomery Ward actually
went out of business. Supermarkets, department stores, and drugstores are most
at risk or on the brink – since 2000, fewer consumers have shopped these
channels weekly, as newer, more relevant places have come to serve their needs.
As discount retailers improve their quality and image, consumers have been
willing to trade down.
vi.
GROWING INVESTMENT
IN TECHNOLOGY
Retailers
are using computers to produce better forecasts, control inventory cost, order
electronically from suppliers, send e-mail between stores, and even sell to
consumers within stores. They are adopting checkout scanning systems,
electronic funds transfer, electronic data interchange, in-store television,
store traffic radar systems and improved merchandise handling systems.
vii.
GLOBAL
PRESENCE OF MAJOR RETAILERS
Retailers
with unique formats and strong brand positioning are increasingly appearing in
other countries. US retailers such as MCDonald’s, The Limited, GAP, and Toys
“R” US have become globally prominent. Wal-Mart operates over 700 stores
abroad. Among foreign-based global retailers in the united state are Britain’s Marks and Spencer,
Italy’s Benetton,
France’s Carrefour
hypermarkets , Sweden’s IKEA
home furnishing stores and Japan’s
Yaohan supermarkets.
TYPES OF
RETAILERS
Consumers
today can shop for goods and services in a wide variety of retail
organizations. There are store retailers, nonstore retailers, and retail organization.
1. SUPERMARKETS
These
are large self-service stores traditionally selling food, drinks and
toiletries, but range broadening by some supermarket chains means that such
items as non-prescription pharmaceuticals, cosmetics, and clothing are also
being sold. While one attraction of supermarkets is their lower prices compared
with small independent grocery shops, the extent to which price is a key
competitive weapon depends upon the supermarket’s positioning strategy.
2. DEPARTMENT STORES
So-called
because related product lines are sold in separate departments such as men’s
and women’s clothing, jewelry, cosmetics, toys, and home furnishings, in recent
years department stores have been under increasing pressure from discount
houses, specialty stores and the move to out-of-town shopping. Nevertheless,
they are still surviving in this competitive arena.
3. SPECIALITY SHOP
These
outlets specialize in a narrow product line. For example, many town centers
have shops selling confectionery, cigarettes and newspapers in the same outlet.
May speciality outlets sell only one product line such as Tie Rack and Sock Shop.
Specialization allows a deep product line to be sold in restricted shops space.
Some speciality shops focus on quality and personal services such as butchers
and greengrocers.
4. DISCOUNT HOUSES
These
sell products at low prices by bulk buying, accepting low margins and selling
high volumes. Low prices, sometimes promoted as sale prices, are offered
throughout the year. As an executive of Dixons, a UK discounter of electrical goods,
commented we only have two sales each lasting six months. Many discounters
operate from out-of-town retail warehouses with the capacity of stock a wide
range of merchandize.
5. CATEGORY KILLERS
These
are retail outlets with a narrow product focus but with an unusually wide width
and depth to that product range. Category killers emerged in the USA in
the early 1980s as a challenge to discount houses. They are distinct from
speciality shops in that they are bigger and carry a wider and deeper range of
products within their chosen product category, and are distinguished from discount
houses in their focus on only one product category.
Two
examples of the category killer are Toys “R” Us and Nevada Bob’s Discount Golf
warehouses, e-marketing 20.1 discusses how Toys “R” Us operates and gains
competitive advantage over traditional toy outlets, while facing a major threat
from a new internet – based competitor eToys.
6. CONVENIENCE STORES
These
stores offer customer the convenience of close location and long opening hours
every day of the week. Because they are
small they pay higher prices for their merchandise than supermarkets, and
therefore have to charge higher prices to their customers. Some of these stores
join buying groups such as spar or mace to gain some purchasing power and lower
prices. But the main customer need that they fulfill is for top-up buying, for
example when short of a carton of milk or loaf of bread. Although average
purchase value is low, convenience stores prosper because of their higher
prices and low staff costs, many are family businesses.
7. CATALOGUE STORES
These
retail outlets promote their products through catalogues which are either
posted or are available in the store for customers to take home. Purchase is in
city center outlets where customers fill in order forms, pay for the goods and
then collect them from a designated place in the store. In the UK, Argos
is a successful catalogue retailer selling a wide range of discounted products
such as electrical goods, jewelry, gardening tools, furniture, toys, car
accessories, sports goods, luggage, and cutlery
NONSTORE RETAILING
MAIL ORDER
This
non-store form of retailing may also employ catalogues as a promotional vehicle
but the purchase transaction is conducted via the mail. Alternatively, outward communication
may be by direct mail, television, magazine or newspaper advertising.
Increasingly orders are being placed by telephone, a process which is
facilitated by the use of credit cards as a means of payment. Goods are then
sent by mail. A growth area is the selling of personal computers by mail order.
By eliminating costly intermediaries, products can be offered at low prices.
Mail order has the prospect of pan-European catalogues, central warehousing and
processing of cross-border orders.
AUTOMATIC VENDING
Automatic
vending is used for a variety of merchandise including impulse goods like
cigarette, soft drinks, coffee, candy, newspapers, magazines, and other
products like hosiery, cosmetics, hot food, condoms, and paperbacks. Vending
machines are found in factories, offices, large retail stores, gasoline stations,
hotels, restaurants and many other places. They offer 24 hours selling,
self-service, and merchandise that is always fresh.
BUYING SERVICE
This
is a storeless retailer serving a specific clientele usually employees of large
organizations who are entitled to buy from a list of retailers that have agreed
to give discounts in return for membership.
DIRECT SELLING
Direct
selling, sometimes called door-to-door retailing, involves direct sales of
goods and services to consumers through personal interactions and
demonstrations in their home or office.
TELEMARKETING
Another
form of nonstore retailing, called telemarketing, involves using the telephone
to interact with and sell directly to consumers. Compared with direct mail,
telemarketing is often viewed as a more efficient means of targeting consumers,
although the two techniques are often used together.
ONLINE RETAILING
Online
retailing allows consumers to search for, evaluate, and order products through
the internet. For many consumers the advantages of this form of retailing are
the 24-hour access, the ability to comparison shop, in-home privacy and
variety.
FORCES
INFLUENCING RETAIL STRUCTURE
The
retail structure is highly dynamic and constantly changing in form. There are
so many factors that affect retailing structure but we shall pay special
attention to only the population density, population mobility, disposable
income, social custom and competition.
THE DENSITY OF POPULATION
The
density of population will determine the nature and size of retail organization.
In a low density area, there are likely to be small retail outlets dealing in
general lines of goods. But in high density areas, there will be large retail
outlets with some of them specializing in few product lines.
POPULATION MOBILITY
Population
mobility can be looked at from the people’s ability to move to other areas.
Such movement may be temporary as when people travel to transact their business
or permanent as when they leave their homes to live in other areas. In Nigeria,
there is what can be called the rural-urban areas. This type of mobility is
bound to affect the structure of retailing because it decrease population in
the rural area and increases that of the urban areas.
DISPOSABLE INCOME
The
levels of disposable income available to the people also affect the retail
structure. Disposable income measures the standard of living of a people. Low
disposable income will encourage small retail outlets while high disposable
income will stimulate large scale retail outlets. Disposable income means that
portion of one’s income which one can spend on oneself after paying for taxes
and other essentials.
SOCIAL CUSTOM
The
culture of a people also affects retail structure. Until recently, most
Nigerians preferred to buy their needs from the open market or small retail
outlets instead of large scale retail establishment. This had encouraged small
retail outlets to the disadvantage of the big retail outlets. This has a
linkage with both the disposable income and the standard of living.
COMPETITION
Competition
in retailing institution is of two types, competition between retail
institutions of different kinds and competition between institutions of the
same kind. In general, competition stimulates growth within the institution and
those retailing outlets that cannot cope may decline and eventually liquidate.
FUNCTIONS OF RETAILERS
The
functions of the retailer include:
1.
The primary functions of a retailer are the assembling
at convenient points a wide assortment of goods from numerous sources.
2.
The retailer keeps ready stocks to meet the demands of
consumer every day.
3.
He brings new products and new varieties to the
knowledge of consumers.
4.
He offers expert advice to the consumers on the merits
and suitability of the products.
5.
He extends credit, undertakes door delivery and allows
liberal exchange facilities.
6.
The retailer saves the manufacturer from the expensive
and time consuming process of direct marketing.
7.
He undertakes also promotion activities through
window-display and counter display
8.
The retailer who buys in fairly large quantities from
the wholesaler normally has to break the bulk further so that he can sell at appropriate
quantities to the consumers.
9.
Retailers with known “Goodwill” sometimes undertake
local branding of not too well known manufacturers goods, to facilitate easy
sales.
10.
Some large retail outlets like departmental stores and
supermarkets have facilities for delivery of purchased items such as furniture
and other consumer durables to buyer’s premises.
11.
The retailer opens at convenient hours for the benefit
of the shopper. The large retail outlets have the opening and closing hours,
which may be meet the requirements of both the working and non-working
housewife.
12.
They pass information from consumers about their
complaints and preferences to wholesalers for onward transfer to the producer.
13.
Completion of production process such as labeling
14.
Providing after-sales services to customers such as
installation and maintenance services.
15.
Selling to consumers at convenient place and time.
RETAILER MARKETING
DECISIONS
The
basic framework for deciding retail marketing strategy cannot be over
emphasized. We will examine retailer’s marketing decisions in the areas of
retail positioning, store location, product assortment and services, price, communication
and store atmosphere.
RETAIL POSITIONING
Retail
positioning involves the choice of target market and differential advantage.
Targeting allows retailers to tailor their marketing mix, which includes
product assortment, service levels, store location, prices and promotion, to
the needs of their chosen customer segment. Differentiation provides a reason
to shop at one store rather than another. A useful framework for creating a
differential advantage has been proposed by Davies, who suggests that
innovation in retailing can come only when novelty in the process offered to
the shoppers, or from novelty in the product or product assortment offered to
the shopper.
STORE LOCATION
Convenience
is an important issue for many shoppers, and so store location can have a major
bearing on sales performance. Retailers have to decide on regional coverage,
the town and cities to target within regions and the precise location within a
give town or city. Many retailers begin life as regional suppliers, and grow by
expanding geographically. In the UK,
for example, the Asda supermarket chain expanded from the north of England,
while Sainsbury’s original base was in the South of England.
The
choice of town or city will depend upon such factors as correspondence with the
retailer’s chosen target market, the level of disposable income in the
catchments area, the availability of suitable site, and the level of
competition. The choice of a particular site may depend on the level of
existing traffic (Pedestrian and / or vehicular) passing the site, parking
provision, access to the outlet for delivery vehicles, the presence of
competition, planning restrictions, and the opportunity to form new retailing centers with other outlets.
PRODUCT ASSORTMENT AND SERVICES
Retailers
have to decide upon the breadth of their product assortment and its depth. A supermarket,
for example, may decide to widen its product assortment from food, drink and
toiletries to include clothes and toys, this is called scrambled merchandising.
Within each product line it can choose to stock a deep or shallow product
range. Department stores, however, offer a much broader range of products
including toys, cosmetics, jewelry, clothes, electrical goods and household
accessories. Some retailers begin with one product line and gradually broaden
their product assortment to maximize revenue for customers.
The
choice of product assortment will be dependent on the positioning strategy of
the retailer, customer expectations, and ultimately on the profitability of
each product line. Slow moving unprofitable lines should be dropped unless they
are necessary to conform with the range of products expected by customers. For
example, customers expect a full range of food products in a supermarket.
Another
product decision concerns own-label branding. Large retailers may decide to
sell a range of own-label products to complement national brands. Often the
purchasing power of large retail chains means that prices can be lower and yet
profit margins higher than for competing national brands. This makes the
activity an attractive proposition for many retailers.
Finally,
retailers need to consider the nature and degree of customer service. Discount
stores traditionally provided little services but as price differentials have
narrowed some have sought differentiation through service. For example many
electrical goods retailers provide a comprehensive after-sales service package
for their customers. Superior customer service may make customers more tolerant
of higher prices and even where the product is standardized (as in fast food
restaurants) training employees to give individual attention to each customer
can arise loyalty to the outlet.
PRICE
Price
is a key positioning factor and must be decided in relation to the target
market, the product – and – service assortment mix, and the competition. All
retailers would like to achieve high volumes and high gross margins. They would
like high turns x Earns, but the two usually do not go together. Most retailers
fall into the high-markup, lower-volume group (fine specialty stores) or the
low-markup – volume group (mass merchandisers and discount stores).
Retailers
must also pay attention to pricing tactics. Most retailers will put low prices
on some items to serve as traffic builders or loss leaders. They will run
storewide sales. They will plan markdowns on slower-moving merchandise.
COMMUNICATION
Retailers
use a wide range of communication tools to generate traffic and purchases. They
place ads, run special sales, issue money-saving coupons, and run frequent
shopper-reward programs. in-store food sampling, and coupons on shelves or at
checkout points. Each retailer must use communications that support and
reinforce its image positioning. Fine stores will place tasteful, full-page ads
in magazines such as vogue, Vanity Fair or Esquire. They will carefully train
sales people to greet customers, interpret their needs, and handle complaints.
Off-price retailers will arrange their merchandise to promote the idea of
bargains and large savings, while conserving on service and sales assistance.
STORE ATMOSPHERE
This
is created by the design, colour and layout of a store. Both exterior and
interior design affect atmosphere. External factors include architectural
design, signs, window display and use of colour that create an identity for a
welcoming rather than an intimidating mood. The image which is projected should
be consonant with the ethos of the shop.
Interior
design also has a major impact on atmosphere. Store lighting, fixtures and
fittings, and layout are important considerations. Supermarkets that have
narrow aisles that contribute to congestion can project a negative image, and
poorly lit showrooms can feel intimidating. Colour, sound and smell can affect
mood. Colour has meaning and can be used to create the desired atmosphere in a
store. Supermarkets often use music to create a relaxed atmosphere, whereas
some boutiques use pop music to attract their target customers. Departmental
stores often plan perfume counters near the entrance, and supermarkets may use
the smell of baking bread to attract their customers.
THE VALUE OF
RETAILING
Retailing
is an important marketing activity. Not only do producers and consumers meet
through retailing actions, but retailing also creates customer value and has a
significant impact on the economy. To consumers, the value of retailing is in
the form of utilities provided. Retailing economic value is represented by the
people employed by retailing as well as by the total amount of money exchanged
in retail sales.
CONSUMER UTILITIES OFFERED BY
RETAILING
The
utilities provided by retailers create value for consumers. Time, place,
possession, and form utilities are offered by most retailers in varying
degrees, but one utility is often emphasized more than others.
Providing
minibanks in supermarkets as wells Fargo
does, puts the bank’s products and services close to the consumer, providing
place utility. By providing financing or leasing and taking used cars as trade-ins,
Saturn makes the purchase easier and provides possession utility. Form
utility-production or alteration of a product is offered by Levi Strauss and
Co. as it creates “Original Spin” jeans to meet each customer’s specifications.
Finding toy shelves stocked in May is the time utility dream about by every
child (and many parents) who enters Toys “R” US. Many retailers offer a
combination of the four basic utilities. Some supermarkets, for example, offer
convenient location (place utility) and are open 24 hours (time utility). In
addition, consumers may seek additional utilities such as entertainment,
recreation, or information.
CHANGE IN
RETAIL INSTITUTION
Retailing
is the most dynamic aspect of a channel of distribution. Store such as factory
outlets show that new retailers are always entering the market, searching for a
new position that will attract customers. The reason for this continual change
is explained by three concepts. These are wheel of retailing, the retail
accordion and the retail life cycle.
WHEEL OF RETAILING THEORY
According
to Rachman, et al. (1980), changes in
retailing are cyclical. At first, a new store type changes an existing
institution by cutting prices, using crude facilities, giving few services, and
offering only a limited merchandise selection. Gradually, they acquire more
elaborate establishments and facilities, which require both increased
investments and higher operating costs. Finally, they nature as high-cost,
high-price merchants, vulnerable to newer retailers who in turn, go through a
similar wheel pattern.
The
wheel of retailing hypothesis according to pride and Ferrell (2008) states that
“new retailers usually enter the market as low-status, low-margin, and
low-price operators”. This theory or hypothesis explains many changes in
retailing. But it must be noted that not all changes in retailing result from
an effort to cut costs. An instance is the vending machine which is a high cost
innovation but is recording elements of success.
RETAIL ACCORDION
In
the words of Mason and Mayer (1984), the accordion theory of retail development
focuses on changes in the width of the product mix offered by the types of
retail institutions. The theory states that “Retail institutions offer a
product mix that is first very wide, then much narrower, and then returns to a
wider product mix. This theory was based on the experience of retail development
in the U.S.A.
The development started with the general stores some of which developed into
departmental stores with narrower product mix. Mail-order stores developed
later with more specialized lines and were followed by single-line and
specialty stores. Now there are the conglomerate merchants which are retail
empires combining several types of
stores under one management.
RETAIL LIFE CYCLE THEORY
The
retail stores are here likened to products which have life cycles. Kevin Roger et al (2003) identified four stages –
early growth, accelerated development, maturity and decline. The early growth
may also call the innovative stage. The movement to a new phase is brought
about by competitive pressure, but not necessarily related to cost cutting.
In
the early or innovative stage, a new type of retail institution emerges with
distinctive offers to the consumers. Such offers may include lower prices, ease
of shopping location, distinctive product assortment and unique promotional
techniques.
During
the accelerated development stage, sales volume and profits grow rapidly. These
are indicators that attract many competitors and efforts by existing firms to
sustain growth, would result in increased operating costs.
At
the maturity stage, sales growth and market share level off. The firms would
have assumed larger status with increased inventories that may increase space
and storage costs. In addition, new forms of competition from other retailing
firms may set in.
These
maturity associated problems contribute to the decline stages. At this stage,
sales drop drastically and profits may be low or negative. During this stage,
retailers struggle to avoid decline by repositioning their store or by
modifying their marketing approach.
The
implication of this theory is that business people going into new type of
retailing have less time than ever before to recover their investments. In
other words, retailing is becoming more risky.
ADVANTAGES
AND DISADVANTAGES OF SMALL AND LARGE SCALE RETAIL ORGANIZATIONS.
ADVANTAGES OF SMALL RETAIL OUTLETS
These
types of outlets appeal to people with lean resources and offer the following
advantages
a.
Location: - They can
easily be located at places which are convenient for both the retailers and the
buyers. This advantage derives from their size.
b.
Personal
contact: - Small retail outlets create avenue for the effective interaction
between the retailers and the buyers. Being mostly neighbourhood stores, both
sellers and buyers know themselves and can easily exchange pleasantries.
c.
Motivation to
work: The owners are usually independent retailers who depend on their stores
for livelihood. They regard the store as a part of them and are strongly
motivated to work for the success of the stores. The retailers appreciate that
they well fall or rise in status with the operations of the stores. This
accounts for long operating hours of most of these stores without any grudge by
their owners.
d.
Job
opportunity: Small retail outlets require little amount of money
to take off. This has encouraged many jobless people to start on their own.
DISADVANTAGES OF SMALL RETAIL OUTLETS
The
disadvantages associated with small retail outlets can be examined by looking
at their scope of operation. By their nature, the scope of operation is usually
narrow. The immediate implications are that such retail outlets lack the
financial resources, and manpower required for the efficient management of a
business.
Lack
of financial resources makes expansion difficult. The retailer under such a
situation cannot take opportunity of low prices, cash and quantity discounts.
Retail outlets under consideration are usually small and qualified hands will neither
accept to work in them nor will their owners make attempts at recruiting them.
This accounts for why they remain as one-man business for a long time. There
are, however, few small retail outlets whose owners have strived in elevating
both their status and capital base.
ADVANTAGE OF LARGE SCALE RETAIL
ORGANIZATION
Large
retail outlets command relatively huge financial resources and this enable them
to increase their capital base. The advantages they have arisen from this
capital base are:
a.
Buying power: These
retail organizations have the capital and even can afford to buy large
quantities of goods at a given time. They are therefore regarded as “valued
customers”. This entitles them to reasonable trade, quantity and cash
discounts.
b.
Division of
labour: As large retail organizations they need specialist hands to negotiate
their purchases, to handle their accounting system, to supervise sales etc. the
engagement of these experts makes for division of labour with its attendant
benefits.
c.
Access to
Capital: In business, the biblical saying that “to those who have, more will be
added onto them” is very true. Small retail outlets cannot have access to easy
capital because their capital base is small and no security to use for a loan.
But large retail organizations have strong capital base and good security which
enable them to borrow from the financial institutions very easily. They can
also attract credit facilities faster from their customers.
d.
Distribution: These
retail organizations buy in large quantities which mean that they can move
their goods in car load quantity. This reduces the cost of transportation. In
addition, they have their own warehouses and thereby minimize the storage
costs.
e.
Prestige: - Large
retail organization, like Kingsway, leventis, etc. have imposing stores, good
layout, attractively displayed shelves, etc. which have combined to give them
prestigious image within the society. Customers have high opinion of such
stores and they make sure they dress well while going to shop in them.
f.
Research and
experiment: Given their financial base, they are in a very good position to
research and carryout experiments on new methods of retailing.
DISADVANTAGES OF LARGE SCALE RETAIL ORGANIZATION
These
disadvantages derive from the large size of these organizations. They include
lack of personal contact, complex supervision, high overhead costs and problem
of adjustments.
REFERENCES
Aham Anyanwu
(2000), Dimensions of Marketing. 2nd Edition. (Owerri: Pascal
Publications), p.146.
Ben, Ogedengbe
(2007), Small Business Management: A Contemporary Approach. 1st
Edition (Kaduna:
Data Prints), p. 152.
David Jobber
(2009), Principles and Practice of Marketing. 3rd Edition. (New York: McGraw –
Hill), p. 745 – 760.
M.O. Ode et al (2011), Fundamental of Marketing
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