Types of Retailers

The retailers can be classified into small scale retailers and large scale retailers.

A. Small Scale Retailers

Retail trade is carried on both at small scale and large scale. Small scale retailers are either
mobile traders (itinerants) or fixed shops. Mobile Traders or Itinerants
These retailers have no fixed place of business. They move from place to place and
sell articles of daily use near to consumers. These include the following:

1. Hawkers: A hawker moves about in residential localities. He carries his goods in a hand
cart or bicycle. He deals in low-priced goods of daily use. E.g. combs, toys, soaps,
mirrors, bangles, vegetables, fruits, ice-cream, etc.

2. Peddlers: A peddler also moves from house to house and sells articles of daily use. But
he carries his wares on his head or on the back of a mule.

3. Cheap Jacks: A cheap jack hires a small shop in a residential locality for a temporary
period. He shifts his business from one locality to another depending on the availability
of customers. He deals in low-priced household articles.

4. Pavement dealers or Street Traders: A pavement dealer displays his wares on footpath
and outside public places such as railway station, bus stand, cinema, temple, etc. He sells
low priced articles like newspapers, magazines, fruits, vegetables, footwear to the
passersby. He is also called street trader.

5. Market Traders: A market trader sells goods at weekly markets when the shops are
closed for weekly holiday. He displays goods outside the closed shops. He deals in low-
priced articles of daily use. He may also set up stalls on fairs and exhibitions.

Fixed Shops (Small Scale Retail Shops) Small scale retail shops are the most popular form of
retail trade. These may be classified as follows;
 1. Street stalls holders: These stalls are located in the main streets or street crossings. A
stall is an improvised structure made of tin or wood. The street stall holder displays his
goods on a temporary platform and sells toys, stationery, hosiery items, etc. at low prices.

2. Second hand goods shops: These shops sell used or second hand articles such as books,
clothes, furniture, etc. They cater to the needs of poor people who cannot afford new
articles. These shops collect goods at private and public auctions.

3. General stores: These stores sell a wide variety of products under one roof. .For
example, a provision store deals in grocery, bread, butter, toothpaste, razor blades,
bathing soap, washing powder, soft drinks, confectionery, cosmetics, etc. Consumers can
buy most of their daily requirements at one place. Their time and effort is saved. Some of
these stores offer free home delivery and monthly credit facilities to regular customers.

4. Single line stores: These stores deal in one line of goods. They keep stock of different
size, design and quality of goods in the same line. Book stores, chemist shops, electrical
stores, shoe stores, cloth stores, jeweler shops, etc., are examples of single line stores.

5. Specialty shops: These shops generally specialize in one type of product rather than
dealing in a line of products. Shops selling children’s garments, educational books, etc.,
are examples of such shops.

Difference between street traders and street shops

B. Large Scale Retailers

The retail trade is conducted now on a large scale. The mass production of goods and the
concentration of population in urban centers have necessitated the establishment of large-scale
retail trading houses. There are many advantages of retailing on a large scale.
However, in spite of the economies of large scale retailing, the small-scale units could not be
eliminated because of the various special advantages possessed by them. Some of the more
prominent large-scale retail organizations are as follows:

 Departmental Stores
 Multiple Shops or Chain Stores
 Mail Order Houses
 Super Markets
 Consumer Cooperative Stores
 Vending Machines

1. Departmental Stores: A departmental store is a large-scale retail organisation having a

number of departments under one roof. Each department specializes in one particular
kind of trade. All these departments are centrally organized and are under one united
management and control. A departmental store is an organization of several retail stores
carried on in one building and under united controlled management. The basic objective
of a departmental store is to provide a large variety or merchandise from a pin to an aero
plane at one place.

The following points highlight the features of a departmental store:

 Central locations: Department stores are generally located in central areas so as to

attract a large number of customers.
 Defined hierarchy: The management in departmental stores follows the same hierarchy
that is generally followed in any joint stock company. That is, the top management
consists of a board of directors, with the managing director, the general manager and the
department managers under it in that order.
 Absence of middlemen: Departmental stores purchase goods directly from
manufacturers and sell them to customers. Thus, they eliminate the role of middlemen.
 Centralised purchase with decentralised sales: In a departmental store, the purchases
from manufacturers are handled by a single division that follows a centralised purchase
policy. On the other hand, the sales are handled by the respective sections of the
departmental store, which follow a decentralised policy for sales.

2. Multiple Shops or Chain Stores: A multiple shop system is a network of branch shops,
situated at different localities in the city or in different parts of the country, under a
centralised management and dealing in similar lines of goods. Such multiple shops are
very common and popular in the west and are known as Chain Stores. According to J.L.
Fri, “Chain Stores is a group of stores handling similar lines of merchandise with single
ownership and centralised location.” The Federal Trade Commission defined a chain
store as “an organization owing a controlling interest in two or more establishments
which sell substantially similar merchandise at retail prices.”

Differences between Departmental stores and multiple shops

3. Mail Order Sale Houses: A Mail Order Sale is a retail business where orders are placed
by post or mail and goods Eire received either by registered parcel or V.P.P. i.e., Value
Payable Post. Under such a type of selling, the seller advertises his products in the
 leading dailies and magazines of the area and the intending buyers respond to such
advertisements by requesting for catalogues and price lists from the seller. The buyers do
not inspect the goods before purchasing but place orders on the basis of the
advertisements which they see in the newspapers and magazines. After orders are
received from customers, the goods are dispatched by V.P.P. or registered mail. The
postman of the buyer’s locality delivers the goods to him and takes the payment for the
same. Thus the post office play a vital role in such type of sale, and it is because of this
type of sale is also sometimes referred to as “Shopping by Post”.
4. Super Markets: The super market is a large-scale retail institution specializing in
necessaries and convenience goods. They have huge premises and generally deal in food
and non-food articles. In the words of M. M. Zimmerman, “A super market is a
departmentalized retail establishment having four basic departments viz, self-service
grocery, meat produce, dairy products plus other household departments, doing a
maximum business. It may be entirely owner operated or have some of the departments
leased out on a concession basis.”Super markets came into existence in the USA during
the Great Depression of the thirties. However, the original super markets were established
by independent merchants who dealt mainly in food products.
5. Consumer Co-Operative Stores: A consumer co-operative is a retail business which is
owned by the consumers themselves. Their basic objective is to eliminate middlemen.
The consumers join together and manage the business and the profit thus earned is
retained among themselves in the proportion of their contribution. The society purchases
in bulk and avails the discounts and sells in small lots to the members. Some of the co-
operative stores are run on a large-scale basis while others are small in size and nature.

The following are some advantages that consumer cooperative stores have over large- scale
retailers:

 Democratic management: Consumer cooperative stores are democratic organisations as

they are managed and controlled by elected managing committees of consumer societies.
The members of managing committees are elected by the members of consumer societies
on the principle of ‘one member, one vote’.
  Limited liability: The liability of the members of consumer cooperative societies is
limited to the amount of shares held by them. Thus, in case a society’s liabilities increase
beyond the assets, the members will not be liable to repay the debts using their personal
assets.
 Low price of goods: As the goods offered by consumer cooperatives are directly
purchased from manufacturers and wholesalers, the role of middlemen is eliminated.
Therefore, consumer societies are able to sell goods at lower prices.

6. Vending Machines: Such selling machines are extensively used in the west. The vending
machine is operated by inserting a coin and the buyer can get the articles. Vending
machines are usually acquired to sell articles like cigarettes, soft drinks, chocolates,
candles etc. Railway platform and bus tickets are also sold by this method. The articles
sold by a vending machine are pre-packed and labeled and are usually of reputed brands.
The goods should be uniform in size and shape and less bulky in weight. The installation
of such machines is an expensive affair and it needs regular maintenance also. Such
machines are quite attractive in appearance and installed at busy shopping centers.

Super market

Super market is nothing but a retail organization providing food and household articles to
consumer under one roof without any kind of sales pressure from salesmen and sale assistants.
The United States of America (USA) is said to be the homeland .of super markets.
In India, Apna Bazaar, Sahakari Bhandar, etc., are some good examples of super markets or
super bazaars.

According to Dictionary of Business and Finance, Supermarket is defined as, “Large store
selling a wide variety of consumer goods, particularly food and small articles of household
requirements.”
Features of Super market

The characteristics or features of the super market are as follows:

1. Centrally located in big premises: Super markets are normally opened in a central
locality where ample space is available. It is housed in big premises. Without such
premises proper display of different goods cannot be arranged.

2. No sales pressure: One important feature of a super market is self-service. There is a

complete absence of salesmen and sales assistants. Thus, there is no sales pressure of any
kind. Customers can make a selection according to their needs and desires.

3. Maintains low prices: The prices of goods in the super markets are reasonable or low.
This is because they (companies running super markets) buy in bulk and enjoy all the
advantages of bulk buying. Similarly, their salary bill is low due to the absence of
salesmen and sales assistants.

4. Sell goods on a cash basis: Super markets sell goods on ‘Cash and carry basis In such a
kind of a business, credit facilities are usually not offered. This reduces bad debts.

5. Deals in necessaries of life: Super market deals in commodities, which are required

regularly. Thus, they deal in tinned products of well-known brands, groceries and
provision, ready made garments, fruits, etc. The turn over is quick as the demand for the
necessaries of life is a continuous one.

6. Established by companies: Super markets are retailing shops, which are large in size.
They do business on a large scale and require huge financial resources. Hence, they are
normally established by Joint-stock companies.

7.  Deals in pre-packed goods: Super market normally deals in pre-packed goods or

products. It uses latest and up-to-date packing material to protect quality and quantity. On
all packages, prices, weights, particulars of goods, grade and quality are specified.

8. Needs huge capital to operate: Super market is a large retail trading organization. It

requires a substantial amount of capital for big premises, huge warehousing, ample
parking and stocking of a wide variety of commodities.

9. Self-service store: Customers are given attractive trolleys or hand baskets or bags for
keeping goods which they want to buy. Goods are systematically arranged and
 beautifully displayed. Customers select these goods and keep them in the trolley. Finally,
they have to come to the billing section for making payment and then delivery is given at
the delivery counter.

Advantages of Super Market

 Saving in labour cost due to self-service system.

  Super market has large turn over.

 Reasonable or low prices of goods.

  Low cost of operation.

 Freedom of selection.

 Shopping is very easy and quick.

 Due to adequate parking space, shopping becomes easy and pleasing activity rather than
boredom.

  High degree of efficiency due to elimination of service.

  High margin of profit to organizers.

 Advantages of large scale operations.

Disadvantages of Super Market

The disadvantages of a super market or Super Bazaar are as follows:

 Super market requires huge financial resources.

 It is normally situated at a long distance from the residential localities.

 There is lack of personal attention.

  Super market does not provide various services such as free home delivery, personal
guidance, credit facility and after sale service.

 It faces the problem of coordinating activities of various sections of the market.

 It requires large and extensive premises.

 Goods which require explanation by salesmen cannot be sold in such markets.

The differences between departmental stores and multiple shops are summarized below:

I. Location: A departmental store is centrally located and attracts customers towards it. On
the other hand, multiple shops are situated in different localities and attempt to reach near
the customers.

II. Variety of goods: A departmental store deals in a wide variety of products and serves as
a universal supplier. On the other hand, a multiple shop specialises in one line of goods.

III. Type of customers: A departmental store caters mainly to rich people, whereas multiple
shops cater to the general public.

IV. Nature of dealings: A departmental store sells goods both on cash and credit basis. But
multiple shops sell goods on cash and carry basis.

V. Services: A departmental store offers banking, post office, restaurant and other facilities
to customers. Multiple shops do not offer such services.

VI. Pricing: Different departments of a departmental store may sell goods at different prices.
But all the multiple shops sell goods at the same prices.

VII. Decoration and display: Every department of a departmental store may have different
decoration and display. But all the multiple shops of an owner have uniform shop
decoration and window display. A departmental store advertises at local level, whereas
multiple shops advertise at national level.
VIII. Object: A departmental store aims at providing everything at one place. Multiple shop
system, on the other hand, is an attempt to eliminate middlemen and establish direct
contact between the manufacturer and consumers.

IX. Flexibility: In a departmental store quick adjustment can be made according to local
changes. One line of goods can be substituted by others. Multiple shop system lacks such
flexibility.

X. Control: In a departmental store, heads of departments have considerable discretion in

the management of operations. Branch managers in a multiple shop system have to
follow the policies and procedures laid down by the head office.

XI. Ownership: A departmental store is generally owned and established by a retail trader.
On the other hand, multiple shop system usually operates under the ownership and
management of a manufacturer or a wholesaler.

XII. Risk: Risk involved in a departmental store is relatively greater because success depends
on the prosperity of a single location. In multiple shops system risks are spread over
different shops located in different areas.