written by | November 4, 2022

Understanding Retail Trade and Its Features In Detail

×

Table of Content


Retail trade is a business in which the seller sells their goods to the consumer as per their needs. Departmental stores and supermarkets are prevalent examples of the retail trade business model. All items undergo a distribution channel to travel from the producer to the last consumer. One essential piece of this set up is the retail change, the last step of the distribution channel. 

Did you know? Most of the products at retail stores are of better quality than those at online shopping stores. Retail stores offer genuine products at cheaper rates than popular online shopping stores.

Also Read: What are the Pros and Cons of Free Trade?

Understanding Retail Trade

Retail trade is an enterprise pillar that is related to the sale of products to the very last customer, the final customer. It is the hyperlink between wholesalers or producers and the clients of the product. Retail businesses are divided into two categories: large-scale and small-scale. The major difference is that small-scale retail businesses are restricted to a small variety of goods. In contrast, there is a wide variety of products in large-scale retail businesses.

Retail is the very last step of the distribution channel. Retail exchanges can take lots of forms. It is not vital that the products are bought from a store; retail exchange may even occur over the phone, through put-up or mail service, door-to-door promotion, etc. So the vicinity of sale can also fluctuate greatly, for example, a store, a supermarket, the customer’s residence, or maybe a merchandising machine.

Concept of Retail Trade

Retailers are the essential hyperlink between manufacturers and customers. They are the final income factor and are precious to the complete distribution channel. They offer services to the wholesalers as well as to the consumers. Let us have a look.

The full-fledged retail trade business model is discussed below.

Final Link in Distribution of Items

This is a characteristic of place utility. Wholesalers or manufacturers can't cover an extensive geographical area or market to promote the products to the final consumer. It falls upon the store to create space utility and ensure that the products are distributed to the whole marketplace and reach all clients. Retailers are the link between the wholesalers and the final customers.

Personalised Selling Efforts

Certain items require personal selling. These are non-standardised items that cannot be picked off the shelves. But the manufacturer isn't there to promote the product; that duty falls to the shops. They use personal promoting strategies to execute the sale. Take, for instance, promoting shoes, which constantly calls for private contact from the store.

Economies of Scale

A manufacturer can produce items in bulk, and a wholesaler can purchase items in bulk because shops carry out the characteristic of breaking apart the bulk. Although they purchase in bulk, they promote smaller (and, on occasion, individual) units. This permits the manufacturers or wholesalers to revel in the economies of scale.

Market Information Source

Retailers are in direct contact with the final clients every day. They are uniquely positioned to offer the manufacturers the precious feedback they've accumulated from the clients. If a customer has complaints about any product, the store is the primary person he contacts. Such facts are valuable to the producers in their quest to enhance their products.

Advertising and Promotions

Retailers can help manufacturers and wholesalers with their promotions and commercials. Retailers will regularly participate in promotional activities such as placing commercials for the product inside their shops, running offers, discounts, etc.

Also Read: Top Performing Import-Export Business Ideas In India

Importance of Retailers

Retail stores are very important in the neighborhood of each person, and the following points will give a clear view regarding the importance of retailers

Convenience

Retail stores overcome geographical barriers by allowing their customers to shop for all of their products at their local market, which is close to their homes. Additionally, consumers no longer have to worry about sourcing the goods they require because retailers execute this function for them. So, if a consumer in Chennai wants to buy a product made in Mumbai, he or she only needs to go to their local retail store.

Assured Availability

A customer does not have to hassle shopping for the products in bulk. They can purchase them in individual units as and when required. The retail store will ensure that the product is available when the need for it arises. There is no fear of storage or warehousing as such for the customer.

Variety

Another essential service that shops offer to customers is that they offer a whole lot of options to their customers. The variety offered allows the customer to make the first-class choice for themselves after having reviewed all of the options.

Service after purchasing an item

Certain merchandise, in certain instances, requires a little installation, demonstration, or after-sales service. It typically falls upon the shops to offer such offerings to the customers. Here, retail stores play a major role because if a person purchases a product from a retail shop and, unfortunately, the product turns out to be faulty after installation, then that person can replace the product immediately from the retail store. At the same time, online stores take up to 2-3 days to replace it.

The facility of credit

A store, for instance, will provide the customer with a financing alternative or a credit facility to pay the price in month-to-month installments or, in reality, to defer the price to some other date. This allows the consumer to shop for the products they want even though they do not presently have to pay the whole amount for their purchase.

Also Read: Most Easy Steps in Starting an Import Export Business

Conclusion:

The retail trade industry is undoubtedly one of the biggest and fastest developing worldwide. The boom of many nations additionally depends upon the boom of their retail trade. Retail trade is a dynamic marketplace, with many global manufacturers entering it to capitalise on changing consumption patterns. With proper reforms and government initiatives, the retail trade industry is inching its way toward becoming the next growth industry. The destiny of the retail trade industry seems promising, as beneficial government policies will come into play, making it easier to do business.
Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: What are the different types of retailers?

Ans:

There are various types of retail traders:

  • Itinerant traders don't have a uniform rate of items. They commonly promote items which are effortlessly consumable, like vegetables, and have different ways of promoting them from door to door.
  • Fixed-store traders promote products at constant fees, even though they will give discounts. The prices of products offered by such traders are nearly uniform everywhere across the market, and the discounts or different offerings from the selected dealers may also attract clients.

Q: Why are some products only available to retailers?

Ans:

Retail buying and selling is a vital enterprise activity. It is the one with the factor of contact with the client. It can play a critical function in growing a brand's image and reputation and attracting the attention of most customers. So, to create a well-crafted personal experience for the clients, manufacturers must regularly promote their products at their novelty stores. Usually, high-end line products are offered at these locations. For example, customers can only purchase Tanishq jewellery from their retail stores.

Q: What is the significance of retail traders to manufacturers?

Ans:

Retailers play a vital function for the manufacturers as they buy bulk portions from them despite low costs. This provides them with a guarantee of the sale. They are also capable of promotion at faraway locations, which allows the goods to reach far and wide. They additionally relay feedback on merchandise to the manufacturers.

Q: Retailers are the only solution to the problem of space. True or false?

Ans:

The given statement is true. A manufacturer or wholesaler can't cover the whole marketplace for good. It spreads over a huge geographical area, just like the entire country. Retailers help to triumph over this barrier of space because they're spread out in all the neighbourhood markets.

Q: What do you understand about the retail business?

Ans:

Purchasing items and merchandise at wholesale cost in bulk quantities from wholesalers or directly from the manufacturers and selling them to the proper customers at a profit is called retail business. Retailers act as both an advertiser to customers and a feedback mechanism for manufacturers, acting as a link between manufacturers and customers.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
×
Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.