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Types of Retail Trade: Explained

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Retail Trade Meaning and Types

Retail trade is a business activity that is performed; selling goods directly to the consumers is known as retail trading. It doesn't provide goods or material to the corporations. It acts as a final distribution channel in the journey of selling goods from the manufacturer to the consumer. It doesn't deal with the wholesale or lump sum amount of goods and services. The shops which use these retail trading are known as retail outlets of a particular company or a product. And the persons who perform these trading activities are nothing but retailers.

 

The retail trade bridges the gap between manufacturers or wholesalers and consumers. The trading activity will be performed in various ways. The consumer can come to the retail store and purchase his requirements. Also, the orders can be taken from the phone or online, etc. Retail trading also has some strategies to provide festival offers, discounts, price reductions while placing bulk orders, etc.


The business activity of selling items to the final consumer, or ultimate customer, is known as retail trade. It serves as a link between wholesalers or manufacturers and the product's end users. 


Typically, retailers sell things to consumers in modest amounts for personal use alone, not for resale or company.


The final phase in the distribution chain is retail. The retailer will purchase the goods in bulk (big quantities) at a discounted price from the wholesaler or, in some cases, straight from the producer. 


The firm then offers the goods to the ultimate consumers in small units or quantities at retail prices, profiting in the process.


Types of Retailing Trade

So we call it retail trade when the goods are sold to the final consumer for personal use. Buying a thing from a store or a roadside hawker is still retail trade. So how can we categorise the different retailers we encounter? 


We can categorise them by size or ownership modules. One simple technique is to categorise them as fixed or not. 

  1. Itinerant Retailers

These are retailers who don't have a set location. Their business is distinguished by frequent shop relocations. They are retailers even if they do not have a physical location.


Features

  • The operation is tiny. 

  • Itinerant retailers also have capital constraints.

  • They mainly deal in everyday commodities like fruits, vegetables, milk, toiletries, etc.

  • These businesses promote client convenience by bringing things to their doorsteps.

  • They have low inventory due to frequent relocations.


Types:

  • Peddlers and Hawkers

Hawkers and peddlers are among the world's oldest retailers. They transport their stuff via bicycle, hand cart, basket, etc. 


They set up shop in markets and on streets. So they travel to contact as many clients as possible. Hawkers don't usually offer branded goods, but rather non-standardized everyday items. 


  • Cheap Jacks

Unlike hawkers, cheap jacks have a shop, but it is temporary. They move these temporary shops if better possibilities arise elsewhere. 


  • Market Traders

These are small shops that only open on market days. So if the market is only open Mondays and Wednesdays, they only trade then. 


They usually specialise in one product line. These stores' major consumers are low-income or bulk buyers (but still for personal use).


  • Street Traders

Street traders are sometimes known as pavement sellers. They set their shop on streets near schools, cinemas, train stations, etc. and sell everyday items. Eg. Newspaper seller, food item seller etc.


  1. Fixed Shop Retailers

They operate from a fixed location and are self-explanatory. They are permanent structures that do not relocate frequently.


Features

  • Fixed shop retailers often operate on a considerably larger scale, though this varies by store type.

  • They need a lot of cash for merchandise and infrastructure.

  • They also provide a wide range of products and services.

  • Consumers and manufacturers/wholesalers trust these businesses more.


Types:

  • General Stores

General stores are the most common in India. They stock everything from crackers and grains to toothpaste and shampoos. They are positioned in a market where clients may easily access them. To promote convenience, these establishments sometimes offer home delivery and credit options.


  • Speciality Stores

Stores that specialise in one product category, such as women's clothing, technology, or cosmetics. They exclusively sell things from one category. Vijay Sales exclusively sells electronics. These shops are frequently located in cities. They set up shop in a busy area, like a mall, to maximise foot traffic.


  • Secondhand Products Store

They sell used goods. Some of these used things are rare books or furniture or even cars. Their products are sourced differently than typical merchants, although they are still considered retail. 


  • Street Stallholders

These vendors have permanent stalls put up on the street. They don't move their stalls often. Their shops are small, thus they can't hold much stuff. They also deal in everyday products like clothing, stationery, and tobacco.

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FAQs on Types of Retail Trade: Explained

1. What exactly is meant by retail trade in business studies?

Retail trade is the final stage in the distribution of goods. It involves the sale of goods and services directly to the final consumers for their personal use, not for resale. A person or business that engages in retail trade is known as a retailer. For example, your local grocery store or a large clothing showroom are both part of the retail trade.

2. What are the two primary categories of retail trade?

Retail trade is broadly classified into two main categories based on the place of business:

  • Itinerant Retailers: These are traders who do not have a fixed place of business. They move from one place to another to sell their goods, like hawkers and pedlars.
  • Fixed-Shop Retailers: These retailers operate from a permanent establishment or shop. They can be small-scale (like a local general store) or large-scale (like a supermarket or a mall).

3. What's the main difference between a retailer and a wholesaler?

The main difference lies in who their customer is. A wholesaler buys goods in large quantities from manufacturers and sells them to retailers. A retailer, on the other hand, buys goods in smaller quantities from wholesalers and sells them directly to the final consumers. The retailer is the last link in the supply chain before the customer.

4. Can you give some common examples of fixed-shop retailers?

Fixed-shop retailers are very common and can be found everywhere. Some popular examples include:

  • General Stores: Your neighborhood kirana shop that sells a variety of daily-use items.
  • Speciality Shops: Stores that focus on a specific line of products, like a bookstore or a shop that only sells shoes.
  • Departmental Stores: Large stores offering a wide range of products organised into different departments, such as clothing, electronics, and home goods.
  • Supermarkets: Large, self-service stores that mainly sell groceries and household items.

5. Why are retailers considered important for both manufacturers and consumers?

Retailers play a crucial role as a link between manufacturers and consumers. For consumers, they provide a variety of products in one place, offer credit, and give information about new products. For manufacturers, retailers are essential for distributing their products to a wide audience and providing valuable feedback about customer preferences.

6. How is a departmental store different from a supermarket?

While both are large retail stores, their focus is different. A departmental store aims to satisfy all the needs of a customer under one roof, offering a wide variety of goods like clothing, electronics, and furniture with a strong emphasis on service. A supermarket primarily deals in food items, groceries, and household necessities, operating on a self-service basis with lower prices.

7. What are the main functions that a retailer performs?

A retailer performs several key functions in the market:

  • Assembling Goods: They buy and collect a variety of goods from different wholesalers.
  • Breaking Bulk: They purchase in large quantities and sell in the small quantities that consumers need.
  • Warehousing: They hold stock of goods so they are available whenever consumers want them.
  • Providing Information: They inform customers about new products and their features.
  • Risk Bearing: They bear the risk of price fluctuations, spoilage, and changes in demand.

8. Why is organised retail, like malls and chain stores, becoming so popular now?

The growth of organised retail is driven by several factors. Rising disposable incomes mean people can spend more. Changing lifestyles and a growing urban population create a demand for one-stop shopping experiences. Organised retailers can offer a wider variety of products, better prices due to bulk buying, and a comfortable shopping environment, all of which appeal to the modern consumer.