Functions of a Retailer

A retailer performs several distinct functions that make goods conveniently available to the final consumer, well beyond simply reselling what a wholesaler has supplied.

Buying and assembling is the retailer's starting function: a retailer purchases a wide variety of goods, often from many different wholesalers or producers, and assembles them together under one roof. This is what allows a single customer visit to a shop to satisfy many different needs at once, and it is also what gives the consumer choice — instead of dealing separately with dozens of producers, the consumer can compare and choose from the range a retailer has assembled.

Breaking bulk is arguably the retailer's most defining function. Wholesalers and producers deal in large lots — cartons, bales, drums — that are far more than any single household needs. The retailer buys in these bulk quantities and divides them into small units suited to what an individual consumer actually wants to buy and can afford at one time: a single bar of soap, a half-kilogram of a spice, a single shirt.

Storing (warehousing) goods is a related function: a retailer holds stock at the shop so that goods are available whenever a consumer wants to buy, without the consumer needing to know or care how far back up the supply chain that stock originally came from.

Providing a convenient location and time of purchase — a retailer sets up shop where consumers actually live or pass by, and keeps hours that suit ordinary daily life, saving the consumer the time and cost of dealing directly with a distant wholesaler or producer.

Personal selling, after-sales service, and credit — a retailer, being in direct daily contact with consumers, is able to offer advice and personal assistance in choosing goods, arrange after-sales service for durable items, and, for regular or trusted customers, extend short-term credit — none of which a wholesaler, dealing at arm's length in bulk, is well placed to do. …