Retail Trade — Meaning and Features

3. Retail Trade — Meaning and Features

A retailer is the final link in the chain of distribution — the trader who buys goods, generally from a wholesaler (though occasionally directly from a manufacturer), and sells them in small units directly to the individual consumer, for that consumer's own personal or household use, and not for resale.

Features of retail trade:

1. Small-scale operation — both the retailer's own purchase and each individual sale are comparatively small in quantity.
2. Direct, personal contact with the consumer — unlike a wholesaler, a retailer deals face-to-face with the very person who will use the goods, and can therefore respond directly to that person's individual preference, budget and convenience.
3. Wide variety in small quantities — many retailers (though not all — see the single-line and speciality formats in the next sections) stock a broad range of largely unrelated items, each in a modest quantity, to meet the day-to-day range of a household's needs.
4. Location close to the consumer — retail shops are deliberately sited within or near residential and commercial areas, prioritising the convenience of the buyer's daily movement over the logistics priorities that drive wholesale location.
5. Personalised service — because the volume per customer is small and the relationship is often repeated, retailers, particularly small ones, can offer a level of individual attention, advice and sometimes credit that a wholesaler dealing in bulk consignments does not.
6. Comparatively smaller capital — an individual small retail shop typically needs far less capital than a wholesale business, though this is not true of the large-scale retail formats (departmental stores, chain stores, supermarkets) discussed later in this chapter, which can require capital on a scale that rivals or exceeds a wholesaler's.

Classification of retailers. Based on whether they operate from a fixed place of business, and on their scale of operation, retailers are conventionally grouped into three broad categories, each covered in its own section below:

1. Itinerant retailers — no fixed place of business; move from place to place.
2. Small-scale fixed-shop retailers — operate from one small, permanent shop.
3. Large-scale retailers — operate on a big scale, often from large premises or across many branches, under organised, often centralised management.