RETAIL TRADE – Trade involves the transfer of the ownership of goods or services, from one person or entity to another, in exchange for money, goods or services. Simple put, trade is the act of buying and selling of goods and services.
Home trade, also known as domestic trade or internal trade, is the exchange of domestic goods within the boundaries of a country. This may be sub-divided into two categories, wholesale and retail.
Categories of Home Trade
- Retail trade
- Wholesale trade
RETAIL TRADE: Retail trade is the re-sale (sale without transformation) of new and used goods to the general public, for personal or household consumption or utilisation. Retailing is the last link in the chain of distribution of goods and services. Its aim is to make goods available to the final consumers. Retail trade is carried out by a retailer
A Retailer is a person or a trader who buys goods in small quantities from the wholesalers and sells in smaller units directly to the final consumers.
Functions of The Retailer
- The retailer sells in small quantities to the consumers; s/he buys from the wholesalers and breaks the goods into unit to sell to the consumer.
- The retailer sells at convenient locations and hours: They sell to the consumers at any time of the day.
- Retailers stock varieties of goods: The retailers are exposed to wide range of goods, they sell all kinds of items at the same time, thereby affording a consumer an opportunity to get whatever s/he needs.
- Retailers render door to door services
- They can also sell on credits to the consumer due to the personal business relationship that exist between them
- They give advice to the consumers in making choices
- They deliver goods to customers on request
- Retailers give feedback the wholesalers and producers
- They provide after sales service to consumer
- They maintain close relationship with consumer.
Factors to consider when setting up a Retail Business
- The types of goods
- Terms of trade
- Location of the business
- Sources of supply
CLASSIFICATION OF RETAIL TRADE
Retail activities can be classified into small scale and large scale
SMALL SCALE RETAIL TRADE
Small scale retail trade involves trading within a small scope of operations. It usually requires little capital to set up. Examples include street or roadside trading, Kiosks, Small stores, Hawking etc.
Advantages of Small Scale Retail Trade
- It requires little capital
- It is near to the consumers
- It creates employment opportunities
- It requires low running cost
- Flexible trading period. A small scale retailer can operate 24/7
- No extra cost of advertisement is required
Disadvantages of Small Scale Retail Trade
- It does not encourage expansion
- The profit in the business is usually low
- The retailers have no technical knowledge about the goods they sell
- They lack good capital to run the business
LARGE SCALE RETAIL TRADE
Large scale retail trade is a kind of retailing that involves either single type of goods or a variety of goods being made available to a large number of consumers in a big shop under a single roof or may be made available at the convenience of customers. Large scale retail trade has a large scale of operation; the retailers achieve their growth by increasing the size of their units to cater for more customers. Examples of large scale retail trade include Chain or multiple stores, Variety stores, Retail co-operative society, Franchising, Mail order, etc.
Advantages of Large Scale Retail Trade
- Access to larger capital
- They stock varieties of goods
- This type of retailing facilitates e-commerce – it encourages electronic buying and selling.
- They operate on cash and carry.
- They offer after sale service to consumers
Disadvantages of Large Scale Retail Trade
- They do not give credit facilities to customers
- Less attention is given to customers since there are usually price tags on goods.
- The trade is usually common and restricted to those in the urban area.
- There is high cost of operation
- There is no opportunity to bargain
- There is high rate of pilfer as a result of self service
- It involve high operating cost