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Retailing is the process of executing a comprehensive series of activities or steps used to effectively and efficiently market a product or service to consumers for their personal or family use. It is responsible for matching the individual demands of the consumer with the diverse range of products offered by manufacturers.
The term “retail” originates from the French word “retailer,” which means to cut a piece off or ‘to break bulk’. The process of distributing consumer products begins with the producer and ends with the ultimate consumer. Between the producer and the consumer, there are middlemen and the retailer is the last middleman who links the producers and the ultimate consumers.
“Retailer is who directly meets end users to sell the product/services and to get feedback for producers.”
According to Cundiff and Still, “Retailing consists of all those activities involved in selling directly to ultimate consumers”.
According to Mc. Carthy, “Retailing is selling final consumer products to households”.
Thus, retailing includes all the direct sale of goods or services to end consumers for personal, non-commercial purposes. A retailer, or retail store, is a business enterprise whose sales volume comes primarily from retailing. Any organisation selling to final consumers – whether a manufacturer, wholesaler, or retailer is doing retailing. It does not matter how the goods or services are sold (by person, mail, telephone, vending machine, or Internet) or the location of sale (in a store, on the street, or in the consumer’s home), it is of no consequence.
Functions of Retailing
The major functions of retailing are given as follows:-
1) Transport and Advertising Functions
Small manufacturers can use retailers to facilitate storage, transportation, advertising, and pre-payment of their merchandise. This also works the other way around in cases when the number of retailers is limited. The number of functions performed by a particular retailer has a dinner relation to the percentage and volume of sales needed to cover both their costs and profits.
2) Holding Stock
Retailers also provide manufacturers with the valuable service of stock storage and management. Retailers maintain an inventory to ensure the prompt availability of the product to the consumers. It helps to keep prices stable and enables the manufacturer to regulate production. Consumers can keep a small stock of pro at home as they know that the ship can be replenished by the retailer as it allows them to save on carrying costs.
In the sorting process, manufacturers usually make one or a variety of products and would like to sell their entire inventory to a few buyers to reduce costs. In contrast, final consumers prefer a wide range of goods and services to choose from and usually buy them in small quantities. Retailers can balance the demands of both sides, by collecting an assortment of goods from different sources, buying them in sufficiently large quantities, and selling them to consumers in small units.
4) Channel of Communication
Retailers also act as channels of communication and information flow between wholesalers or suppliers and consumers. Through advertisement, salespeople, and displays, shoppers learn about the characteristics and features of a product or service being offered. Manufacturers, in their turn learn of sales forecasts, delivery delays, and customer grievances. The manufacturer can then modify defective or satisfactory merchandise and services.
5) Breaking Bulk
Breaking bulk is another function carried out by the retail industry. The term “retailing” originates from the French word “retailer,” which means “to cut a piece off”. To minimize transportation expenses, manufacturers and wholesalers commonly opt for shipping large cartons of the product, which are then tailored by the retailers into smaller quantities to meet individual consumption needs.
6) Additional Services
Retailers case the change in the tip of merchandise by providing services that make it convenient to buy and use products. Priding product guarantees, after-sales service, and dealing with consumer complaints are some of the services that enhance the overall product experience for customers at the retail level. Retailers also provide customers with credit and hire-purchase options, enabling them to buy a product now and pay for it later. Retailers fulfil orders and efficiently handle the processing, delivery, and installation of products. Salespeople are also employed by retailers to answer queries and offer supplementary information regarding the products showcased on the shelves.
Importance of Retailing
The importance of retailer in providing various services to consumer and channel member are as follows:
1) Importance for Consumers
Retailers are served consumers in innumerable ways as follows:
i) Variety of Goods
The retailer keeps a good assortment of various varieties of a product manufactured by different firms.
ii) Personal Services
The retailer provides many personal services to the customer such as home delivery, after-sales service, liberal exchange of goods, etc.
iii) Demand Creation
Most of the demand-creation methods are undertaken by retailers for manufacturers and wholesalers. They arrange for the display of goods, supply the necessary information to the customers and provide various similar services.
The retailer is a highly proficient expert in the distribution of consumer goods. Out of their experience, training and intimate knowledge of the goods, they are in a position to guide customers in making the right selection.
v) Sale on Approval
As the retailers are very close to the consumers, they sell the goods on an approval basis. In this particular selling model, consumers are given the facility of returning goods within a specified time limit if they do not meet their preferences or gain approval from their family members.
vi) Credit Facility
The retailer frequently offers credit facilities to consumers. These alone account for a larger sales volume.
The retailer maintains a diverse inventory of various goods. An average consumer faces financial constraints that prevent them from stocking up on the necessary everyday items.
2) Importance for Wholesalers and Producers
Retailers serve the wholesalers and producers in the following ways:
i) Arrangement to Sell the Goods
Retailers and only retailers sell the product to innumerable small consumers and thus relieve the wholesalers from selling the goods to ultimate consumers in small quantities.
ii) Information about Consumers’ Habits, Tastes and Needs
The retailers are in close touch with the consumers and have full knowledge of their habits, tastes, needs and preferences. They also know the change in their tastes, habits etc.
iii) Advertisement of New Products
The retailers are in direct touch with the consumers and they know the needs and wants of the consumers. They possess the ability to sway consumer decisions towards purchasing a new product. Consumers consult retailers to know the characteristics and utilities of the new product.