Classification of Retailers

Classification of Retailers

There can be multiple categories for retailers.

  • Service-based classification: These retailers are those which have the special capability to offer a variety of services to the consumer; for instance, rentals, electricity, banking, cooking gas, etc.; there are various factors that determine the success of the service. These factors include the usage of advanced technology, the amount of customization, and service delivery within the given deadline.
  • Store-based classification: Store-based retailers have subdivisions furthermore – ownership and merchandise based.
  • Non-store-based classification: They emphasize establishing direct contact with the end customer. These comprise nonpersonal selling as well as personal or direct selling. Nonpersonal selling includes TV, mail, catalog, internet, etc.

Classification of retailers as per ownership:

  • Partnership: One of the most common business formats in our country, the partnership is quite popular here. In this format of business, two or more people share the ownership of the company and runs the organization.
  • Joint venture: This involves the creation of a new or third entity because of professional collaboration between multiple parties. They agree to operate and manage all the business activities in a definite area. The decision to use a specific amount of resources and share the profits as well. Also, all of them need to follow some fixed terms and conditions.
  • Sole proprietorship: Multiple small business ventures start as a sole proprietorship basis. A single person holds the ownership of the business. He is accountable for the everyday operations of his business. The profit that accrues will be earned by enjoyed by the sole proprietor only.

Chain Stores:

Do you know what a chain store is? Basically, it is the group of 4 or more stores that deal with the same merchandise. They are controlled by central ownership. The supplies to these chain stores come from the central warehouse. Their main motive is to approach a huge number of consumers by expanding their operations. They concentrate on selling the same product. In India, USHA and BATA are the main examples of chain stores. Although the buying is centralized, the selling process is decentralized.

Benefits of chain stores:

  • Since the risks are distributed, the possibility of loss is also less.
  • Chain stores can be established anywhere. They do not need prime or costly locations. So, there is a greater level of flexibility.
  • These stores always enjoy cost advantages because they buy in bulk. Also, their advertisement expenditure is quite less.

Disadvantages of chain stores:

  • Chain stores can be quite expensive from the consumer point of view.
  • Since chain stores operate as a large-scale business organization, lots of difficulties pop up regarding management and maintenance.

Also Read: Overview of Retail Management

Supermarkets:

Supermarkets, too, operate on a large-scale basis, just like the chain stores. But here, the service is more like the self-service type. Supermarkets are either operated by the owner, or they may lease out a few departments. Mostly, you will notice that these supermarkets are located in plush locations and prime markets of a city. You will get branded products and merchandise. Also, they offer a parking facility.

Benefits of supermarkets:

  • Supermarkets offer attractive discounts. The products can be affordable because of these schemes and discounts.
  • They offer you the experience of convenient shopping. Also, consumers get to choose from a huge variety.
  • Shopping time also gets reduced since consumers get most of the things under one roof.

Disadvantages of supermarkets:

  • The expense of store operation is quite hefty.
  • Their maintenance and administrative expenses are also quite high.

Departmental stores:

Departmental stores can be categorized as income group-based or ownership-based. A departmental store always operates in proper integration under a common roof. They can have multi-level retail outlets that operate at the national as well as international level. You will find them locally, as well. Shoppers Stop, Westside, and Lifestyle, are some of the major national level departmental stores in our country.

Advantages of departmental stores:

  • Customers get to buy a lot of products under a common roof. So, they tend to surge departmental stores more often.
  • These stores are always in a position to enjoy the advantage of economies of scale. They operate on a large-scale basis, and hence, they enjoy cost benefits. Bulk quantity purchases result in special discounts or concessions to consumers.

Disadvantages of departmental stores:

  • Generally, the staff members lack the much-needed expertise and professionalism to tackle everyday business affairs.
  • There is a severe lacking in the efforts to maintain a long-term relationship with clients. The element of personal involvement is almost zero.
  • The overall expenses involved in operating and managing a departmental store is exceedingly high.

Direct selling:

Direct selling always involves that much-coveted personal touch. The customers will be able to create personal contact with the salesperson. Also, consumers can freely discuss their needs, requirements, and queries with the sales representative. The seller plays a significant role as he is in the position to influence and convince the consumers to buy the products.

Disadvantages of direct selling:

  • Finalizing the sales commissions, management, and administrative operations – a lot goes into direct selling. The seller needs to multitask all the time.
  • Managing everything single-handedly can often increase the chance of errors.
  • Direct selling may also lead to high expenses.

So, these are the different types of retailer classifications.