Home Trade: Modern Trends In Retailing SS1 Commerce Lesson Note

Modern Trends In Retailing include:

1. Self Service
2. Branding
3. After-sales services
4. Vending machines/Automatic Vending

1. Self-service: This is a method that allows customers to do their shopping in a shop with little or no assistance from sales attendants.  

The goods are conspicuously displayed and arranged on the shelves of shops with price tags.  The customer goes about in the shop, examines the goods displayed, compares them, tries them on, where necessary, selects those of his choice and gathers them in a basket or tray made available in the shop,  The customer finally approaches the checkout counter where he pays for the goods brought to the  cashier,  

This arrangement saves time because it avoids bargaining. Self Service is associated with a large-scale retailer who has enough space and the necessary equipment e.g. supermarkets, departmental stores, markets etc

FEATURES OR CHARACTERISTICS OF SELF-SERVICE

i. Few shop attendants are required.

ii. Goods are displayed with price tags.

iii. The use of trolleys and baskets is common.

iv. Customers move around to select their choice of goods.

v. Large space is required.

vi. Security men or close circuit cameras are employed to fore-stall pilfering.

vii. Goods are paid for at the checkout counter.

viii. Goods are pre-packed and neatly labelled.

ADVANTAGES OF SELF-SERVICE

i. Customers have the freedom to select their choice of goods.

ii. Purchasing is quick and fast.

iii. Labour cost is reduced as there is no need to employ many sales attendants.

iv. It encourages impulse buying which increases sales.

v. The spacious environment enhances the convenience of customers.

vi. The benefits of loss-leaders to both sellers and buyers can be maximized.

DISADVANTAGES OF SELF-SERVICE

i. Shop-lifting or pilfering is rampant.

ii. More rapid deterioration of goods due to constant handling by customers.

iii. High cost of checking shoplifting or pilfering e.g. cost of close circuit camera, store detectives can increase the cost of operation.

iv. Expensive facilities are needed e.g. larger floor space, trolley, baskets.

v. Less personal attention is given to customers. 

vi. It is not suitable for all types of goods.

vii. Self-service reduces employment opportunities for shop/store assistants.

viii. Prices are not negotiable

ix  Goods selected and paid for are not returnable.

x. Setting it up is capital intensive.

2. BRANDING

This is a general term covering names, designs, marks, symbols or descriptions which may be used by a producer to distinguish his goods from those of other organizations. Branded goods are, therefore, goods sold under a refrigerated trademark or trade name to distinguish one manufactured product from similar products of other manufacturers. 

Examples of brand or trade names are Elephant, Omo, and Ariel for detergents and Pepsodent, Close up, Colgate, MacLean for toothpaste etc.

ADVANTAGES OF BRANDING

i. It ensures high-quality goods.

ii. It saves the cost of advertising.

iii. Consumers can select without any problem.

iv. Goods are standardized i.e. uniformly packed.

v. It prevents product adulteration and imitation.

vi. Branding aids inspection and ordering of goods by appropriate description.

vii. It encourages self-service

viii. Recommended prices by the manufacturers can be shown in advertisements so that consumers are not cheated by retailers.

DISADVANTAGES OF BRANDING

i. Highly advertising cost

ii. Branding can create impulsive buying on the part of the customers

iii. Necessity to stock many brands of the products if the retailer is to please all his customers

iv. Price-cutting wars may be unhealthy for smaller firms.

3. AFTER SALES SERVICES

These are extra services which retailers render to their customers after purchasing their products to ensure constant patronage.  The after-sales services are usually extended to the buyer of a commodity free of charge.  

The extra services may be free delivery, free advice as to how the product concerned is used or operated, free repairs, free fixing or installation of the article, replacement, maintenance etc. It may also be in the form of a guarantee or warranty. It is used mainly for technical goods.

FACTORS DETERMINING THE LEVEL OF AFTER-SALES SERVICES TO BE PROVIDED

Whether or not after-sales services will be provided, and to what extent will depend on the following factors:

i. The type of goods involved e.g. electrical appliances and drugs require the explanation of how they are to be used.

ii. The cost of the good; expensive Goods are necessarily backed up with a guarantee

iii. The practice of competitors:  Where the selling of a particular article is very competitive, free deliveries could be offered to maintain customers.

iv. Cost of rendering the after-sales services. If the seller’s profit margins are not much affected then after-sales services are offered.

v. Legal requirements: Some consumer protection laws require the seller to grant a guarantee to the buyer.

ADVANTAGES OF AFTER-SALES SERVICES

i. Increased volume of sales.

ii. Customers enjoy better personal attention from sellers.

iii. Customers develop greater confidence in articles bought when given guarantees.

iv. The quality of goods is assured.

v. Seller goodwill and reputation are greatly improved.

vi. The manufacturer can easily keep his technical details secret

vii. It enhances the usefulness of a product

DISADVANTAGES OF AFTER-SALES SERVICES

i. Higher prices may be charged for the extra services i.e. the cost of such services are often included in the price of the goods.

ii. Customers may be wrongly advised.

iii. Customers’ choice in maintenance is often limited.

4. AUTOMATIC VENDING/VENDING MACHINES

This involved the sale of goods to customers through coin-operated (or card-operated) machines. The buyer drops the correct amount of coin or inserts a magnetic card into the appropriate slot or hole in the machine and gets the product required.  The machines are located in areas where a large number of people converge e.g. offices, schools, sports arena, cinema, churches, etc,  the products sold through automatic vending are typically small and branded. E.g. candles, soft drinks, ice cream, coffee, tea, cigarettes, snacks, postage, telephone service, automated tellers that dispense cash etc.

ADVANTAGES OF AUTOMATIC VENDING

i. Available for twenty-four hours daily and every day of the week.

ii. Availability of a wide range of goods.

iii. The machine saves a lot of time.

iv. It saves labour costs.  It makes little use of human labour and is therefore very useful for sales points where the volume of sales is low.

v. Standard price is charged. I,e there is uniformity in price for the same quantity of goods.

vi. It is good for emergencies e.g. automatic teller machines.

vii. Recording after the slotting of money or cards makes for accountability.

viii. It ensures  self-service

viii. It economizes the use of space

Pilfering is avoided.

DISADVANTAGES OF AUTOMATIC VENDING

i. The cost of purchasing the machine is high.

ii. Customers can usually obtain only one item from a machine.

iii. It may be vulnerable to pilferage

iv. It attracts additional maintenance costs.

v. Prices of goods are high as a result of the expensive machine used.

vi. Limitation to the worth of goods to be bought where the machine accepts only coins.

vii. The buyer must hold the actual amount because there is no provision for balance or change.

viii. It offers a limited range of items.

ix. Faults in the machine may not be easily detected.

x. A lot of money is spent on providing security.

ASSIGNMENT

1. Automatic  vending machines facilitate

(a) wrapping (b) cash deposits (c) sales of tools  (d) self-services

2. Which of the following makes sales possible without a sales attendant?

(a) telex  machine (b) fax machine (c) vending machine  (d) franking machine

3. The practice of offering a commodity for sale at an unprofitable price to attract buyers to a shop is known as 

(a) auction sales (b) loss leader (c) price ring   (d) market segmentation.

4. Which of the following cannot be sold through a vending machine?

(a) ice-cream  (b) shoes  (c) tea (d) tickets

5. Mail-order firms largely depend on the services of 

(a) banks (b) insurance companies (c) mobile vans (d) post offices.

THEORY

6. State four advantages of automatic vending

7. List two disadvantages of after-sales service

8. Give five reasons why retail shops adopt self-service