Home Trade: Modern Trends in Retailing – SS1 Commerce Lesson Note (Second Term)

Modern trends in retailing are the newer methods retailers use to sell goods to customers. They are self-service, branding, after-sales services and automatic vending. Self-service lets customers pick goods themselves, branding identifies a producer’s goods, after-sales services support buyers after purchase, and vending machines sell goods without a sales attendant.

What are the modern trends in retailing?

The modern trends in retailing include:

1. Self-service
2. Branding
3. After-sales services
4. Vending machines/automatic vending

Behavioural objectives

By the end of the lesson, students should be able to:

• Name the modern trends in retailing.
• Explain self-service and state its features, advantages and disadvantages.
• Explain branding and state its advantages and disadvantages.
• Explain after-sales services, the factors that decide their level, and their advantages and disadvantages.
• Explain automatic vending and state its advantages and disadvantages.

What is self-service?

Self-service 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 the cashier for the goods.

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

1. Few shop attendants are required.
2. Goods are displayed with price tags.
3. The use of trolleys and baskets is common.
4. Customers move around to select their choice of goods.
5. Large space is required.
6. Security men or closed-circuit cameras are employed to forestall pilfering.
7. Goods are paid for at the checkout counter.
8. Goods are pre-packed and neatly labelled.

Advantages of self-service

1. Customers have the freedom to select their choice of goods.
2. Purchasing is quick and fast.
3. Labour cost is reduced as there is no need to employ many sales attendants.
4. It encourages impulse buying, which increases sales.
5. The spacious environment enhances the convenience of customers.
6. The benefits of loss-leaders to both sellers and buyers can be maximised.

Disadvantages of self-service

1. Shop-lifting or pilfering is rampant.
2. Goods deteriorate more rapidly because customers handle them constantly.
3. The cost of checking shoplifting or pilfering, e.g. closed-circuit cameras and store detectives, can increase the cost of operation.
4. Expensive facilities are needed, e.g. larger floor space, trolleys and baskets.
5. Less personal attention is given to customers.
6. It is not suitable for all types of goods.
7. Self-service reduces employment opportunities for shop/store assistants.
8. Prices are not negotiable.
9. Goods selected and paid for are not returnable.
10. Setting it up is capital intensive.

What is branding?

Branding 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 organisations. Branded goods are, therefore, goods sold under a registered 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 and MacLean for toothpaste.

Advantages of branding

1. It ensures high-quality goods.
2. It saves the cost of advertising.
3. Consumers can select without any problem.
4. Goods are standardised, i.e. uniformly packed.
5. It prevents product adulteration and imitation.
6. Branding aids inspection and ordering of goods by appropriate description.
7. It encourages self-service.
8. Prices recommended by the manufacturers can be shown in advertisements so that consumers are not cheated by retailers.

Disadvantages of branding

1. Advertising cost is high.
2. Branding can create impulsive buying on the part of the customers.
3. The retailer must stock many brands of a product if he is to please all his customers.
4. Price-cutting wars may be unhealthy for smaller firms.

What are after-sales services?

After-sales services are extra services which retailers render to their customers after they have bought their products, to ensure constant patronage. They are usually extended to the buyer of a commodity free of charge.

The extra services may be free delivery, free advice on how the product is used or operated, free repairs, free fixing or installation of the article, replacement, maintenance etc. They may also take the form of a guarantee or warranty. They are 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, depends on the following factors:

1. The type of goods involved, e.g. electrical appliances and drugs require an explanation of how they are to be used.
2. The cost of the goods: expensive goods are necessarily backed up with a guarantee.
3. The practice of competitors: where the selling of a particular article is very competitive, free deliveries could be offered to maintain customers.
4. The cost of rendering the after-sales services: if the seller’s profit margins are not much affected, then after-sales services are offered.
5. Legal requirements: some consumer protection laws require the seller to grant a guarantee to the buyer.

Advantages of after-sales services

1. Sales volume increases.
2. Customers enjoy better personal attention from sellers.
3. Customers develop greater confidence in articles bought when given guarantees.
4. The quality of goods is assured.
5. Seller goodwill and reputation are greatly improved.
6. The manufacturer can easily keep his technical details secret.
7. It enhances the usefulness of a product.

Disadvantages of after-sales services

1. Higher prices may be charged for the extra services, i.e. the cost of such services is often included in the price of the goods.
2. Customers may be wrongly advised.
3. Customers’ choice in maintenance is often limited.

What is automatic vending?

Automatic vending is the sale of goods to customers through coin-operated (or card-operated) machines. The buyer drops the correct amount of coins or inserts a magnetic card into the appropriate slot 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 arenas, cinemas and churches. 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 and automated tellers that dispense cash.

Advantages of automatic vending

1. It is available for twenty-four hours daily and every day of the week.
2. A wide range of goods is available.
3. The machine saves a lot of time.
4. 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.
5. A standard price is charged, i.e. there is uniformity in price for the same quantity of goods.
6. It is good for emergencies, e.g. automatic teller machines.
7. Recording after the slotting of money or cards makes for accountability.
8. It ensures self-service.
9. It economises the use of space.
10. Pilfering is avoided.

Disadvantages of automatic vending

1. The cost of purchasing the machine is high.
2. Customers can usually obtain only one item from a machine.
3. It may be vulnerable to pilferage.
4. It attracts additional maintenance costs.
5. Prices of goods are high because of the expensive machine used.
6. The worth of goods that can be bought is limited where the machine accepts only coins.
7. The buyer must hold the actual amount because there is no provision for balance or change.
8. It offers a limited range of items.
9. Faults in the machine may not be easily detected.
10. A lot of money is spent on providing security.

Evaluation

1. State four features of self-service.
2. Define branding and give two examples of brand names.
3. List three factors that determine the level of after-sales services a seller provides.
4. Mention three places where vending machines are usually located.

Assignment

Objective questions

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.