Home Trade: Large Scale Retailers SS1 Commerce Lesson Note

LARGE SCALE RETAILING

Types Of Large Scale Retailing

1. Multiple Shops Or Chain Stores: These are large-scale retail businesses consisting of several similar shops or branches spread or located in different towns/ cities all over a country. They sell the same type of goods and all the shops are controlled from the head office e.g. Lennards, Challenge Bookshop, Famad etc

Features/ Characteristics Of Multiple Shops

i. Standard or identical shop design.

ii. Dealing with one line of product in their branches.

iii. They have a centralized form of administration and ownership.

iv. They operate based on cash and carry.

v. Prices of goods sold in all branches are fixed by the head office.

vi. They practice self-service.

Advantages Of Multiple Shops

i. They are easy to identify.

ii. Staff can be moved between branches.

iii. Their cash and carry system reduces the incidence of bad debts.

iv. They save a lot of cost in advertising.

v. Unsold stock in one branch can be moved to other branches.

Disadvantages Of Multiple Shops

i. They deal in a limited range of products.

ii. The cost of setting up multiple shops all over the country is very large.

iii. They do not offer credit facilities to customers.

iv. No personal attention is given to customers.

v. Less control is exercised by branch managers.

2. Departmental Stores: This is a large single retail outlet selling a wide variety of goods in separate departments. Each department specializes in a particular line of goods different from those of other departments.

A departmental store is often referred to as many shops under one roof and common management e.g. UTC Stores, Cash and Carry, UAC Stores etc.

Features Of Departmental Stores

i. They are divided into different departments.

ii. Buying and selling is decentralized.

iii. They deal in a wide range of goods.

iv. They practice self-service

v. They are located in the centre of cities and urban areas.

Advantages Of Departmental Stores

i. They stock a wide variety of goods.

ii. They are easily located by customers.

iii. There is self-service and orderliness.

iv. Impulse buying is possible as shoppers move from one department to another.

v. Goods in one section help to advertise goods in other sections.

Disadvantages Of Departmental Stores

i. Lack of personal attention for customers.

ii. High running expenses/overhead costs.

iii. Pilfering and shoplifting (i.e. stealing of goods) are rampant.

iv. It requires large capital to set up.

v. They do not allow customers to return goods.

vi. They give little or no credit to customers.

3. Supermarket: This is a large-scale retail shop offering for sale, principally by self-service, household goods like groceries, provisions, tinned foods, frozen food, vegetables, fresh fruits etc.

Features Of Supermarket

i. They operate the system of self-service.

ii. They deal in a wide range of goods 

iii. They are located in urban centres e.g. Lagos.

iv. They stock household goods and food items

v. They operate with few sales attendants.

NOTE: The advantages and disadvantages of supermarkets are similar to those of departmental stores.

4. Hypermarkets: These are extra large or giant supermarkets that deal in a greater variety of goods. They are usually located on the outskirts of towns and cities. Unlike supermarkets, hypermarkets also deal in consumer durables and they offer car parking facilities for customers.

5. Mail Order Business: This is a form of large-scale retailing in which buying and selling is carried out through the Post Office or agents.

The Mail Order firms contact prospective customers by mail, receive their orders by mail and make delivery of goods to customers also by mail. It involves the use of specially prepared catalogues that present the retailer’s products both visually and in writing.

Features Of Mail Order Business

i. Retailing is done through the Post Office or agents.

ii. Intensive advertising through catalogs, and newspapers is involved.

iii. They deal in a wide range of durable goods.

iv. It requires a large warehouse for storing goods. 

v. It requires few workers for its operations.

Advantages Of Mail Order Business

i. The business pays low rent as it can operate a warehouse located out of town.

ii. It requires few salesmen or sales assistants.

iii. Expensive fixtures and displays are not needed.

iv. They provide a variety of goods.

v. There is an opportunity for advertising through catalogues.

Disadvantages Of Mail Order Business

i. It is completely dependent on the efficiency of the postal system.

ii. Customers are not able to assess the quality of goods before buying them.

iii. Lack of personal contact with customers

iv. High advertising costs e.g. cost of printing a catalog   

v. There is the possibility of goods being lost or damaged in transit

      6. Retail Co-operative Society: This is a form of co-operative in which many small independent retailers pool their resources together to enable bulk purchases and then sell the goods at lower prices. The profits are shared in proportion to the amount of purchase made by each member

    7. Variety Chain Stores: These are large retail stores which combine some aspects of both departmental stores and multiple shops. No notable example can easily be found in Nigeria.

Features of Variety Chain Stores 

i. Many branches all over the country

ii. Uniform shop design

iii. They deal in a variety of goods  

iv. Stores are under one roof but without clear divisions into departments 

v. Centralized management as in multiple shops