CBSE Class 10 Elements of Business Unit V: Large Scale Retail Trade

Unit V: Large Scale Retail Trade

(a) Forms of large-Scale Retail Trade – Department Stores and Multiple Shops
(b) Non store retailing – mail-order business, teleshopping, automated vending machines, selling through internet

(a) Forms of large-Scale Retail Trade – Department Stores and Multiple Shops

Departmental Stores:

A departmental store is a huge establishment offering wide variety of products classified into well-defined departments. Here, customers can find whatever they need under one roof. Thus, there may be separate departments for toiletries, medicines, furniture, electronics, clothing etc. In India, departmental stores in its true avatar have not come up in a big way.

Features:
(i) A modern departmental store may provide all facilities such as restaurant, travel and information bureau, rest rooms etc.
(ii) Such stores are generally located in the heart of a city.
(iii) Departmental stores being very large they are formed as joint stock companies.
(iv) A departmental store combines retailing as well as warehousing.

Advantages:
(i) Attract large number of customers.
(ii) Departmental stores provide customers with great shopping experience.
(iii) Often goods are offered at discount as departmental stores buy goods at economical rates.
(iv) These stores are great places for sales promotion.

Limitations:
(i) Lack of personal attention is one major disadvantage. This is not Practically feasible.
(ii) As these stores give more emphasis on providing services, the operating costs are high.
(iii) The chances of incurring losses are high because of high operating costs.
(iv) It is not convenient to buy goods that are immediately needed as stores are not localised.

Multiple Shops/ Chain Stores:

These are networks of retail stores that are owned and operated by manufacturers or intermediaries. Under this system a number of shops with same brand design and similar appearance are established in localities spread over different parts of the country. These shops follow identical merchandising strategies. The shops, normally deal in standardised and branded consumer products with rapid turnover. The chain operation is most effective in handling high volume merchandise whose sales are relatively constant throughout the year.

Features:
(i) These stores are located in populous localities which is very convenient.
(ii) Centralised procurement and distribution of goods resulting in cost savings.
(iii) All branches are under centralised control which interact with branch managers.
(iv) The prices of goods in these shops are fixed.

Advantages:
(i) These type of stores enjoy economies of scale.
(ii) Stores are centrally controlled eliminating middlemen.
(iii) These stores operate on cash basis, so, there is no chance of bad debts.
(iv) Losses of one store are absorbed by other stores, diffusing risk of losses.
(v) Because of centralised bulk procurement goods can be offered at fair prices.

Limitations:
(i) Limited range of products and services is one of the main disadvantages.
(ii) As everything is centrally controlled, there is lack of initiative at branch level.
(iii) There is lack of flexibility and response to changes in demand is slow.

(b) Non store retailing – mail-order business, teleshopping, automated vending machines, selling through internet

1. Mail Order Houses:
Mail order houses are retail outlets that sell their merchandise through mail.. There is no personal contact between the buyer and the seller. Advertisements are generally put up in newspapers or magazine. All relevant detail about the product-price, features, delivery, and terms of payment are described there. On receiving orders, the goods are sent by post. The terms of payment may be advance /full payment against order or the goods may be sent by Value Payable Post (VPP) when goods are delivered to customers only on making full payment. Goods may also be sent through a bank. This type of business is not suitable for perishable items.

Advantages:
(i) Mail order business does not require heavy investment on infrastructure. This may result in lower prices.
(ii) As payment is ensured before delivery, chances of bad debt are not there.
(iii) A large number of people can be approached through advertisements.
(iv) Customers get door step delivery which is a great convenience for them.

Limitations:
(i) Lack of personal touch between sellers and buyers is not helpful as likes and dislikes of people cannot be ascertained.
(ii)The mail order business relies heavily on advertisement , hence promotional costs are heavy.
(iii) As buyers and sellers located far away, no after sales service is possible.
(iv) As payments are made in advance, buyers can be victims of fraud or false claims by sellers.
(v) Dependence on postal services can sometimes be a tricky issue as postal services may not always be efficient.

2. Teleshopping:
Teleshopping is also known as Direct Response Television (DRTV) Shopping. It is a means of purchasing products and services advertised on television. Viewers can order products by calling a number or using a computer. The products are then delivered to the buyer’s home. This is a kind of Direct response marketing technique.

3. Automated Vending Machines:
Vending machines are a revelation in marketing methods. Coin operated vending machines are proving useful in selling hot beverages, platform tickets, soft drinks etc. eliminating the need for salesmen. Vending machines can be useful for selling prepacked brands of low- priced products which have high turnover. But, the cost of installation of such machines and their maintenance are quite high. Also, special packs have to be developed for such machines. In-spite of these factors vending machines have adapted to fast changing lifestyles of modern times.

4. Internet marketing (E-tailing)/ Online Sale

Internet marketing or e-tailing through websites is a very popular mode of marketing nowadays. It is convenient, user friendly and offers almost unending varieties and styles of a multitude of products. There are giant online companies working alongside many smaller companies and they have caught the imagination of consumers, especially the younger generation in a big way. The following step are involved in sales through internet:

(i) Platform: Developing a website where detail listing of products is shown along with prices and payment options. This is like a virtual shop with pictures of the products and other details.

(ii) Going online: A customer has to log on to the website through internet connection either from a smartphone or a computer. He has to choose a product carefully and select a payment option.

(iii) Payment: The buyer has to choose a payment option which may through UPI mode, or by debit or credit card. He may even opt for cash on delivery mode.

(iv) Shipment: After receiving payment the seller would arrange to deliver the product to the address indicated by the customer and send the shipment detail along with expected date of delivery.

(v) Delivery: The transaction is completed after the delivery agent of the seller delivers the product at the customer’s doorstep.

(vi) Reviews: Often, reviews and customer feedback are invited by the sellers to understand customer preference and the level of satisfaction to improve services.

Advantages of Internet marketing (E-tailing)/ Online Sale

(i) Convenience: It is so convenient to buy things through internet. One has to choose a product, see the specifications, and make payment. A tentative delivery time is given when the product is delivered.

(ii) Price comparison: The internet shopping enables a buyer to compare prices of many brands so that a suitable choice can be made.

(iii) Wide choice: With hundreds of items and brands the buyer is spoilt for choice which is not possible in a fixed store.

(iv) Easy return: If the buyer is not satisfied with the product he has received ,he may choose to return it easily, just mentioning a reason is enough.

Limitations:

(i) Risk of fraud: As payment in internet shopping is normally made in advance, there is risk of getting defrauded as the business offering the goods may disappear.

(ii) Delayed delivery: Articles may take some time to be delivered as the delivery agents appointed by the seller may not be prompt.

(iii) Missing personal touch: In online shopping the buyer or the seller do not get to see each other. So, the personal touch or relationship of a regular shop will be missed.

(iv) Delivery mismatch: Often it happens that the item shown and chosen from the website is not delivered. So, it has to be returned.

Other Small Retailers:

Itinerant Retailers:
Itinerant retailers are traders who do not have a fixed place of business. They keep moving with their wares from place to place or from street to street. The characteristics of itinerant retailing are:
(i) They are small traders operating with limited resources
(ii) They normally deal in consumer products of daily use
(iii)The emphasis is on providing greater customer service
(iv) They do not have any fixed business establishment

Types of itinerant traders
(i) Peddlers and hawkers
(ii) Street traders

Speciality stores :
Speciality stores are niche retail outlets that specialise in a particular type of merchandise and cater to customers who have a specific buying agenda. Examples of speciality stores are: (i)Book Stores
(ii)Florists
(iii)Furniture
(iv)Jewellery shop
(v)Sports goods shop
(vi)Video games parlour
These shops have committed groups of clients who would visit the shop whenever they have any requirement. Personal touch is a hallmark of these stores.

Auction Sale:
An auction sale is usually a public sale of goods where buyers take part in competitive bidding and the highest bidder gets possession of the item put on auction. Auction sale may be open auction or closed auction. In the open auction, the buyers assemble at the auction venue and participate in bidding. A closed auction notice is advertised in newspapers and the prospective buyers send their offers in sealed covers. The offers are opened on a stipulated date and the highest bidder wins possession of the auctioned item. Banks and financial institutions usually dispose of non-performing assets in this manner.

CBSE Class 10 Elements of Business Unit V: Large Scale Retail Trade – Completed

The following topics have been completed in Unit V: Large Scale Retail Trade:

(a) Forms of large-Scale Retail Trade – Department Stores and Multiple Shops
(b) Non store retailing – mail-order business, teleshopping, automated vending machines, selling through internet