Everything you need to know about the functions of retailers. Retailers play a significant role as a medium between manufacturers, wholesalers, suppliers, and consumers.
In this context, they perform various functions like sorting, breaking bulk, holding stock, as a channel of communication, storage, advertising and certain additional services.
The retailer also serves the manufacturer by performing the function of distributing the goods to the end consumers and thus forming a channel of information leading to the consumers. He is the final link in the distribution chain and very vital too.
For several product categories where brand loyalty is not very strong or for unbranded products the retailer’s recommendation is vital.
Some of the functions of retailers are:-
1. Merchandising 2. Warehousing 3. Selling 4. Risk-Bearing 5. Grading and Packaging 6. Grant of Credit
7. Guide to Wholesaler or Producer 8. Last Outlet in the Chain of Distribution 9. Advertising, Salesmanship and Sales Promotion 10. Ready Stock 11. Variety of Products 12. Transportation
13. Market Information 14. Financing 15. Connecting Link 16. Marketing Function 17. Helps Distribution 18. Creates Demand
19. Local Convenience 20. Sorting 21. Bearing Bulk 22. Holding Stock 23. Additional Services 24. Channel of Communication and a Few Others.
Functions of Retailers: Breaking the Bulk, Storing, Stocks Multiple Brands, Customer Education, Online Services and Other Details
Functions of Retailers – Merchandising, Warehousing, Selling, Risk-Bearing, Grading, Packing, Grant of Credit, Guide to Wholesaler, Advertising and Salesmanship
As a middleman between the wholesaler/manufacturer and the consumer/user in the market, the retailer performs many functions.
Some of this important functions are:
Merchandising covers the activities of planning and supervising the marketing of goods at the right places, times and prices and in right quantities to the right customers. It facilitates a proper coordination of supply with demand. The marketing activities of assembling (buying) of goods from different producers and wholesalers and preparing them for resale to consumers at a profit are called merchandising activities.
Retailers have to assemble and maintain enough stocks of a variety of goods so that they can meet adequately consumer demand and fulfil consumer expectations.
In order to meet consumer demand promptly, the retailer must keep goods in ready stock and avoid an out-of-stock position as far as possible. Hence, he should have reasonable storage facilities.
Successful buying must be combined with efficient methods of selling, advertising and sales promotion. The retailer is the last point of sale in the machinery of distribution. Retail trade is an important branch of commerce where goods are directly sold to the final consumer.
Goods are bought and stored in .anticipation of sales at a profit. Consumer demand is always changing. Prices, too, fluctuate. Hence, the risk of loss due to changes in demand and changes in prices is always present. Then, again, there is always the possibility of the loss of goods by fire, theft, riot, deterioration in quality, etc., the risk of loss due to changes in -demand, changes in style and fashions, changes in prices are borne by retailers.
(v) Grading and Packing:
A retailer may have to perform the marketing functions of branding, grading and packaging when lie deals with ungraded goods received from producers.
(vi) Grant of Credit:
Credit sales offer a lot of convenience to salaried and wage-earning people. A credit sale is a sales promotion device, for it encourages permanent and regular customers to deal with one retailer. People who “run an account” with the retailer go to one shop. For the sale of durable and costly goods to consumers, a hire-purchase or an installment sale facility is offered. In its absence, the sale of costly consumer durable goods may not be possible on a large scale. Many people buy goods on hire-purchase or HP.
(vii) Guide to Wholesaler or Producer:
Manufacturers and wholesalers can secure first-hand information of the wants of consumers from retailers, because retailers have personal contacts with their consumers. They can guide manufacturers to produce those articles which are likely to be in great demand in the near future due to changes in the tastes and habits of consumers.
The retailer is the best source for the determination of the pulse of demand, e.g., changing consumer preferences and tastes, and changes in fashions. Marketing plans are based on probable consumer demand.
(viii) Last Outlet in the Chain of Distribution:
In relation to producers and wholesalers, retailers act as the last outlet for the distribution of goods within the country. A retailer is the connecting link between the wholesaler and the consumers. Individual sales in small quantities is the responsibility of the retailer. In the absence of retailers, it would be impossible to distribute goods to ultimate consumers, and most of our wants will remain unsatisfied. In short, the entire trade will be paralysed.
(ix) Advertising, Salesmanship and Sales Promotion:
Manufactured goods are worthless unless they pass the acid test of retail distribution. The retailer must employ efficient methods of promotion, i.e., salesmanship, advertising and sales promotion. Nothing can be sold without the means of promotion or means of marketing communication.
The retailer is the last middleman in chain of distribution. He is responsible for satisfying the numerous and recurrent wants of consumers. Retailing is an activity directly related to the sale of goods or services to the ultimate consumer for personal, non-business use. The retailer may perform the following marketing functions – (i) Buying and selling ; (ii) Storage ; (iii) Dividing, grading, packing and pricing ; (iv) Delivery of goods to consumers ; (v) Credit to customers ; (vi) Risk-taking ; (vii) Sales promotion ; (viii) Market information ; (ix) Service after sales ; (x) Personalised services to consumers.
Functions of Retailers – 8 Important Functions: Ready Stock, Variety of Products, Transportation, Grading, Packaging, Risk Bearing, Market Information and Financing
1. Ready Stock:
Retailers know the exact requirements of their customers and also the sources from where they could obtain the goods to meet these requirements. As such they keep a ready stock of all the goods, so that they are able to supply the goods required by customers at all times.
2. Variety of Products:
Even though retailers function in a limited area with a small number of customers, they always keep themselves ready to meet all the requirements of their customers. For this, first of all they are required to know the different kinds of goods likely to be demanded by them and, secondly to locate the sources from where such goods could be obtained at competitive prices.
In many cases, retailers get the goods delivered at their shops. But in order to minimize delay, they themselves carry the purchased goods from wholesalers.
4. Grading and Packaging:
Sometimes, retailers have to sort out goods according to the quality and other requirements. They also make suitable package for convenience of sale to the consumers. For example, pulses and spices are graded and put in small packets for sale by most grocers.
5. Risk Bearing:
Retailers keep a reasonable stock of various products. They bear the risk of loss of goods by fire, theft, deterioration in quality etc., as long as they are not sold away.
6. Market Information:
As retailers are in direct personal touch with consumers, they are often helpful in providing useful market information to the wholesalers and manufacturers regarding changes in consumer’s tastes and preferences as well as the availability of competing goods. They provide knowledge regarding new products and new uses of old products to the consumers. They act as an adviser and guide to the customers.
Large number of retailers sell goods on credit and play an important role in providing finance for the distribution of goods. They encourage consumption of goods and also provide after-sales service to their customers.
8. Sales Promotion:
Another very important function of retailers is sales promotion. This is done through an effective display, shelf spacing, and various personal services like free home delivery, replacement etc., which they provide to their customers.
Functions of Retailers – Connecting Link, Marketing Function, Market Information, Helps Distribution, Creates Demand and Local Convenience
The trade in which goods is sold in smaller quantities to the final consumer is called Retail trade. Retail trade cuts off smaller portion from a lump of goods. The individual who undertakes the activities of retail trade is known as a ‘Retailed’. Retailers are the last middlemen in the chain of distribution who sell in small quantities to the end consumer. A retailer provides valuable services to both, the wholesalers as well as consumers.
The functions of the retailer can be explained as follows:
i. Connecting Link:
A retailer is the connecting link between the wholesaler and consumer. He purchases goods from the wholesaler and sells the same to the end consumer.
ii. Marketing Function:
Whenever the wholesaler is not capable of carrying out marketing functions transportation and warehousing of goods, retailer takes over the responsibility. The retailer also helps in advertising the goods and services effectively as he is in direct contact with the consumers.
iii. Market Information:
A retailer provides the following information to the wholesaler:
a. Tastes and preferences of consumers,
b. Current market trend for a particular product and
c. Demand for competitors’ product.
This helps the wholesaler in understanding the products that are currently in demand. A retailer provides the consumers with the detailed information regarding the product attributes, price, warranty etc. enabling them to make an informed decision regarding the purchase.
In case of perishable goods like fruits, vegetables, poultry or dairy products, it is necessary that the goods reach the end consumers in time. This is because they have a short shelf life. Since retailers are in direct contact with a large number of consumers, they help in faster distribution of goods.
A retailer tries to draw consumers’ attention towards the newly launched goods through the medium of window display and banner advertisements. The retailer is also able to convince the customers into buying a certain product due to personal relations he has with them. This helps in creating demand for the products.
Retailers are usually located in residential areas and remain operational throughout the day. The customers have flexibility of purchasing goods from such nearby retailers as per their convenience. They do not have to travel long distances to reach the wholesaler or the producer. Also the manufacturer is assured that his goods are reaching the place of consumption on a timely basis.
Functions of Retailers – 6 Major Functions: Sorting, Bearing Bulk, Holding Stock, Additional Services, Channel of Communication, Advertising Functions and a Few Others
From the customers point of view the retailer serves him by providing the goods that he needs in the required assortment at the required place and time. From an economics standpoint, the customer comes from four different perspectives.
a. First is utility regarding the form of a product that is acceptable to the customer? The retailer does not supply raw materials but rather offers finished goods and service in a form that the consumers want. The retailer performs the function of storing the goods and providing the customer with an assortment of products in various categories.
b. He creates time utility by keeping the store open when the customer prefers to shop.
c. By being available at a convention location he creates place utility
d. Finally when the product is sold, ownership utility is created.
All these are real benefits which retailers offer by getting close to potential customers. It is necessary therefore for retailers to fully understand the motivations that drive their customers. The retailer serves the consumer by functioning as a marketing intermediary and creating time, place and ownership utility for the consumer.
The retailer also serves the manufacturer by performing the function of distributing the goods to the end consumers and thus forming a channel of information leading to the consumers. He is the final link in the distribution chain and very vital too. For several product categories where brand loyalty is not very strong or for unbranded products the retailer’s recommendation is vital.
Retailers play a significant role as a link between manufacturers, wholesalers, suppliers and customers. In this context, they perform various functions like sorting, breaking bulk, holding stock, as a channel of communication, storage, advertising and certain additional services.
Function # 1. Sorting:
Manufacturers usually make one or a variety of products and would like to sell their entire inventory to a few buyers to reduce costs. Final consumers, in contrast, prefer a large variety of goods and service to choose from and usually buy them in small quantities.
Retailers are able to balance the demands of both sides by collecting an assortment of goods from different sources, buying them in sufficiently large quantities and selling them to consumers in small units.
The above process is referred to as the sorting process. Through this process, retailers undertake activities and perform functions that add to the value of the products and services sold to the consumers. Supermarkets in the developed countries offer, on an average, 15,000 different items from 500 companies.
Customers are able to choose from a wide range of designs, size, and brands from just one location. If each manufactures had a separate store for its own products, customers would have to visit several stores to complete their shopping. While all retailers offer an assortment, they specialize in types of assortment offered and the market which the offering is made.
Westside provides clothing and accessories while a chain like Nilgiris Nest specializes in food and bakery items. Shopper’s stop targets the elite urban class, while Pantaloons is targeted at the middle class.
Function # 2. Breaking Bulk:
Breaking bulk is another function performed by retailing. The word retailing is derived from the French word retailer, meaning ‘to cut a piece off’. To reduce transportation costs, manufacturers and wholesalers typically ship large cartons of the product which are than tailored by the retailers into smaller quantities to meet individual computation needs.
Breaking bulk means physical repackaging of the products by retailers in small unit sizes according to customer’s convenience and stocking requirements. Normally retailers receive large quantities of sacks and cases of merchandise from suppliers to reduce their transportation costs.
In order to meet their customer’s requirements retailer have to break or arrange the bulk into convention units. This entire function of the retailers adds value to the offerings not only for the end customers but also for the suppliers in the value chain. Even in the earlier days of generic and commodity-based trading most of the retailers used to perform this important function in the value chain.
This function receives negligible attention from the retailers now due to the introduction of new product categories such as FMCG and ready-to-wear apparel.
Function # 3. Holding Stock:
Retailers also offer the service of holding stock for the manufacturers. Retailers maintain an inventory that allows for instant availability of the product to the customers. It helps to keep prices stable and enables the manufacturer to regulate production. Consumers can keep a small stock of product at home as they know that this can be replenished by the retailer and can save on inventory carrying costs.
To ensure the regular availability of the offerings retailers maintain appropriate inventory levels. Consumers normally depend on the retailers directly to replenish their stocks at home.
Therefore, retailers, on periodic basis maintain the required levels of stock to meet the regular or seasonal fluctuations in the demand. Retailers need to maintain equilibrium between the range and variety carried and the ales which it gives rise to.
Retailers have to face the negative consequence of holding unwanted levels of stock-for instance, too little stock will hamper the sales volume, whereas too much stock will increase the retailer’s cost of operation.
Generally, in small towns of India, most retailers have arrangements with the nearby warehouses to stock only on the shop floor. Retailers in the organized sector, to a certain extent are using effective software packages for maintaining adequate levels of inventory. At the same time, retailers avail just-in-time delivery with the help of efficient consumers response systems, which reduces the burden of maintaining high levels of stocks.
Function # 4. Additional Services:
Retailers ease the change in ownership of merchandise by providing services that make it convenient to buy and use products. Providing product guarantees, after-sales service and dealing with consumers complaints are some of the services that add value to the actual product at the retailer end.
Retailer also offer credit and hire-purchase facilities the consumers to enable them to buy a product now and pay for it later. Retailers fill orders, promptly process, deliver and install products. The display itself allows the consumers to see and test products before actual purchase. Retail essentially completes transaction with customers.
Function # 5. Channel of Communication:
Retailers also act as the channel of communication and information between the wholesalers or suppliers and the consumers. From advertisements, salespeople and display, shoppers learn about the characteristics and features of a product of service offered. Manufacturers in their turn learn of sales forecasts, delivery delays, and customer complaints. The manufactures can then modify defective or unsatisfactory merchandise and service.
Function # 6. Transport and Advertising Functions:
Small manufacturers can use retailers to provide assistance with transport, storage, advertising and pre-payment of merchandise. This also works the other way round in case the number or retailers is small. The number of functions performed by a particular retailer has a direct relation to the percentage and volume of sales needed to cover both their costs and profits.
Functions of Retailers – Arranging Assorting, Breaking Bulk, Holding Stock and Extending Services
Retailers undertake various business activities and perform functions that add value to the offerings they make to their target segments. Retailers provide convenient location, stock and appropriate mix of merchandise in suitable back ages in accordance with the needs of customers.
The four major activities, carried out by retailers are:
1. Arrange for assortment of offerings
2. Breaking bulk
3. Holding stock
1. Arranging Assortment:
An assortment is a retailer’s selection of merchandise. It includes both the depth and breadth of products carried. Retailers have to select the combination of assortments from various categories. The assortment must include substitutable items of multiple brands and price points.
They should be distinguished on account of physical dimensions and attributed e.g., colour of flavour. The small retailer takes assortment decision on the basis of his experience on the other hand retailers from organized retailing depend on a detailed study of past trends and future projections.
Retailers need to consider certain factors while devising assortment plans for their stores: profitability associated particular merchandise mix, store image, layout and the level of compatibility between the existing merchandise.
For example, Spencer’s Daily, a leading food supermarket positioned of their consumers and survive in the business whereas, ‘More’ stores a grocery chain in India has impressive assortments of only the fast moving brands and Stock keeping units (SKU) rather than all available variants in the market. Their assortment plan is governed by location size and store image (value for money) of their stores.
2. Extending Services:
Retailing provides multiple services to immediate customers and other members of the value chain. The set of services extended by particular retailers may be part of their core product offerings or it may ‘add on’ to their product or service.
Retailers offer credit, home delivery, after-sales services and information regarding new products to their customers, thereby making the shopping experience convenient and enjoyable. At the same time they provide stocking place reach to the ultimate customers and information about the concerned target segment to the suppliers.
For example, Time Zone, the first organized retail chain of wrist watches in India started by leading watch manufacturers Titan, set up in all stores, service centers with proper equipment and trained manpower.
This has not only diluted the relevance of service providers in the unorganized sector but has also enhanced the confidence of the customer in the retail services provided by the particular retail chain as after-sales service is considered to be integral ingredient of the watch purchase.
Functions of Retailers – 13 Important Functions: Breaking the Bulk, Storing, Stocks Multiple Brands, Customer Education, Retailers Provide Services and a Few Others
1. Breaking the Bulk – One of the most important functions of the retailer is to split the large quantities of the product in to smaller units.
2. Storing – The retailer stores products for the customer. Products are continuously available in the stores most of the time.
3. Provides Variety and Assortment – The retailer provides various types of products to the consumers and also a number of variations in each type of product. Variety is the different types of products offered by the retailer, e.g. Biscuits, soap, detergent, snacks, tooth paste etc. Assortment is the number of variations available in each product category, e.g. Biscuits can have an assortment of chocolate, biscuits, salty biscuits, butter biscuits, cream biscuits, digestive biscuits etc.
4. Stocks Multiple Brands – The retailer holds stock of merchandise that belong to multiple brands. Holding merchandise is not on the basis of bias or any personal agreement, it is done solely of profit and commissions agreed upon. Example- A supermarket will have soaps or deodorants of different brands belonging to various manufacturers.
5. Customer Education – It is the retailer who is in direct contact with the consumers and it is the retailer who answers the queries of customers. When customers in a store enquire about a product they do not call the manufacturer, they directly ask the retailer.
6. Provides Discount and Credit – The retailer provides many cash saving schemes to the customers, the retailer also offers credit facilities to many consumers. This acts as a driver or motivator in purchase decision making of the customers.
7. Provides Feedback – The retailers speak to customers and get valuable feedback about the merchandise. This information is sent back to the wholesalers or manufacturers, who in turn will use it in their marketing strategies.
8. Retailers Provide Services – Retailers provide many services to their customers as well as their suppliers. For the suppliers they may undertake packaging and labelling activities, promotional activities etc. for the customers the services may be home delivery of goods, alterations or customization of merchandise, gift packing etc.
9. Returns and Replacements – Retailers undertake the function of taking back damaged products and replacing them with new ones. They return the damaged products to the suppliers and thus maintain a feeling of security and trust with the customers.
10. Online Services – In recent times many retailers have resorted to online services for their customers. A good example would be the food and travel sector, a customer can book a taxi or a pizza from the comfort of her home and the service would be provided by the retailer.
11. Satisfies Local Tastes – Retailers keep the local tastes and preferences in mind and stock merchandise accordingly. Example- In an area where rice is mostly eaten, variety of rice products may be stocked with the retailer, and a place where wheat is consumed more in quantity, wheat related products will be stocked.
12. Offers Local, National and International Brands – Retailers make it very convenient for consumers to have access to local, national and international brands of products at a single place. In other word retailing is a heaven for shoppers.
13. Specialized Services – Some retailers are specialist in their product or service lines. These retailers offer specialized products or services to their customers. Example- Diagnostic services, music and handicraft stores, medical services etc.
Functions of Retailers – Assortment, Breaking Bulk, Holding Stock, Extended Services and Channel of Communication
Retailers play a significant role as a medium between manufacturers, wholesalers, suppliers, and consumers.
Retailers perform various functions like:
2. Breaking bulk,
3. Holding stock,
4. Extended services, and
5. Channel of communication.
Manufacturers usually make one or a variety of products and sell their entire inventory to a few buyers to reduce costs. Final consumers, by contrast, prefer a large variety of goods and services to choose from and usually buy them in small quantities.
Retailers are able to balance the demands of both the sides, by collection of an assortment of goods from different sources, buying them in sufficiently large quantities and selling them to consumers in small units. Many retailers often specialize in types of assortment like Reliance Fresh has got 15,000 merchandize like food and groceries from various companies.
Their assortment plan is governed by location, size, and store image of their stores. Customers are able to choose from a wide range of designs, sizes, and brands at just one location.
2. Breaking Bulk:
Breaking bulk means physical repackaging of the products by retailers in small unit sizes, according to customer’s convenience and stocking requirements. Normally, retailers receive large quantities from suppliers to reduce their transportation costs.
3. Holding Stock:
To ensure the regular availability of the offerings, the retailers maintain appropriate levels of inventory. Consumers normally depend on the retailers directly to replenish their stocks at home. Therefore, retailers, on a periodic basis, maintain the required levels of stock to meet the regular or seasonal fluctuations in the demand.
4. Extended Services:
The retailers provide multiple services to the customers as a part of their core product, or it may be an ‘add on’ to their product or service. Retailers offer home delivery, after-sales services, and information regarding new products to their customers, thereby making the shopping experience convenient and enjoyable. For example, Reliance Digital offers electronic products and also provides after sales services like repairs and maintenance.
5. Channel of Communication:
Retailers also act as the channel of communication and information between the wholesalers or suppliers and the consumers. From advertisements, salespeople and display, shoppers learn about the characteristics and features of a product or service offered.
Functions of Retailers
1. The retailer gives maximum local convenience to consumers. They are now providing home delivery also, thus giving maximum convenience to consumers.
2. Consumers need not store the commodity beyond their normal requirements.
3. A retailer also stocks a wide variety of items.
4. A retailer gives information to consumers and displays the item in his store.
5. Retailers give advice and guidance to customers regarding the goods and services.
6. A retailer is the connecting link between manufacturers and wholesalers. Thus, without retailers it is not possible to distribute goods to the ultimate customer and if so, our wants will remain unsatisfied.
7. Retailers ensure the supply of essential items like fruits, vegetables, bread, milk, etc.
8. Retailers give consumer durables on an installment basis, thus helping consumers and manufacturers.
9. Retailers give the feedback to wholesalers and manufacturers about the latest change in consumer wants and preferences, so that they can make the changes accordingly.
10. A retailer also educates customers about the diverse uses of new products.
11. A retailer is a guide and friend to his customer.
Functions of Retailers – Services to Wholesalers and Consumers
A. Services to Wholesalers:
1. Sale of their goods in small quantities
2. Publicity & canvassing of their goods
3. Knowledge of consumers’ tastes & preferences conveyed
4. Bridge between wholesalers and consumers
B. Services to Consumers:
1. Easy reach of consumers
2. Single point facility of wide selection (instead of customer going to several different places)
3. Detailed knowledge about product & manufacturers given to consumer
4. Free consultation
5. Availability of offseason & Seasonal goods
6. Availability of goods as per consumer tastes
7. Facility of return of good
8. Provides after sales service repair and maintenance
9. Periodic checkup services free or at low cost during or after warranty period
10. Standard Repairs at reasonable rates
11. Credit – Facilities (if so desired)
12. Home delivery
13. Technical services like installation, counseling about effective use and maintenance
14. Assortments – They collect assortments or variety of goods from different wholesalers and sell them to consumers according to their needs
15. Handle Consumer Complaints