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Retail Trade Definition

Every year, millions of products are manufactured for consumption. These products vary from daily consumption items to high priced purchases. Selling of goods to the final consumer is termed as Retail Trading. Retail trade is usually the final step that takes place in a distribution channel. After a product is manufactured, wholesalers buy bulk quantities of these products. Next, the retail traders buy from these wholesalers or sometimes directly from the manufacturers depending on the scale of the enterprise.


Retail trade is the business activity involved in the sales of finished goods/products to the customers thus making them a pivotal part of the distribution channel. Retail traders act as a linkage between manufacturers or wholesalers and customers.


Retail Business Meaning

Retail business/trade means purchasing the goods from the wholesalers/manufacturers and selling them to the final consumers for a profit. Usually, retail businesses buy bulk quantity at a lower price and then sell them to the customers at a higher price to make profits. Generally, retail traders are classified into two categories:

  1. Itinerant Traders

The selling point in this case is not fixed. Itinerant traders move to different places to sell their products. For example, the vegetable vendors, weekly market, peddlers and hawkers. Generally, in this case, traders come to consumers and make their sales. These traders sell usually lower-priced products and products of daily use like vegetables etc.

  1. Fixed Shop Traders

This is the more common type of retail trading where traders set up shop in a marketplace or near residential areas. Consumers can come up to these retail traders or shops as they are commonly mentioned and purchase the goods they need. For example, Supermarkets, Departmental stores, General stores, Speciality stores, malls etc. These traders provide more services to the customer. Customers also prefer to buy products from these traders as they are more reliable than itinerant traders and they build a relationship with them. These retail traders give customer satisfaction by giving them guarantees, repairs, discounts and credit facilities to their customers.


Importance of Retailing

Retail traders are a very important cog in the smooth functioning of any distribution channel. Retail traders fill some specific and general needs of not only the final consumer but also the manufacturers and wholesalers.


Importance for Manufacturers/Wholesalers

  • Distribution of Goods - Manufacturers need not worry about distributing their products in the country themselves. They can set up plants in a particular place and the retail traders and wholesalers will take care of selling their products to the final consumer.

  • Personal Selling - Some products require selling them to the customers personally. For example, garments are something the customers need help with. So the retail traders bring in their expertise of selling them to the customers.

  • Enabling Large Scale Operations - Retail traders take their place in the market by acting as a middle man between the manufacturers and their customers thus enabling the manufacturers to produce large quantities.

  • Market Information and Feedback - Retail traders also play an important role in the feedback mechanism. Retail traders are usually the point of contact with the customers. So any defect or improvement that can be brought upon the product can be conveyed by the retail traders to the manufacturers.

  • Promotional Activities - Sellers also definitely help in promoting any product. How they arrange their products in their showcase is very important for manufacturers. Product placement is given utmost importance in any supermarket for this reason as part of their promotional activity for a product of some brand.

Services Provided to Consumers

  • Availability - The need for a particular product may arise anytime. So to fulfil that need, products are available with the retail traders. Whenever the consumer needs something, he can go to his local store and purchase that product.

  • New Products - Retail traders can help the customers also by telling them about newer available products which could be more suitable to the consumer needs. Here, this is subject to the sellers’ desire to sell a particular product because it is more suitable or maybe because his profit margin on that product is higher.

  • Convenience in Buying - As a consumer, there is a limit to how much we can store at our houses and even then we might need something urgently or at an odd hour. Retail traders give the consumer convenient buying time so that the consumer can purchase what he needs when he needs it.

  • A Wide Selection of Goods - The options available at retail traders are wide-ranging giving the customer the freedom to purchase a product of whatever brand or quantity he wishes to.

  • Services - In addition to these, consumers can also avail services like repairs or credit facilities if you are a regular customer at retail traders.

FAQ (Frequently Asked Questions)

Q1. Retail Traders Play an Active and Imperative Role in the Economy. Comment.

Ans. Retails traders are the link between wholesalers/manufacturers and consumers in a market place. Retail traders are important to both of them because of the services it gives to both of them. It is a very important aspect of any distribution channel. For consumers to be able to buy products with ease and for the manufacturers to be able to produce goods without the hassle of selling it worldwide, retail traders take their place in a distribution channel and keep it moving.

Q2. Why are Some Products Available at Only Select Retail Traders?

Ans. Retail trading is a very important business activity. It is the one with the point of contact with the customer. It can play a vital role in creating a brand image and recognition and awareness among the consumers. So, in order to create a well-crafted personal experience for the consumers, brands often sell their products at their own novelty stores. Usually, high-end single line products are sold at these places. For example, customers can only buy Tanishq jewellery from their retail stores.

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