LARGE SCALE RETAILERS

Large-scale retailers have the following features/characteristics;

• Require large amounts of capital to start and maintain
• They operate from larger fixed premises
• They operate mainly in urban areas
• They have a large labour force
• Buy goods in large quantities from wholesalers or directly from producers and are therefore allowed large trade and quantity discounts and other favourable credit facilities
• Require the services of specialists such as salespersons and accountants
• May occupy one large premise or several premises in the same town or in different towns
• They have large stocks and large sales volumes

TYPES OF LARGE SCALE RETAILERS

1. Supermarkets:A supermarket is a large-scale self-selection/self-service store that deals mainly with household goods such as utensils, foodstuffs and clothes. It has the following features;

Features of supermarkets

• Requires large capital to start
• They stock a wide variety of goods
• Offers self service facilities
• Goods have price tags or bar codes
• Prices of goods are fixed
• No credit facilities are offered
• Sell at comparatively low prices
• Goods are systematically arranged for easy selection
• Shoppers are provided with baskets or trolleys for convenience
• There is minimal interaction between buyer and seller
• There are employees who pack goods for customers at the pay points.

Advantages of supermarkets

• Prices may be relatively low because they buy their goods in bulk and are given discounts
• Saves time as customers are able to get most goods they require under one roof
• Self-service saves the customers time
• Few attendants are employed thereby reducing the monthly wage bill
• Impulse buying leads to more sales, hence high profits
• Bad debts are avoided because there are no credit sales.
• The price tags on goods help customers to monitor their spending.

Disadvantages of supermarkets

• Do not offer credit facilities to customers
• Do not deliver goods to the customer’s premises
• Are found mainly in urban areas
• May incur losses due to pilferage of goods
• Impulse buying may lead the customers to buying goods they may not need.
• They are expensive to start and operate due to the large amount of capital required
• Prices are fixed and bargaining is not accepted, which discourages some customers
• Minimal personal interaction limits chances for making more sales

1. Hypermarkets

A hypermarket is a large shopping complex/centre comprising a variety of businesses managed by different people all housed in one building

Examples; village market, sarit centre, Tuskeys-Kisumu, Nakumatt mega city-Kisumu e.t.c

Features/Characteristics of Hypermarkets

• Are served with good access roads
• They have ample parking space
• Many businesses in one building
• Located in the outskirts of town
• Offer a variety of goods and services
• Occupy a large space.

Advantages of Hypermarkets

• Offer ample and secure parking space to customers
• Customers can do all their shopping in one building
• They are usually open for long hours
• They may provide credit facilities by accepting credit cards
• There is less traffic congestion as hypermarkets are located away from urban centres
• Provide a wide variety of goods and services to customers under one roof.
• They have fair prices that are customer friendly.

Disadvantages of Hypermarkets

• Are only convenient to customers who have cars because they are situated away from city centres
• They serve limited number of people due to their location
• They require large amount of capital to establish
• They can easily exploit their customers since their prices are not controlled
• Require large amount of space which are not available in central business district (CBD)
• They spend a lot of security to safeguard properties
• Chain stores (Multiple shops); Are large scale businesses with separate branches which are managed and organized centrally. The branch managers are accountable to the head office. Examples; African Retail Traders (ART), White Rose dry cleaners, Nakumatt, Tuskys, Uchumi e.t.c

Characteristics/features of chain stores

• Are managed centrally from a head office
• Prices are standard for all their products in all their branches
• All branches deal in the same type of products
• Sales are decentralized i.e. the various shops situated in different places act as selling points or branches
• Purchases of stock are centralized i.e. buy stock buy stock in bulk centrally and distributed to the different branches
• Goods can be transferred from one shop to another where the need for them is higher
• The shops operate under one name and are similar in appearance and interior layout

Advantages of chain stores/multiple shops

• They enjoy large trade discounts since they buy their goods in bulk centrally and is passed to consumers in form of low prices
• Common costs such as those of advertising are shared
• Goods that do not have a high demand in one branch can be transferred to another where their demand is high
• They are easily identified by their colour and design
• They have low operational costs because of the centralized buying, storage, advertising and accounting
• They serve a large number of customers because they are spread in many towns and cities
• The similarity of the shops in appearance and services serves as an advertising tool
• Risks such as losses are spread among many shops
• It is possible to pay for goods in one branch and pick them up in another.

Disadvantages of chain stores/multiple shops

• Large amount of capital is required to start and maintain the business
• They cater mainly for the urban areas as they are situated in those places
• Organizational problems may occur due to their large size
• No credit facilities are offered except those operating exclusively on hire purchase schemes
• Response to market changes is slow due to the slow decision making
• Decision making is slow as the head office must be consulted
• Lack of personal touch with customers
• Absence of personal touch between employer and employee may reduce incentives for hard work among staff
• People tend to shy away from buying similar products such as clothes and this may reduce sales.

1. Departmental stores

This is a group of single shops operating under one roof with a centralized management

Each shop/department specializes in a particular line of products and is headed by its own department manager.

Characteristics of departmental stores

• Each department has its own manager
• Each department sells only one line of products
• All departmental managers are answerable to a general manger
• They offer a wide variety of goods at relatively low prices
• They sell goods strictly on cash basis
• They are usually in town centres
• Goods are not transferable from one department to another as each has its own variety of goods.

Advantages of departmental stores

• Customers can buy/access a wide variety of goods at fair prices under one roof.
• They can afford to hire trained qualified experienced staff who provide quality services
• They buy goods in large trade discounts. This enables them to sell at low prices.
• Each department is able to make independent and quick decisions that affect its operations.
• The independence of departments ensures that the weakness of one department does not affect each other.
• Savings can be made on some activities such as product promotion by centralizing them.

Disadvantages of Departmental stores

• A large amount of capital is required to start and maintain the stores
• They require a large number of customers to operate profitably
• It is difficult to give personal attention to customers
• They cater mainly for the urban communities in which they are located
• They strictly sell their goods on cash basis
• Operational costs are high due to the wide variety of services offered
• Their large size could encourage theft and pilferage of goods
• The independence of departments can make central control difficult.

1. Mail order stores

This is a type of retail business where business is carried out through the post office, telephone or email

-Ordering of the goods is done through the post office telephone or email and delivering of goods is done by post or courier

-There is no personal contact between the seller and the buyer and buyers get information from advertisements.

-Goods are dispatched on the basis of cash with order (CWD) or cash on delivery (COD).

Characteristics/features of Mail order stores

–They sell the goods through the post office

-They operate on cash with order (CWO) or cash on delivery (COD) terms

-Heavy advertisement are involved

-Customers do not visit the selling premises.

-There is no personal contact between the buyer or the seller

-All transactions are done through the post office

-They deal with goods that are less bulky, have high value, and are durable and not too fragile

-May have large warehouses

Advantages of Mail order stores

• They reach customers who are far for away from the shopping centres
• Do not require the services of sales personnel or shop attendants for skilled labour since selling is routine
• Total control of distribution is possible
• Payments is made with order or delivery so there is little chance of bad debts
• Eliminates the loss associated with shop space, thus saving on rent
• Supply of goods is based on order thus a trader requires little working capital
• The method eliminates trips to congested stores and lengthy waits queues
• Do not require large storage space for goods.

Disadvantages of Mail order stores

• Advertising and postage costs may increases the price of goods
• There is lack of personal contact between the seller and the buyer
• There is limited variety of goods on offer
• Customers do not have the opportunity of inspecting goods before buying
• There are no credit facilities
• The method is only suitable for those who can read and write
• Should there be a problem with the post office.e.g industrial action like strikes, the business may be affected
• Difficult to operate in places where post office services are poor or unavailable
• Chances of being defrauded are high.