Basics of Retailing Chapter Notes - Class 11 PDF Download

Meaning and Significance of Retail Business

Definition: A retailer is a merchant, agent, or business primarily involved in selling directly to end consumers.

• Core Activities: Retailers engage in various marketing activities including purchasing, selling, grading, and understanding customer preferences.
• Role in Distribution: Acts as an intermediary between producers and consumers, specializing in maintaining contact with both parties.
• Importance: Retailers streamline the distribution process, making it more convenient, cost-effective, and efficient compared to direct selling by producers.

Wholesaler Overview

• Definition: Wholesalers also serve as intermediaries in the distribution channel, selling to retailers or businesses for resale purposes.
• Operations: Purchase goods in bulk from manufacturers and distribute them in smaller quantities to retailers.
• Role in Distribution: Operates between manufacturers and retailers in the distribution chain.

Retail Landscape in India

• Key Players: Corner grocers or Kirana Stores play a vital role due to the preference for nearby shopping for daily needs.
• Consumer Preferences: Convenience is a primary factor in grocery, fruit, and lifestyle purchases, while product quality is crucial in durable goods, books, and apparel.
• Trend: Slow emergence of retail chains such as supermarkets, department stores, malls, and discount stores.
• Facilitating Factors: Availability of quality products at competitive prices, enhanced shopping experience, and integration of entertainment into the retail environment.

E-Tailing and Technology

• Definition: E-Tailing refers to the sale of goods and services online, including B2B and B2C transactions, subscriptions, and TV shopping.
• Payment Methods: Transactions are facilitated through credit or debit cards, leveraging advancements in Information Communication Technology (ICT).

Employment Opportunities in Retail

• Growth: Expansion in the retail sector has created diverse job opportunities requiring various skills and talents.

Organised and Unorganised Retail Business

Shift in Consumer Behavior: Transition from traditional kirana shops and mobile vendors to larger individual-run stores with few employees.

Development of Departmental Stores: Increase in the standard of living leading to the emergence of more departmental stores.

Organized Sector Formation: Reform in the retail sector resulting in the distinction between organized and unorganized retailing.

Organized vs. Unorganized Retailing

Unorganized Retailing:

• Description: Traditional low-cost retailing formats include kirana shops, owner-manned general stores, paan shops, convenience stores, etc.
• Characteristics: Poor infrastructure, lack of technology, insufficient funds, and absence of skilled manpower. Often not registered under legal provisions.
• Examples: Mandis, haats, melas, local baniyas, kirana shops, paanwalas, and other small scattered units.

Organized Retailing:

• Description: Trading activities undertaken by licensed retailers, including corporate-backed hypermarkets, retail chains, and large privately-owned businesses.
• Characteristics: Offers more convenience, choice, and control to customers. Registered for sales tax, income tax, etc.
• Examples: Supermarkets, departmental stores, hypermarkets, shopping malls, multilevel marketing, teleshopping, etc.
• Employment Opportunities: Capable of generating significant job opportunities and holds potential for substantial growth.

Difference between Organized and Unorganized Retail Business

Different Types of Retail Business Establishments

1. Based on merchandise offered
2.  Based on ownership 

Based on Merchandise Offered

• Convenience Outlets

  These are small-scale stores situated in residential areas, operating extended hours and offering a limited range of convenience items like eggs, bread, milk, and vegetables.

• Supermarkets

  Self-service shops providing a diverse selection of food and household products, organized systematically within aisles.

• Hypermarkets

  Retail establishments combining elements of departmental stores and grocery supermarkets, featuring a wide array of products including appliances, apparel, and groceries.

• Specialty Stores

  Consumer outlets specializing in unique or niche products within specific categories such as furniture, electronics, sports gear, and jewellery.

• Department Stores

  Large-scale retail outlets offering a broad range of consumer goods, organized into departments, often requiring substantial investment and offering home delivery services.

• Catalogue Showrooms

  Retailers focusing on durable goods, allowing customers to browse through printed or online catalogues, fill out order forms, and retrieve items from the warehouse.

• Discount Stores

  Retail shops offering products at discounted prices compared to regular market rates.

• Shopping Malls

  Modern shopping complexes comprising multiple interconnected buildings, housing a diverse mix of retail shops and merchants.

• General Stores

  Retail establishments found in small towns or rural areas, stocking a wide variety of goods including groceries and household items.

• Warehouse Stores

  Food and grocery retailers operating stores with significantly discounted prices compared to traditional supermarkets, often requiring membership fees.

• Variety Stores

  Retail outlets offering an extensive range of affordable household items and goods.

Based on Ownership 

• Independent Retailer

  A small-scale business owned and operated by an individual rather than a corporation, maintaining direct contact with customers. Examples include local baniyas, kirana stores, and paanwalas. The retail strategy is determined based on store location and product mix.

• Corporate Retail Chain

  A group of stores engaged in the same kind of business across different locations, under the same ownership and management. Retail chains in malls or shopping centers constantly seek to enhance their market position and strengthen brand identity. Examples include Reliance, Bata, Arrow, Louis Philippe, and Food World.

• Franchising

  An arrangement where one party (franchiser) grants another party (franchisee) the right to use its trademark, business systems, and processes to produce and market goods or services according to specified guidelines. Examples include McDonald's, Pizza Hut, and Van Heusen.

• Consumer Cooperatives

  Enterprises owned and managed by consumers, aiming to fulfill the needs and aspirations of their members. Consumer cooperatives often manifest as retail outlets owned and operated by their consumers, who may also contribute the capital required for the enterprise. Examples include Apna Bazaars in Mumbai.

Other Modern Retailers

• E-Retailers

  • E-retailing allows consumers to buy goods or services directly from a seller over the Internet.
  • Consumers can find products by visiting the e-retailer's website or using shopping search engines.
  • Examples include Amazon and Flipkart.
  • Payments are accepted online or at the time of delivery, with products often shipped directly from manufacturers or wholesalers.
  • E-retailing is convenient for customers who prefer online shopping, but caution is advised regarding product quality and secure transactions.

• Vending Machines

  • Vending machines are automated machines from which products are sold.
  • Customers insert money, select a product from the menu, and receive the item dispensed by the machine.

• Automated Retail Stores

  • Automated retail refers to self-service, standalone kiosks located in high-traffic areas like airports, malls, and convenience stores.
  • These kiosks accept credit cards and are typically operational 24/7.
  • Examples include Zoom shops and Redbox.

Functions of Retailer

• Breaking Bulk into Small Quantities

  Retailers play a crucial role in reducing the cost of long-distance transportation by breaking down goods shipped in large quantities from producers or wholesalers into smaller, more manageable quantities for consumers.

• Providing Product Information to Customers

  Having comprehensive product knowledge allows retailers to effectively communicate the features and benefits of products to customers, ultimately influencing their purchasing decisions.

• Offering Customer Services

  Customer service is essential for retailers, involving efficient and friendly assistance to address customer needs. Services may include free home delivery, gift wrapping, credit facilities, and after-sales support.

• Creating a Convenient, Comfortable, and Pleasant Shopping Experience

  Retailers strive to provide a positive shopping environment by ensuring the convenient availability of products, offering speed and relevance in product offerings, and delivering exceptional customer service. Factors contributing to a pleasant shopping experience include friendly greetings, relevant product offerings, soft music, proper lighting, spacious layout, courteous and well-presented employees, among others.

• Providing Feedback to Producers about Customer Needs

  Retailers maintain first-hand interaction with customers, allowing them to understand consumer needs effectively. They share this valuable feedback with producers to help keep products in demand and ensure competitive pricing, contributing to continuous product improvement and customer satisfaction.

Essential Requirements of Retailers

• Establish the shop in locations that attract customers.
• Stock goods according to customer demand.
• Sell quality goods at competitive prices.
• Stay updated about the latest market trends.
• Ensure attractive window and counter displays to promote sales.
• Always be accessible to customers.

• Selling goods in small quantities at reasonable prices.
• Meeting consumer demand by maintaining necessary stock.
• Providing essential information to assist customers in making purchasing decisions.
• Guiding customers on replacement conditions for damaged goods.
• Displaying and demonstrating goods to attract customers.
• Offering credit facilities to regular and reliable customers.