in this chapter you will learn about :
- large scale retailing, advantages and disadvantages, effects on wholesalers, other retailers and consumers.
- reasons for the survival of the small scale retailer.
Advantages of retailing on a large scale
Large scale retailers with many branches have a large turnover. This enables them to:
- buy in bulk directly from the manufacturers and obtain goods at discounted prices.
- Enables them to charge lower than average prices to consumers
- And offer special promotions and loss leaders to their consumers.
Large scale retailers can
afford specialist employees :
- buyers who purchase for the company as a whole
- accountants who monitor cost
- estate managers and surveyors who look for suitable sites for new shops
- manage the building of these shops.
Retailing on a large scale enables greater use of computerised systems. Stock control can be more accurate and money is not wasted on surplus stock. Regional distribution centres (warehouse) can be established to supply shops located close to them as quickly as possible.
Breaking bulk and repackaging can be undertaken there. Large scale retailers can also, increasingly, to deliver to costumers who have purchased
online.
Since large-scale retailers have enormous purchasing power, these companies can lay down specific standards for their suppliers and insist that they are maintained. They can also
negotiate reduced prices with suppliers so that they can pass on these lower prices to their customers and remain profitable.
Many large-scale retailers are public limited companies.
This makes it possible for them to raise to large amounts of capital necessary for setting up and expanding their retail bussineses. Many of these retailers have shops and stores in centralised shopping areas as
they can afford the high costs of rent and local taxes.
Some large scale retailers also have their own factories, e.g Bata footwear factories. They are, however, more likely to buy directly fro several manufacturers. The major advantage of large-scale retailing is economies of scale, the benefits of size. As the business becomes larger, the costs per unit such as advertising and wages fall.
disanvantages of retailing on a large scale
the growth of large scale retailing has meant a decline in personal services for the consumer. most large scale retailers use self-service methods but many of this retailers are now recognizing the need for some form of customer contact and are introducing some counter service and information desk in their shops.
many consumer complain about being standardise and massproduced. they miss the individuality in the products for sale. often the products are repackaged and it is difficult to buy individual items. the customer may want one bun or screws. buns may be grouped in packets of four or six whereas screws may be sold in tens and so on.
many large retailers employ stuff who are not very interested in the jobs they are doing and who are often locate. this may reflect on the image of the store and affect sales. many large scale retailers offer staff training courses, staff appraisal and a carrier progession in retailing to counter act. large scale retailer, have high overhead or cost. they have large wage bills as they often employ over 100 people both full time and part time. in one individual shop. they have large adminisstrative cost the cost of national advertising high rents and the cost of warehousing.
effects on suppliers, whosalers, other retailers and consumers.
