Large Scale Retailing

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Welcome to class! 

In today’s class, we will be talking about large scale retailing. Enjoy the class!

Large Scale Retailing

Types of large scale retailing

A. Multiple shops or chain stores:

These are large scale retail businesses consisting of many similar shops or branches spread or located in different towns/ cities all over a country. They sell the same type of goods, and all the shops are controlled from the head office, e.g. Lennards, Challenge Bookshop, Famad, etc.

Features or characteristics of multiple shops

1. Standard or an identical shop design.
2. Dealing in one line of product in their branches.
3. They have a centralized form of administration and ownership.
4. They operate based on cash and carry.
5. Prices of goods sold in all branches are fixed by the head office.
6. They practice self-service.

Advantages of multiple shops

1. They are easy to identify.
2. Staff can be moved between branches.
3. Their cash and carry system reduces the incidence of bad debts.
4. They save a lot of cost in advertising.
5. Unsold stock in one branch can be moved to other branches.

Disadvantages of multiple shops

1. They deal in a limited range of products.
2. The cost of setting up multiple shops all over the country is very large.
3. They do not offer credit facilities to customers.
4. No personal attention is given to customers.
5. Less control is exercised by branch managers.

B. Departmental stores:

This is a large single retail outlet selling a wide variety of goods in separate departments. Each department specializes in a particular line of goods different from those of other departments.

A departmental store is often referred to as many shops under one roof and common management e.g. UTC Stores, Cash and Carry, UAC Stores etc.

Features of departmental stores

1. They are divided into different departments.
2. Buying and selling are decentralized.
3. They deal in a wide range of goods.
4. They practice self-service
5. They are located in the centre of cities and urban areas.

Advantages of departmental stores

1. They stock a wide variety of goods.
2. They are easily located by customers.
3. There is self-service and orderliness.
4. Impulse buying is possible as shoppers move from one department to another.
5. Goods in one section help to advertise goods in other sections.

Disadvantages of departmental stores

1. Lack of personal attention for customers.
2. High running expenses/overhead costs.
3. Pilfering and shoplifting (i.e. the stealing of goods) are rampant.
4. It requires large capital to set up.
5. They do not allow customers to return goods.
6. They give little or no credit to customers.

Evaluation

1. Describe any four features of multiple shops
2. With the aid of a diagram, illustrate six branches of trade and show six types of retail outlets
3. List three disadvantages of departmental stores to (a) The customers (b) The owners

Types of large retailing

C. Supermarket:

This is a large scale retailing shop offering for sale, principally by self-service, household goods like groceries, provisions, tinned foods, frozen food, vegetables, fresh fruits etc.

Features of supermarket

1. They operate the system of self-service.
2. They deal in a wide range of goods
3. They are located in urban centres e.g. Lagos.
4. They stock household goods and food items
5. They operate with few sales attendants

The advantages and disadvantages of supermarkets are similar to those departmental stores.

D. Hypermarkets:

These are extra-large or giant supermarkets that deal in a greater variety of goods. They are usually located at the outskirt of town and cities. Unlike supermarkets, hypermarkets also deal in consumer durables and they offer car parking facilities for customers

E. Mail ordered business:

This is a form of large scale retailing in which buying and selling are carried out through the Post Office or agents.

The Mail Order firms contact prospective customers by mail, receive their orders by mail and make delivery of goods to customers also by mail. It involves the use of specially prepared catalogues that presents the retailer’s products both visually and in writing.

Features of mail-order business

1. Retailing is done through the Post Office or agents.
2. Intensive advertising through catalogues, newspapers is involved.
3. They deal in a wide range of durable goods.
4. It requires a large warehouse for storing goods.
5. It requires few workers for its operations.

Advantages of mail-order business

1. The business pays low rent as it can operate a warehouse located out of town.
2. It requires a few salesmen or sales assistants.
3. Expensive fixtures and displays are not needed.
4. They provide a variety of goods.
5. There is an opportunity for advertising through catalogues.

Disadvantages of mail-order business

1. It is completely dependent on the efficiency of the postal system.
2. Customers are not able to assess the quality of goods before buying them.
3. Lack of personal contact with customers
4. High advertising costs e.g. cost of printing a catalogue
5. There is a possibility of goods being lost or damaged in transit.

• Retail co-operative society:

This is a form of co-operative in which many small independent retailers pool their resources together to enable bulk purchases and then sell the goods at lower prices. The profits are shared in proportion to the amount of purchase made by each member.

• Variety chain stores:

These are large retail stores which combine some aspects of both departmental stores and multiples shops. No notable example can easily be found in Nigeria.

Features of variety chain stores

1. Many branches all over the country
2. Uniform shop design
3. They deal in variety of goods
4. Stores are under one roof but without clear divisions into departments 5. Centralized management as in multiple shops

General evaluation

1. Explain five advantages of large scale retailing
2. State five characteristics of departmental stores
3. List five disadvantages of hawking as a form of retailing
4. State five services provided by a retailer to his customers
5. List five factors that should be considered in starting a retail business

Evaluation

1. List four disadvantages of Mail Order Business
2. State five factors accounting for the growth of large scale retailing in Nigeria

Reading assignment

Essential commerce for SSS by O.A. Longe Page 25-31

Theory

1. List three types of large scale retail outlets.
2. State three advantages of multiple shops to the customers.

 

In our next class, we will be talking about Modern Trends in Retailing.  We hope you enjoyed the class.

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