ch-10 - Prashanth Ellinancertbooks.prashanthellina.com/.../Ch-10.pdf · 226 BUSINESS STUDIES 10.1 INTRODUCTION Trade refers to buying and selling of goods and services with the objective

CHAPTER 10

INTERNAL TRADE

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

• describe the meaning and types of internal trade;

• specify the services of wholesalers to manufactures and retailers;

• explain the services of retailers;

• classify the types of retailers;

• explain the forms of small scale and large scale retailers; and

• state the role of Chambers of Commerce and industry in thepromotion of internal trade.

226 BUSINESS STUDIES

10.1 INTRODUCTION

Trade refers to buying and selling ofgoods and services with the objectiveof earning profit. Mankind has beenengaged in trading, in some form orthe other, since early days ofcivilisation. The importance of tradein modern times has increased as newproducts are being developed everyday and are being made available forconsumption throughout the world.No individual or country can claim tobe self-sufficient in producing all thegoods and services required by it.Thus, each one is engaged inproducing what it is best suited toproduce and exchanging the excessproduce with others.

On the basis of geographicallocation of buyers and sellers, trade canbroadly be classified into two categories(i) Internal trade; and (ii) External trade.Trade which takes place within a

country is called internal trade. Tradebetween two or more countries, on theother hand, is called external trade. Thepresent chapter discusses in detail themeaning and nature of internal tradeand explains its different types and therole of chambers of commerce inpromoting internal trade.

10.2 INTERNAL TRADE

Buying and selling of goods andservices within the boundaries of anation are referred to as internal trade.Whether the products are purchasedfrom a neighbourhood shop in a localityor a central market or a departmentalstore or a mall or even from any door-to-door salesperson or from anexhibition, all these would beconsidered to be examples of internaltrade as the goods are purchased froman individual or establishment withina country. No custom duty or import

Have you ever thought if there were no markets, how products of differentmanufacturers would reach us? We are all aware of our general provisions storeround the corner which is selling items of our daily need. But is that enough?When we need to buy items of a specialised nature, we like to look at biggermarkets or shops with variety. Our observation tells us that there are differenttypes of shops selling different items or specialised goods and depending on ourrequirements we purchase from certain shops or markets. In rural areas, wemay have noticed people selling their goods on the streets, these goods mayrange from vegetables to clothes. This is a completely different scene from whatwe see in the urban areas. In our country, all kinds of markets co-exist inharmony. With the advent of imported goods and multinational corporations, wehave shops selling these products too. In big towns and cities, there are manyretail shops selling particular branded products only. Another aspect of all thisis, how these products reach the shops from the manufacturers? There must besome middlemen doing this job. Are they really useful or do prices increasebecause of them?

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duty is levied on such trade as goodsare part of domestic production and aremeant for domestic consumption.Generally, payment has to be made inthe legal tender of the country or anyother acceptable currency.

Internal trade can be classified intotwo broad categories viz., (i) wholesaletrade and (ii) retail trade. Generally, forproducts, which are to be distributedto a large number of buyers who arelocated over a wide geographical area,it becomes very difficult for theproducers to reach all consumers orusers directly. For example, if vegetableoil or bathing soap or salt produced ina factory in any part of the country areto be reached to millions of consumersthroughout the country, the help ofwholesalers and retailers becomes veryimportant. Purchase and sale of goodsand services in large quantities, for thepurpose of resale or intermediate useis referred to as wholesale trade.

On the other hand, purchase andsale of goods in relatively smallquantities, generally to the ultimateconsumers, is referred to as retail trade.Traders dealing in wholesale trade arecalled wholesale traders and thosedealing in retail trade are calledretailers. Both retailers and wholesalersare important marketing intermediarieswho perform very useful functions inthe process of exchange of goods andservices between producers and usersor ultimate consumers. Internal tradeaims at equitable distribution of goodswithin a nation speedily and atreasonable cost.

10.3 WHOLESALE TRADE

As discussed in the previous section,wholesale trade refers to buying andselling of goods and services in largequantities for the purpose of resale orintermediate use.

Wholesaling is concerned with theactivities of those persons orestablishments which sell to retailersand other merchants, and/or toindustrial institutional and commercialusers but who don’t sell in significantamount to ultimate consumers.Wholesalers serve as an important linkbetween manufacturers and retailers.They not only enable the producers toreach large number of buyers spreadover a wide geographical area (throughretailers) but perform a variety offunctions in the process of distributionof goods and services. They generallytake title of the goods and bear thebusiness risks by purchasing andselling the goods in their own name.They purchase in bulk and sell in smalllots to retailers or industrial users.They undertake various activities suchas grading of products, packing intosmaller lots, storage, transportation,promotion of goods, collection ofmarket information, collection of smalland scattered orders of retailers anddistribution of supplies to them. Theyalso relieve the retailers of maintaininglarge stock of articles and extend creditfacilities to them. Most of the functionsperformed by wholesalers are suchwhich cannot be eliminated. If there areno wholesalers, these functions shallhave to be performed either by themanufacturers or the retailers.


Services of Wholesalers

Wholesalers provide various services tothe manufacturers as well as theretailers and provide immense help inthe distribution of goods and services.By making the products available at aplace where these are needed and at atime when these are needed forconsumption or use, they provide bothtime and place utility. The variousservices of wholesalers to differentsections are listed as follows:

10.3.1 Services to Manufacturers

The major services offered bywholesalers to the producers of goodsand services are given as below:(i) Facilitating large scale production:Wholesalers collect small orders fromnumber of retailers and pass on the poolof such orders to manufacturers andmake purchases in bulk quantities. Thisenables the producers to undertakeproduction on a large scale and takeadvantage of the economies of scale.(ii) Bearing risk: The wholesalemerchants deal in goods in their ownname, take delivery of the goods andkeep the goods purchased in large lotsin their warehouses. In the process theybear lots of risks such as the risk of fallin prices, theft, pilferage, spoilage, fire,etc. To that extent, they relieve themanufacturers from bearing these risks.(iii) Financial assistance: Thewholesalers provide financial assistanceto the manufacturers in the sense thatthey generally make cash payment forthe goods purchased by them. To thatextent, the manufacturers need not

block their capital in the stocks.Sometimes they also advance money tothe producers for bulk orders placedby them.(iv) Expert advice: As the wholesalersare in direct contact with the retailers,they are in a position to advice themanufacturers about various aspectsincluding customer’s tastes andpreferences, market conditions,competitive activities and the featurespreferred by the buyers. They serve asan important source of marketinformation on these and relatedaspects.(v) Help in the marketing function:The wholesalers take care of thedistribution of goods to a number ofretailers who, in turn, sell to largenumber of customers spread over alarge geographical area. This relieves themanufacturers of many of the marketingactivities and enable them toconcentrate on the production activity.(vi) Facilitate continuity: Thewholesalers facilitate continuity ofproduction activity throughout theyear by purchasing the goods as andwhen these are produced.(vii) Storage: Wholesalers take deliveryof goods when these are produced infactory and keep them in theirgodowns/warehouses. This reducesthe burden of manufacturers ofproviding for storage facilities for thefinished products.

10.3.2 Services to Retailers

The important services offered bymanufacturers to the retailers are listedas below:

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(i) Availability of goods: Retailershave to maintain adequate stock ofvaried commodities so that they canoffer variety to their customers. Thewholesalers make the products ofvarious manufacturers readilyavailable to the retailers. This relievesthe retailers of the work of collectinggoods from several producers andkeeping big inventory of the same.(ii) Marketing support: The whole-salers perform various marketingfunctions and provide support to theretailers. They undertake advertise-ments and other sales promotionalactivities to induce customers topurchase the goods. The retailers arebenefitted as it helps them in increasingthe demand for various new products.(iii) Grant of credit: The wholesalersgenerally extend credit facilities to theirregular customers. This enables theretailers to manage their business withrelatively small amount of workingcapital.(iv) Specialised knowledge: Thewholesalers specialise in one line ofproducts and know the pulse of themarket. They pass on the benefit oftheir specialised knowledge to theretailers. They inform the retailersabout the new products, their uses,quality, prices, etc. They may alsoadvise on the decor of the retail outlet,allocation of shelf space anddemonstration of certain products.(v) Risk sharing: The wholesalerspurchase in bulk and sell in relativelysmall quantities to the retailers. Beingable to manage with purchase of

merchandise in smaller quantities,retailers are in a position to avoid therisk of storage, pilferage, obsolescence,reduction in prices and demandfluctuations in respect of the additionalgoods that they would have topurchase in case the services ofwholesalers are not available.

10.4 RETAIL TRADE

A retailer is a business enterprise thatis engaged in the sale of goods andservices directly to the ultimateconsumers. He/she normally buysgoods in large quantities fromwholesalers and sells them in smallquantities to the ultimate consumers.He/she represents the final stage inthe distribution where goods aretransferred from the hands of tradersto final consumers or users. Retailingis, thus, that branch of business whichis devoted to the sale of goods andservices to the ultimate consumers, fortheir personal, non-business use.

There may be different ways ofselling the goods viz., personally, ontelephone, or by vending machines.Also, the products may be sold atdifferent places viz., in a store, at thecustomer’s house or any other place.Some of the common situations that weencounter in our daily life for example,are the sale of ball pens or some magicmedicine or book of jokes in theroadways buses; the sale of cosmetics/detergent powder, door-to-door sales;and the sale of vegetables by the roadside by a small farmer. But as long asthe goods are sold to ultimate


consumers, these will be treated ascases of retail selling. Thus, irrespectiveof ‘how’ the products are sold or ‘where’the sale is made, if the sales are madedirectly to the consumers, it will beconsidered as retailing.

A retailer performs differentfunctions in the distribution of goodsand services. He/she purchases avariety of products from wholesaledistributors and others, arranges forproper storage of the goods, sells thegoods in small quantities, bearsbusiness risks, grades the products,collects market information, extendscredit to the buyers and promotes thesale of products through displays,participation in various schemes, etc.

Services of Retailers

Retailers serve as an important linkbetween the producers and finalconsumers in the distribution ofproducts and services in this process.They provide useful services tothe consumers, wholesalers andmanufacturers. Some of the importantservices of retailers are described asbelow:

10.4.1 Services to Manufacturersand Wholesalers

The invaluable services that theretailers render to the wholesalers andproducers are given as here under:(i) Help in distribution of goods: Aretailer’s most important service to thewholesalers and manufacturers is toprovide help in the distribution of theirproducts by making these available to

the final consumers, who may bescattered over a large geographic area.(ii) Personal selling: In the process ofsale of most consumer goods, someamount of personal selling effort isnecessary. By undertaking personalselling efforts, the retailers relieve theproducers of this activity and greatlyhelp them in the process of actualisingthe sale of the products.(iii) Enabling large-scale operations:On account of retailer’s services, themanufacturers and wholesalers arefreed from the botheration of makingindividual sales to consumers in smallquantities. This enables them tooperate at relatively large scale, andthereby fully concentrate on their otheractivities.(iv) Collecting market information:As retailers remain in direct andconstant touch with the buyers, theyserve as an important source ofcollecting market information aboutthe tastes, preferences and attitudes ofcustomers. Such information isconsidered very useful in takingimportant marketing decisions in anorganisation.(v) Help in promotion: From time-to-time, manufacturers and distributorshave to carry on various promotionalactivities in order to increase the saleof their products. For example, theyhave to advertise their products andoffer short-term incentives in the formof coupons, free gifts, sales contests,and so on. Retailers participate in theseactivities in various ways and, thereby,help in promoting the sale of theproducts.

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10.4.2 Services to Consumers

Some of the important services ofretailers from the point of view ofconsumers are as follows :(i) Regular availability of products:The most important service of a retailerto consumers is to maintain regularavailability of various productsproduced by different manufacturers.This enables the buyers to chooseproducts according to their tastes froma wide variety and buy them whenneeded.(ii) New products information: Byarranging for effective display ofproducts and through their personalselling efforts, retailers provideimportant information about thearrival, special features, etc., of newproducts to the customers. This servesas an important factor in the decisionmaking process for the purchase ofthose goods.(iii) Convenience in buying: Retailersgenerally buy goods in large quantitiesand sell these in small quantities,according to the requirements of theircustomers. Also, they are normallysituated very near to the residential areasand remain open for long hours. Thisoffers great convenience to thecustomers in buying products of theirrequirements.(iv) Wide selection: Retailers generallykeep 0stock of a variety of products ofdifferent manufacturers. This enables theconsumers to make their choice out of awide selection of goods.(v) After-sales services: Retailersprovide important after-sales services

in the form of home delivery, supply ofspare parts and attending tocustomers. This becomes an importantfactor in the buyers’ decision for repeatpurchase of the products.(vi) Provide credit facilities: Theretailers sometimes provide creditfacilities to their regular buyers. Thisenables the latter to increase their levelof consumption and, thereby, theirstandard of living.

10.5 TYPES OF RETAILING TRADE

There are many types of retailers inIndia. For proper understanding, itwould be useful, to classify them intocertain common categories. Differentclassifications have been used byexperts to categorise retailers intodifferent types. For example, on thebasis of ‘size of business’, they may becategorised into large, medium andsmall retailers. On the basis of ‘type ofownership’, they may be categorisedinto ‘sole trader’, ‘partnership firm’,‘cooperative store’ and ‘company’.Similarly, on the basis of ‘merchandisehandled’, the different classificationsmay be ‘speciality store’, ‘supermarket’and ‘departmental store’. Anothercommon basis of classification iswhether or not they have a fixed placeof business. On this basis, there aretwo categories of retailers:

(a) Itinerant retailers, and(b) Fixed shop retailersBoth these types of retailers have

been described in detail in the sectionsthat follow here after.


10.5.1 Itinerant Retailers

Itinerant retailers are traders who donot have a fixed place of business tooperate from. They keep on moving withtheir wares from street to street or placeto place, in search of customers.

Characteristics

(a) They are small traders operatingwith limited resources;

(b) They normally deal in consumerproducts of daily use such astoiletry products, fruits andvegetables, and so on;

(c) The emphasis of such traders ison providing greater customerservice by making the productsavailable at the very doorstep ofthe customers; and

(d) As they do not have any fixedbusiness establishment to operatefrom, these retailers have to keeptheir limited inventory ofmerchandise either at home or atsome other place.

Some of the most common types ofitinerant retailers operating in India areas below:(i) Peddlers and hawkers: Peddlersand hawkers are probably amongst theoldest form of retailers in the marketplace who have not lost their utility evenduring modern times. They are smallproducers or petty traders who carrythe products on a bicycle, a hand cart,a cycle-rickshaw or on their heads, andmove from place to place to sell theirmerchandise at the doorstep of thecustomers. They generally deal in non-standardised and low-value products

such as toys, vegetables and fruits,fabrics, carpets, snacks and ice creams,etc. They are also found in streets ofresidential areas, places of exhibitionsor meals, and outside schools, duringa lunch break.

The main advantage of this form ofretailing is the provision of convenientservice to the consumers. However,one should be careful in dealing withthem, as the products they deal in arenot always reliable in terms of qualityand price.(ii) Market traders: Market traders arethe small retailers who open their shopsat different places on fixed days ordates, such as every Saturday oralternate Saturdays, and so on. Thesetraders may be dealing in oneparticular line of merchandise, sayfabrics or ready-made garments, toys,or crockery, or alternatively, they maybe general merchants. They are mainlycatering to lower-income group ofcustomers and deal in low-pricedconsumer items of daily use.(iii) Street traders (pavementvendors): Street traders are the smallretailers who are commonly found atplaces where huge floating populationgathers, for example, near railwaystations and bus stands, and sellconsumer items of common use, suchas stationery items, eatables, ready-made garments, newspapers andmagazines. They are different frommarket traders in the sense that theydo not change their place of businessso frequently.(iv) Cheap jacks: Cheap jacks arepetty retailers who have independent

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shops of a temporary nature in abusiness locality. They keep onchanging their business from onelocality to another, depending upon thepotentiality of the area. However, thechange of place is not as frequent as inthe case of hawkers or market traders.They also deal in consumer items andprovide service to consumers interms of making the products availablewhere needed.

10.5.2 Fixed Shop Retailers

This is the most common type ofretailing in the market place. As isevident from the name, these are retailshops who maintain permanentestablishment to sell their merchandise.They, therefore, do not move fromplace to place to serve their customers.Some of the other characteristics ofsuch traders are:

Characteristics

(a) Compared with the itinerant traders,normally they have greater resourcesand operate at a relatively largescale. However, there are differentsize groups of fixed shop retailers,varying from very small to verylarge;

(b) These retailers may be dealing indifferent products, includingconsumer durables as well as non-durables; and

(c) This category of retailers has greatercredibility in the minds ofcustomers, and they are in a positionto provide greater services to thecustomers such as home delivery,

guarantees, repairs, credit facilities,availability of spares, etc.

Types

The fixed-shop retailers can beclassified into two distinct types on thebasis of the size of their operations.These are:

(a) small shop-keepers, and(b) large retailers.The different types of retailers falling

under the above two broad heads aredescribed below:

Fixed Shop Small Retailers

(i) General stores: General stores aremost commonly found in a localmarket and residential areas. As thename indicates, these shops carry stockof a variety of products needed tosatisfy the day-to-day needs of theconsumers residing in nearby localities.Such stores remain open for long hoursat convenient timings and often providecredit facilities to some of their regularcustomers. The biggest advantage ofsuch stores is in terms of convenienceto the customers in buying productsof daily use such as grocery items, softdrinks, toiletry products, stationeryand confectionery. As most of theircustomers are residents of thesame locality, an important factorcontributing to their success is theimage of the owner and the rapport hehas established with them.(ii) Speciality shops: This type of retailstore is, of late, becoming very popular,particularly in urban areas. Instead ofselling a variety of products of different


types, these retail stores specialise inthe sale of a specific line of products.For example, shops selling children’sgarments, men’s wear, ladies shoes,toys and gifts, school uniforms,college books or consumer electronicgoods, etc. These are some of thecommonly found stores of this type inthe market place.

The speciality shops are generallylocated in a central place where a largenumber of customers can be attracted,and they provide a wide choice to thecustomers in the selection of goods.(iii) Street stall holders: These smallvendors are commonly found at streetcrossings or other places where flow oftraffic is heavy. They attract floatingcustomers and deal mainly in goods ofcheap variety like hosiery products,toys, cigarettes, soft drinks, etc. Theyget their supplies from local suppliersas well as wholesalers. The total areacovered by a stall is very limited and,therefore, they handle goods on a verysmall scale. Their main advantage is inproviding convenient service to thecustomers in buying some of the itemsof their needs.(iv) Secondhand goods shop: Theseshops deal in secondhand or usedgoods, like books, clothes,automobiles, furniture and otherhousehold goods. Generally personswith modest means purchase goodsfrom such shops. The goods are soldat lower prices. Such shops may alsostock rare objects of historical valueand antique items which are sold atrather heavy prices to people who havespecial interest in such antique goods.

The shops, selling second handgoods may be located at streetcrossings or in busy streets in the formof a stall having very little structure —a table or a temporary platform todisplay the books or may havereasonably good infrastructure, as inthe case of those selling furniture orused cars or scooters or motorcycles.(v) Single line stores: Single linestores are those shops which deal in asingle product line such as readymadegarments, watches, textiles, shoes,automobiles, tyres, computers, books,and stationery. These shops keep awide variety of items of the same lineand are situated at a central location.Most of these stores are organised asindependent retail outlets in the formof sole traders or partnership firms.

Fixed shop — Large stores

1. Departmental storesA departmental store is a largeestablishment offering a widevariety of products, classified intowell-defined departments, aimedat satisfying practically everycustomer’s need under one roof. Ithas a number of departments, eachone confining its activities to onekind of product. For example, theremay be separate departments fortoiletries, medicines, furniture,groceries, electronics, clothing anddress material. Thus, they satisfydiverse market segments with awide variety of goods and services.It is not uncommon for adepartment store in the UnitedStates of America to carry ‘needle

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to an aeroplane’ or ‘all shoppingunder one roof.’ Everything from‘a pin to an elephant’ is the spiritbehind a typical department store.In India real departmental storeshave not yet come in a big wayin the retailing business. However,some stores on this line inIndia include ‘Akberally’ in Mumbaiand ‘Spencers’ in Chennai.Some of the important featuresof a departmental store areas follows:

(a) A modern departmental store mayprovide all facilities such asrestaurant, travel and informationbureau, telephone booth, rest-rooms, etc. As such they try toprovide maximum service to higherclass of customers for whom priceis of secondary importance.

(b) These stores are generally locatedat a central place in the heart of acity, which caters to a large numberof customers.

(c) As the size of these stores is verylarge, they are generally formed asa joint stock company managed bya board of directors. There is amanaging director assisted by ageneral manager and severaldepartment managers;

(d) A departmental store combinesboth the functions of retailingas well as warehousing.They purchase directly frommanufacturers and operateseparate warehouses. That way theyhelp in eliminating undesirablemiddlemen between the producersand the customers; and

(e) They have centralised purchasingarrangements. All the purchases ina department store are madecentrally by the purchasedepartment of the store, whereassales are decentralised in differentdepartments.

Advantages

The major advantages of retailingthrough departmental stores may belisted as follows:(i) Attract large number ofcustomers: As these stores are usuallylocated at central places they attract alarge number of customers during thebest part of the day.(ii) Convenience in buying: By offeringlarge variety of goods under one roof thedepartmental stores provide greatconvenience to customers in buyingalmost all goods of their requirementsat one place. As a result, they do nothave to run from one place to theanother to complete their shopping.(iii) Attractive services: A depart-mental store aims at providingmaximum services to the customers.Some of the services offered by itinclude home delivery of goods,execution of telephone orders, grant ofcredit facilities and provision for rest-rooms, telephone booths, restaurants,saloons etc.(iv) Economy of large-scaleoperations: As these stores areorganised at a very large-scale, thebenefits of large-scale operations,particularly, in respect of purchase ofgoods are available to them.


(v) Promotion of sales: The depart-mental stores are in a position tospend considerable amount of moneyon advertising and other promotionalactivities, which help in boostingtheir sales.

Limitations

However, there are certain limitationsof this type of retailing. These aredescribed as follows:(i) Lack of personal attention:Because of the large-scale operations,it is very difficult to provide adequatepersonal attention to the customers inthese stores.(ii) High operating cost: As thesestores give more emphasis on providingservices, their operating costs tend tobe on the higher side. These costs, inturn, make the prices of the goods high.They are, therefore, not attractive to thelower income group of people.(iii) High possibility of loss: As aresult of high operating costs and large-scale operations, the chances ofincurring losses in a departmental storeare high. For example, if there is anychange in the tastes of customers orlatest fashions, it necessitates selling ofsuch out-of-fashion articles inclearance sale, to reduce the hugeinventory of goods built up.(iv) Inconvenient location: As adepartmental store is generally situatedat a central location, it is not convenientfor the purchase of goods that areneeded at short notice.

In spite of some of these limitationsthe departmental stores have been

popular in some of the westerncountries of the world because of theirbenefits to a certain class of customers.2. Chain Stores or Multiple Shops:

Chain stores or multiple shops arenetworks of retail shops that areowned and operated by manu-facturers or intermediaries. Underthis type of arrangement, a numberof shops with similar appearance areestablished in localities, spread overdifferent parts of the country. Thesedifferent types of shops normallydeal in standardised and brandedconsumer products, which haverapid sales turnover. These shopsare run by the same organisationand have identical merchandisingstrategies, with identical productsand displays. Some of the importantfeatures of such shops may bedescribed here under:

(a) These shops are located in fairlypopulous localities, wheresufficient number of customerscan be approached. The idea is toserve the customers at a pointwhich is nearest to their residenceor work place, rather thanattracting them to a central place;

(b) The manufacturing/procurementof merchandise for all the retailunits is centralised at the headoffice, from where the goods aredespatched to each of these shopsaccording to their requirements.This results in savings in the costof operation of these stores;

(c) Each retail shop is under the directsupervision of a Branch Manager,who is held responsible for its day-

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to-day management. The BranchManager sends daily reports to thehead office in respect of the sales,cash deposits, and the require-ments of the stock;

(d) All the branches are controlled bythe head office, which is concernedwith formulating the policies andgetting them implemented;

(e) The prices of goods in such shopsare fixed and all sales are made oncash basis. The cash realised fromthe sales of merchandise isdeposited daily into a local bankaccount on behalf of the headoffice, and a report is sent to thehead office in this regard.

(f) The head office normally appointsinspectors, who are concerned withday-to-day supervision of theshops, in respect of quality ofcustomer service provided,adherence to the policies of thehead office, and so on.The chain operation is most

effective in handling high-volumemerchandise, whose sales are relativelyconstant throughout the year. In India,Bata Shoe stores are typical examplesof such shops. Similar type of retailoutlets are coming up in other productsalso. For example, the exclusiveshowrooms of D.C.M., Raymonds andthe fast food chains of Nirula’s andMcDonald.

Advantages

Multiple shops are offering variousadvantages to the consumers, whichare described as follows:

(i) Economies of scale: As there iscentral procurement/manufacturing,the multiple-shop organisation enjoysthe economies of scale.(ii) Elimination of middlemen: Byselling directly to the consumers, themultiple-shop organisation is able toeliminate unnecessary middlemen inthe sale of goods and services.(iii) No bad debts: Since all the salesin these shops are made on cash basis,there are no losses on account of baddebts.(iv) Transfer of goods: The goods notin demand in a particular locality maybe transferred to another locality whereit is in demand. This reduces thechances of dead stock in these shops.(v) Diffusion of risk: The lossesincurred by one shop may be coveredby profits in other shops, reducing thetotal risk of an organisation.(vi) Low cost: Because of centraliseda purchasing, elimination of middle-men, centralised promotion of sales andincreased sales, the multiple shopshave lower cost of business.(vii) Flexibility: Under this system, ifa shop is not operating at a profit, themanagement may decide to close it orshift it to some other place withoutreally affecting the profitability of theorganisation as a whole.

Limitations

(i) Limited selection of goods: Themultiple shops deal only in limitedrange of products, mostly thoseproduced by the marketers. Theydo not sell products of other


manufacturers. In that way theconsumers get only a limited choiceof goods.(ii) Lack of initiative: The personnelmanaging the multiple shops have toobey the instructions received from thehead office. This makes them habitualof looking up to the head office forguidance on all matters, and takes awaythe initiative from them to use theircreative skills to satisfy the customers.(iii) Lack of personal touch: Lack ofinitiative in the employees sometimesleads to indifference and lack ofpersonal touch in them.(iv) Difficult to change demand: Ifthe demand for the merchandisehandled by multiple shops changerapidly, the management may haveto sustain huge losses because oflarge stocks lying unsold at thecentral depot.

Difference between Departmentalstores and Multiple shops

Although both these types of retailorganisations are large establishments,there are certain differencesbetween the two. Such differences aregiven here below:(i) Location: A departmental store islocated at a central place, where a largenumber of customers can be attractedto it. However, the multiple stores arelocated at a number of places forapproaching a large number ofcustomers. Thus, central location isnot necessary for a multiple shop.(ii) Range of products: Departmentalstores aim at satisfying all the needs of

customers under one roof. As such,they have to carry a variety of productsof different types. However, the multiplestores aim to satisfy the requirementsof customers relating to a specifiedrange of their products only.(iii) Services offered: The depart-mental stores lay great emphasis onproviding maximum service to theircustomers. Some of the services,provided by them include post office,restaurant and so on. As against this,the multiple shops provide very limitedservice confined to guarantees andrepairs if the sold out goods turn outto be defective.(iv) Pricing: The multiple shop chainssell goods at fixed prices and maintainuniform pricing policies for all theshops. The departmental stores,however, do not have uniform pricingpolicy for all the departments; ratherthey have to occasionally offerdiscounts on certain products andvarieties to clear their stock.(v) Class of customers: The depart-mental stores cater to the needs ofrelatively high income group ofcustomers who care more for theservices provided rather than the pricesof the product. The multiple shops, onthe other hand, cater to differenttypes of customers, including thosebelonging to the lower income groups,who are interested in buying qualitygoods at reasonable prices.(vi) Credit facilities: All sales in themultiple shops are made strictly on cashbasis. In contrast, the departmentalstores may provide credit facilities tosome of their regular customers.

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(vii) Flexibility: As the departmentalstores deal in a wide variety ofproducts, they have certain flexibilityin respect of the line of goods marketed.However, there is not much scope forflexibility in the chain stores, which dealonly in limited line of products.

Mail Order Houses

Mail order houses are the retail outletsthat sell their merchandise throughmail. There is generally no directpersonal contact between the buyersand the sellers in this type of trading.For obtaining orders, potential customersare approached through advertisementsin newspapers or magazines, circulars,catalogues, samples and bills, and pricelists sent to them by post. All the relevantinformation about the products such asthe price, features, delivery terms, termsof payment, etc., are described in theadvertisement. On receiving the orders,the items are carefully scrutinised withrespect to the specifications asked forby the buyers and are complied withthrough the post office.

There can be different alternatives forreceiving payments. First, the customersmay be asked to make full payment inadvance. Second, the goods may be sentby Value Payable Post (VPP). Under thisarrangement, the goods are sent throughpost and are delivered to the customersonly on making full payment for thesame. Third, the goods may be sentthrough a bank, which is instructed todeliver the articles to the customers. Inthis arrangement there is no risk of baddebt, as the goods are handed over tothe buyers only after he makes full

payment. However, there is a need toensure the buyers that the goodsdespatched are in accordance with theirspecifications.

This type of business is not suitablefor all types of products. For example,goods that are perishable in nature orare bulky and cannot be easily handled,are not recommended for mail-housetrading. Only the goods that can be(i) graded and standardised, (ii) easilytransported at low cost, (iii) have readydemand in the market, (iv) are availablein large quantity throughout the year,(v) involve least possible competition inthe market and (vi) can be describedthrough pictures etc., are suitable forthis type of trading. Another importantpoint in this regard is that mail housebusiness cannot be successfully carriedout unless education is wide spread.It is so because only the literatepeople can be reached throughadvertisements and other forms ofwritten communication.

Advantages

(i) Limited capital requirement: Mailorder business does not require heavyexpenditure on building and otherinfrastructural facilities. Therefore, itcan be started with relatively lowamount of capital.(ii) Elimination of middle men: Thebiggest advantage of mail-orderbusiness from the point of view ofconsumers is that unnecessarymiddlemen between the buyers andsellers are eliminated. This may resultin lot of savings both to the buyers aswell as to the sellers.


(iii) Absence of bad debt: Since themail order houses do not extend creditfacilities to the customers, there areno chances of any bad debt on accountof non payment of cash by thecustomers.(iv) Wide reach: Under this system thegoods can be sent to all the placeshaving postal services. This opens widescope for business as a large numberof people throughout the country canbe served through mail.(v) Convenience: Under this systemgoods are delivered at the doorstep ofthe customers. This results in greatconvenience to the customers in buyingthese products.

Limitations

(i) Lack of personal contact: As thereis no personal contact between thebuyers and the sellers under thesystem of mail order selling, thereare greater possibilities of mis-understanding and mistrust betweenthe two. The buyers are not in a positionto examine the products before buyingand the sellers cannot pay personalattention to the likes and dislikes of thebuyers and cannot clear all their doubtsthrough catalogues and advertisements.(ii) High promotion cost: The mailorder business has to rely heavily onadvertisements and other methods ofpromotion in order to inform andpersuade the potential buyers to buytheir products. As a result, there isheavy expenditure on promotion of theproducts.(iii) No after sales service: In mailorder selling, the buyers and sellers

may be located very far away from eachother and there is no personal contactbetween the two. As a result, there isabsence of after sales services which isso important for the satisfaction of thecustomers.(iv) No credit facilities: The mail orderhouses do not provide credit facilitiesto the buyers. Thus, customers withlimited means may not be interested inthis type of trading.(v) Delayed delivery: There is noimmediate delivery of goods to thecustomers, as receipt and execution oforder through mail takes its own time.(vi) Possibility of abuse: This type ofbusiness provides greater possibility ofabuse to dishonest traders to cheat thecustomers by making false claimsabout the products or not honouringthe commitments made through handbills or advertisements.(vii) High dependence on postalservices: The success of mail orderbusiness depends heavily on theavailability of efficient postal services ata place. But in a vast country like ours,where many places are still withoutpostal facilities, this type of businesshas limited prospects.

Consumer Cooperative Store

A consumer cooperative store is anorganisation owned, managed andcontrolled by consumers themselves.The objective of such stores is to reducethe number of middlemen who increasethe cost of produce, and therebyprovide service to the members.The cooperative stores generallybuy in large quantity, directly from

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manufacturers or wholesalers and sellthem to the consumers at reasonableprices. Since the middleman areeliminated or reduced, the members getproducts of good quality at cheaperrates. The profits earned by consumercooperative stores during a year areutilised for declaring bonus tomembers according to purchasesmade by them and for strengtheningthe general reserves and general welfarefunds or similar funds for social andeducational benefits of the members.

To start a consumer cooperativestore, at least 10 people have to cometogether and form a voluntaryassociation and get it registered underthe Cooperative Societies Act. Thecapital of a cooperative store is raisedby issue of shares to members. Themanagement of the store is democraticand entrusted to an elected managingcommittee where one man one vote isthe rule. The liability of the membersof a cooperative store is generallylimited to the extent of the capitalcontributed by them. To ensure fairmanagement of funds the accounts ofthe stores are audited by the Registrarof Cooperative Societies or a personauthorised by him/her.

Advantages

The major advantages of a consumercooperative store are as follows:(i) Ease information: It is easy to forma consumer cooperative society. Any 10people can come together to form avoluntary association and getthemselves registered with the Registrar

of Cooperative Societies by completingcertain formalities.(ii) Limited liability: The liability ofthe members in a cooperative store islimited to the extent of the capitalcontributed by them. Over and abovethat amount, they are not liablepersonally to pay for the debts ofsociety, in case the liabilities aregreater than its assets.(iii) Democratic management:Cooperative societies are democrati-cally managed through managementcommittees which are elected by themembers. Each member has one vote,irrespective of the number of sharesheld by him/her.(iv) Lower prices: A cooperative storepurchases goods directly from themanufacturers or wholesalers andsells them to members and others.Elimination of middlemen results inlower prices for the consumer goods tothe members.(v) Cash sales: The consumercooperative stores normally sell goods oncash basis. As a result, the requirementfor working capital is reduced.(vi) Convenient location: Theconsumer cooperative stores aregenerally opened at convenient publicplaces where the members and otherscan easily buy the products as per theirrequirements.

Limitations

The limitations of consumer cooperativestores are given as below:(i) Lack of initiative: As the cooperativestores are managed by people who work


on honorary basis there is a lack ofsufficient initiative and motivationamongst them to work more effectively.(ii) Shortage of funds: The primarysource of funds for a cooperative storeis the money raised from members byissue of shares. The stores generally faceshortage of funds as membership islimited. This comes in the way of growthand expansion of the cooperative stores.(iii) Lack of patronage: The membersof the cooperative stores generally don’tpatronise them regularly. As a resultof this, the stores are not able to operatesuccessfully.(iv) Lack of business training: Thepeople entrusted with the managementof cooperative stores lack expertise asthey are not trained in running thestores efficiently.

Super Markets

A super market is a large retailingbusiness unit selling wide variety ofconsumer goods on the basis of lowmargin appeal, wide variety andassortment, self-service and heavyemphasis on merchandising appeal. Thegoods traded are generally food productsand other low priced, branded and widelyused consumer products such asgrocery, utensils, clothes, electronicappliances, household goods, andmedicines. Super markets are generallysituated at the main shopping centres.Goods are kept on racks with clearlylabelled price and quality tags in suchstores. The customers move into the storeto pick up goods of their requirements,bring them to the cash counter, makepayment and take home the delivery.

Super markets are organised ondepartmental basis where customerscan buy various types of goods underone roof. However, as compared todepartmental stores, these marketsdon’t offer certain services such as freehome delivery, credit facilities, etc., andalso don’t appoint sales persons toconvince customers about the qualityof products. Some of the importantcharacteristics of a super market areas follows:

(i) A super market generally carriesa complete line of food items andgroceries, in addition to non-foodconvenience goods;

(ii) The buyers can purchase differentproducts as per their requirementsunder one roof in such markets;

(iii) A super market operates on theprinciple of self-service. Thedistribution cost is, therefore,lower;

(iv) The prices of the products aregenerally lower than other typesof retail stores because of bulkpurchasing, lower operationalcost, and low profit margins;

(v) The goods are sold on cash basisonly; and

(vi) The super markets are generallylocated at central locations tosecure high turnover.

Advantages

The following are the merits of supermarkets:(i) One roof, low cost: Super marketsoffer a wide variety of products at lowcost, under one roof. These outlets are,therefore, not only convenient but also

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economical to the buyers for makingtheir purchases.(ii) Central location: The supermarkets are generally located in theheart of the city. As a result, these areeasily accessible to large number ofpeople staying in the surroundinglocalities.(iii) Wide selection: Super marketskeep a wide variety of goods of differentdesigns, colour, etc., which enables thebuyers to make better selection.(iv) No bad debts: As generally thesales are made on cash basis, there areno bad debts in super markets.(v) Benefits of being large scale: Asuper market is a large scale retailingstore. It enjoys all the benefits of largescale buying and selling because ofwhich its operating costs are lower.

Limitations

The major limitations of super marketsare as follows:(i) No credit: Super markets sell theirproducts on cash basis only. No creditfacilities are made available to thebuyers. This restricts the purchasingpower of buyers from such markets.(ii) No personal attention: Supermarkets work on the principle of self-service. The customers, therefore, don’tget any personal attention. As a result,such commodities that requirepersonal attention by sales peoplecannot be handled effectively in supermarkets.(iii) Mishandling of goods: Somecustomers handle the goods kept in theshelf carelessly. This may raise costsin super markets.

(iv) High overhead expenses: Supermarket incur high overhead expenses.As a result these have not been able tocreate low price appeal among thecustomers.(v) Huge capital requirement:Establishing and running a supermarket requires huge investment. Theturnover of a store should be high sothat the overheads are kept underreasonable level. This can be possiblein bigger towns but not in small towns.

Vending Machines

Vending machines are the newestrevolution in marketing methods.Coin operated vending machines areproving useful in selling severalproducts such as hot beverages,platform tickets, milk, soft drinks,chocolates, newspaper, etc., in manycountries. Apart from some of theproducts mentioned here, the latestarea in which this concept is gettingpopular in many parts of our country(particularly in the urban areas) isthe case of Automated Teller Machines(ATM) in the banking service. As thename suggests, these machines havealtogether changed the concept ofbanking and made it possible towithdraw money at any time withoutvisiting any branch of a bank.

Vending machines can be useful forselling pre-packed brands of low pricedproducts which have high turnoverand which are uniform in size andweight. However, the initial cost ofinstalling a vending machine and theexpenditure on regular maintenance


and repair is quite high. Alsoconsumers cannot feel or see theproduct before buying and don’t havethe opportunity of returning unwantedgoods. Apart from that, special packshave to be developed for the machines.The machines have to be made reliablein their operations. In spite of theselimitations, with the growth in theeconomy, vending machines havea promising future in retail sales ofhigh turnover and low pricedconsumer products.

10.6 ROLE OF INDIAN CHAMBERS OF

COMMERCE AND INDUSTRY IN

PROMOTION OF INTERNAL TRADE

The Chambers of Commerce andIndustry was formed as an associationof business and industrial houses topromote and protect their commoninterest and goals. Many suchchambers where formed and arepresent in the country. For example,ASSOCHAM, Confederation of IndianIndustry (CII) and Federation of IndianChambers of Commerce and Industry(FICCI). These associations orchambers regard themselves as thenational guardians of trade, commerceand industry.

The Indian Chambers of Commerceand Industry has been playinga catalytic role in strengtheninginternal trade to make it an importantpart of overall economic activity.The Chambers interact with thegovernment at different levels toreorient or put in place policies whichreduce hindrances, increase interstate

movement of goods, introducetransparency and remove multiplelayers of inspection and bureaucratichurdles. Besides, the chambers alsoaims at erecting sound infrastructureand simplifying and harmonising thetax structures. The interventions aremainly in the following areas:(i) Transportation or inter statemovement of goods: The Chambersof Commerce and Industry help inmany activities concerning inter statemovement of goods which includesregistration of vehicles, surfacetransport policies, construction ofhighways and roads. For example, theconstruction of golden quadrilateralcorridor announced by the PrimeMinister of India in one of the AnnualGeneral Meetings of the Federation ofIndian Chambers of Commerce andIndustry (FICCI) will facilitateinternal trade.(ii) Octroi and other local levies:Octroi and local taxes are the importantsources of revenue of the localgovernment. These are collected on thegoods and from people entering thestate or the municipal limits. Thegovernment and Chambers ofCommerce should ensure that theirimposition is not at the cost of smoothtransportation and local trade.(iii) Harmonisation of sales taxstructure and Value Added Tax:The Chambers of Commerce andIndustry play an important role ininteracting with the government toharmonise the sales tax structure indifferent states. The sales tax is animportant part of the state revenue. A

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rational structure of the sales tax andits uniform rates across states, areimportant for promoting a balance intrade. As per the new policy of thegovernment, the Value Added Tax isbeing levied in place of the sales taxto remove the cascading effect of thesales tax.(iv) Marketing of agro products andrelated issues: The associations ofagriculturists and other federationsplay an important role in themarketing of agro products.Streamlining of local subsidies andmarketing policies of organisationsselling agro products are some of theareas where the Chambers ofCommerce and Industry can reallyintervene and interact with concernedagencies like farming cooperatives.(v) Weights and Measures andprevention of duplication brands:Laws relating to Weights andMeasures and protection of brands arenecessary to protect the interest of theconsumers as well as the traders. Theyneed to be enforced strictly. TheChambers of Commerce and Industry

interact with the government toformulate such laws and take actionagainst those who violate rulesand regulations.(vi) Excise duty: Central excise is thechief source of the Governmentrevenue levied across states by thecentral government. The excise policyplays an important role in pricingmechanism and hence the associationsneed to interact with the governmentto ensure streamlining of excise duties.(vii) Promoting sound infrastructure:A sound infrastructure like road, port,electricity, railways etc., play a catalyticrole in promoting trade. The Chambersof Commerce and Industry incollaboration with the governmentneeds to take up heavy investmentprojects.(viii) Labour legislation: A simpleand flexible labour legislation ishelpful in running industries,maximising production and generatingemployment. The Chambers ofCommerce and Industry the governmentare constantly interacting on issues likelabour laws, retrenchment etc.

Key Terms

Internal trade Wholesales Market traders

Wholesale trade Retailers Cheap jacks

Retail trade Internal retailers Speciality stores

Single line stores Chain stores Vending machines

Departmental stores Super markets Chambers of Commerce


SUMMARY

Trade refers to buying and selling of goods and services with the objective ofearning profit on the basis of geographical location of buyers and sellers. Itcan be classified into two categories (i) internal trade; and (ii) external trade.

Internal trade: Buying and selling of goods and services within theboundaries of a nation are referred to as internal trade. No custom duties orimport duties are levied on such trade as goods are part of domestic productionand are meant for domestic consumption. Internal trade can be categorisedinto two broad categories (i) wholesale trade; and (ii) retailing trade.

Wholesale trade: Purchase and sale of goods and services in large quantitiesfor the purposes of resale or intermediate use is referred to as wholesaletrade. Wholesalers perform a number of functions in the process ofdistribution of goods and services and provide valuable services tomanufacturers and retailers.

Services of wholesalers: Wholesalers are an important link betweenmanufacturers and retailers. They add value by creating time and place utility.

Services of manufacturers: The services provided by wholesalers tomanufacturers include (i) facilitating large scale production; (ii) bearingrisk; (iii) providing financial assistance; (iv) expert advice; (v) help inmarketing function; (vi) facilitating continuity; and (vii) storage.

Services to retailers: The services provided by wholesalers to retailersinclude (i) availability of goods (ii) marketing support (iii) grant of credit (iv)specialised knowledge (v) risk sharing

Retail trade: A retailer is a business enterprise that is engaged in the saleof goods and services directly to the ultimate consumers.

Services of retailers: Retailers are an important link between the producersand final consumers. They provide useful service to consumers wholesalersand manufacturers in the distribution of products and services.

Services to manufacturers/wholesalers: Different services provided byretailers to wholesalers and manufacturers include (i) helping distributionof goods; (ii) personal selling; (iii) enabling large scale operations; (iv) collectingmarket information; and (v) help in promotion of goods and services.

Services to consumers: The different services provided by retailers toconsumers include (i) regular availability of products (ii) new productinformation (iii) convenience of buying (iv) trade selection (v) after salesservices and (vi) providing credit facilities.

Types of retail trade: Retail trade can be classified into different typesaccording to their size, type of ownership, on the basis of merchandise

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handled and whether they have fixed place of business or not. Retailerscan be categorised as (i) itinerant retailers; and (ii) fixed shop retailers.

Itinerant retailers: Itinerant retailers are traders who don’t have a fixedplace of business to operate from. They are small traders operating withlimited resources who keep on moving with their wares from street to streetor place to place in search of customers. The major types of such retailersare:

(i) Peddlers and hawkers: They are small producers or petty traders whocarry the products on a bicycle or handcart or on their heads and movefrom place to place, to sell their goods at the doorstep of the customers.

(ii) Market traders: Market traders are small retailers who open their shopsat different places on fixed days/dates, catering mainly to lower income groupof customers and dealing in low priced consumer items of daily use.

(iii) Street trades: Street traders are the small retailers who are commonlyfound at places where huge floating population gathers.

(iv) Cheap jacks: Cheap jacks are those petty retailers who have independentshops of a temporary nature in a business location. They deal in consumeritems and provide services to consumers in terms of making the productsavailable where needed.

Fixed shop retailers: On the basis of size of operations, (fixed shop retailerscan be classified as a) small shopkeepers and (b) large retailers.

Fixed shop small retailers

(i) General stores: General stores carry stock of a variety of products such asgrocery items, soft drinks, toiletry products, confectionery, and stationery,needed to satisfy day-to-day needs of consumers, residing in nearby localities.

(ii) Speciality shops: Speciality shops specialise in the sale of specific lineof products such as children’s garments, men’s wear, ladies shoes, schooluniform, college books or consumer electronic goods, etc.,

(iii) Street stall holders: These small vendors are commonly found atstreet crossing or other places where flow of traffic is heavy and dealmainly in goods of cheap variety like hosiery products, toys, cigarettes,soft drinks, etc.

(iv) Second hand goods shop: These shops deals in second hand or usedgoods of different kinds like furniture, books, clothes and other householdarticles which are sold at lower prices.

(v) Single line stores: Single line stores deal in a single product line such asready made garments, watches, shoes etc., and keep variety of items of thesame line and are situated at central location.


Fixed shop large stores: In fixed shop large stores, the volume and varietyof goods stocked is large.

Departmental stores: A departmental store is a large establishment offeringa wide variety of products, classified into well-designed departments, aimedat satisfying practically every customer’s need under one roof.

Advantages: (a) attracts large number of customers (b) convenience inbuying (c) attractive services (d) economy of large scale operation(e) promotion of sales.

Limitations: (a) lacks personal attention (b) high operating cost (c) highpossibility of loss (d) inconvenient location.

Chain stores or multiple shops: These shops are networks of retail shopsthat are owned and operated by manufacturers or intermediaries dealingin standardised and branded consumer products having rapid salesturnover.

Advantages: (a) economies of scale (b) elimination of middlemen (c) no baddebts (d) transfer of goods (e) diffusion of risk (e) low cost (f) flexibility.

Limitations: (a) limited selection of goods (b) lack of initiative (c) lack ofpersonal touch (d) difficult to change demand.

Difference between Departmental Stores and Multiple Shops: (a) location(b) range of products (c) services offered (d) pricing (e) class of customers(f) credit facilities (g) flexibility.

Mail order houses: Mail order houses are retail outlets that sell theirmerchandise through mail, without any direct personal contact with thebuyers.

Advantages: (a) limited capital requirements (b) elimination of middlemen,(c) absence of bad debts (d) wide reach (e) convenience.

Limitations: (a) lack of personal contact, (b) high promotion cost (c) no aftersales services (d) no credit facilities (e) delayed delivery (f) possibility ofabuse (g) high dependence on postal services.

Consumer cooperative stores: A consumer cooperative store is anorganisation owned managed and controlled by consumers themselvesformed with the objective of reducing the number of middlemen and therebyproviding services to members.

Advantages: (i) ease in formation (ii) limited liability (iii) democraticmanagement (iv) lower prices (v) cash sales (vi) convenient location.

Limitations: (i) lack of initiative (ii)shortage of funds (iii) lack of patronage(iv) lack of business training.

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Super markets: A super market is a large retailing business unit sellingwide variety of consumer goods on the basis of low margin appeal, widevariety and assortment and heavy emphasis on merchandising appeal.

Advantages: (i) one roof, low cost (ii) central location (iii) wide selection (iv)no bad debts (v) benefits of large scale.

Limitations: (a) no credit (b) no personal attention (c) mishandling of goods(d) high over head expenses (e) huge capital requirements.

Vending Machines: Vending machines are proving useful in sellingpre-packed brands of low priced products which have high turnover andwhich are uniform in size and weight.

EXERCISES

Short Answer Questions

1. What is meant by internal trade?

2. Specify the characteristics of fixed shop retailers.

3. What purpose is served by wholesalers providing warehousing facilities?

4. How does market information provided by the wholesalers benefit themanufacturers?

5. How does the wholesaler help the manufacturer in availing the economiesof scale?

6. Distinguish between single line stores and speciality stores. Can youidentify such stores in your locality?

7. How would you differentiate between street traders and street shops?

8. Explain the services offered by wholesalers to manufacturers.

9. What are the services offered by retailers to wholesalers and consumers?

Long Answer Questions

1. Itinerant traders have been an integral part of internal trade in India.Analyse the reasons for their survival in spite of competition from largescale retailers.

2. Discuss the features of a departmental store. How are they different frommultiple shops or chain stores.

3. Why are consumer cooperative stores considered to be less expensive?What are its relative advantages over other large scale retailers?


4. Imagine life without your local market. What difficulties would a consumerface if there is no retail shop?

5. Explain the usefulness of mail orders houses. What type of products aregenerally handled by them? Specify.

Projects/Assignments

1. Identify various fixed shop retailers in your locality and classify themaccording to the different types you have studied.

2. Do you know any retailers selling second-hand goods in your area? Findout the category of the product that they deal in ? Which products aresuitable for resale? List some of your findings. What conclusions do youdraw?

3. Do you observe any difference in the retail business of yesterday and thetimes to come. Prepare a brief write-up and discuss it in class.

4. From you own experience, compare the features of two retail stores sellingthe same product. For example, the same products being sold at a smallscale retailer like a general store and in a big store like a departmentalstore. What similarities and differences can you identify in terms of price,service, variety, convenience, etc.

Documents

ch-10 - Prashanth Ellinancertbooks.prashanthellina.com/.../Ch-10.pdf · 226 BUSINESS STUDIES 10.1 INTRODUCTION Trade refers to buying and selling of goods and services with the objective