THE RETAILER: functions and types



In this article we will be examining the retailer who is the last link in the channel of production. In the production process, the manufacturer makes goods for the wholesaler and retailer who provide distribution services. The expertise of the wholesaler and the retailer makes them unique. At the end of this reading you should be able to:

1.      Define retail trade

2.      Explain the functions of the retailer

3.      Differentiate between the small and the large retailers in the economy.


Meaning of retail

Retail means the selling of goods to the final consumer. That is making the goods available to the person who needs them. The final consumer is the one who buys goods for his personal use. If it is food, the final consumer eats it for his growth and health. In the case of non consumable goods, such as cloths, he acquires them to wear.


the retailer
the retailer

Who is a retailer?

The individual or organization that ensures that the goods needed by the consumer are available in sufficient quantities is called the retailer. As a person or organization who is selling directly to the customer, the retailers buy in smaller quantities. The retailer buys from the wholesaler and sells to the final consumer in the society.


Position of the retailer


The channel of production shown below indicates the position of the retailer relative to that of the manufacturer, wholesaler and consumer.






The above diagram illustrates the channel of goods production and the close relationship between the retailer and the consumer. The retailer plays a dual function. Firstly he interacts directly with the wholesaler on behalf of the consumer. He existence in business can only continue while the consumer are satisfied with the services they receive. Secondly he maintains a direct link with the wholesalers.


Functions of the retailer

The retailer performs several functions. These functions can be divided into two groups; services to the wholesaler or manufacturer, and services to the consumer.

Services to the wholesaler

1.      The retailer represents the wholesaler at the local, individual precinct or ward level. Since there are few wholesalers in any given area, the retailer represents the interests of the wholesaler in areas where the wholesaler activities are not prominent. Where the retailer buys directly from the manufacturer, information about sales, consumer complaints about products and suggestions are collected from the retailer.

2.      The retailer buys in small quantities from the wholesaler according to the demand of the customer. As a result, the wholesaler is able to determine the demand of a particular locality.

3.      The retailer helps the quick movement of goods. The transaction of goods from the wholesaler warehouse is usually at the expense of the retailer.

Services to the consumer

1.      The retailer breaks bulk. Since most consumers cannot afford to buy in large quantities or in packets, the retailer breaks products into smaller units. For example, small retailers will even sell cigarettes singly rather than in packets.

2.      The retailer makes goods available to small segment of a form. Some nations are underdeveloped especially in the rural areas, with several villages in accessible to most vehicles, expect the motorcycles or bicycle. The local retailers make available most products produced several kilometers away to the consumer in such areas

3.      The retailer makes buying more convenient. In many localities, retailer opens their shops for business from very early in the morning to late at night. In some areas buying continues in small retail owner’s houses until midnight.

4.      The retailer assists the consumer. Since there are several products with different names, the consumer may want information about the product that could most adequately satisfy his needs. The retailer has information about the products he sells, so he should be able to help the consumer to make a choice of product among different brand names.


Types of retailer

There are several types of retailer.  Generally they can be classified into two groups, the small and the large retailer.

The small retailer

There are three types of small retailers. These are;


Traders who carry their wares from place to place are known as hawkers. Such individuals do not have a fixed place they can call a place of business. These hawkers are found in all trades. They sell anything from household items to cooked food.

The hawker carries his wares either in a truck or on his hands. Hawkers also provide services rather than sell goods

Kiosk owner

The kiosk owner is a small retailer, the kiosk is a small enclosure found by the street sides and compounds in most cities. The kiosk trader sells a variety of consumer items most commonly demanded by the customers.

Besides occupying small spaces, the kiosk owner cannot carry a wide variety of products because of storage problems and limited capital. Kiosk can be found in both poor and rich neighborhood.

Stall holders  

They are also small retailers and are most likely to be found in open air markets and covered market. The stall holder occupies a small space which is, however, larger than occupied by a kiosk. A stall is usually rented to a trader by the local government or a contractor who controls the market stalls. Unlike the kiosk owner is likely to be found selling food items or non consumable items, the stall holders can buy directly from the wholesaler for distribution to other small retailers. This makes the channel of goods distribution longer. As seen previously, the producer may sell to the wholesaler, the stall holder buys from the wholesaler and then sell to the kiosk owner. The kiosk owner now sells directly to the consumers. By the time the goods get to the final consumer, they may have changed hands four times more.


The large scale retailer

The large scale retailer is usually found in big and small cities. There are several types of large retailer, these are:

1.      Department stores

2.      Retail cooperatives

3.      Mail orders

4.      Supermarkets.

The department store

In many countries there are several department stores owned by either a large or a small number of share holders. The department stores are so called because they provide the variety of goods under one roof. The goods are usually arranged according to departments. Department may be established to take care of confectionary items, body care products, magazine and book. There may also be department solely for drinks which may stock a variety of drinks from wine to hard liquor.

It is usual to find a variety of department under the same roof. Each section has its own manager, sales person, cashier and attendants. Nevertheless all the department is under one central authority or management. A general manager is appointed to direct the management of the various departments. The Kingsway and leventies stores are examples of department’s stores with several departments under one roof. And also have their branches all over the country.


The retail cooperative

The retail cooperative has become popular in recent years. In Nigeria for example the austerity measures introduced in the 1980s led to the growth of cooperative businesses aimed at distributing essential goods to members of the society. The prices are usually lower at retail cooperative than in many markets. In almost any kind of business organization, village or civil organization a cooperative store has been established to cater for members essential commodity needs. The stores have been opened solely to buy and sell essential commodities.

At the state level, retail cooperative are large business concerns which buy goods in large quantities for distribution to other retail stores. Like department store, there are usually several departments in one store, since a variety of goods are arranged accordingly to department. A general manager is usually appointed to coordinate the various activities of the store.

Mail order stores

Mail order means buying through the mail. The mail order store has a catalogue which it distributes to all potential customers. The catalogue gives a general description of the goods being sold. The goods are ordered and distributed through the mail. Customers pay by cheque money order or postal order. They may be allowed to pay in installment.

The mail order stores keep a large quantity of goods which are mailed to customers. The catalogues are departmentalized. Each department has coded identification numbers.

This is a specialized business. Some mail order stores also operate super stores where customers can visit and buy goods. The advantage of this store over the other super stores is that it caters for customers who would prefer to personally inspect goods before they pay for them as well as those who are too busy to have time for shopping or live in remote areas. The cost of goods in mail order stores is usually lower than in department stores since there are not many employees to be paid.


How to become a retailer

Are you looking to become a retailer? If so, there are a few things you need to do in order to become a retailer. First, you need to find a wholesale supplier that you can buy products from. Next, you need to set up a retail store or website where you can sell the products you purchase from your wholesale supplier. Finally, you need to promote your retail store or website so that customers can find you and make purchases.

If you follow these steps, you can become a retailer. However, it is important to remember that becoming a successful retailer takes time, effort, and dedication. You need to be patient and consistent in order to build up your customer base and make sales. But if you are willing to put in the work, becoming a retailer can be a great way to earn income and build your own business.

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