Importance of Retailing

Importance of Retailing

Retail is the last stage in a channel of distribution. The channel of distribution includes all business and people involved in the physical movement and transfer of ownership from producers to the consumers. Retailers acts as the connecting link between the manufacturers, wholesalers and the consumers. A typical distribution channel is shown below;

Retailing provides the last mile connectivity and plays a vital role in the value delivery system. The importance of retailing can be understood from the various services provided by the retailers while selling the products and services. In the process of selling the products the retailers perform a variety of services to the Wholesalers, Manufacturers, and Consumers and to the economy. These aspects are dealt below-

Consumers’ Perspective

The consumers are provided with the following array of services by the retailer;       

·         Consumers are offered with wide variety of products and choices in terms of brands, flavors’, designs, sizes, colors and prices under one roof. They are saved from wasting time in searching for products /choices from various shops. Hence retails outlets are preferred by shoppers as all the products needed could be purchased at their convenience.

·         Development of organized retailing has led to quality products of good standards. Stiff competition among the national and international brands of product and the competition among the retailers has led to increased quality of products at affordable prices. The end consumers are provided with more value for money.

·         Consumers purchase the products required by them in smaller quantities. The number of transactions made by them is more but each transaction involves a smaller financial outlay. It is not possible for the consumers to reach the producers for smaller quantities. The retailers help the consumers by way of breaking the bulk into smaller lot. They purchase larger quantities from producers and wholesalers into convert them into smaller quantities as required by the final consumers. This makes it affordable and reachable for the shoppers.

·         Retailers maintain a large assortment of inventories. Retailers enable the consumers to keep smaller quantities of all products as they can purchase their requirement whenever they need. This helps consumers to save the money which can be used otherwise.

·         Retailers display the products in attractive manner such a way that the consumers can understand and select the products easily. They are also provided with additional information needed for making a purchase. Customer service executives are made available to help them in making choice. In view of tough competition, many retailers provide additional services like free pickup and drop to the retail shops, free home delivery, play station for children and the like.

·         Retailing creates utilities for consumers in terms of values viz., functional, emotional, social, epistemic and conditional. Functional values are related to economic needs in terms of convenient opening hours, affordable prices, good quality etc. Emotional values address psychological needs for example the consumer may have an emotional attachment with the shop. Social values satisfy the needs for belongingness. For example people may visit a retail store to be a part of particular class in society. Epistemic values address the need for novelty and ego satisfaction. Conditional-values satisfy the need arising out of a particular condition like availability of extremely cheap products due to stock clearance/festival discounts etc.

·         The development in organized retailing has made shopping a pleasure to the customers. The ambience created in the retail showroom relaxes the customers and rejunavates them to the extent that it is termed as Shopping therapy.

Contribution to the Economy

·         Retail sales in India amounts to $180 billion contributing to 10-11% of the gross domestic product of the country. The move towards organized retailing has led to increased standard of living of Indian consumers in terms of more value for money, convenience, increased social infrastructure and the like.

·         Retailing is becoming highly competitive and challenging which enhances the need for employing skilled and creative manpower. The function of retail involves activities like arranging for finance, purchase goods/services, manage warehouse and distribution system, advertising, promotion, sale force management, market research etc. All these functions need manpower which enhances employment opportunities.

·         Due to the policy liberalization huge amount of foreign direct investment is attracted towards our country contributing to the development of the nation. More money is invested for development of infrastructure which is a must for attracting investment from around the globe.

·         Retailing provides opportunities for people wishing to start their own business. It enables people to become entrepreneurs and contribute their share in the economic development of the country.

·         Retail industry requires millions of square feet for construction of malls and the related infrastructure. This will put into large areas of land into more effective utilization which will lead to real estate boom in the economy.

·         Developing organized retailing would enable to attract large number of tourists as it happens in Dubai, Singapore and other countries. This will enhance the government revenues and popularize our country’s brands across the world.

·         Organized retailing can bring changes in the agricultural supply chain, remove the inefficiencies in distribution of consumer goods and improve the productivity.

·         Large number of task related to retail management can be outsourced right from market research to identify the needs of customer to loyalty management. This will be a catalyst for augmenting our country’s wealth.

Manufactures/Wholesalers Perspective

·         The manufactures are provided with information regarding the consumers needs, wants, improvement expected by them in the products and the like. This enables the producer to have an insight regarding the consumers and synchronize their plans to meet the requirements of the consumers.

·         The manufacturers need not waste the time and attention by focusing on the marketing their products to ultimate consumers. The retailers enable the producers to concentrate on production and thereby contribute to maximize their efficiency.

·         The final consumers buy the products in smaller quantities and tend to have a number of transactions which is not feasible for the producers. Retailers help the producers by buying the quantities in bulk which also reduces the number of transactions and thereby the cost is minimized.

·         The producers/wholesalers need not lock the money in terms of inventory as the retailers’ takes the burden of holding the stock until the consumers buy the same. The fund is available for investment in production or further trade. The cash flow is smooth as the producers or wholesales sell in bulk and realize entire amount as against selling in small units to final consumers.