CHAPTER 10:

RETAILING AND
WHOLESALING
WHAT IS RETAILING?
Retailing refers to the business activity of
selling goods or services to the final
consumer.
Retailer is the one whose business firm
sells mainly to the final consumer. Retailer
in some cases sell on a nonretail basis, i.e.,
wholesale.
The manufacturer and the wholesaler may,
at times, also perform retailing activities,
i.e., sell directly to the final user.

NOTE: The final consumer is one who uses a product

or service for his own personal benefit not as a
means of producing other goods or services.
FUNCTIONS OF RETAILERS:
They provide convenience;
They provide guarantees and service;
They provide financing of transactions;
They perform promotional activities;
They perform storage functions;
They perform intelligence service for the
manufacturer;
They serve as buying agent of the
consumer.
 CONVENIENCE
Most retailers are located very near the
ultimate consumers. This spares the
consumer from having to travel very far to
find a retailer selling the required products or
services.
Retailers operate at hours most convenient
to the consumers. Most sari-sari stores are
open 6:00 AM to 9:00 PM.
GUARANTEE AND SERVICE
Manufacturers and wholesalers
sometimes sell directly to consumers.
Most often, they are not in the position to
satisfy immediate request for service and
product guarantees. With accessibility,
the retailer can immediately replace a
defective product, or perform services
like installing the purchased item.
 FINANCING
A great numbers of retailing
institutions provide financing by selling
on credit terms. Some retail stores
collect from customers on a monthly
billing basis. This function relieves the
manufacturer from having to tie up
with his limited funds in activities like
retail financing.
PROMOTION
Retailers perform promotional
activities to stimulate sales. The
effective display of products, for
instance, increases the chance of
making sales.
 STORAGE
With the service provided by the retailers,
the consumers are relieved from buying
products which are not needed. Without the
retailers, the consumers will be forced to
buy in advance from manufacturers. This
action will force the consumer to store the
products. If the consumer are not willing to
assume the storage function, the
manufacturer will have to absorb it or forego
production altogether.
INTELLIGENCE
The manufacturers, most often, do not have
the facility to monitor information from
individual consumers. Since the retailers are
directly in touch with the consumers, the
retailers are in a better position to gather
information which could be relayed later to
the manufacturers. This, in effect, makes the
retailers intelligence agents of the
manufacturers.
 BUYING AGENTS
Many consumers have limited shopping time
especially if it means selecting from among
thousands of products coming out of the factories.
The retailers who have the time, the skill and the
bargaining power, perform the task of selecting the
products and making them available for purchase
by the consumer in more convenient locations like
the stores. In effect, make the retailers perform the
role of buying agents of the consumers.
TYPES OF RETAILERS
by sales volume;
by product mix offered;
by form of ownership;
by method of operation
 SALES VOLUME

According to sales volume,

retail stores may be
classified as: (1)Small;
(2)Medium; (3)Large
PRODUCT MIX OFFERED

Retailers may also be classified

based on products lines they carry.
They may be categorized into :
(1)General merchandise stores;
and (2) Specialty Stores.
 RETAILE
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 GENERAL MERCHANDISE STORES
- Are those that carry a larger variety of product
lines, oftentimes with a number of assortments in
each product line. Classified as: (1)Department
Stores and (2)Variety Stores.
Department Stores Those which carry a
variety of product lines which includes furniture,
clothing, sporting goods and toys.
Variety Stores Those that sell a variety of
product but not as extensive ass those of
department stores.
 SPECIALTY STORES
- Are those which carry out only a specific
line of products.
Single-line Specialty Offers only one
or a very few closely related product
lines.
Limited-line Specialty Sells items
more specialized in nature than those
sold by a single-line specialty store.
 FORM OF OWNERSHIP
1.Corporate chain stores;
2.Independent stores;
3.Franchise stores
CORPORATE CHAIN STORE

Composed of two or more outlets

that are owned commonly by a
person or a group of persons selling
similar product lines, maintaining
centralized buying and
merchandising, and using a common
logo.
INDEPENDENT STORE
Are owed and operated by
independent retailers. Some of them
form cooperatives to attain economies
of scale in activities like purchasing
and promotion.
FRANCHISE STORE
Also known as franchise
dealer is an independent retailer
given the right, usually exclusive,
by the manufacturer to sell his
products in a definite market area.
 METHOD OF OPERATION
1. Full Service Retailers Stores where
assistance in a variety of ways is
extended to the customers. They have
higher operating cost due to full service.
2. Supermarkets Large department
stores which offers a variety of good
including apparel, groceries, bread, dairy
and candies.
3. Discount Stores Self-service retailers
that sells a wide variety of gods at less than
traditional retail prices.
4. Nonstore Retailers Refer to those who
sell outside of the store and may be
classified as: (1) At-home retailers;
(2)Telephone retailers; (3)Vending machine
retailers; (4)Mail-order retailers; (5) Internet
retailers; (6)Cellphone service retailers.