Retail trade

Retail trade is a branch of domestic trade that involves purchasing goods and services in large quantities from wholesalers and selling them in smaller quantities to the final consumers. Retail trade acts as a link between wholesale trade and the final consumer. Essentially, retail means small, as it involves the buying and selling of goods in small quantities.

A retailer is a person or business that buys goods and services in relatively large quantities and resells them in smaller quantities to the final consumer. The retailer profits by selling at a higher price than the purchase price. Retailers act as the intermediary between wholesalers and consumers.

1. Market Survey A retailer conducts market research to understand the needs of consumers. Purpose: This helps the retailer supply goods according to market demand, determining the types, quality, and quantity of goods required by consumers at an acceptable price and place.
2. Buying and Assembling Retailers buy and stock a variety of goods. Purpose: They purchase goods from manufacturers, wholesalers, or other large-scale retailers, assembling them based on customers' needs identified through market research.
3. Transportation Transporting goods from the source to the retailer or final consumer. Retailers ensure that goods are delivered on time and at a reasonable cost. The mode of transport (e.g., road, railway, water, or air) depends on factors such as quantity, product nature, and delivery location.
4. Warehousing or Storing Storing goods until they are needed by consumers. Goods are stored in a secure warehouse to protect them from risks like theft, weather, and insects. This ensures products are always available for consumers, even when demand exceeds supply.
5. Sales Promotion Promoting goods to attract customers. Retailers increase awareness of products through advertising, attractive packaging, exhibitions, and promotional offers (e.g., discounts, gifts).
6. Selling Directly selling goods and services to consumers in small quantities. Retailers meet customer demands by offering products in quantities that consumers can afford and need.
7. Stock Control Managing and tracking the quantity and value of stock in a warehouse. Proper stock control ensures that there are enough goods to meet consumer demand. It helps retailers plan for purchases and keep accurate accounting records to calculate profits and losses.
8. Risk Taking Bearing risks associated with the retail business. Retailers face risks like theft, spoilage, fire, fraud, and changes in demand or prices, depending on the nature of the goods they sell.
9. Financing Providing credit facilities to trustworthy customers. Retailers may sell goods on credit, allowing customers to pay later, thus facilitating customer purchases and helping manage cash flow.
10. Provision of Market Information to Wholesalers Retailers share consumer behavior and market trends with wholesalers. This helps wholesalers make informed decisions and adjust their products to better meet the demands of the market.
11. Provision of Advice to Customers Offering guidance to customers on the use of products. Retailers provide advice on how to use or maintain products, helping consumers make better purchasing decisions and enhancing customer satisfaction.
12. Breaking the Bulk Splitting large quantities into smaller ones. Retailers allow consumers to buy goods in quantities they can afford. For example, a customer might buy a single bar of soap instead of a bulk pack.

1. Link Between Manufacturers and Consumers Retail trade connects producers of goods with the end consumers who purchase them.
2. Source of Employment Retail trade generates employment opportunities for individuals, providing wages or salaries for retailers and their employees.
3. Consumer Feedback to Producers Retailers gather feedback from consumers and pass it on to wholesalers and manufacturers to improve products and meet market demand.
4. Convenient Access to Goods Retailers break bulk goods into smaller quantities and sell them to consumers in required amounts, providing convenience and choice.
5. Accessibility and Convenience Retail trade makes goods available in easily accessible locations, ensuring consumers can find what they need in their local area.
6. Contribution to the Economy Retail trade contributes to economic growth by facilitating the circulation of goods, increasing revenue, creating jobs, and supporting local businesses.

Retail trade is the sale of goods and services directly to the final consumer for personal use. It can be classified based on various factors such as capital investment, number of employees, sales volume, shop size, number of branches, method of operation, and taxation level. From these bases, retail trade is broadly divided into two main categories:

1. Small-Scale Retailers These are traders who operate businesses with limited capital, employ few or no workers, and manage small stock volumes. Their operations typically serve small, local markets, and they often rely on their own labour or that of family members and close associates.
2. Large-Scale Retailers These are well-established retailers with permanent premises and operate at a large scale, carrying large stocks and selling goods in high volumes. They possess substantial initial and working capital, employ qualified personnel, and are managed centrally. They often have branches across regions or countries and contribute significantly in the form of taxes.

Small-scale retailers can be divided into two main types based on their physical location:

Non-stationed retailers

These are mobile retailers who do not have permanent business premises. They move from one location to another in search of customers. This group includes:

1. Itinerant Traders These traders carry their goods to different locations, often targeting populated residential areas such as villages, suburbs, and public places like bus stands, beaches, football pitches, and hospital areas. They typically sell everyday items like fruits, vegetables, bread, utensils, and clothing.

   Advantages of itinerant trading:

   • Requires a small startup capital.
   • Helps build a loyal customer base.
   • Provides easy access to goods for consumers.

   Disadvantages of itinerant trading:

   • Traders are exposed to harsh weather and dust, which can affect health and product quality.
   • Some itinerant traders are accused of selling defective goods.
   • They often evade taxes due to the difficulty in regulating their mobile operations.
   • Itinerant traders include the following subtypes:

2. Hawkers These traders move from place to place carrying goods using bicycles, motorcycles, or by foot. They sell items such as ice cream, vegetables, fruits, fish, books, magazines, and newspapers.

   

   A hawker in a bicycle selling ice cream to customers

3. Peddlers Peddlers are similar to hawkers but carry their goods on their shoulders. They are commonly seen in villages and busy urban streets, selling consumer products like clothes, kitchen utensils, musical instruments, toys, milk, and fruits.

   

   A peddler carrying goods in a busy street searching for customers

4. Mobile Shop Operators These traders operate from mobile vans, lorries, or bicycles, where goods are neatly displayed for customer selection. They usually visit specific areas on a schedule, commonly found in cities such as Dar es Salaam, Mwanza, Zanzibar, Arusha, Mbeya, Tanga, and Dodoma. Goods sold include utensils, clothes, shoes, and fruits.

5. Barrow Boys (Two-Wheel Barrow Operators) These traders use handcarts or wheelbarrows to carry and sell goods. They typically deal with foodstuffs, stationery, and fruits, and are commonly seen in urban markets and streets.

   

   A two wheel barrow car

Stationed retailers

These are retailers who operate from a permanent location and do not move from place to place. They are based in fixed locations such as roadside stalls, kiosks, shops, and vending machines. Below are the main types of stationed retailers:

I. Street traders or roadside retailers

These are retailers who set up their businesses along streets in busy areas such as bus stops, public halls, highways, and railway stations. They typically use trays, movable stalls, or cardboards to display fast-moving goods like cigarettes, sweets, and soft drinks.

Key Features:

1. Located in high-traffic areas.
2. Low operating costs—minimal expenses on rent, water, and electricity.
3. Can offer lower prices due to low fixed costs.
4. Require small capital to start.

II. Small fixed shops

These are small retail outlets owned mostly by sole proprietors, and are permanently established in one location. Examples include kiosks and canteens.

Advantages:

1. Low overhead costs such as rent, water, and electricity.
2. Promote personal interaction with customers.
3. Often allow credit sales, encouraging customer loyalty and increased sales.
4. Offer stability as they are permanent establishments.

III. Kiosks

These are make-shift retail structures that can be relocated if needed. Though mobile, they are typically stationed for long durations in busy public places such as roadside areas and shopping malls.

Small booth in the walkway of a City Mall

Characteristics:

1. Usually single-unit shops with no branches.
2. Built with timber and metal sheets.
3. Positioned in high-foot-traffic locations, e.g., parking lots and roadsides.
4. Example: Soft drink company kiosks at bus/taxi stations.

IV. Canteens

Unlike kiosks, canteens are permanently located in specific institutions like schools, hospitals, churches, factories, or offices.

Functions:

1. Serve food, tea, and cold drinks to students, workers, and the general public.
2. Typically found in institutional or workplace settings.
3. Operate from fixed premises.

V. Tied shops

These are retail outlets that sell products of a single manufacturer only. They are like exclusive dealers.

Filling station

Example:

• Petrol stations selling only products of a particular oil company.
• Operate under agreements with specific manufacturers.

VI. Automatic vending machines

These are self-service machines that sell goods or services without human attendants.

Snack food vending machine

Features:

1. Operate using coins, paper money, credit cards, or special cards.
2. Sell items like snacks, soft drinks, cigarettes, lottery tickets, and magazines.
3. Example of services: ATM machines used for withdrawing money.
4. Labour-saving and convenient for consumers.

These are well-established retailers with permanent premises and operate at a large scale, carrying large stocks and selling goods in high volumes. They possess substantial initial and working capital, employ qualified personnel, and are managed centrally. They often have branches across regions or countries and contribute significantly in the form of taxes. The main types of large-scale retailers include:

I. Mail order shops

These retailers sell goods through the postal system. They do not have regular display shops but operate through warehouses, showrooms, and offices.

Key Features:

1. Customers place orders and make payments via post.
2. Goods are delivered after payment confirmation, reducing the risk of bad debts.
3. No personal contact between buyer and seller.
4. Traders do not need large stocks or big warehouses; they stock based on received orders.
5. Common items sold include books, clothes, food, jewellery, computers, and office supplies.

II. Departmental stores

These are large retail outlets that offer a wide range of goods under one roof, with each section or department specialising in a product category.

Key Features:

1. Each department has its own manager and controls stock independently.
2. All departments are managed under one central authority.
3. Customers enjoy variety and convenience as they shop in one location.
4. Examples of departments: men's wear, women's wear, children's clothing, sportswear.
5. Usually located in central areas to attract a larger number of customers.

III. Multiple shops (chain stores)

These are branches of the same retail business located in different areas, operating under one ownership and selling similar types of goods.

Key Features:

1. Each shop (branch) is run by a manager with limited powers.
2. Centralised purchasing from manufacturers; decentralised selling across branches.
3. Selling is done strictly on a cash basis; no credit sales.
4. Uniform pricing across all branches is maintained by the head office.
5. Each branch needs its own business license and tax registration.

IV. Supermarkets

Supermarkets are large-scale self-service stores that primarily sell food items and household goods.

Key Features:

1. Customers select items themselves, which are all price-tagged.
2. Products include groceries, clothing, utensils, drinks, cleaning supplies, and light appliances.
3. Customers proceed to a cashier counter for payment after self-selection.
4. Emphasize convenience, speed, and wide product availability.

V. Consumer cooperative stores

These are retail stores owned and operated by consumers themselves. They buy goods in bulk directly from producers or wholesalers and sell them to members at low prices.

Key Features:

1. Ownership is by members, who contribute capital and elect representatives to manage the store.
2. Open membership—any interested adult can join and become a shareholder.
3. Profits are shared based on members' purchases.
4. Each member has one vote, regardless of the number of shares held.
5. Aim to eliminate middlemen, thereby reducing exploitation and maximizing value for members.
6. Usually operate on a cash-only basis to avoid bad debts.

1. Politeness in Dealing with Customers A good retailer should always be polite and respectful when interacting with customers, creating a positive environment that encourages repeat business.
2. Good Buyer Skills A good retailer knows how to efficiently purchase goods by considering factors such as what to buy, where to buy, when to buy, at what price, and how to earn a reasonable profit.
3. Ability to Forecast Customer Demand A good retailer can predict customer demand, ensuring the right quantity and quality of products are stocked at the right price, time, and with the appropriate packaging or branding.
4. Good Administrator A good retailer is capable of managing staff effectively, controlling stock movements, and overseeing other business operations to ensure smooth running.
5. Honesty with Customers A good retailer should be honest, selling goods at fair prices and ensuring products are genuine, avoiding exploitation of customer ignorance.
6. Cooperation with Suppliers A good retailer works well with suppliers by ensuring timely payments and maintaining strong relationships for efficient supply chain management.