Retailer: Definition, Functions, Types & Features

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What is a Retailer?

The retailer is that person who sells goods in smaller quantities or units to the final consumers. He is the last link in the chain of distribution. He is therefore the middleman between the wholesaler and the consumer.

Retailer
Retailer

The retailer, or retail distributor, is that economic agent that is located in the penultimate phase of the value chain. That is, the one that transfers goods, or provides services, to final consumers.

Retailer often refers to small businesses or family businesses. Shops, street stalls, small shops are examples of retail trade. These are the last link in the distribution chain, since they focus on the sale of the finished product to the final consumer.

When we talk about goods, we must clarify that we are referring to manufactured products and that they are finished. That is, we are not talking about raw materials.

In short, we are talking about the business that is in direct contact with the client.

Functions of a Retailer

Functions of the Retailer to the Wholesaler

  • He provides useful information on consumers’ demands to the wholesaler.
  • He keeps a variety of goods/services from which consumers can choose.

Functions of the Retailer to the Consumer

  • He sells in small quantities to numerous consumers.
  • He provides goods/services to the remotest areas.
  • He grants credit facilities to reliable customers.
  • He provides after sales services to his customers.

Features of the Retailer

The main features of the retailer are:

  • It is the one that is in direct contact with the client.
  • Buy products in large quantities and sell in small units.
  • They are the last link in the distribution chain, as well as the penultimate link in the value chain.
  • They operate with small amounts.
  • Retail trade integrates all those stores and small family businesses that operate in the economy.

Types of Retailers

Based on a number of criteria, the retailer can be one type or another. In this case, we will proceed to classify the types of distributor and retailer, based on two main criteria: the organization of the company and its form of sale.

Based on its organization, we can classify retail into 5 types:

  • Independent Commerce: Typical store or establishment of small dimensions and that is dedicated to the sale.
  • Associated/integrated Commerce: These are independent businesses, but they are inside large areas. The best example is shopping malls.
  • Large Distribution: Large wholesale companies that operate as retailers. Very common in supermarkets.
  • Franchise: Store that, despite being independent, is part of a network of stores that follow the same criteria, while often offering similar products.

On the other hand, based on their form of sale, we can classify the retail distributor into 4 types:

  • Traditional Commerce: It has three main elements that are: counter, seller and warehouse.
  • Self-service trade: It is the consumer who is dispatched.
  • Mixed trade: Where the self-service is presented, but when it comes to charging, there is a person who is in charge of collecting and receiving the sale.
  • Sale without a commercial establishment: All sales that are made through street vending, online sales (e-commerce), automatic sales (vending machines) and distance sales or by catalogue.

Reasons why the Small Scale Traders are Important

  • There is flexibility in their operation as exemplified in hours of operation, and granting of credit to customers which can be tailored to meet their needs.
  • They require small capital to start their businesses. This is tied up with the low level of income and low level of savings that are prevalent.
  • Ability to meet the peculiar needs of their customers is there. They keep a variety of goods from which their customers easily make their choices.
  • Low overhead costs make them readily suitable to the West African business environment.
  • Some of them serve as suppliers of the needs of larger firms.
  • They are seen as training grounds for launching into large-scale production.
  • Pride of ownership or joy of self-employment commends their operational suitability in West Africa.
  • Small-scale businesses entail lower levels of risks and hence they are easily undertaken by the small-scale traders.
  • The small-scale traders distribute goods to the very remote areas, which is a peculiar characteristic of theirs.
  • The small-scale traders supply information to the manufacturers through the wholesalers thereby serving as links between the consumers and the wholesalers/ manufacturers.