In simple words retailing refers to all transactions which involve the sale of goods to the ultimate consumers for personal consumption. If the buyer uses the goods for reselling purposes it will not be treated as a retailing transaction. Any individual or business unit or shop primarily engaged in retail selling is known as a retailer or retail store. In a general sense, even a manufacturer or wholesaler may sometimes engage in the sale of goods to the ultimate consumers. But they are not called retailers as retailing is not the major activity d a manufacturer or wholesaler. Thus a retailer or retail store is one whose business consists primarily of sale of goods to consumers for their own use, but not for resale in business. A retail business may include other types of transactions also. It will be treated as a retailing business if more than half of its total sales revenue is from retail trading.
A retailer is a middleman because retailing involves procuring goods from suppliers (generally wholesalers) and selling them to consumers for their personal use. Retailers perform the very important task of making goods available to consumers, which after all is the objective that underlies the production of goods. Retailers thus form a vital link in the channel of distribution of products.
Since the retailers deal with a large number of consumers of many different categories, tl~e role of retailers in the physical distribution of goods is clearly of vital importance. The retailers act as a link between the producers or wholesalers on the one hand and the consumers on the other. Without retailers, neither the products would sell in distant places, nor would it be possible for consumers to buy goods of their choice in shops located nearby. Due to the large-scale manufacture of a wide variety of consumer goods and the necessity of making them available to individuals living in distant villages, cities and towns, retailers are now regarded as the most important middlemen in the chain of distribution of goods.
FUNCTIONS OF RETAILERS
As middlemen engaged in the distribution of goods, retailers deal with wholesalers and consumers. Manufacturers, as well as wholesalers, depend a great deal on retailers for reaching the ultimate consumers to supply various products. Retailers provide the necessary outlet for goods and thus render very useful service to the wholesalers and also to the producers indirectly. The services of retailers to consumers are significant in several ways:
(1) Holding ready stocks: By holding stocks, retailers supply varieties of goods of daily use to consumers. Besides, consumers are also given the opportunity to make their choice from several varieties produced by different Finns.
(2) Display of goods: By displaying goods on shelves or in show-cases, retailers bring new products to the notice of customers. They also keep the customers informed about the latest varieties of goods available for sale by explaining their qualities and prices. Customers are also given a demonstration of new products on the sales counter.
(3) Advice to consumers: Very often retailers help the customers to make their decision to buy certain goods by advising them on the merits and use of particular varieties of products.
(4) Personal services: Apart from meeting the needs of different types of customers, retailers also offer a variety of services like home delivery, sale on credit, etc