Large Scale Retailing

Advantages of Retailing on a large scale
1.Retailers earn large turnover
2.They have financial resources to do bulk buying which enables them to enjoy trade discounts from suppliers.Thus, there is a higher margin for profits and competitive prices can be offered which attract customers.
3.Specialist staff can be employed.
4.Greater automation and computerisation ensures accurate stock control.RDC can be established.
5.Can afford delivery vehicles and own warehouses.They can supply shop anytime they want.They can save on delivery charges.
6.They can use their purchasing power to buy standardised goods from several different manufacturers.
7.They can generate the capital for establishing business and working capital to cater the day-to-day business activity by operating as public limited company.
8.Economies of scale:as size increases , expenses are spread over a large area so there is lower cost per unit of advertising,bulk buying from suppliers, paperwork for administrative purposes.
Disadvantages of Retailing on a large scale:
1.Self service has lead to decline in personal contact between retailer and consumers.
2.They do not cater for individual needs so there is lack of individuality.
3.Shoplifting,pilfering and theft is a constant problem.Security costs e.g cameras,guards,televisions add to business expenses,leading to lower net profits.
4.Retailers employ low paid staff.This may reflect business image and affect sales.
5.Due to large area, the overall costs of rents and overheads is high.There are many specialists employed and have to  be paid high wages.These costs as well as advertising costs increase expenses

Types of Warehouses

Bonded Warehouses:
They may be situated anywhere but they are found mainly at seaports, dry ports and airports.They are used to store dutiable goods on which duty is not paid.
Importance:
1.Importer can postpone payment of duty
2.Entrepot trade can take place without payment of duty.
3.Bonded warehouses located in cities and towns are important to producers of dutiable goods such as beer which is brewed for sale in the home market.
Cold Storage Warehouses:
These are temperature controlled warehouses that help to preserve perishable foods for long periods.
Importance:
1.Seasonal goods can be stored so that they are available in good condition to meet the demand throughout the year.
2.Countries that have export based on perishables like fish and fish products need them to ensure exports of high quality items in large quantities when demand rises.
3. General wholesalers can increase turnover by extending the wide range of goods that they offer to small-scale retailers by having a freezer section in the store.
Cash and Carry Warehouses:
These are warehouses owned by the Cash and Carry wholesalers and are regarded as wholesale supermarkets.They are important to small scale retailers,helping them to survive competition from large retailers.Self service is provided.No credit and delivery services are provided so goods are bought at competitive prices which can then be passed on to the consumer.
Advantages to wholesaler:
1.More trade from small retailers.
2.Can attract other businesses
3.May sell directly to consumers who get membership cards.
4.No problems of cash flow and bad debts.
Disadvantages to wholesaler:
1.Long working hours
2.High capital investment.
3.Large amount of cash at hand is difficult to handle.There is danger of theft.
Advantages to small scale retailers:
1.Competitive prices
2.Immediate access.
3.Retailer can obtain goods to meet sudden rise in demand and  unexpected change in consumer tastes.
4.Less storage space required.
5.Less time wastage on administrative work.
6.Retailer can travel anytime he wants as there are long working hours.
Disadvantages to small retailers:
1.No delivery service.Retailer has to own or hire transport.
2.It may not be convenient for retailer to leave shop and restock when there is scarcity and more demand from customers.
3.No credit is given.Retailer must have funds to make immediate payment.
Manufacturer's warehouse:
It will be used to store raw material,components and finished goods awaiting sale or transport.
Importance:
1.Manufacturer can produce before demand rises
2.Store goods for his factory shop.
3.If the manufacturer serves all parts of a country,regional warehouses may be set up to serve particular areas.
4.Seasonal goods can be produced throughout the year.
5.Imported parts have to be here before usage by car assembly factories.
RDC:
They are used by large retailers to supply businesses as well as online shop.They are very large warehouses,usually situated at busy road junctions where major highways meet.
Importance:
1.Easy access for manufacturer
2.Constant supply.
3.Reduces the expenses of retailer
Other warehouses:
Primary producers e.g farmers have silos and barns to store fertilizers,machinery,food,oil etc.
Transport companies have warehouses where imported goods are stored before transported to importer.
Public warehouses are used to store illegal imported goods.
General warehouses provided by Port Authority for goods awaiting export or imported goods awaiting transport that are not subject to payment of customs duties.  

Terms of payment

Mark up:
Mark-up is defined as the profit margin on a product offered for sale. It is a percentage of cost price of the product.
Two Basic Formulae:

Mark up Percentage= Selling price - Cost price  ×100
                                                       Cost price

Mark up Percentage= Gross Profit ×100
                                        Cost price     

Factors affecting percentage mark up
- Overall expenses and expected profits
- Quantity of goods that a retailer wants should be sold by his outlet
- Goods that have seasonal demand have mark up varying according to season
- Consumer durables have high mark up