NAME: Ugoh Okechi Francisca

FACULTY: Business Administration

DEPARTMENT: Accountancy

MATT NO:

COURSE CODE: MKT 701.

ASSIGNMENT: Examine the Classification of Retail Business

Retail Business: This includes all activities associated with selling goods and
services to the ultimate consumers.

A retail sale according to a court decision is a sale made to consumers rather than
to dealer in merchant for resale.(Stanton 1981).

Classification of retail Business: Schewe and smith et.al (1980) had classified retail
business into four namely:

1. The amount of shopping effort required of consumers.

2. The ownership of the retail operation.
3. The extent and type of product line handled.
4. The various functions performed.
a.) Classification based on shopping effort : this is sub-classified into
convenience, shopping and specialty outlets.
i. Convenience stores are located near residential areas or near
workplaces of their target customers. Owners of such stores
emphasize in the location, easy movement within the store and other
things that makes shopping convenient for customers.
ii. Shopping stores are where we have consumers shopping certain
types of products such as clotting, appliances, sporting goods, etc.
iii. Specialty stores are retail outlets where customers have developed
strong and special allegiance, interest and preference to. This
 commitment may be based on the product lines offered, services and
reputations, etc.
b.) Classification based on ownership status: this is sub classified based on the
form of ownership or control which includes:
i. Independence: retailers who own their single stores that not
affiliated to others. The advantages includes ownership control,
personal relationship with customers, fast decisions making, low
operational costs, etc. while the disadvantages of such independent
stores are incompetent, lack of managerial experience, lack of
experience in product line, etc.
ii. Chain stores: this is an organized system consisting of two or more
stores centrally owned, managed, and handling the same lines of
goods on the same level in the distribution structure. Chain stores
enjoys such advantages as quantity discounts since they centralized
their buying, strong financial position, store loyalty due to advertising
power and good management. Chain store may also own their means
of transportation and warehouses for goods storage.
iii. Association of independents: these has to do with a group of
individual retailers who have agreed to come together in order to
gain the advantage and benefits of group membership without giving
up their freedoms and flexibilities. These association of
independence can be identified as cooperative organizations,
voluntary chains and franchise.
a. Corporative organization: this group is where the independent retailers
pool their resources in order to maintain their own retailing operation.
They carry out branding and advertising activities in all, they still
maintain their independence.
b. Voluntary chain: they are like cooperative organization, except that in
this case, a wholesaler initiates and run the organization.
c. Franchise: according to Birnbaun (1981) a franchise is a contractual
agreement in which a parent company (franchisor) grants an individual
or a relatively small company (franchisee) the right to do business in a
prescribed manner over a certain period of time in a specific place. The
 rights may include sale of the product, use of company name and
adoption of methods, trademarks and architecture.
c.) Classification Based on product lines: it s based on the line and dept of
products carried. Some retailers carry as much product line as they can,
others carry limited line of products, while others specializes in few lines.
Examples:
i. General merchandiser: a retailer who carries a wide range of
products for customers.
ii. Limited retailers: they carry limited lines of products. They are
usually drug stores, chemical stores, etc.
iii. Specialty – line retailers: they go a step further by offering one or
two product lines but with substantial depth and greater expertise.
They also operate in tobacco, bakery, etc.
d.) Classification according to the functions performed: this are the majority of
retailers, they account for retail bulk sales. They are classified into two;
store and non store retailers.
a.) Store refers to those retailers who operate from stores. these includes:
i. Department stores: offers wide variety of product lines with varying
depths according to stores, which includes cosmetics, clothing,
appliances, etc.
ii. Discount stores: these are self services, general merchandise stores
that combine low prices and high sales volume to achieve profits.
iii. Supermarkets: they are large sale services stores that carry a full
line of food product s and a number of non food products freshly
produced. They emphasize convenience items, minimum services,
price appeal and large parking space. Supermarkets have low profit
margin and strives at all time to keep operating in low costs.
iv. Shopping centers: these are group of retail stores that are planned,
developed and controlled by an organization.
b.) Non- store retailers: these are retailers who operate retail business
without necessarily having stores.
i) Mail order firms: they accept and fill orders by mailing some firms
that specializes in mail order business, while others undertake it
 as a supplement to the business activities. Customers may buy
from the mail, order firms through these methods:
a) Place an order after consulting the firm’s catalogue that contains pictures
and price tags of the products.
b) Mail in the newspaper cutting, which the firm has be costs to be advertised
in national dailies.
c) An order form directly received from the seller may be used in request.

Although, mail order business is popular in most African countries due to poor
postal services and corrupt post office staff who may convert the products.