Large Scale Retail Trade: Types, Advantages, And Disadvantages (Part 1)

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Large-scale retail trade involves businesses that operate as big stores or chains of stores, operating on a large scale to serve a wider audience. They carry a wide range of products and services and often operate in bulk.

Think of large retail stores like supermarkets, department stores, or big-box stores. They often have many locations, both physical and online, and offer a broad range of products, from groceries to clothing to electronics. Because they operate on a large scale, they can often offer lower prices and a wider selection of products than smaller stores.

Large-scale retailers also often have more resources to invest in marketing, logistics, and technology, which can help them reach more customers and manage their operations more efficiently. This can make it easier for customers to find what they need and get it quickly.

Types of Large-Scale Retailing

Multiple Chain Stores

Multiple chain stores refer to a network of retail outlets situated in different locations but operated under the centralized management of a single retail organization. These organizations are often structured as limited liability companies. Each store within the network functions as a branch, with purchasing and distribution controlled by the head office. The head office is responsible for procuring stock and supplying it to all branches.

Each branch is overseen by a manager who has limited decision-making power, including pricing, which is determined by the head office. The branch manager submits regular reports on sales, revenue, expenses, and stock levels. A distinguishing feature of multiple chain stores is their uniform shop design, signage, and branding, making them easily recognizable. These stores are commonly located in high-traffic areas within cities, displaying the company’s name, logo, and other brand elements prominently.

Advantages of Multiple Chain Stores

1. Easily recognizable store designs and branding.
2. Allows manufacturers to sell their products directly to consumers.
3. Employees can be transferred between branches as needed.
4. Middlemen can be bypassed when manufacturers operate their own retail stores.

Disadvantages of Multiple Chain Stores

1. Goods must pass through the head office before reaching branches, leading to increased transportation costs.
2. Branch managers have minimal decision-making authority and must refer most matters to the head office.
3. The lack of personalized customer service may deter some shoppers.

Types of Multiple Chain Stores

1. Single-Trade (Specialized) Chain Stores

These stores focus on a specific category of products rather than offering a variety of items. Examples include retail chains specializing in electrical appliances, textbooks, or footwear.

2. Variety Chain Stores

Unlike single-trade stores, variety chain stores offer a diverse selection of products. In some cases, manufacturers produce exclusive goods for these retail chains. These stores share uniform branding and storefront designs.

3. Supermarkets

Supermarkets are large retail outlets within a chain store network that provide self-service shopping. These stores typically occupy expansive spaces, often covering around 200 square meters, allowing customers to browse and select items freely.

Supermarkets may specialize in a specific category of products or offer a broad selection, primarily focusing on household essentials and food items. While many small retail stores in Nigeria are labeled as “supermarkets,” this is a misnomer, as true supermarkets operate on a much larger scale.

In developed countries, some supermarkets have grown into massive retail centers, referred to as hypermarkets, superstores, or even “super super-markets.

Department Stores

A department store is a large retail establishment that houses multiple shops under one roof. Each shop operates as an independent unit known as a department, with its own manager responsible for sourcing supplies. Departments are typically categorized based on product types, such as food, electronics, clothing, and household goods.

A department store is generally divided into four key sections:

1. Merchandising Division – Handles the sale of products.
2. Administration Division – Oversees staff management and operations.
3. Accounts Division – Manages financial records and transactions.
4. Stores Division – Responsible for stock management and inventory control.

Advantages of Department Stores

1. Comfortable Shopping Environment – These stores offer a pleasant and convenient atmosphere for customers.
2. One-Stop Shopping – A wide variety of goods is available under one roof, making it easier for customers to meet all their needs in a single location.
3. Expert Assistance – Trained staff are available to guide customers on the usage and maintenance of specialized products such as televisions and home appliances.
4. Efficient Customer Service – Staff can easily direct customers to different departments within the store.
5. Managerial Autonomy – Departmental managers have the authority to make independent decisions regarding stock and sales, leading to better customer satisfaction and increased revenue.
6. Direct Sourcing from Manufacturers – Department stores can purchase goods directly from manufacturers, eliminating middlemen and potentially reducing costs.

Disadvantages of Department Stores

1. Limited Accessibility – Department stores are primarily located in large cities, making them less accessible to rural customers.
2. High Operating Costs – Due to luxurious facilities and services, the cost of operation is high, often resulting in increased product prices.

Expensive Rent – Renting space in urban areas is costly, which adds to the overall expenses of running a department store.