Home Trade 2
Advantages of small-scale retailers without shops
i) They require a small amount of capital to start and operate their businesses.
ii) They are convenient since they take goods to the customers within their reach.
iii) They incur low costs of doing business
iv) Most of their goods are low-priced and hence more affordable to customers.
v) The business is flexible. It is easy to change from one business to another
vi) They require few legal requirements
vii) The financial risks involved in these businesses are minimal
viii) They do not suffer bad debts since they sell on cash bases
ix) They interact at personal level with the customers and can convince them to buy their goods.Disadvantages of small-scale retailers without shops
i) It is tiring for traders to move from place to place especially if the goods are heavy and the distance covered are long
ii) The traders face stiff competition from other traders with more resources
iii) They offer a limited variety of goods
iv) They are affected by unfavorable weather condition
v) Lack of permanent operating premises denies them a chance to develop permanent customers
vi) They face a lot of certainty, especially in terms of a steady flow of income
vii) They sometimes sell defective or low quality goods because customers expect to pay little money for themb) Small scale Retailers with shops
These are small scale retailers with permanent locations to operate from. They include;i) Kiosks
These are small shops or structures found mostly in residential areas, busy streets, highly populated areas or inside building where people pass by or work
They deal in fast-moving items and groceries such as; sodas, cakes, sweets, cigarettes, and newspapers e.t.c. some kiosks also sell foodii) Market stalls
These are permanent stands found in market places, especially those operated by the various local authorities
They are of different designs depending on the goods they sell or services they offer.
They are rented or leased by individuals from local authorities
They deal in fast moving household goods though some may specialize in other products such as clothing and shoes.
Examples are stalls at Muthurwa markets, Kariokor, and most municipal markets. Advantages of kiosks and market stalls They are small, hence easy to start and operate
They are conveniently located close to their customers
They require little capital to start
They tend to have a loyal group of customers since they have permanent premises
They incur relatively low running costs
They give personal attention to their customers
They are flexible since the owner can change from one business to another easily.
Disadvantages of kiosks and market stalls
They provide a limited range of products
They usually do not have adequate higher capital for expansion
They charge relatively higher prices than the retailers without shops
They face stiff competition from more established retail businesses
They sometimes suffer from bad debts
Due to their size, they do not enjoy economies of scale
For market stalls the hours for operation are controlled by the local authority concerned
iii) Single shops (unit shops)
- Single shops are mostly located in the trading or market centres in rural areas or in the residential areas of high towns
They are operated from fixed premises
They are usually run by one person who may get assistance from him/her family or employ attendance
- Some deal in one line of commodity such as houses, clothing, groceries or electronics
Advantages of single shops
Minimal capital is required
Running costs are usually low as the owner may use the services of family members
They may offer credit facilities to some customers
They are easy to start because only a licence is required
They usually have a loyal group of customers
Flexibility. The owner can change his or her line of business at will
They are easy to start since the owner does not have to meet any manufactures requirements
Products prices are fixed by the shop owners
The owner has the freedom of creativity and independence
They are convenient since they ensure goods are within easy reach of their customers.
Disadvantages of single shops
• Expansion is difficult due to limited funds
• They face stiff competition from large businesses
• The absence of the owner may result in closure and loss of business
• May suffer bad debts
• Provide limited variety of goods
• The operations of the business are affected by the owner’s commitment.
iv) Tied shops
These are shops that mainly sell the products of one particular manufacture or are owned by a specific supplier of certain goods.
The shops are owned or controlled by the manufacturer, and are thus tied to the manufacture.
The manufacture/supplier designs the organization of the shop and its appearance e.g. painting hence they look alike.
The supply closely supervises the shops. Examples of tide shops include; Bata shops which sell shoes made by Bata Company, petrol station like National, Kobil, and total e.t.c
Advantages of Tied shops
Availability of goods is assured at all times
The supplier carries out promotion for the goods
The manufacturer/supplier can easily give credit to the shops
Customers can return or change faulty goods at any of the shops
The shops are easily identifiable due to their similarity
Traders are financed by the manufacture
They get loyal customers who keep buying their branded products
Advertisement expenses are met by the manufacture
They get technical advice from the manufacture
Some operate from permanent premises owned by the manufacture.
Disadvantages of Tied shops
Decision making is slow because the manufacturer must be consulted
The variety of goods is limited
The shops cannot sell goods from any other manufactures even if customers require them
Prices are fixed by the manufacture and sometimes profit margins may be low
They inhibit the retailers creativity and innovations
There is a likelihood of disagreements between the manufacture and the tied shop owners.
Differences/Distinction between a tied shop and single shop
Owner is free to stock whatever he/she wishes
Owned by individual or a group of
Sells products from different
Design of shop according to owners wish
Prices of goods determined by shop owner or different manufactures
Operators not trained by manufacturers
Dealership can be withdrawn if operators stock competing products
The owner is normally the manufacturer
Sells products from a single manufacturer
Shops usually have the same design
Prices of goods set by the manufacturer
Operators are usually trained by
These are retail shops found in institutions such as schools,colleges, hospitals and army barracks.
-They stock a variety of consumable goods such as sodas, bread, tea, groceries and other things used by the people in that institution.
- They are run by the institutions management or by individuals on retail business
- Most of them operate without a license as they are considered to be part of the institution. Their hours of operation are sometimes regulated by the institution
Advantages of canteens
Some do not pay any rent, thus they incur low overhead costs
They often require low capital to start
Some offer credit facilities to their customers
They are situated at ideal location which is convenient for their customers
They are assured of a market as they cater for people in particular institution.
Disadvantages of canteens
The market is limited to people in a particular institution
They do not open throughout/they open for limited hours e.g. after classes in schools
They close down when the targeted customers are not available e.g. during school holidays.
They may suffer from bad debts
They are difficult to expand due to insufficient funds.
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