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 them

b) 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 food

ii) 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

    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

    Tied shop

  • 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

    v) Canteens

    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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