RETAIL INSTITUTIONS

CHARACTERIZED BY OWNERSHIP
Independent: an independent retailer
owns one retail unit. The number of
independents is associated with ease
of entry into the marketplace, due to
low capital requirements.
Advantages:
1. Investment costs for leases, fixtures, workers and
merchandise are low. There is no duplication of
stock or personnel functions.
2. They are specialists for a particular goods/service
category. They are more efficient.
3. Decision making is centralized. Layers of
management personnel are minimized.
Disadvantages:

1. In bargaining with suppliers, they do not have

much power because they buy in small
quantities.
2. . Due to high costs for TV ads, broad coverage of
magazines and newspapers, independents are
limited in their access to certain media.
2. CHAIN
A chain retailer operates multiple outlets under
common ownership, it engages in centralized
purchasing and decision making.
• Advantages:
1.chains achieve cost effectiveness when they buy
directly from manufacturers and in large volume.
2. Efficiency is gained by sharing warehouse
facilities, centralized decision making and other
practices.
3.chains, particularly national or regional ones, take
advantage of a variety of media, from TV to
newspapers.
Disadvantages:

1. Once a chain is established, flexibility is limited.

New non overlapping store locations may be hard
to find.
2. Personnel in large chains have limited
independence because there are several
management layers
3. Managerial control is complex. Lack of
communication and delays in making and
enacting decisions are some problems
3. FRANCHISING
Franchising involves a contractual arrangement
between a franchisor (manufacturer, wholesaler)
and a retail franchisee which allows the franchisee
to conduct business under an established name
and according to a given pattern of business. The
franchisee pays an initial fee and a monthly
percentage of gross sales in exchange for the rights
to sell goods.
Benefits to franchisees:
1. They own a retail enterprise with small capital
investment
2. They acquire well known names and goods/service
lines
3. They obtain exclusive selling rights for specified
geographical regions
Benefits to franchisors:
4. A national or global presence is developed more
quickly and with less investment.
5. Money is obtained when goods are delivered rather
than when they are sold.
4. LEASED DEPARTMENT
A leased dep't is a department in a retail store-
usually a department or speciality store rented to
an outside party. The leased dep't proprietor is
responsible for all aspects of its business and pays
a percentage of sales as rent.
For e.g.: in store photographic studios, shoe and
jewellery, cosmetics, shoe repair department etc
Advantages to the stores from leased departments:

1. The market is enlarged by providing one stop

customer shopping
2. Regular store personnel do not have to be involved
A percentage of revenues is received regularly
 Disadvantages:
1. Leased department operating procedures may
conflict with store procedures
2. Lessees may adversely affect stores’ image