ADVANTAGES AND DISADVANTAGES OF LARGE SCALE RETAILER

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Large-scale retailers are those who buy goods in bulk from producers and then resell them to customers in break-bulk quantities.

A large-scale retailer deals in a large number of stock. He also buys large quantities of goods from the manufacturer.

To start a large-scale retail business, large capital is required as one has to pay for a building, buy a large number of stocks and hire staff to man the store.

The next heading explains the advantages and disadvantages of large-scale retailers.

Advantages of Large scale retailers

1. Economies of scale: Large-scale retailers enjoy economies of scale by buying goods in bulk from the manufacturer.

Large-scale retailers typically purchase in bulk to avoid the transportation costs associated with purchasing goods separately.

Hence, they enjoy the benefit of economies of scale.

2. Low competition: Most large-scale retailers face low competition usually because of the capital requirement.

Large capital investment is necessary to open a large-scale retail business because of the extremely high operational size.

Given how expensive it is to launch a large-scale retail business, the majority of large retailers do indeed have low competition.

3. Financial strength: large scale retailers can raise necessary funding from financial institutions and other lending institutions.

Banks and other lending institutions are persuaded that large-scale retailers are viable and reliable borrowers by the large-size, large fixed assets of large scale retailers.

Additionally, since the majority of large retailers are set up as public or private companies, they can raise money for their operations since lending institutions prefer to lend to companied over single proprietorships or proprietors, which is how the majority of small retailers are set up.

4. Better quality service to customers: Department stores and other large retailers typically provide customers with convenience services like restaurants, restrooms, telephones, and point-of-sale services.

This ensures that customers feel comfortable when shopping in the store.

5. High rate of turnover: Large-scale retailers consistently has a high rate of turnover because of the large sales volume they experience daily.

Every day, we see customers troop into supermarkets, department stores, and chain stores to get their items of daily need.

Large scale retailers make high turnover since they sell at large volume to customers and many of these retailers have large numbers of customers daily.

6. Provide goods variety: Large retailers usually sell a wide range of goods.

Goods like foods, beverages, furniture, and kitchen utensils are usually sold in large-scale retail shops.

Large-scale retailers give customers the opportunity to satisfy all of their needs under one roof, relieving them of the stress of searching from store to store for a certain commodity.

Disadvantages of large-scale retailers

1. Absence of personal contact: This is one of the major disadvantages of large-scale retailing.

Large-scale retailers typically do not offer individualized services to consumers due to the sheer volume of customers they must handle daily.

2. High cost: Large wage bills, large inventory, and rental costs constitute a larger percentage of the high cost of large retailers.

Even when the retailer operates on a self-basis such that it only needs to employ few people, the retailer still has to invest in closed-circuit television to monitor keep an eye on customers' activities in the shop.

Additionally, the cost of generating electricity for its operation as well as the cost of maintaining security equipment inside the store all contribute to an increase in operating expenses of the store.

3. May suffer loss: Running a large-scale retail business is very expensive

The company could suffer loss if revenues are insufficient to offset the expenses.

4. Exposed to theft: Large retailers, particularly those that use a self-service model, are frequently subject to theft of merchandise by customers

Such activities increase the cost of the business, who must now additional quantities of the goods stolen despite not selling the goods.

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