Organisation of the Retail Sector

1922 words (8 pages) Essay

12th Jul 2017 Marketing Reference this

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For the purpose of this assignment, I shall start off the assignment by defining the term ‘retailing’. I shall then describe how the retail industry is organised include many ways and places in which retail is conducted and finally I shall describe the changes that are taking place in the industry structure.

Retailing is to provide services and products and at a profit. Retailing consists of the sale of goods for personal or household consumption operating from an appropriate location offering wide range of access to its target audience. For example, Retail Park in (Lakeside) ensuring adequate stock is available to meet customer demand as well as offering attractive and distinctive products.

Ways and places in which retail is conducted

There are immense ways and places in which retail may be conducting in current environment, however the aim of all types of retails is to engage with customer effectively and achieve the organisation aims and objectives through the various strategies that may suit them. Some of the ways and places are mentioned in detail as following.

Classification of types of store

There are several classifications of types of retail store as shown in the table below.

Type of retailer

Example

Independent

Corner shop such as

Multiple chains

Pharmacy,

Department stores

John Lewis, Selfridge, Tesco Metro

Supermarkets

Iceland, Morrison, Mark & Spencer, Tesco

Catalogue stores

Argos, Empire direct, kays

Discount stores

Pc World, Maplin, Currys, Comet, Superdrug

Emerging store types

There are number of new store formats have appeared recently as mentioned below

Shopping village

Outlet Stores, Factory Shops, Factory Outlets, there are many names but only one concept, and that is to bring you designer products at discount prices. For example, shopping village in Oxford provides designer cloths at discount prices through website.

Factory shops

The factory shop is attached to a factory. A factory shop normally sell imperfect produced in the adjacent factory. In other words goods that may not be satisfactory produced in nearby factory. For example, The original factory shop offering a wide range of merchandise Ladieswear, Menswear, Kidswear, Sportswear, Football, Electricals, Housewares, Toys and Gifts, Beauty and Fragrance – all discounted. Much of what they sell is either branded or is originally made for other high street stores and supermarkets.

Television sales channels

In recent years cable or satellite channels companies have dedicated shopping channels such as QVC and Express Shop to allow the consumer to order online instantly through remote control.

E -Retailing

The internet has tremendous change on the shopping habit of consumers and selling and buying products over the internet continues to gain popularity. This is because the internet has tree main advantages such as

Convince shopping over internet allows consumer to shop online without having to leave their house

Choices this is seen as the biggest advantages as the internet allows access to wide range of products from across the world for example EBay, this gives advantage to internet over shopping centre.

Cost in general, goods sold online are much cheaper than those sold in shops and the expenses to run the website is relatively less than running physical shops.

Online and physical stores

The combination of technology and physical appearance of store is combined together, for example an electric store Pc World attempts to combine both an online web store and a physical store as it allows customer to surfer to order online and pick up from the store as well as delivering at their doorsteps.

Service versus product retailing

Organisation providing high proportion of services emphasis on providing effective marketing mix, such organisation includes banks, estate agents, cafes e.t.c. however product retailer emphasis not as much as service providing organisation. It is because service can exists within customer and organisation for long time such as Tenants and agents and therefore the agents has to provide effective service to convey customer and not loss it, on the other hand retailer selling cable electrical products, if once sold to customer then it will be used as long as the fault becomes. Therefore the service can exist for a long time where as providing products can be flexible and quick.

Classification of retailers

Retailers can be classified from variety of viewpoints, for example higher number of employees and sales turnover is indication of a tall structured organisation. There are other factors as well such as the size and product strategy, for example very large stores such as ASDA and Morison’s selling a full range of food and non food products. In the UK 11% of all enterprises are retailers operating from around 280,000 retail outlets.

Location

The places of shopping have become more diverse, today’s there are local, city centre and out of town retail parks, plus regional shopping developments.

Local

Local shops are located and serve suburban areas or smaller towns. They generally consisted of significant number of stores. The aim of such stores is to provide flexible shopping for consumers in a given locality enabling them to shop close by where they live rather than having to travel far away.

In town stores and shopping centres

It is commonly known as typical high street which is consisted of

Department stores (such as Mark & Spencer)

Multiples (such as new Look)

Service retailer (such as building societies and banks)

The aim of such town stores and shipping centres is to provide large coverage and access to all possible products and services that is commonly used by consumers such as cloths, food and non food products, banking e.t.c. it is to maximising the efficiency of providing everything at located places.

Out of town retail parks and regional centres

There are huge regional shopping complexes located in several out of town sites in the UK. They have more attraction than shopping mall on large scale, these provides wide range of facilities such as restaurants, cinema, cash points as well as train stations and motorway access. Other out of town includes stores such as Comet, Dixons, Pc World, MF and B&Q. The reason for such stores is that it is easy to park, prices are competitive and the size of these stores is huge means a great variety of goods is on sale.

Ownership

The ownership of retail stores reflects the diverse nature of the industry.

Independent retailers are organisation with fewer then ten branches. Independent retailers tend to offer specialist range of products for example medicines, they also sell a range of products including groceries household goods, wine and spirits.

Multiple retailers are organisation with more than ten branches. Some multiples are classified as specialist such as Burtons for clothing. Multiple variety stores like Boot s and Mark & Spencer offer wide range of food. These stores tend to be in busy shopping areas and the prices tend to be relatively low.

Voluntary chain retailers choose to buy most of the stock from the certain wholesalers whose price tends to be relatively low due to their buying power such as SPAR.

Franchised retailers are granted the rights in a geographical area. In simple words, it is legal right given to a person who wishes to run the branch of established business or organisation an example would be Mc Donald or KFC. The franchisee pays a fee based sales or even agrees to buy supplies from the franchisor.

Structured of the retail industry

The structured of the retail industry has become more diverse due to expansions of brands in different type of location. The structure of retail can be noticed from number of perspectives such as the size and profitability, Trends in sale and other aspects.

  • Size

The size of UK retail industry continues to grow but not as rapid as it was from year 2000 to 2007. This is due to competitive market and economic turmoil in the current environment which is forcing industry size to be limited or even reduce it as the sales begin to slump.

  • Trends in sales

Form the past two year the retail sales have fallen dramatically due to the affect of recession on their sales, some retailers have reported of 10% sales being fallen. This has reduced the growth rates of the UK retailers. UK retail sales values fell 0.1% on a like-for-like basis from August 2008, however Retail sales in central London in November were 13.3% higher on a like-for-like basis than a year ago, when sales had fallen 0.4%, as financial turmoil hit consumer confidence especially in the City. This shows the glowing picture of sales.

  • Profitability

The formula for better profit is high sales and similarly low sale contributes to low profit. The retailers from across the country have reported improved sales from the last three years this means presumably healthy profit. however it can’t be neglected that the uncertainty still remain in the British economy. But for the mean time the retailer are enjoying the volume of profit.

  • Store size and location

Some of the retailers such as Tesco have expanded in terms of the size and location. The management have made changes into physical structure enlarging it even further in some of the stores. Tesco have also begun to deploy stores in community such as Tesco Express in local community where the local shops are also operating. In general, it is noticed that retailer are committed expand the physical size as well as location such as retail park to provide maximum access to consumers.

  • Not-for-profit and public place retailers

There has been a growth in not for profit retailers such as Oxfam, Cancer research. They sell goods brought in by donors and use voluntary staff. The growth can be as people are becoming aware of their aims and objectives and thus feel compassionate towards their cause.

Public retailers also have common variety of diverse venues, for example there has been noticeable rise in the products available from vending machines as it provide more services such as hot drinks. Similarly, there has been increased in retailers in main rail station for example, WHSmith is a common sight at many UK rail stations.

  • Employment characteristic

The retail industry employee approximately 3 million people, over the last five years employment in retailing has grown by 141,000. However, from the last year there has been decline in retail employment due to economic turmoil and the demand of employment has reduced significantly.

Conclusion

In this assignment, I have defined the term ‘retailing’ described how the retail industry is organised through many ways and places in which retail is conducted and I have described the changes that are taking place in the industry structure

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