What are functions of retailer in the distribution channel?


Functions of Retailer in the Distribution Channel :

1.      Providing Assortments: Manufacturers generally specialize in Producing specific types of products: For example, Cadbury’s makes chocolates, Kraft makes dairy products, Kellogg makes breakfast cereals, and Everest makes spices. If such manufacturers decided to have their own stores selling only their own products, consumers would have to go to many different stores to make purchases for their requirements. Retailers collect a variety of products and services from a number of sources and then offer these as an assortment to their customers, Offering an assortment enables their customers to choose from a wide selection of brands, designs, sizes, colors, and prices in one location.

2.      Breaking Bulk: Breaking bulk is beneficial to both manufactures and consumers. Manufacturers prefer to ship products in bulk quantity cartons in order to reduce transportation costs as it is more cost effective for manufacturers to package and ship merchandise in larger, rather than smaller quantities. Consumers, in turn, prefer to purchase merchandise in smaller, more manageable quantities. Retailers purchase the products in larger quantities from manufacturers and then offer the products in smaller quantities to the consumers as per their requirements. This is called breaking bulk.

3.      Holding Inventory: Holding inventory is a major function of retailers in order to keep inventory that has been broken down from their bulk packaging into user-friendly sizes so that products can be mad available in smaller quantities whenever consumers want them. This will enable consumers to conveniently maintain a small inventory products at home since they are aware that the retailers will always maintain an inventory of the products they need at the store and make the products available when they need more. This reduces the consumer’s cost of storing products. Consumers find this beneficial since they have limited storage space especially for perishable merchandise like dairy and frozen products.

4.      Providing Convenient Locations and Timings: Retailers select the locations of their stores and keep them open for longer timings so that they are conveniently located and available to their customers for fulfilling their requirements of goods and services as soon as the require them.

5.      Providing Services: Retailers provide services in order to make it easier for consumers to buy and use products: This could be in the form of providing credit to consumers so that they can use a product now and pay for it later. This could also involve services like providing the space required for displaying products so that consumers can see the variety and feel and test them before buying. Retailers may also provide additional information about the characteristics and availability of products to customers through salespeople who are available to answer questions. With multi-channel retailing, retailers offer the flexibility of multiple retail formats like retail stores, web sites, mail-order catalogs, and a toll-free number. This provides convenience and enables customers to buy anytime during the day or night. Customers can also choose to pick merchandise up at a store at their convenience or have it home-delivered.

6.      Recording and Providing Feedback: Retailers record transactions and feedback from customers which they inform back to wholesalers and manufacturers in the form of sales forecasts, delivery delays, defective items, customer complaints, inventory turnover, and other information. This retailer feedback enables the wholesalers and manufacturers to modify goods and services in order to better satisfy customers and in the process increase their sales.

7.      Increasing the Value of Products and Services: Retailers provide assortments, break bulk, hold inventory, offer convenient locations and timings, provide services, and record and provide feedback, thus increasing the value provided to consumers from products and services.

In general, retailers serve the following functions:

  • Anticipate and fulfill consumer needs and wants at competitive prices
  • Provide assortments by stocking large quantities of different items manufactured by various companies.
  • Break bulk in order to offer smaller quantities tailored to individual customer needs.
  • Hold inventory which can be made available to consumers when they want them; thus, customers do not have to hoard products since these are easily available.
  • Provide formation regarding the product and services to the customer.

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MT UVA- University, Vocational and Affiliated Education for BMS


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