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By Prof. MUHAMMAD WALI KHAN DURRANI
Assisted by Ms SAIMA KHALIL

May 20 - June 02, 2002

Retailing is a specialized marketing activity. It comprises all business activities involved in the sale of goods and services, directly to the ultimate (final) consumer for personal, family, household or non-business use. Retailing is the last stage in a channel of distribution. "The ultimate objective of al1 marketing endeavours is to reach the ultimate consumer with the product he needs at the time he wants, at the price which suits him. Retailing augments in the achievement of this ultimate objective."

In general retailers perform four functions:

a. They collect an assortment of products and services from a vide variety of suppliers and offer them for sale.

b. They provide information to consumers, as well as to other channel members.

c. They frequently store merchandise, mark prices on it and pay for items prior to, selling them to final consumers.

d. They conclude transactions with the final consumers.

DYNAMIC NATURE OF RETAILING

The dynamic nature of retailing has never been demonstrated, experienced and seen better than now. Changes in environments Economic, Political/Legal, Socio-cultural, Technological, Ethical and Competitive within which retailers of all kinds must operate, force adjustments in policies, methods and managerial strategies.

The retailer has to be very familiar with the environmental factors. Also, he has to remain watchful of the continuous change taking place in the environments since the change in these factors has and will always have vital impact on survival, growth, profit making and ultimate success of the business. Therefore, as far as possible, all plans, objectives, strategies, policies have to be formulated and implemented, catering for and considering the changing environments.

THE INFLUENCING CHANGING ENVIRONMENTS

Economic, Political, Legal, Social, Cultural, Technological, Ethical and Competitive ENVIRONMENTS substantially influence the conduct of retail enterprises and for each factor, as already emphasized, the retailer not only has to be familiar with them but also has to keep a close watch on the likely changes which may occur. The following forces under each factor need consideration at all times.

a. ECONOMIC:

1) Basic Economic System

2) Economic Stability

3) Market Size

4) Social Overhead Capital

5) Personal Disposable Income

6) Distribution of Income

7) Inflation

b. POLITICAL/ LEGAL:

1) Political Stability

2) Political Organization

3) Relevant Legal Rules: Quality, efficiency and effectiveness of the legal structure in terms of general business law, labour law, tax law, laws relevant to business and General Law & Order.

4) Degree of Law enforcement and reliability.

5) Flexibility of Law and Legal Changes.

c. SOCIOLOGICAL- CULTURAL:

1) Over all population growth

2) Population growth in certain age groups

3) Class structure

4) Mobility of people and individual mobility

5) Suburban living

6) Culture

7) Diferent Groups (Ethnic, Linguistic, Political, Religion,

Sect and Caste etc.)

8) Preferences, Biases, Prejudices and social values

d. TECHNOLOGICAL/ EDUCATIONAL/ MANAGERIAL

1) Industrialisation

2) Literacy level

3) Attitude of people

4) Enhanced means of transport and communication

5) Scientific Discoveries

e. COMPETITIVE:

1) Number and Type of competitors

2) Strength of competitors

3) Size of Competitors

f. ETHICAL:

1) Integrity/Honesty of the Competitors

2) Integrity/Honesty of the people

3) Ethical conduct and values of people and workers

HISTORY OF RETAILING "FROM PEDDLERS TO CHAIN STORES"

For thousands of years most goods were sold in market places or by peddling. In Pakistan, India, tropical Africa and most of the developing countries including south and Latin America, hawkers still walk the streets of cities and towns carrying their wares, or cycle/ motor cycle from street to street or village to village. Even, in most developed countries peddlers are still seen selling goods.

It is a normal sight in Pakistani cities, towns and villages that either on bicycles, tricycles, or on animal driven carts, vendors sell all kinds of daily consumer goods and services, The commodities range from cloth to cosmetics and milk to meat. Hairdressers, knife & scissors repairers and sharpeners are normally seen on bicycles. In Karachi, Milkmen have switched to bicycle from walking & from bicycle to motorcycle. Even some are using motor carriers these days. Yet, still the market places remain the chief form of retail selling.

THE RETAIL STORES:

Chain of retail stores is known to have been operative in China several centuries before Christ. The chain store, as it is known in much of the world today, however, is generally believed to stem from the founding of Great Atlantic and Pacific Tea Company (A&P) in New York City in 1859.

The prototype of present day departmental stores existed in Japan as early as the 17th century. The horse-drawn buses encouraged the growth of central business districts and allowed department store to take hold in the western world. "Au Bon March" in Paris developed from a large specialty-store to a department store in about 1860.

SMALL INDEPENDENT MERCHANTS, however still form the majority of retailers in all the countries of the world. Till disintegration of the USSR, most retail stores in all the communist countries were nationalized and still in most countries they remain so. However in some states (Central Asian States) the trend is gradually changing and self-owned retail stores are being encouraged and they are coming up.

The pattern of SUPER MARKET development was set in the United States in 1930, when Michael Cullin opened the first unit of what was to become the King Kullen Chain of Super Markets. CONSUMER COOPERATIVES are retail stores owned and operated by consumers for their mutual benefit. Most COOPERATIVES adopt the principles of the first cooperative store established in Rochelle, England in 1954.

The three principal types of NON-STORE RETAILERS are catalog houses, itinerant (roving) retailers and vending machines operators. The largest catalog houses in the world, Sears, Roebuck & company and Montgomery Ward & company were founded in the United States during the latter part of the 19th century. Following World War II, mail order specialists grew rapidly in highly industrialized countries.

TYPES OF RETAIL OUTLETS:

Many types of retail outlets each fulfilling a particular purpose in the distributive process can be identified. The retailer reaches the customer in one or more of following four ways:

a. Through stores

b. House to house selling

c. Through mail

d. Automatic Vending machines

It is the type and range of merchandise, which determine the form of organization of retail stores. The distinctions are as under:

a. Small retailer and small chains

b. The large chain or multiple

c. The department store

d. The cooperative store

e. The mail order

f. Automatic vending machines

To do a good job, i.e. entire satisfaction of customers and running a profitable business, the retailer must perform many important functions. Some of the functions are:

a. Appropriate choice of locating and layout

b. lntelligent selection of merchandise

c. Selection of the sources of supply

d. Timing the availability of goods and services

e. Recruitment, training and motivation of sale personnel

f. Making most efficient use of capital and other resources

g. Planning and control of promotional campaigns

h. Maintaining proper records

i. Management of credit business

j. Handling complaints

k. Handling purchases and sales returns

l. Improving customer relations

m. Developing inventory control techniques

RETAILING IN PAKISTAN

Retailing in Pakistan, and for that matter in most of the Third World Countries, has traditionally been a small scale business, meant mainly for small and less or not educated entrepreneurs. Till late sixties, large scale retailing institutions like Super Markets, Departmental Stores, Discount Houses were unheard of in Pakistan.

However, utility Store and canteen stores Department, a type of mini super markets, are functioning since the time of independence: but these stores were mutual benefit stores for service of government servants and Defense Services personnel respectively. In late sixties, in Lahore, a super market chain with the name of COOP stores was introduced. The CSD still remains a mutual benefit store but utility stores have been opened to general public. The chain of COOP store of Lahore was later taken over by Utility Stores Corporation of Pakistan.

In the rural areas of Pakistan, the retailing still follows the same traditional "HUTTI' system small shops which provide very necessary daily use items to the villagers from available stores. These days almost all grocery items, cosmetics, vegetable ghee, and other essential items including shelf medicines are available on HUTTIES, but back in fifties rather till late in sixties very few items could be procured from these HUTTIES.

In the urban areas of Pakistan, almost all types of related outlets exist. The introduction of sector wise planned markets in the newly planned modern city of Islamabad the capital, gave new dimensions to modern retailing in Pakistan. Thereafter almost in all other cities and new towns of Pakistan, where a new residential locality had to be developed, special emphasis was given to plan retail markets in a proper way. The main retail urban outlets are:

a. Small retailers

b. Large retailers/ wholesale retail stores

c. Department stores

d. Super markets

e. Street vendors

f. Vending machines

g. Mail order selling

h. Utility stores

i. Cooperative stores

j. Medical & general stores

k. Specialty stores

l. Juma, Mangal or Itwar Bazars

SMALL RETAILERS:

These are very similar to HUTTIES found in the rural areas of the country. Normally these types of stores are located in suburbs of the cities and towns and take care of the demands and requirements of the people living in that area.

LARGE RETAILERS/ WHOLESALE RETAIL STORES

These are few in numbers as compared to small retail stores. These are the types of stores which, in Karachi, were originally found in the areas of Jodia Bazaar and Joona Market only. Almost all the retailers in the city use to collect supplies from them till mid seventies. However, with the development of the city, such like stores were opened in the areas of Liaqatabad (Lalukhet), Nazimabad, Landhi, Malir Colony, Shah Faisal Colony, New Karachi, North Karachi, Korangi, Orangi, Federal B area (Water Pump) and North Nazimabad.

DEPARTMENT STORES:

A department store is a large retailer employing about 25 or more people and usually selling a general line of apparel for the family, household linens and dry goods and furniture, home furnishings appliances, radios, and televisions. It is organized into separate departments for purpose of buying, promotion, service and control.

In Pakistan, we do have department stores, but these stores do not qualify for discussion under large scale retailing. The people who manage these stores are generally the owners or family members of the owners who are guided solely by their gut-feeling. Most of them did not have the exposure to any professional training or any kind of higher education. With the passage of time, however, more and more educated persons are now entering into the retailing business.

SUPER MARKETS:

A supermarket is a departmentalized food store. Pakistan entered the super market era at a time when some western European countries were moving from super market to 'Hypermarche'. The first supermarket in Pakistan was opened at Karachi in 1968. During last 27 years quite a few of them have sprung up, but most of these are more like "superettes" or mini super markets rather than full fledged supermarkets with intensive and extensive product mix. Even food items like meat, fresh fruits, are not available with most of them.

STREET VENDORS/VENDING MACHINES

Door to door selling is a very common sight in Pakistan. The provision of products and services through street vendors range from milk, bakery items, fish, vegetables, fruits, textiles, garments, crockery, linen, CHATNIS & ACHARS and other special home made eatables to barber, gardening, house-making & cleaning and tailoring services.

The seller has to carry the merchandise. At times, vendors book orders by showing samples but that is very rare. Normally credit facilities are not extended by door to door sellers; yet at times depending on relations, credit is provided by the sellers for a period extending upto one week or so. The milkman and the newspaper suppliers and at times even the vegetable vendors submit bills at the end of the month; so in some cases a month's credit is extended to customers.

VENDING MACHINES were seen at airports and Railway stations sometimes back in 80s. Even now, in cities like Islamabad, Karachi and Lahore vending machines are operative. These machines are usually attended by a salesperson, thus the element of self service is not there. However, now telephone booths which can be operated through coded cards are operative in almost all the major cities of Pakistan.

MAIL ORDER SELLING:

This mode is popular in books and periodicals but seldom used for sale/ purchase of any other merchandise. Lack of knowledge interest and integrity on the part of sellers and lack of efficient postal system appears to be the two main causes for poor mail order business. Lack of information of consumers and high cost of producing illustrated catalogs could be another factor for restricted use of this method of retailing.

UTILITY STORES

Initially, utility stores were opened to provide goods on subsidized prices to government servants only. However, later to ensure regular provision of essential commodities to general public at reasonable prices, the doors of utilities stores were opened for commoners too. Utilities stores stock and sell daily use items at lower prices compared to general market. The utility stores corporation of Pakistan, a government controlled autonomous body is a limited company and has several hundred branches all over the country. As per reported figures, the corporation by now has a chain of about 1000 stores, which are located in all major cities and towns.

COOPERATIVE STORES

PIA coop store and a few other established in the country are the example. The COOP established in 60s in Lahore has been taken over by utility stores corporation. Due to vested interest of the members and lack of training, knowledge and education of the store operators these kinds of stores have not been successful in Pakistan.

JUMMA/MANGAL/ITWAR BAZAARS:

The institution of these Bazaars can be described as a step towards "consumerism" in Pakistan. In these Bazaars all daily use items are available. These can be termed; as discount houses since as per claims, the commodities are available at much cheaper rates. The middleman and his share has been eliminated and the producers directly sell goods to the end- users. The normal complaint about these Bazaars is that sub-standard goods are sold at comparatively cheap rates. However, this fact can not be denied that except for nominal official rent and license fee to be paid to Government, no other overheads are to be borne by the sellers and hence sellers at these Bazaars remain cheaper as compared to stores housed in big buildings and malls.