Retail Trade

Frequently Asked QuestionsBy: Qresha Abdul Gaffaar

many companies wish to expand their markets without incurring the expenses of additional

shop space

Explain two reasons why e-commerce is becoming increasingly important. [4]

their competitors are offering e-commerce, so they must offer e-commerce to remain

competitive

Explain two reasons why e-commerce is becoming increasingly important. [4]

suitable for a large range of products/services

some of the difficulties of using Internet shopping have been overcome - dangerof credit card fraud

an increasing number of people have access to computers and to the Internet

many people have little time to go shopping and prefer to shop on-line

Explain two reasons why e-commerce is becoming increasingly important. [4]

saves time and money on other forms of advertising

to make the chocolates more attractive than other chocolates

Explain why attractive packaging is used for the chocolates. [4]

chocolates are often given as presents so colour adds to this

the brand can be included on the packaging to attract attention

so that the packaging attracts attention - may mean more orders

Explain why attractive packaging is used for the chocolates. [4]

can be used as part of the advertising on the website

to encourage impulse buying

(d) Explain how a retailer might make use of computers to run the business. [6]

use of computers in documentation process

use of Internet banking to run the business' finances

use of computer software to manage accounts

word processing, advertising, literature,

communication with customers - fax, e-mail

(d) Explain how a retailer might make use of computers to run the business. [6]

communication with other parts of the business - intranet, fax, e-mail

• communication with suppliers - fax, e-mail

database of customers and their details

(d) Explain how a retailer might make use of computers to run the business. [6]

stock control in warehouse

communication with customers

desktop publishing for communication and advertising material

buying in bulk - obtain discounts - lower prices to customers

(a) What are the advantages of large-scale retailing to Bonusbuy itself? [6]

can afford to use regional distribution centres and own transport

can use self service - savings on sales staff

employment of specialist buyers - quality goods at competitive prices

should have quick turnover - beneficial when selling perishables

(a) What are the advantages of large-scale retailing to retailers itself? [6]

economies of scale - administration/advertising

use of technology - bar coding, epos

offers wide range of goods

(a) What are the advantages of large-scale retailing to Bonusbuy itself? [6]

may encourage impulse buying - so greater turnover

What are the advantages to the retailer of providing self service to its customers [3]

saves on sales staff - stocking shelves, manning tills

may encourage more shoppers who want to self select

involves less work for retailer than offering personal service

enables customers to recognise the products

What are the advantages to the retailer of selling its own brands [3]

makes the goods offered by the retailer distinctive

assists retailers to advertise

What are the advantages to the retailer of selling its own brands [3]

encourages brand loyalty/goodwill

may be able to offer these goods more cheaply than other brands because hasplaced a bulk order with a particular

producer

What are the advantages to the retailer of using bar coding on its goods. [3]

may speed up individual transactions at the till

may reduce human error at the till

saves pricing goods individually

enables stock control to be computerised

What are the advantages to the retailer of using bar coding on its goods. [3]

enables the retailer to see which types of goods are selling

enables re-ordering to be computerised

and so reduces costs to Retailer

and so reduces costs to retailer

What are the advantages to the retailer of providing after sale service. [3]

Creates customer loyalty

May increase turnover

May need to deliver goods

May be selling goods which require maintenance

Explain why the retail trade attracts many people wishing to set up small businesses. [4]

A small amount of money is needed to start trading e.g. own savings

Banks may be willing to lend against collateral such as property

It is an attractive job for many people with a wide diversity of opportunities/products/

services that can be sold

Explain why the retail trade attracts many people wishing to set up small businesses. [4]

It may be possible to take a franchise and so share risk with a larger organisation

It may be possible to operate from home using the Internet or have premises close

to home

Many people enjoy serving customers and offering personal service

Explain why the retail trade attracts many people wishing to set up small businesses. [4]

Name important factors to consider when deciding on the

location of a small retail business. [6]

Nearness to customers – customers often buy locally

Availability of labour – may need shop assistants

Availability of transport – customers to come to the shop, labour

Kind of site – close to other shops – on main roads

Name important factors to consider when deciding on the

location of a small retail business. [6]

Ease of obtaining supplies – near main roads, delivery area

Close to/away from competition especially large-scale retailers – may have to rely on nearby customers

Close to/away from competition especially large-scale retailers – may have to rely

on nearby customers

Explain why Paradise Supermarkets decided to buy most

of its supplies direct from suppliers.

can take advantage of economies of scale – bulk buying to obtain discounts

can obtain goods to its own specification and so can control the quality

may required manufacturers to make goods under its own brand name + e.g.

Why many customers prefer to buy from

supermarkets. [6]

it allows them to do one-stop shopping and to buy large quantities of goods

are able to use self service so that they can examine the goods

shop at their own pace without pressure from sales staff.

wide range of goods at competitive prices

the goods are likely to be fresher and also packaged and branded for easy recognition

delivery of goods, specialist counters within the store e.g. bakery

Why many customers prefer to buy from

supermarkets. [6]

They value the personal service and the quality of the goods sold

prefer to shop daily rather than weekly

They may also be allowed informal credit

Why many customers prefer to buy from small corner

shops. [6]

They may also be allowed informal credit

purchase cans of baked beans in very large quantities, obtain larger trade discount

supermarket may be offering the beans on special offer or as a loss leader

no middleman like wholesaler

(i) Why is the supermarket able to sell cans of beans more

cheaply? [4]

Large turnover

very convenient to buy in the comfort of their own homes

credit card fraud have been reduced

(Does the growth of e-commerce present a threat or an

opportunity to the shops in the shopping centre?

are too busy to have time for shoppingand find it convenient to order everything

obtain sales by offering online services

Opportunities

supermarkets allow shoppers to order food and household goods online and offer a delivery service

This has greatly added to their turnover

(Does the growth of e-commerce present a threat or an

opportunity to the shops in the shopping centre?

save them costs of expensive rentals and reduce the wage bill

Opportunities

Threats

shops who are reliant on shoppers

Others prefer to see the actual goods they wish to buy

(Does the growth of e-commerce present a threat or an

opportunity to the shops in the shopping centre?

buying online is likely to be more expensive

Offer products or services that the large-scale retailer does not offer.

Try to cut costs – reduce labour.

((b) Mrs Habib, a small-scale retailer, is faced with competition from a large-scale retailer. Suggest two actions she might take. [2]

Advertise – introduce special promotions.

Convert from personal service to self-service.

Look for different/cheaper suppliers.

Move to another location

Do nothing and wait and see.

Use cash and carry.

b) Mrs Habib, a small-scale retailer, is faced with competition from a large-scale retailer. Suggest two actions she might

take. [2]

Join voluntary chain.

Give credit (informal credit).

Improve variety of goods.

Provide after-sales service.

Use of bar-coding and scanners – to speed up transactions at the checkout and to aid stock control.

Database – stock records.

(i) Large-scale retailers computerise many of their operations. Describe two ways in which these retailers make use of

computers. [4]

Computerised ordering of supplies and the accounts.

Electronic point of sale with electronic tills to speed up customer payments.

Use of security cameras to try to prevent shoplifting and employee theft.

Online ordering by customers with Internet catalogues and home delivery.

(i) Large-scale retailers computerise many of their operations. Describe two ways in which these retailers make use of

computers. [4]

Intranet – computer network within the retail business to aid communication between staff

Communication between branches by means of email.

Preparation of advertising and promotional materials using desktop publishing.

(i) Large-scale retailers computerise many of their operations. Describe two ways in which these retailers make use of

computers. [4]

Internet – for advertising.

Use of credit card machines.

Retailer uses bar coding and electronic tills, customers should find that there are fewer mistakes

(i) Is computerisation by large-scale retailers likely to benefit their customers? Give reasons for your answer. [6]

move through the checkouts more quickly

retailer should not run out of supplies.

It may offer the customer online shopping and prices may be lower

large-scale retailer is able to offer customers more services

(i) Is computerisation by large-scale retailers likely to benefit their customers? Give reasons for your answer. [6]

(checking their shopping bills, loyalty schemes) and a wider range of goods with better promotions.