Indian Retail Industry -Pantaloon Retail (India) Ltd.- Two Basic Forms of Retailers

Two Basic Forms of Retailers: Wholesale and Specialty

Wholesalers

Wholesalers consist of two most important classes. One class that “takes title to merchandise” is composed of merchant wholesalers (also known as wholesale merchants), and the other class consists of agents (also known as functional wholesalers) who “do not take title to merchandise but act as agents for others” (Converse, 2007, pp.87). While the functional wholesalers act “for another person or organization called a principal and performs certain specified services for which he is paid a fee or commission”, it has been observed that “the wholesale merchant hopes to make a profit by selling merchandise for more than he paid for it” (Converse, 2007, pp.87). It may often so happen that the services performed by merchant wholesalers resemble those that are performed by the agent wholesalers; however due to the lack of an agreement under which anyone will pay for these services, “the wholesale merchant takes a chance that he will earn a profit” (Converse, 2007, pp.87).

Wholesalers can be classified into several types, viz. (1) service/full function, (2) drop shippers, (3) cash-carry, (4) truck jobbers, (5) converters, (6) exporters, (7) importers, (8) industrial distributors, (9) voluntary group wholesalers and (10) retailer-owned/co-operative warehouses (Converse, 2007, pp.87-92). There is another type known as the integrated wholesalers. They include retailers or manufacturers whose operations are aimed at “the sale of their goods to retailers and industrial buyers” as well as “the purchase of goods from the manufacturers” (Converse, 2007, pp.92-93).

As it has been observed, “when a product is an intermediate good, and not sold direct to consumers, there are two transactions of interest: the retail transaction (between retailers and final consumers) and the wholesale transaction (between the manufacturer and the retailer)” (Neumann & Weigand, 2004, pp.294), and hence, it is quite evident that wholesalers have a close association with the retailers. This is further augmented by the fact that “if the market of interest is the wholesale market, then it is clear that the consequences of a 10 per cent increase in wholesale prices will depend, in part, on behavior in the downstream retail market” (Neumann & Weigand, 2004, pp.294).

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