Home trade is the act of buying and selling goods within a geographical area, usually a country. It can be referred to as domestic or internal trade. In home trade, the same currency is used for exchange (buying and selling) within a country, e.g. Nigeria. Home trade is a branch of commerce which comprises wholesaling and retailing.




Retail trade is the business activity of selling goods and services to the final consumer. Retailing is the final link in the chain of distribution of goods and services. To be classified as retailing, selling activities must be directed to the ultimate consumers. All retailers are involved in assisting the physical movement of goods and services to the consumers at the right time and place. This is the commonest form of home trade. Retailing out number the combined total of the other two major business activities-manufacturing and wholesaling.


The Retailer

A retailer may be defined as a trader who buys goods in small quantities from the

wholesaler and sells in bits or units to the final consumers. In other words, a retailer is a merchant whose main business is to purchase goods from the wholesalers in small quantities and sell in smaller units directly to the final consumers. A retailer is distinguished by the nature of its sales, which is in units. He is one of the middlemen essential in the chain of distribution of goods.


Characteristics of the Retailer

  1. Retailers sell in small units: The retailer sells to the consumers in small units after buying in small quantities from the wholesalers. This function is one of the basic feature of retail trade.
  2. Stock wide variety of goods: The retailer is known to stock wide variety of goods which he normally sells to the final consumers.
  3. Retailer is the last link in the chain of distribution: Retailer represents the last link in the chain of distribution of goods to the consumers as he personally sell goods to the final consumers.
  4. Retailer stocks mainly consumer’s goods: Retailers are known to stock mainly consumers goods since he deals or sells directly to the final consumers.
  5. Wares consist of fast selling products: Majority of the wares of retailers are fast selling products which the consumers need on daily basis.
  6. Business location are close to consumers: Majority of the business location of the retailers are very close to the consumers for easy accessibility.
  7. Business is owned by individuals: Retail business are mainly owned by individuals and in few cases by some group of people.
  8. Render door to door service: Most of the retailers except the large retail business do take their goods directly to the consumers at home.


Functions of the Retailer

  1. He sells in small quantities to consumers: The retailer purchases in small quantities from the wholesaler and breaks the goods down into units for the customers.
  2. He provides after-sales services: He provides after-sales services like installation, repairs, servicing, etc to the consumer.
  3. He grants credit facilities to the consumers: The retailer can grant credit facilities to the consumers so as to enable them enjoy goods without payment immediately.
  4. Stock variety of goods: The consumers can buy varieties of goods from the retailers, hence they are exposed to a wide range of goods.
  5. He supplies information to the wholesaler and manufacturer: The retailer is in the best position to collect information and feedback about the market, as well as the needs of the consumers and makes it available to the wholesaler and manufacturer.
  6. He sells at convenient locations and hours: The retailer sells goods to the consumers at any time of the day and at convenient places.
  7. Ensures door-to-door services: The retailer ensures that goods are brought to the doorstep of the consumers or nearer to their houses.
  8. He gives advice to the consumers: He can advise the consumer on the quality, uses, specifications and performance of products.



The following factors should be taken into consideration in setting up a retail trade:

  1. Capital: Before setting up a business, the initial amount of capital available must be taken into consideration. Consideration must be given to the money at hand for such a venture.
  2. Pricing Policy: The retailer must take into consideration which price to put on his products. He will choose the best pricing policy, e.g. market penetration policy, market skimming or pricing above the market.
  3. Source of Supply: He must determine the source of supply so as to ensure constant supply. The retailer will decide on whether to buy directly from the manufacturer or wholesaler so as to suit his purpose.
  4. Type of Goods: Another factor to be considered is the type of goods to be sold. He must determine whether it is going to be perishable goods or industrial goods.
  5. Terms of Trade: The terms of trade must be considered. The retailer will decide on whether he will allow credit or sell on cash only and the rate of discount to be given.
  6. Experience: The experience, business acumen and managerial abilities of the retailer will determine the scope of the retail trade, i.e ., whether large scale or small scale.
  7. Advertising: He must take into consideration the best medium of advertising that will suit the products so that effective awareness will be created among the consumers.
  8. Location of the Business: The site of the business must be decided. A trader will prefer to locate his business where the goods can easily get to the consumers.



Retail activities can be classified into small scale and large scale.



Methods of Classification of Retail Stores

Retail stores can be classified as follows:

  1. By the types of the range of goods offered for sale.
  2. By the functions performed.
  3. By size based on the number of employees or turn over.
  4. By ownership, e.g. independent, co-operative.
  5. By location, e.g. rural or urban.

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