RETAILING is that part of the distributive process that is concerned with the selection, purchase, display and sale at retail of commodities to the consumer. The object of retailing is to obtain for a given community appropriate merchandise in such grades and in such quantities that it will give the purchaser com plete satisfaction and that it can be sold at a profit. The units of merchandise sold in the greatest volume at retail are food prod ucts, clothing, clothing accessories and articles for the furnishing of homes.
The most significant developments in retailing in the five years ending in 1929 have been : (a.) The rapid changes in style and design of many com modities that were formerly relatively staple; (b.) The inauguration of hand-to-mouth buying because of the need for greater turnover in sales and also because of the quicker obsolescence of merchandise caused by its rapid style changes; (c.) The elimination of the wholesaler in certain lines as an important link in the chain of distribution, caused by more and more retailers purchasing direct from manufacturers; (d.) The rapidly increasing cost of distribution, and, (e.) The phenomenal growth of chain store or multiple shop systems which are becoming very important factors in reducing the cost of distribution.
It is authoritatively estimated that in the United States of America, the volume of sales at retail for the year 1928 aggre gated $41,000,0oo,000. Of this volume, it is estimated that: $25,200,000,000 or 611% represents sales by small independ ent specialty and neighbourhood stores; 6,500,000,000 or 16% represents sales by large depart mental stores; 6,200,000,000 or 15% represents sales by chain stores; 1,400,000,00o or 31% represents sales by mail order con cerns; 800,000,000 or 2% represents sales by company stores operated by various firms for their staffs; 800,000,000 or 2% represents sales by house to house canvassers; Ioo,000,000 or -I of 1% represents sales by consumers' cooperative stores.
The volume of retailing carried on by small independent stores is exceedingly large because it has been easy for anyone with very small capital to engage in retailing. But out of every Ioo inde pendent retail stores opened during the past 25 years, not over 10 have been really successful. A recent survey made by the University of Buffalo revealed that of 7,225 independent retail grocery stores which engaged in business in Buffalo between 1918 and 1926, only 242 had survived—a mortality of approximately 97% ! In the past three years it has been especially difficult for the small independent retailer in spite of affiliating with other inde pendent retailers in group buying and thus obtaining price con cessions from the manufacturers, to succeed in competition either with the large department stores or with the chain stores or multiple shops. Consequently, it is safe to predict that the trend of distribution both in America and in Europe will be toward a decreasing proportion of commodities sold by the small independ ent specialty stores and an increased volume of merchandise distributed by departmental and chain stores.
The growth of group buying and the development of central buying by the chain stores is tending toward the elimination of the wholesaler in some lines. The effect of this change has been to transfer the wholesaling function to the manufacturer, who in many lines must manufacture in advance and carry "fill in" stocks to render the services to the retailer that the wholesaler formerly rendered. Some wholesalers have maintained their posi tions in the distributive process by acquiring a financial interest In a number of retail stores.
The amount of merchandise sold at retail through the chain stores is increasing more rapidly each year than that sold through departmental stores. This is due to the fact that the chain store unit can distribute merchandise at a lower overhead expense than the departmental store. The principal commodities dis tributed by chains are hosiery and underwear, women's ready-to wear, women's and men's shoes, men's clothing and furnishings, household utensils, hardware, millinery, furniture, drugs and toilet articles, groceries and sweets.
The tremendous purchasing power of these chains enables them to buy in such quantities that manufacturers are impelled to quote them prices as low as those formerly quoted to wholesalers. Since the chain stores do not provide the convenience either of charge accounts or free delivery they usually are able to sell their stand ardized articles more cheaply than those independent department stores which provide complete assortments of new merchandise, service and the privilege of returning merchandise that is not satisfactory.
The competition from the chain stores is resulting in affiliations and combinations of department stores for the purpose of reducing overhead expense through research activities and of reducing the cost of merchandise through group buying or central buying.
Most department stores in America and many in England are now combined either in associations or in financially controlled combinations. The future will determine whether public opinion will support both the department store and the chain store. The chain store represents a standard but rigid type of store with lim ited selections of merchandise at standardized prices which is sold, generally speaking, on a cash and carry basis. Certain of the chain stores distributing food products deliver merchandise. The de partment store represents an institution with policies that are more flexible and more in harmony with the needs of its locality as these change from time to time.
As the competition between chains becomes increasingly keen and as department stores attempt to meet chain store competition through overhead economies effected by mergers and the savings effected through central buying and group buying, there may de velop again in distribution a place for the independent retailer.