Page 52 - DMGT550_RETAIL_MANAGEMENT

Unit 3: Types of Retailer

Jyothy Fabrics, Enrich Salon and Pinks & Bloos, Café Coffee Day, Orchid Thai Spa and Kodak to Notes
offer a plethora of services to its customers.

3.10 Types of Ownership

Entrepreneurs have many forms of retail business ownership available to them. Each business
model has its own list of pros and cons. Choosing a type of retail business to start will depend
on why you want to own a business, as well as your lifestyle, family, personality, basic skills
and much more. Here are a few of the main types of retail ownership and the advantages,
disadvantages, and support system of each.
There are five types of Retail ownership:
1. Independent Retailer: In independent retailer is one who builds his/her business from
the ground up. From the business planning stage to opening day, the independent retail
owner does it all. He/she may hire consultants, staff and others to assist in the business
endeavor. The opportunities are endless.

Advantages: There are no restrictions on who, how or where an entrepreneur should set up
his/her business. The freedom to do what one wants to do is the biggest advantage in this
form of business. It can be extremely fulfilling.
Disadvantages: Because of the ease and flexibility of getting started, there can be a lot of
competition in a particular area for a certain type of customer. Every business decision
rests on the owner(s). There is no branding, no preset guidelines and a great deal of risk in
this business model.

Support: Other than small business resources online, in print or sponsored by the various
government and trade organizations, there isn’t much in the way of support for the
independent retailer.
2. Existing Retail Business: Someone who inherits or buys an existing business is taking
ownership and responsibility of someone else’s hard work. The foundation has already
been laid.
Advantages: The biggest advantage to buying an existing business or taking ownership of
an already established retail store is time. The time to build a customer base, the time to
establish branding, and the time it takes to establish credit are generally all past which
means most of the hard part is behind the new owner.
Disadvantages: The existing business may have a negative image or reputation that will
take a lot of time to undo. Loyal customers may not like the change of ownership. Previous
owners have caused problems by opening a competing business.
Support: A well-established business will usually have a written set of procedures or
policy manual. Staff members already in place have the knowledge to help guide a new
owner.
3. Franchise: Purchasing a franchise is buying the right to use a name, product, concept and
business plan. The franchisee will receive a proven business model from an established
business.
4. Dealership: Retailers may find the business model of a licensed dealership as a mix of
franchise and independent retailer. The licensee has the right (sometimes this is exclusive)
to sell a brand of products. Unlike a franchise, the dealer can sell a variety of brands and
there generally no fees to the licensor. Dealerships may or may not be identified as an
authorized seller or by the company’s trademark.

LOVELY PROFESSIONAL UNIVERSITY 47