Types of Organizations in the Retail Trade

In the past, retailers attracted customers and secured market share with better products, prices and service than their competitors. They also offered customers flexible payment arrangements like store accounts and credit cards. Today, retailers explore new marketing strategies to attract and keep customers in volume. National-brand manufacturers place their branded goods not only in department stores, but also in mass-merchandise discount stores, off-price discount retailers and on the Internet, making retail products in each store very similar.

Corporate chains started as far back as 1670 with The Hudson's Bay Company and have been influencing both consumers and dealers ever since. The benefits of corporate chains are their mass-buying with central supervision, inventory control, rapid turnover, store display, health and safety standards of cleanliness and quality, opportunities for part-time employment and sales training. With concessions on brokering and freight allowances, advertising allowances and other rebates, chains are able to provide lower pricing for a cost-conscious consumer.

Retailer cooperatives started as a means of humanizing the capitalist factory system, providing workers with membership in a democratic work environment. Today, locally-owned grocery stores, hardware stores and pharmacies, such as IGA, Leader Drug Stores, Handy Hardware and Mr. Tire, are examples of retailer cooperatives. Cooperatives receive discounts from manufacturers that they then pass onto their customers. Cooperatives function under a democratically-controlled process. Their members enjoy educational and training opportunities and can qualify for substantial in-store merchandise discounts. Some members of cooperatives have profit-sharing programs allowing workers decision-making rights.

Merchandising conglomerates are corporations that have diversified retailing under central ownership. For example, Target Corporation operates Marshall Fields, an upscale department store, and also operates Target, an upscale discount store, as well as "Target.direct" for online retailing and direct marketing. Diversified retailing, with its multi-branding strategy, provides superior management systems and economies that benefit the separate retail operations while increasing the conglomerate's bottom line.

A company may want to expand its business by allowing, through a license, an independent business owner to sell its products and render its services under its name and trademark. The company granting the license is the "franchisor," and the business owner is the "franchisee." A franchisor has the benefit of expanding quickly with capital and labor supplied by the franchisee. Since the franchisees are accountable for the success of their outlets, they do their best to ensure their businesses run smoothly and prosper.