Content uploaded by Babulia Dodo Mghebrishvili
Author content
All content in this area was uploaded by Babulia Dodo Mghebrishvili on Aug 16, 2017
Content may be subject to copyright.
Content uploaded by Ekaterine Urotadze
Author content
All content in this area was uploaded by Ekaterine Urotadze on Jun 08, 2016
Content may be subject to copyright.
27 April 2016, 23rd International Academic Conference, Venice ISBN 978-80-87927-23-6 , IISES
DOI: 10.20472/IAC.2016.023.070
BABULIA MGHEBRISHVILI
Ivane Javakhishvili Tbilisi State University, Georgia
EKATERINE UROTADZE
Ivane Javakhishvili Tbilisi State University, Georgia
FUNCTIONS OF RETAILING
Abstract:
Retailing plays an important role in the development of Georgia’s economy. In recent years it has
changed considerably. Sales volume has increased as well as the number of employees in this
sphere. According to the international rating regarding retail trading Georgia held the 6th position
among 30 countries. In strengthening this position understanding and implementation of the
functions of retailing plays an important role along with some other factors. The essence of retailing
is expressed in its functions, so if the functions are completed properly, the tasks of retailing are
usually successfully solved. At present the scientists do not have the same opinion about the
functions of retailing. As a result of the analyses of different opinions about the matter, we think that
the main function of retailing is delivering of the product through selling and buying to the
immediate customer. In order to accomplish this function, all retailers perform certain operations,
which are called by us as sub-functions. They are the following: Studying of market conjuncture;
Analyses of the demand – supply ratio of certain products; Product buying and formation of product
assortment; Storage of products; Price setting for products; Information provision for suppliers and
buyers; Selling of the product to the immediate customer.
Keywords:
Retailing, Function, Customer, Supplier.
JEL Classification: M31
356http://www.iises.net/proceedings/23rd-international-academic-conference-venice/front-page
Introduction
Retailing plays an important role in the development of Georgia’s economy. According to
the data for year 2014, number of the employed in this sphere and the total turnover has
almost doubled, compared with 2010 [Geostat 2015, p 200, 203] and this evidences
development of retailing in the country. Business environment in Georgia contributes to
gradual development and improvement of retailing. Due to the favorable business
environment Georgia ranked 6th among 30 countries by retail sales [Global Retail
Development Index-2015]. This position vests great responsibility in the country. To meet
the expectations as the regional trade oasis, Georgia has to maintain and even improve
its status as a hospitable country free of corruption and favorable for business [Tbilisi-
2015]. Though, in our opinion, this is not sufficient, we believe that people engaged in
retailing should gain a thorough understanding of the theoretical knowledge in this area.
Of theoretical principles of retailing, the sales personnel should primarily understand its
functions and perform them properly. These are the functions that demonstrate the
substance of retailing and if they are performed, the objectives of retailing will be solved
and this sphere would play its role in the economy as required. In discussing the retailing
functions, we imply traditional retailing. We regard that electronic retailing functions
require separate researches, regarding its characteristics.
There is no common view about retailing functions in the scientific literature. Naturally, in
such situation, the practitioners have different understanding of the retailing function as
well and this, in our opinion, results in unreasonable use of the sales personnel. This has
motivated us to study considerations on the functions of retailing widespread today and
prepare this article.
Research results
Numerous scientists have stated their opinions about the functions of retailing, and
provided the relevant arguments as well.
Peter Joel McGoldrick, in his article “Retailing”, in discussing its functions, focused on the
following factors: location, products selection and purchase, retailing brands, pricing,
promotion, retailing atmosphere, human resources, information and logistics [McGoldrick,
P.J., 2002, p. 601-608].
The book “Essentials of Retailing”, written by Michael Levy and Barton A. Weitz contains
absolutely different opinions about retailing functions. The authors of this book have
included into the retailing functions: creation of certain range of the goods and services;
distribution of the received batch of goods; storage of the inventories; providing services
[Levy M., Weitz B.A., p. 20-23].
27 April 2016, 23rd International Academic Conference, Venice ISBN 978-80-87927-23-6 , IISES
357http://www.iises.net/proceedings/23rd-international-academic-conference-venice/front-page
“Retail Management: Strategic Approach”, book by Barry Berman and Joel B. Evans
does not provide clear formulation of some functions of retailing. Their considerations
show that they regard the following as the retail functions: physical delivery of the
products to the consumers, accompanied with transfer of the title; products selection and
procurement; formation of the trade lists; conducting of the sorting process; informing of
the consumers, manufacturers and wholesalers; transactions with the consumers
{Berman B., Evans J.R., 2003, electronic version; Berman B., Evans J.R., 2013, p. 6-7].
The textbook in Marketing published under editorship of A.R. Romanov, formulates the
retailing functions somewhat differently. It emphasizes that retailing performs the
following functions: research of the conditions at goods market; determine demand for
and supply of the specific goods; seeking of the goods necessary for retailing; goods
selection and sorting to create the required range; payment for the goods received from
the suppliers; performing of the goods’ acceptance, storage, marking operations and
establishing the prices for goods; providing transportation-shipment, consultation,
promotion, information and other services to the suppliers and consumers [Marketing,
1996, p. 217].
We have got acquainted with Professor V.N. Naumov’s (1999) the views about the
retailing functions. He regards that the retailing functions include: meeting of the end
users’ demands by places of their residence or employment; distribution of the large
quantities of the supplied goods into small portions, taking into consideration the desires
and requirements of the end users; informing of the manufacturers on existing demand
for the goods; entry into the new markets and promotion of the new goods at market;
performing of the function of advertising of the manufacturers’ goods.
Based on the analysis of the views of the specified authors about the retailing functions,
we came to the view that not all operations performed in retailing could be regarded as its
function, as some of them, in our opinion do not express the substance of retailing. We
regard that some operations specified as the functions are only the tools for realization of
the retailing functions. Finally, our views about retailing functions could be formulated as
follows:
We regard that the main function of retailing is delivery of the product to its end users
through sale and purchase; we classified the trade operations required for performing of
the main function, expressing, in our opinion, the essence of retailing, as the retailing
sub-functions. Retailing sub-functions include:
Research of market situation;
Analysis of the demand and supply ratio for certain types of goods;
Purchasing of the goods and formation of the trade lists;
Goods storage;
Fixing of the goods’ prices;
27 April 2016, 23rd International Academic Conference, Venice ISBN 978-80-87927-23-6 , IISES
358http://www.iises.net/proceedings/23rd-international-academic-conference-venice/front-page
Providing information to the suppliers and consumers;
Sale of goods to the consumers.
We have not included into the retailing sub-functions some operations performed in
retailing and regarded as the functions by the above listed scientists. As it was mentioned
earlier, our discussion of the retailing functions deals with the traditional form of retailing
only. As for electronic retailing, we regard that its key function is sale of the products to
the direct consumers. But the sub-functions ensuring fulfillment of the key function
electronic retailing, in our opinion, are different and require separate researches.
We have stated our views about retailing functions based on the following considerations:
We agree with the opinion that determining of the store location is the decisive
element of retailing strategy as results of retailing are directly correlated with the
store location. Though, in our opinion, location should not be regarded as the
function of retailing. It should be regarded as one of the key conditions for
fulfillment of the key retailing function.
We do not regard that creation of the own brand is the retailing function, as only
large retailers create their own brands and this is expression of their power, rather
than substance of retailing as a whole;
Formation of the trade atmosphere and presence of human resources at any
retailing entity is not the retailing function but rather, the tools contributing to
performing of the retailing functions;
In our view, retailing function is purchase and sale of goods and not distribution of
the accepted batches. It is a trade operation ensuring performing of the sales
function.
We don’t regard dealing (transactions) as the retailing function as well. Deal is a
component of the sales process and in our opinion, it would not be reasonable to
regard the part of the sales process as a separate function.
We have not included payment of the price of goods received from the suppliers
into the retailing functions. Procurement of goods is the retailing function and this,
as such, implies payment of the goods’ price as well.
We do not share the view that transportation & shipping services to the suppliers
and consumers should be regarded as the retailing function though the retailing
entities, usually, offer such services to the small entrepreneurs. This is the fact and
it should be taken into account that in many cases, the retailers need such
services and they accept them from the manufacturers, wholesalers and
specialized enterprises.
We think that discussion of the retailing functions should deal with the entire sector,
rather than with part of the retailers performing one or another operation.
27 April 2016, 23rd International Academic Conference, Venice ISBN 978-80-87927-23-6 , IISES
359http://www.iises.net/proceedings/23rd-international-academic-conference-venice/front-page
Conclusion
In formulating the key function of retailing and sub-functions required for performing
thereof, we relied upon the view that the function expresses the substance of the
economic category, retailing in this case. All retailers sell the products to the direct
consumers and therefore, we regard that the key function of retailing is delivery of the
products to the direct consumers through purchase and sale. As for the sub-functions of
retailing, we included into this category the operations performed in this area
characteristic of the sphere of trade and related to the consumer goods only. All retailers
perform these operations, whether intentionally or not.
We regard that the main function and sub-functions of retailing provide the system called
the retailing in its entirety and regard that if any of the sub-functions are not performed
properly, those would endanger the performance of the main function and generally,
effective functioning of the retailing, as a system.
References
Berman B., Evans J. R., (2003), Retail management: strategic approach. Translation from English into
Russian, publisher: Williams http://www.kodges.ru/econom/buisnes/26883-roznichnaja-torgovlja-
strategicheskijj-podkhod.html
Berman B., Evans J. R., (2013), Retail management: strategic approach. 12 th ed.
Geostat (2015).Statistical Yearbook of Georgia 2014.
www.geostat.ge/cms/site_images/_files/yearbook/Yearbook_2015.pdf
Global Retail Development Index (2015)
https://www.atkearney.com/documents/10192/5972342/Global+Retail+Expansion-
An+Unstoppable+Force+-+2015+GRDI.pdf/22c67371-43ec-4c27-b130-5c7c63c296f
Levy M,, Weitz B. A., (1999). Essentials of Rttailing. Translation from English into Russian, publisher:
Peter
Marketing (1996).Textbook. Editor: A.N. Romanov, “Banks and Stock Exchanges”, publishing association
Unity
McGoldrick P. J., Retailing (2002). The IEBM Encyclopedia of Marketing. Edited By Michael J. Baker.
Translation from English into Russian, publisher: Peter
Naumov V.N, (1999). Sales Marketing / scientific editor: Professor Bagiev G.L., Scientific-Methodological
Manual - СПб: publisher: СПбГУЭФ. http://www.marketing-digital.ru/library/7.pdf
Tbilisi: the New Regional Shopping Bonanza or What? - ISET (2015) http://iset-pi.ge/index.php/ka/iset-
economist-blog/entry/tbilisi-the-new-regional-shopping-bonanza-or-what-2
27 April 2016, 23rd International Academic Conference, Venice ISBN 978-80-87927-23-6 , IISES
360http://www.iises.net/proceedings/23rd-international-academic-conference-venice/front-page