VOLUNTARY CHAINS

:

Example: Wavy Line, Spar.

Features:

·         These groups are organized by wholesalers and they allow small retailers to join and enjoy the benefits of large-scale retailing.

·         The retailers buy goods from the wholesalers within the group at agreed prices.

·         The retailer has to keep his premises and services up to a standard specified by the organization.

·         All the retailers have the same name given by the group.

·         Advertising is done nationally by the whole group.

·         These chains are found mostly in grocery trade.

Advantages:

·         The retailers place orders with wholesalers within the group and can get discounts.

·         Advertising expenses are reduced as the whole group is nationally advertised.

·         The retailer can get loans from the group for renovation and decoration.

·         The group lays down standards for retailers to follow, thus making them more efficient.

Disadvantages:

·         The retailer does not have much freedom as the group makes most of the policy decisions.

·         The representatives of the group decide upon even the advertising, window display, selection of goods, etc.

RETAIL CO-OPERATIVE SOCIETIES:

Definition: A cooperative is a non-profit making voluntary organization where members associate on the basis of equal rights to obtain economic and social benefits for themselves.

Features:

·         Membership is opened to anyone prepared to buy a share in the society.

·         Control is vested among the members. The members elect a management committee by the principle of “One man-One vote”.

·         The societies must be registered with the Registrar of Societies under the Cooperative Ordinance.

·         The members enjoy limited liability.

·         They have separate legal entity of their own, separate from the owners.

·         Retail co-operatives buy a variety of goods from the wholesale co-operatives.

·         Activities include retailing and giving a range of benefits to members like educational aid, youth camps and assistance for funeral expenses.

·         The profits are distributed among members as dividend stamps, exchangeable for cash.

Advantages to the Co-operative:

·         It can raise a large capital at low interest rates.

·         It is exempted from paying taxes on profit.

·         Members buy goods from the cooperative as they enjoy patronage dividend based on their purchases. Thus the cooperative is ensured of a regular clientele.

Advantages to the Members:

·         Members receive interest on capital, which they have invested in the cooperative.

·         Each member receives rebates, patronage dividends or trading stamps in proportion to their purchases.

·         Members receive other benefits like educational aid, group insurance, etc.

Disadvantages:

·         With the separation of management from ownership, members lose interest, as they do not participate in the running of the business.

·         There is inefficiency in the business as the elected management committee consists of ordinary people.

·         There are a limited variety of goods offered by the cooperatives.

·         Sometimes in order to pay patronage dividend, the prices of goods are increased.

·         Many of the retail cooperatives are too small to take advantages of large-scale retailing.