(a) What is the importance of warehousing to Commerce?
(b) What factors should be considered in sitting in a small retail shop?
Explanation
(a) Importance of warehouse to commerce are:
(i) Source of revenue: Warehouse can be hired out to users to generate revenue.
(ii) Storage facilities: Goods produced are stored in the warehouse until they are sold.
(iii) Price stabilization: When goods are produced ahead of demand, they will be stored to prevent excess supply so that price will be stabilized.
(iv) Employment opportunities: In setting up warehouses, managers, clerks, store assistants will be employed.
(V) Long term planning: Since raw materials can be acquired in advance and stored in the warehouse, manufacturers can embark on long term production planning.
(b) Factors that should be considered in siting a small scale retail shop include:
(i) Capital: The amount of capital available is a major factor to consider in deciding the type of retail business to set -up.
(ii) Source of supplies: The cost of transportation to and from the source of supplies is another factor to be considered.
(iii) Type of goods: The nature of the goods should be taken into consideration. Some goods are perishable and some require technical knowledge.
(iv) Credit facilities: The retailer should consider whether he wants to grant credit facilities to customers or sell on a cash basis.
(v) Pricing: The retailer should consider the pricing policy to adopt, i.e. whether to choose one which ensures a quick turnover but small profit or one which ensures higher profits but a very low turnover.
(vi) Structure of population and location: The shop and its site should be accessible to customers.
(vii) Method of Advertising: The method of creating awareness for the goods will be considered.
(viii) Quality of goods to stock: The quality of goods to stock will depend on the quality of the population. A retailer opening up a shop in a high-class area will not make a profit if he stocks cheap goods and vice versa.