Retail Chains

Common features of retail chains include centralized marketing and purchasing that mostly result in economies of scale, thus leading to presumably higher profits at lower costs. The world’s largest retail chain, Wal-Mart, by 2004 became the largest corporation in the world in terms of gross sales. Presently, Wal-Mart is using the emergent tech in retail – the Radio frequency identification device (RFID), which is a data collection system that is based on tiny micro-chips that are attached to a box. This device captures data from tags and then compares and distributes the data. Large retail chains throughout the world are sensitive to certain labor related issues like minimum wages, child labor, abuse of worker's rights, sanitary working conditions, etc. Most of the large retailers have well-documented policies toward suppliers in the developing nations. So, an important note for corporates that prior to approaching any chain store, be ensured that your factory abides by The Universal Declaration of Human Rights and the relevant ILO Standards.

In the large retail chains, the safety, health and environmental issues are very important, particularly regarding food products. The use of commercial fertilizers and pesticides in agro products, quality and quantity of chemicals used in processed food, preservatives, etc. are areas of great concern. Apart from food, there are several environmental issues like the use of bio-degradable packaging materials, organic dye in fabrics, tamper-proof containers used in packaging, etc. are certain other areas of concern for the retail chains.

Retail chains attempt to build partnership with their suppliers pitted against the piecemeal sourcing. Those companies who desire to supply to large retail chains needs to be prepared to spend considerable amount of time and resources in order to understand the working of the supply chain and what is required in becoming a part of the supply chain. Almost all retail chains have their own well documented manuals for helping their suppliers. The products of retail chains are sold under their own brand name. So, suppliers need to be prepared for manufacturing under the brand name of that particular retail chain. In return, the supplier expects the retail chain to control and monitor the quality of inputs, design of the product, packaging, manufacturing, labeling and standardization.

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