Independent retailers have a variety of advantages and disadvantages. These are
among their advantages:
● There is flexibility in choosing retail formats and locations, and in devising
strategy. Because only one location is involved, detailed specifications can be
set for the best site and a thorough search undertaken. Uniform location standards
are not needed, as they are for chains, and independents do not have to
worry about company stores being too close. Independents have great latitude
in selecting target markets. Because they often have modest goals, small
segments may be selected rather than the mass market. Assortments, prices,
hours, and other factors are then set consistent with the segment.
● Investment costs for leases, fixtures, workers, and merchandise can be held
down; and there is no duplication of stock or personnel functions. Responsibilities
are clearly delineated within a store.
● Independents frequently act as specialists in a niche of a particular goods/service
category. They are then more efficient and can lure shoppers interested in
specialized retailers.
● Independents exert strong control over their strategies, and the owner-operator
is typically on the premises. Decision making is centralized and layers of
management personnel are minimized.
● There is a certain image attached to independents, particularly small ones,
that chains cannot readily capture. This is the image of a personable retailer
with a comfortable atmosphere in which to shop.
● Independents can easily sustain consistency in their efforts because only one
store is operated.
● Independents have “independence.” They do not have to fret about stockholders,
board of directors meetings, and labor unrest. They are often free
from unions and seniority rules.
● Owner-operators typically have a strong entrepreneurial drive. They have
made a personal investment and there is a lot of ego involvement. According
to a recent National Small Business Poll, “Two-thirds of Americans hold the
view that if you want to get ahead, own a small business.”3
These are some of the disadvantages of independent retailing:
● In bargaining with suppliers, independents may not have much power
because they often buy in small quantities. Suppliers may even bypass them.
Reordering may be hard if minimum order requirements are high. Some independents,
such as hardware stores, belong to buying groups to increase their
clout.
● Independents generally cannot gain economies of scale in buying and maintaining
inventory. Due to financial constraints, small assortments are bought
several times per year. Transportation, ordering, and handling costs per unit
are high.
● Operations are labor intensive, sometimes with little computerization. Ordering,
taking inventory, marking items, ringing up sales, and bookkeeping may be
done manually. This is less efficient than computerization. In many cases,
owner-operators are unwilling or unable to spend time learning how to set
up and apply computerized procedures.