A convenience store is an example of a small-scale retailer.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2023). The mark or mark type is shown in brackets.

1. [2] 1 mark for each example • Pedlar / itinerant • Hawker / street vendor • Kiosk • Mobile van / shop / roadside trader / food stall • Street market trader / stall • Party selling • Vending machine Tuck shop
2. [3] Up to 3 marks for justified reasoning of yes and / or no responses Yes - As it is given to known customers, less likely to lose money (1) it can attract customers (1) increased sales / turnover (1) impulse buys (1) increasing income / revenue (1) selling some goods that consumers cannot afford / who lack cash (1) stock will be sold more quickly (1) establish customer relationships (1) and increase customer loyalty / more likely to shop there (1) can gain competitive advantage over other stores not offering informal credit (1) may tell their friends / family (1) it should be safe to offer it, as it will be limited to known customers (1) No - Risk of bad debts (1) if customers do not pay (1) will be at a loss / lose money (1) must trust the consumers before granting informal credit / are they able to pay back / must be creditworthy (1) does not help cash flow (1) to finance / buy more stock (1) has to wait for the money (1) no interest / only receives the original amount back (1) need to make records of purchases (1) as there will be no evidence that goods were taken (1) if there are many customers, this will be time-consuming (1)
3. [4] Any 2 reasons and explanation of each to a maximum of 4 marks • Size of business is usually small (1) e.g. clothing repair shop (1) • Easy to set up (1) few forms to complete (1) • Easy to manage (1) no need to have more owners (1) faster decision-making (1) • Can start business with limited capital (1) use of own savings / investment (1) • Able to work from home / near to home (1) so costs are low (1) no need to employ workers (1) less wage costs (1) • Personal attention given to customers (1) can build customer loyalty (1) • Some people like complete control (1) prefer to be independent (1) • Prefer to keep all profits (1) for their own lives / do not want to share profits with others / partners (1) • Unwilling to meet costs of growing (1) cannot afford it (1) • Committed to small business model (1) sees being a sole trader as an asset (1) likes flexible working hours (1) • Lacks skills / ambition (1) may not know how to expand (1) • Lack of demand (1) no need to have more owners (1) • Lack of profit (1) to expand by opening more stores (1) • Lack of knowledge (1) to know how to make business bigger (1)
4. [6] Up to 2 marks for describing ways that small-scale retailers can survive competition from large-scale retailers. Up to a further 2 marks for analysing one or two ways that small-scale retailers can survive competition from large-scale retailers. Up to a final 2 marks for evaluating whether small-scale retailers have a future. • Personal service / adding stock not sold in large-scale retailers – is a way of adding value to products sold. For example, a small-small retailer will get to know customers and carry stock lines to cater for individual customer needs and resolve issues much more quickly than a large-scale retailer can rarely match. • Buying in bulk / using from cash-and-carry warehouses – where there is no credit or delivery given to small-scale retailers but lower prices. These lower prices can help them compete on price. • Buying from voluntary chains – where groups of small-scale retailers combine to bulk-buy from wholesalers on better buying terms resulting in reduced prices and use of own branded goods. Support can also be given by the voluntary chain with advertising and finance. • Use technology – computers provide more efficient invoicing, job pricing, and inventory tracking. If the business is still not on the web, it is important to do so as a website can provide a shop window for products sold as well as a way to communicate with customers. • Location / moving nearer to customers – locating a small-scale retailer near large-scale retailers, in say a shopping centre, may provide the benefits of customer footfall and advertising for the shopping centre. • Flexible / longer opening hours – this means opening when large-scale retailers may be shut or extending opening hours to meet demand. • Use loss leaders – which is a product on which the retailer will lose money but through which you also generate sales of other products in their store. The idea is to price selected items at cost (or even below) in order to entice customers to go to your store, and then hope that these customers will buy more once they are inside the store. • Extra services – e.g. tailors offering a fitting service. • Converting to a specialist store – offering specialist knowledge not found in large-scale retailers • Offering informal credit which may mean more sales and increases customer loyalty • Owning their own premises – if the small-scale retailer lives on the premises with their family, they can reduce costs. • Using market research – to find customer wants and needs Evaluation: It is likely that small-scale retailers have a future. They will continue to serve small local markets that their larger rivals neglect. Also, they will continue to offer services that large-scale retailers cannot match. Overall, by combining the traditional aspects of the small-scale retail business with new technology, small-scale retailers do not have to disappear.