(a) What is the importance of warehousing to Commerce? (b) What factors should be considered in siting a small retail shop?

Answer Details

(a) Importance of warehousing to commerce

1. Storage of goods: A warehouse provides a safe place to keep goods from the time they are produced until they are needed or sold, thereby preventing loss and damage.
2. Bridging the gap between production and consumption: It holds goods over time so that they are available to consumers steadily even though production may be seasonal.
3. Ensuring steady supply and price stability: By storing surplus goods and releasing them gradually, warehousing prevents glut and scarcity and helps to keep prices stable.
4. Storage of seasonal goods: Goods produced only at certain seasons (such as farm crops) can be stored and made available throughout the year.
5. Preparation of goods for sale: Goods can be sorted, graded, blended, packed and branded in the warehouse before distribution.
6. Facilitating large-scale buying: It enables traders to buy in bulk and store, thereby enjoying quantity discounts and lower transport costs.

(A further point: bonded warehouses hold imported goods until duty is paid, aiding the flow of foreign trade.)

(b) Factors to consider in siting a small retail shop

1. Nearness to customers: The shop should be located where there are many potential buyers so as to attract enough patronage.
2. Nearness to source of supply: Being close to suppliers reduces transport cost and delay in restocking.
3. Availability of transport and good roads: The site should be accessible to customers and delivery vehicles.
4. Cost of rent/land: The rent must be affordable and reasonable in relation to the expected turnover.
5. Nature of competition: The trader should consider the number and strength of rival shops in the area.
6. Availability of essential facilities: The site should have amenities such as electricity, water, security and parking space.
7. Nature of the goods sold: Perishable or convenience goods need a site close to consumers, while durable/shopping goods can be sited in a central market.