Modern Trade Vs. General Trade- How do you differentiate?

Modern Trade Vs. General Trade Comparison

Trade is the very fabric of society, intricately woven into the streets, markets, and businesses of every region. Thus, in the space where manufacturers, distributors, retailers, and consumers reside, it is important for brands to have a clear understanding of the difference between Modern trade Vs. General Trade

There are two distinct types of trade. The first is general trade, which is traditional, and the other is modern trade, which seems more relevant for an urban lifestyle. The type of trade a brand chooses to operate must be based on the product, target consumers, regions, and distribution channel.

For example, if the target consumers are mainly situated in or around cities and are used to urban features, it would be beneficial to operate via modern trade options which involve retail chains such as supermarkets, hypermarkets, and mini-markets.

On the other hand, if the target consumers are located in some rural regions, or if the product is targeting consumers in tier 3 to tier 4 towns and villages, they should opt for general trade. In general trade, it is more about interpersonal relationships than branding and offers.

Sometimes brands choose a hybrid trade option because of the blend of consumers. In this essay, we will explore the differences between modern trade vs general trade.

Definition and Overview of Modern Trade and General Trade

What is Modern trade and General trade are different types of retail trade characterized by their structure, meaning, and types of products. Modern trade belongs to organized retail and involves the distribution of consumer goods through hypermarkets, specialized stores, supermarkets, etc. 

The major characteristic of modern trade is the centralized management of these outlets and the compliance with its standards in the process of purchasing, disposal, merchandising, pricing, and promotion. 

The advantage of modern trade from others is the scale of business due to the bulk purchase of goods directly from the manufacturer. General trade is related to unorganized retail. It embraces all types of retail business activity on a small or medium scale.

Modern trade is known for its centralized management system, large scale of activity, and a great variety of types of goods sold. General trade also encompasses street vendors or mom-and-pop shops. 

The difference lies in the fact that modern trade selects a principle of centralization of managing their outlets and does not tolerate violation of centralized standards of goods’ purchase, disposal, merchandising, etc. 

Being in urban areas in most cases, modern trade institutions sell cheaper and better quality products and can be found in several cities only. 

General trade can be practiced in rural territories as well. The greatest majority of retail sellers belongs to the category of general trade. Their products can have different quality too, which is explained by the use of local suppliers.

Modern Trade Caters to Mostly Middle to High Income Consumers whereas General Trade to Low to Middle

One key difference between these two types of retail distribution is their target customers. Modern trade caters to middle-to-high-income consumers who prioritize convenience over price when making purchase decisions.

 As modern trade outlets offer a wide variety of branded products under one roof at competitive prices along with services like parking facilities and home delivery options – it has become an attractive option for busy urban dwellers.

In contrast, general trade primarily serves low-to-middle-income consumers who prefer lower-priced products while being less concerned about brand names or shopping experience. This segment usually resides in smaller towns or villages where access to modern retail outlets is limited.

Modern Trade is Mostly Managed by Distributors Whereas General Trade is Managed By Multiple Intermediaries

Another significant distinction is related to the supply chain management process adopted by these different channels. In modern trade, the distribution process is usually managed by manufacturers or distributors who directly supply goods to retailers. 

In general trade, however, there are multiple intermediaries involved in the supply chain, such as wholesalers and local distributors, who source products from different manufacturers and sell them to small retailers.

Modern Trade Provides Convenience to Urban Consumers

Genral trade vs. modern trade have their unique characteristics that make them suitable for different customer segments. While modern trade offers convenience and efficiency to urban consumers, general trade fulfills the needs of low-income and rural customers with its affordability and accessibility. 

Understanding these distinctions is essential for field sales management teams to develop effective strategies for each channel and maximize their success in both forms of retail distribution.

Comparison Between Modern Trade Vs. General Trade

ParameterModern TradeGeneral Trade
Market Size and ReachLarge retail formats such as supermarkets, hypermarkets, and department stores that cater to a wider consumer base across urban areas.Small retailers such as local convenience stores, mom-and-pop shops, and traditional street markets serving a limited population in rural or semi-urban areas.
Channel StructureDirect relationship between manufacturers/suppliers and retailers through centralized buying offices or distribution centers, allowing for efficient supply chain management and easier access to sales performance data.Involves multiple intermediaries such as wholesalers or distributors before reaching the end consumer, resulting in longer lead times for product delivery and less control over pricing by manufacturers.
Customer DemographicsCaters to more affluent consumers with higher purchasing power.Serves a broader range of customers from all income levels, including those with lower disposable incomes.
Product AssortmentOffers a wide range of products from various brands under one roof, providing a convenient one-stop shopping experience.Limited shelf space resulting in fewer product options available to customers.
Growth PotentialSignificant growth potential due to changing consumer preferences towards organized retail formats like hypermarkets or e-commerce platforms.Still the dominant form of trade in developing countries with large untapped market potential.
Comparison between Modern Trade Vs. General Trade

Breeze Has Solutions For Both Types of Trade

Management of field sales at modern trade and general trade are two different sales channels and need different approaches from each other. In this instance, Breeze’s AI-Powered Sales Force Suite provides innovative solutions in order to make maximum benefits in field sales for both modern trade and general trade.

Here, these best practices of effectively managing field sales at both of these sales channels and how the sales would be managed by the help of Breeze will be reviewed.

1. Understanding the Target Market

Best Practice: Effective field sales management starts with the understanding of the target market.

a. Modern Trade: Consumer behavior, buying habits, preferences of the end customers who are shopping from the supermarket, or hypermarket environment

b. General Trade: Needs and preferences of the small retailer or individual stores in the specific location

Breeze’s AI-powered analytics unveils consumer behaviors and preferences. According to these insights, the brands could give more valuable information to the end-customers from the target segment and make their promotions according to the preferences of these shoppers specifically. 

2. Training and Development

Best Practice: Training’s and developments should be continuously made in order to make their  sales effectively.

a. Modern Trade: Sales agents must focus on building strong negotiation skills and product knowledge.

b. General Trade: Focus must be on building relationships with excellent communication skills. 

The Inbuilt LMS in Breeze application is designed for the sales agents that offers customized training programs thats effective to sell more. 

3. Leveraging AI and Automation

Automation and AI can be leveraged in field sales management to enhance efficiency and effectiveness.

Modern trade: Modern trade requires CRM software to track customer data and their purchasing behaviors.

General trade: In case of general trade, GPS tracking systems are more imporant and used to monitor employee performance and field sales activities.

Breeze’s AI Sales Force Suite provides an advanced platform that integrates traditional CRM functionalities with real-time GPS tracking. As such, field sales activities, sales representative performance, customer data, and route optimization are meticulously analyzed.

4. Monitoring Performance Metrics

Measure KPIs to assess and improve field sales performance.

Modern trade: Analyze POS systems and customer complaints and feedback.

General trade: Compare inventory levels and sales trends to make feasible decisions.

Breeze’s AI-driven analytics platform provides tracking and analytics of KPIs and seamless, regular reporting. Based on the data, sales performance, customer complaints and feedback, and inventory levels can be analyzed and brands can make prudent and data-driven decisions to find ways to enhance sales efficiency and effectiveness.

Wrapping Up

It’s not about which trade system is better but about the strategy that aligns with the business goal. BreezeFSM offers a robust set of features in its application that streamline the sales force. But the question is, can it cater to both modern and general trade scenarios? Absolutely! So, if you are planning to use a field sales management tool, try out Breeze. Breeze offers diverse features powered by AI and acts as a support system for the strategy you take. If you want to know more about us, schedule a demo.

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