The term retail stands for selling goods from a particular location. In the process of retailing, the job of a retailer is to play the role of facilitator between a manufacturer and a consumer.
Therefore, a retailer can also be known as a reseller or a middleman making a bridge between a consumer and a manufacturer. The retail sector can be divided into three classes primary, secondary, and tertiary.
The retail sector can further be classified in organized and unorganized retailing on the basis of employment condition. In the organized retail sector, business is merged with the appropriate government and authority and follow the rules and regulations.
On the other hand, the unorganized sector is incorporated with government authority. Therefore, it does not follow any rules and regulations.
Organized businesses are related to government, business, and large scale of industries whereas unorganized businesses are related with pretty trade, small scale operations, and private businesses, etc. in this article, you will learn about the differences between organized and unorganized retailing.
What is Organized Retail sector?
The organized sector is registered with the government. Therefore, it is called an organized sector. In this sector, the work of people is assured, and they get regular and fixed salaries. Organizations like schools, enterprises, and hospitals fall under the organized sector.
It is difficult to become a part of the organized sector as it requires proper registration of the business, which is a very difficult process. The organized sector is regularized by the government, and proper taxes are applied to it.
People working in the organized sector get some benefits such as they get the advantage of regular salary as well as job security. In addition to this, they are also provided with additional benefits such as perquisites and allowances.
Employees of this sector have to work for a fixed number of hours a day on a fixed salary and increment on salary is given to them after fixed intervals.
What is an Unorganized Retail sector?
This sector is not registered with the government, and terms of employment are not regular and fixed in this sector. No government rules and regulations are followed in the unorganized sector.
It is easy to establish an unorganized retail business as there is no need for registration and affiliation in entering this sector. Therefore, no taxes are levied on this type of businesses.
This sector consists of small-sized enterprises and workshops where there is no unproductive and regular employment. This sector includes low-skilled businesses. There is no fixed limit on the number of working hours per day of an unorganized business. Even employees in such businesses have to work on weekends and on government holidays also.
Daily wages are given to them, which is quite low than the wages given in the organized sector because wages in this sector is decided by the employer and is not prescribed by the government.
The Key Difference between organized and unorganized retailing
|Organized Retailing||Unorganized Retail|
|The Organized retail sector is regulated by the government and the employment terms and working hours per day in this sector are fixed.||The Unorganized retail sector is not regulated by the government and employment terms and working hours per day are not fixed in this sector.|
|The Organized retail sector is governed by various acts like Bonus act, factories act, minimum wages act, and PF act, etc.||There is no government act to govern the unorganized retail sector.|
|Government rules are strictly followed in the Organized retail sector.||No government rules are followed in the unorganized retail sector.|
|Regular monthly salary is given to employees on the monthly basis.||Daily wages are given to employees.|
|There is job security for employees in the Organized retail sector.||The working hours are not fixed in the unorganized retail sector.|
|Workers in the organized retail sector are paid additionally for the extra number of working hours.||Workers in the unorganized retail sector do not get paid additionally for the extra number of working hours.|
|Employers make a contribution to the provident fund of an employee.||Employers do not make any contribution to the provident fund of an employee.|
|Salary given to employees is equal to the salary prescribed by the government.||Less salary is paid to employees than the salary prescribed by the government.|
|The increment is given to employees n regular basis (mostly annually).||Very rarely increment is given to employees.|
|Employees working in the organized retail sector get add on benefits such as a pension, medical facilities, leave compensation, travel compensation, etc.||No benefits or perquisites are provided to employees working in the unorganized retail sector.|
In the above article, you have learned about both organized and unorganized retail sectors. The organized sector involves enterprises, factories, schools, industries, hospitals, etc. in addition to this, all shops and businesses with a formal license are also part of the organized sector.
On the contrary, the unorganized sector involves domestic workers, construction workers, people working in small workshops; people working on the streets are not registered with the government.
There is low unemployment in the organized sector, and people lead a better life working in organized sector than working in the unorganized sector.