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International Recommendations on Distributive Trade Statistics Provisional Draft - June 2007 13 CHAPTER I. SCOPE OF DISTRIBUTIVE TRADE STATISTICS A. Distributive trade as an economic activity 1.1. Economic activity. In general the term “economic activity” is understood as a process, that is to say, as the combination of actions carried out by a certain entity and resulting in a specific type of products (goods and services). An activity is characterized by (i) an input of resources; (ii) a production process; and (iii) an output of products4 . By convention, one single activity is understood as a process resulting in a homogeneous type of products. It is recognized that one activity may consist of one simple process or may cover a whole range of sub-processes, each of which might be classified in different activity categories (see para xxx for details). For statistical purposes an entity engaged in a given activity may be treated as either simple or complex. A simple entity is not subdivided into parts to which activities are attributed while a complex entity is, by definition, composed of several sub-entities each of which is seen as performing a specific activity. The classification of a complex entity in activity classification is governed by specially developed classification rules (see para xxx for details). 1.2. Resale. Taking into account the above conventions the characteristics which make distributive trade different from other types of economic activity are mostly in specificity of its production process which is hereinafter referred to as “resale”. The resale includes a number of actions which might be undertaken to make goods available for buying including negotiating transactions between buyers and sellers or buying goods from the manufacturer on own account, transporting, storing, sorting, assembling, grading, packing, displaying a selection of goods in convenient locations (see para xxx for details). These actions can be organized or combined in different ways. Each combination of such actions resulting in the reselling of goods represents an activity falling within the scope of distributive trade. Some such combinations, typical to distributive trade, are called “type of operation” (see para xxx for further details). 1.3. Sale without transformation. By convention, resale of goods represents sale without transformation. In general, goods are transformed if they undergo a substantial change in form, appearance or nature such that the goods existing after the change are new and different from those existing before the change. The following actions are not considered as substantial transformations of goods by ISIC, Rev.4: sorting, grading and assembling of goods, mixing (blending) of goods (for example wine or sand), bottling (with or without preceding bottle cleaning), packing, breaking bulk and repacking for distribution in smaller lots, storage (whether or not frozen or chilled), cleaning and drying of agricultural products, cutting out of wood fiberboards or metal sheets as secondary activities. 4 See International Standard Industrial Classification of All Economic Activities, Revision 4 (ISIC, Rev.4), United Nations publication, Series M/No .., Rev.4, para [...].
International Recommendations on Distributive Trade Statistics Provisional Draft - June 2007 14 1.4. The distributive trade as an activity consists of (i) provision of a service to customers by storing and displaying a selection of goods in convenient locations and making them easily available for buying; and (ii) provision of other services incidental to the sale of goods or subordinated to the selling such as the delivery, after-sale repair and installation services. B. Scope and structure of distributive trade in ISIC, Rev.4 1.5. Scope. A more precise definition of the scope of distributive trade as well as description of its structure can be given in terms of an activity classification. Following the decision of the United Nations Statistical Commission to adopt ISIC, Rev.4 as an international standard for activity classification, it is recommended that the scope of distributive trade is defined as the scope of section G - Wholesale and retail trade; repair of motor vehicles and motorcycles of ISIC, Rev.4. Countries which do not use ISIC, Rev.4 are encouraged to develop their national activity classifications in such a manner that the overall scope of distributive trade is the same in all national compilations for the purposes of international comparability. Failing this, countries should at the minimum develop clear and precise concordances between their own national classification and distributive trade. 1.6. Structure of distributive trade. It is further recommended that distributive trade is structured following the ISIC, Rev.4 classification scheme which splits it into three divisions. According to the scheme, Division 45 includes all activities related to the sale and repair of motor vehicles and motorcycles, while divisions 46 and 47 include all other sale activities. The distinction between division 46 (wholesale) and division 47 (retail sale) is based on the predominant type of customer. Within the divisions 46 and 47 the classification scheme considers two additional levels of distinction based on the type of operation of units involved in such a trade and kind of products sold. 1.7. Wholesale trade is defined as the resale (sale without transformation) of new and used goods to retailers (see para. 1.8), business-to-business trade, such as to industrial, commercial, institutional or professional users, or resale to other wholesalers, or involves acting as an agent or broker in buying merchandise for, or selling merchandise to, such persons or companies. The principal types of wholesale trade businesses are merchant wholesalers, i.e. wholesalers who take title to the goods they sell, such as wholesale merchants or jobbers, industrial distributors, exporters, importers, and cooperative buying associations, sales branches and sales offices (but not retail stores) that are maintained by manufacturing or mining units apart from their plants or mines for the purpose of marketing their products and that do not merely take orders to be filled by direct shipments from the plants or mines. Other types of wholesale trade businesses are merchandise and commodity brokers, commission merchants and agents and assemblers, buyers and cooperative associations engaged in the marketing of farm products. While by definition, wholesalers do not transform goods, they frequently physically assemble, sort and grade goods in large lots, break bulk, repack and redistribute in smaller lots, for example pharmaceuticals; store, refrigerate, deliver and install goods, engage in sales promotion for their customers and label design.
International Recommendations on Distributive Trade Statistics Provisional Draft - June 2007 15 1.8. Retail trade is defined as the resale (sale without transformation) of new and used goods mainly to the general public for personal or household consumption or utilization, by shops, department stores, stalls, e-commerce retailers, mail-order houses, hawkers and peddlers, consumer cooperatives etc. The goods sold in this division are limited to goods usually referred to as consumer goods or retail goods. Therefore goods not usually entering the retail trade, such as cereal grains, ores, industrial machinery etc., are excluded. Retail trade also includes units engaged primarily in selling to the general public, from displayed merchandise, products such as personal computers and software, stationery, paint or timber, although these sales may not be for personal or household use. Some processing of goods may be involved, but only incidental to selling, e.g. sorting or repackaging of goods, installation of a domestic appliance etc. Retail trade also includes the retail sale by commission agents and activities of retail auctioning houses. 1.9. Structure of divisions 45. This division includes all activities (except manufacture and renting) related to motor vehicles and motorcycles, including lorries and trucks, such as the wholesale and retail sale of new and second-hand vehicles, the repair and maintenance of vehicles and the wholesale and retail sale of parts and accessories for motor vehicles and motorcycles. Also included are activities of commission agents involved in wholesale or retail sale of vehicles. This division also includes activities such as washing, polishing of vehicles etc. Activities are grouped into 4 groups each of which has one basic class. 1.10. Structure of divisions 46. The first distinction that is considered in this division is based on the type of operation, i.e. how the wholesale trade activity is organized. Two groups of activities are distinguished (i) commission trade consisting of group 461 “Wholesale on a fee or contract basis” only without any further detailing and (ii) wholesale trade on own account representing aggregation of groups 462-469 depending on categories of goods sold. The second distinction concerns the split of wholesale trade on own account into specialized and non-specialized trade. Twelve classes are used in ISIC, Rev. 4 to present the groups of products sold (see below). The wholesaling which cannot be defined as specialized (i.e. selling one of these particular groups of products) is classified into group 469 “Non-specialized wholesale trade”. 1.11. Structure of divisions 47. The main structuring criterion used in division 47 is whether or not retail trade operations are organized as a store or not in store trade. The retail trade in stores includes groups 471-477. It is further subdivided by retail trade in specialized stores and non-specialized stores. The third criterion applied to retail trade in stores is category of goods sold. The not in stores retail trade consists of groups 478 and 479 which are further broken down into five classes depending whether they represent retail trade via stalls and markets or other retail trade not in stores such as mail order houses and internet. 1.12. The ISIC, Rev. 4 divisions, groups and classes relevant to distributive trade statistics. The entire structure of section G of ISIC, Rev.4 is presented below.
International Recommendations on Distributive Trade Statistics Provisional Draft - June 2007 16 Section: G - Wholesale and retail trade; repair of motor vehicles and motorcycles Division Group Class 45 - Wholesale and retail trade and repair of motor vehicles and motorcycles 451 – Sale of motor vehicles 4510 - Sale of motor vehicles 452 - Maintenance and repair of motor vehicles 4520 - Maintenance and repair of motor vehicles 453 – Sale of motor vehicle parts and accessories 4530 - Sale of motor vehicle parts and accessories 454 – Sale, maintenance and repair of motorcycles and related parts and accessories 4540 - Sale, maintenance and repair of motorcycles and related parts and accessories 46 - Wholesale trade, except of motor vehicles and motorcycles 461 - Wholesale on a fee or contract basis 4610 - Wholesale on a fee or contract basis 462 - Wholesale of agricultural raw materials and live animals 4620 - Wholesale of agricultural raw materials and live animals 463 - Wholesale of food, beverages and tobacco 4630 - Wholesale of food, beverages and tobacco 464 - Wholesale of household goods 4641 - Wholesale of textiles, clothing and footwear 4649 - Wholesale of other household goods 465 - Wholesale of machinery, equipment and supplies 4651 - Wholesale of computers, computer peripheral equipment and software 4652 - Wholesale of electronic and telecommunications equipment and parts 4653 - Wholesale of agricultural machinery, equipment and supplies 4659 - Wholesale of other machinery and equipment 466 - Other specialized wholesale 4661 - Wholesale of solid, liquid and gaseous fuels and related products 4662 - Wholesale of metals and metal ores 4663 - Wholesale of construction materials, hardware, plumbing and heating equipment and supplies 4669 - Wholesale of waste and scrap and other products n.e.c. 469 – Non-specialized wholesale trade 4690 - Non-specialized wholesale trade 47 - Retail trade, except of motor vehicles and motorcycles 471 - Retail sale in non-specialized stores 4711 - Retail sale in non-specialized stores with food, beverages or tobacco predominating 4719 - Other retail sale in non-specialized stores 472 - Retail sale of food, beverages and tobacco in specialized stores 4721 - Retail sale of food in specialized stores 4722 - Retail sale of beverages in specialized stores 4723 - Retail sale of tobacco products in specialized stores 473 - Retail sale of automotive fuel 4730 - Retail sale of automotive fuel 474 - Retail sale of ICT equipment in specialized stores 4741 - Retail sale of computers, peripheral units, software and telecommunications equipment