Internal Trade: Departmental Stores: Merits and Limitations of Departmental Stores, Multiple Shops: Merits and Limitations of Multiple Shops

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Departmental Stores

A Departmental Store is a large-scale retail shop where a large variety of goods are sold in a single building. The entire building is divided into a number of departments or sections. In each department specific type of goods like stationery items, books, electronic goods, garments, jewellery etc. are made available. All these departments are centrally controlled under one management. Once you enter such a store you can do all your shopping by moving from one department to another. To encourage people to do all their shopping in one store, these stores also provide facilities like restaurant, telephone, toilet, ATM etc., for the conveniences of customers. These stores also provide the facility like free home delivery of goods, execution of telephonic order for goods, credit facility, etc. It is generally located at the main commercial centres of the cities and towns, so that customers from different localities can easily come to buy goods as per their convenience. Big Bazar, Vishal Megamart, Ebony, Shoppers’ stop is some of the leading departmental stores in our country.

Merits of Departmental Stores

  • They sell a large variety of goods to consumers, under one roof. So, it saves time and effort of the customers.

  • Departmental stores offer wide variety of goods produced by different manufacturers.

  • They buy large volumes of goods, at a time directly from manufacturers, and get good amount of discount from them. They are able to reap the benefits of economies of large-scale operations.

  • Since these stores are organised on a large-scale basis, they can afford to employ efficient and competent staff to provide the best services.

  • Each department that is a part of the departmental store in a way advertises for the other departments. While visiting one department customers are attracted to see and even buy the goods displayed in other departments.

  • Inspite of these advantages departmental stores have certain limitations also.

Limitations of Departmental Stores

  • Large amount of capital investment is required to start and run a departmental store.

  • They are generally located at places far from residential areas, so they are not very convenient for buying goods of daily use.

  • The operating cost of the departmental stores is very high since it includes cost of location (in the form of rent or purchase price of building), decoration of building, salary of large number of employees and provision of various facilities for the convenience of customers.

  • There is no direct contact between owners and customers in departmental stores. It is the employees of the store who interact with customers. The owners do not get first-hand information about the tastes, preferences, likes and dislikes of the customers.

Departmental stores vs. multiple shops

Departmental Stores vs. Multiple Shops

Multiple Shops

In the previous section, we learnt that in a departmental store, the whole business is carried on in one building and the customers are drawn to it. Now we shall read about multiple shops under which big manufacturers approach customers by setting up shops near the customers.

Marketing having the same name, same decoration and dealing in the same type of products under a single brand name? Yes, you may say, there is Raymond’s, Nirula’s, McDonalds, etc. These are multiple shops. They sell similar range of commodities at the same price in all their shops. These shops are usually owned and run by big manufacturers/producers. They open a number of branches at different localities in a city or in different cities and towns in a country. These shops are also called ‘Chain Stores’. Multiple shops deal with similar types of goods mostly of everyday use e.g., shoes, textiles, watches, automobile products, etc. The price is uniform for similar items in all the shops. These shops are usually conveniently located in the main marketplace or in busy shopping centres.

Merits of Multiple Shops

The multiple shops offer the following advantages to buyer and sellers. Let us learn about them.

  • All multiple shops are often built alike, that helps customers to recognise the shops easily. They have similar window display, interior decoration of the shop and arrangement of the counter, furniture, sign boards etc.

  • They facilitate elimination of middlemen (wholesalers and retailers) in the process of distribution.

  • These shops enjoy the benefits of large-scale purchase or production of goods (centralised purchase/production). Also, due to common advertisements these shops are able to save on the cost of advertising.

  • The customers can get the goods at a cheaper rate because of low operating cost and elimination of middlemen in the process of distribution.

  • Since the customers get genuine and standardised goods directly from the manufacturers, chances of duplication of goods and cheating does not arise in these shops. Also, standard quality and uniform price of products helps in winning the confidence of customers.

Limitations of Multiple Shops

Inspite of all the above merits, multiple shops also suffer from the following limitations.

  • These shops deal in a limited variety of products and restrict the choice offered to customers.

  • Sales are made on cash basis only and the customer cannot avail of credit facilities from these shops.

  • Customers cannot bargain with salesperson while buying the product. The prices of the product are fixed by the head office and individual shops have no control over it.

  • Each of the multiple shops is generally managed by the branch managers and they strictly follow the instructions of the head office. Often, they do not take initiative or special interest in satisfying the customers.

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