Chain stores are defined as a type of retail organisation that is composed of more than one retail store, and it is owned and operated by a single management company. It is an outlet that is characterised by several locations that share a brand with centralised management along with standard business practices. Chain Stores have completely revolutionised the retail market. They have managed to dominate the sector for a long time and continue to do so with their method of making shopping more convenient for the customers.
Characteristics of Chain Stores
Chain Stores have become a go-to place for customers around the world for fulfilling their multiple shopping needs. As such, it becomes essential for us to understand the main aspects of chain stores and why they are so popular among shoppers. The characteristics of the Chain Stores are as follows:
- Large Scale Retailing – Chain stores are basically a system that involves large scale retailing. These stores mainly sell articles of all kinds, from the ones which are used every day to the luxury items. It tries to cater to customers who are looking for a one-stop shopping experience to fulfil all their needs. These stores are branded, their turnover is pretty fast, and they maintain a decent standard when it comes to the quality of products as well as the shopping experience.
- Approaching a Customer – The success of any chain store revolves around the manner in which they approach the customers and try to address their shopping needs. This approach is very different from the departmental stores who focus more on drawing the customers. Chain stores try to approach more customers at a time by opening a large number of shops within a city or town but at different places. This way they can go nearer to where the customers live and make it more convenient for them to approach the stores. They operate primarily in residential and office spaces, thus completely eliminating the middlemen while also providing great discounts to the customers.
- Same Line of Products – Chain stores generally focus on handling a single line of products. They mostly specialise in one or two articles for a product line. The articles are sold by all the similar shops. They concentrate on a limited number of merchandise products that are related to the convenience goods category because they are always in demand among the consumers. These goods ensure a high turnover and are a constant source of revenue for the store.
- Specialisation – The chain stores deal with a limited set of merchandise products. It helps them to focus on a specialised line of goods that they can deal with, that are also popular with the customers, thus ensuring high turnover.
- Uniformity – These chain stores focus on standardisation and uniformity. They have a uniform logo, colour, product line, layout, colour, counter arrangements, etc., to help customers recognise and associate with these elements easily.
- Single Ownership – Under the chain store system, there are a number of shops, but they are all managed by a single manufacturer. Chain stores are owned and operated by a manufacturer or a group of manufacturers. The advantage of single ownership is that there is a proper chain of command for everyone who works in the organisation and ensures a smoother workflow in the company.
- Centralised Buying and Decentralised Selling – The central organisation in the chain store buys the products and supplies them to all the branches. The shops under the chain store system are established in various cities and in various areas of the big cities to sell the merchandise. The selling function is decentralised.
- Uniform Pricing – One of the central characteristics of chain stores is that their pricing for a particular product or service remains uniform across multiple stores. The pricing is decided by the central office, which they stamp on the article, and then it is sent to the different branches and stores.
- Dealing with Cash – Most, if not all, chain stores are operating on the cash and carry model. They do not allow credit sales for anyone. The goods are sold in the retail shops and delivered to the customer. There are no facilities for home delivery that are provided by the store.
- Central Management – It is important to note that the chain stores are generally controlled by a centralised management system. The daily managerial activities of these stores are under the supervision of local managers. But the important decisions and the policymaking process is under the purview of the headquarters. The headquarters are responsible for making strategic decisions. They also deal with the operating policies, which are standardised across all the units of chain stores.
- Minimum Size – Technically, the chain starts with two stores, but it is up to the management on how many chain stores they want to operate at a point in time. Many small merchants who open multiple stores in the shopping centres or newly populated areas do not see themselves as chain stores. But it is more meaningful to look at a larger number of stores as the minimum criteria for categorising any retailer as a chain.
Chain Stores have come to define as well as symbolise modern retail. These stores have their unique characteristics, which make them such a hit with the customers. It is important to understand that these chain stores have become synonymous with retail shopping because of the wide range of products they offer and the convenience of the overall shopping experience.