Discuss the features of a departmental store. How are they different from multiple shops or chain stores.
Discuss the features of a departmental store. How are they different from multiple shops or chain stores.
Department stores are basically large, fixed establishments that deal in a wide variety of products. The following points highlight the features of a department store:
(a) Central locations: Department stores are generally located in central areas so as to attract a large number of customers.
(b) Defined hierarchy: The management in department stores follows the same hierarchy that is generally followed in any joint stock company. That is, the top management consists of a board of directors, with the managing director, the general manager and the department managers under it in that order.
(c) Absence of middlemen: Department stores purchase goods directly from manufacturers and sell them to customers. Thus, they eliminate the role of middlemen.
(d) Centralised purchase with decentralised sales: In a department store, the purchases from manufacturers are handled by a single division that follows a centralised purchase policy. On the other hand, the sales are handled by the respective sections of the department store, which follow a decentralised policy for sales.
Differences between department stores and multiple shops
Basis of difference
Department stores
Multiple shops
Variety of products
They offer a wide variety of products to customers.
They deal in a single line of product and specialise in it.
Customer services
They offer a wide variety of customer services.
They offer limited customer services.
Location
They are located in central parts of cities so as to attract a large number of customers.
They have multiple locations—that is, they are spread across cities or towns.
Pricing policy
They do not follow a fixed pricing policy as the prices of products vary across departments.
They follow a fixed pricing policy across all the shops that are part of a particular chain.
Cost of failure
They have a very high cost of failure because of the huge initial and operating expenses.
They have a limited cost of failure because the initial investment is not very large and the losses of one shop can be covered by the profits of others.
Department stores are basically large, fixed establishments that deal in a wide variety of products. The following points highlight the features of a department store:
(a) Central locations: Department stores are generally located in central areas so as to attract a large number of customers.
(b) Defined hierarchy: The management in department stores follows the same hierarchy that is generally followed in any joint stock company. That is, the top management consists of a board of directors, with the managing director, the general manager and the department managers under it in that order.
(c) Absence of middlemen: Department stores purchase goods directly from manufacturers and sell them to customers. Thus, they eliminate the role of middlemen.
(d) Centralised purchase with decentralised sales: In a department store, the purchases from manufacturers are handled by a single division that follows a centralised purchase policy. On the other hand, the sales are handled by the respective sections of the department store, which follow a decentralised policy for sales.
Differences between department stores and multiple shops
|
Basis of difference |
Department stores |
Multiple shops |
|
Variety of products |
They offer a wide variety of products to customers. |
They deal in a single line of product and specialise in it. |
|
Customer services |
They offer a wide variety of customer services. |
They offer limited customer services. |
|
Location |
They are located in central parts of cities so as to attract a large number of customers. |
They have multiple locations—that is, they are spread across cities or towns. |
|
Pricing policy |
They do not follow a fixed pricing policy as the prices of products vary across departments. |
They follow a fixed pricing policy across all the shops that are part of a particular chain. |
|
Cost of failure |
They have a very high cost of failure because of the huge initial and operating expenses. |
They have a limited cost of failure because the initial investment is not very large and the losses of one shop can be covered by the profits of others. |
