What is meant by multiple shops? Explain the advantages of multiple shops.
What is meant by multiple shops? Explain the advantages of multiple shops.
Chain stores or multiple shops refer to the network of retail shops established in localities spread in different parts of the country. These are owned and operated by the same organization and have the same merchandising strategies with the same products and display.
For example, Bata shoe stores, Raymonds. These stores believe in serving the customers at their residential point or work place rather than attracting to a central place. For this reason, these stores are located in populous localities. The purchases for all stores are centralised at the head office. From there, the goods are transferred to various shops according to their requirements.
The advantages of multiple shops are as follows :
(i) Low cost : These shops have low operational cost because of centralised purchasing and promotion of sales.
(ii) Diffusion of risk : The total risk of an organization is reduced as the losses incurred by one shop are covered by the profits made in the other shop.
(iii) Flexibility: A loss-making shop can easily be shifted to some other place or an be closed without affecting the profitability of the organization.
(iv) Economies of scale : Centralised manufacturing, purchase enables the organization to enjoy the economies of scale.
(v) Transfer of goods : The goods are transferred from the shop where they are not demanded. Thus, the chances of dead stock in these stores are reduced.
Chain stores or multiple shops refer to the network of retail shops established in localities spread in different parts of the country. These are owned and operated by the same organization and have the same merchandising strategies with the same products and display.
For example, Bata shoe stores, Raymonds. These stores believe in serving the customers at their residential point or work place rather than attracting to a central place. For this reason, these stores are located in populous localities. The purchases for all stores are centralised at the head office. From there, the goods are transferred to various shops according to their requirements.
The advantages of multiple shops are as follows :
(i) Low cost : These shops have low operational cost because of centralised purchasing and promotion of sales.
(ii) Diffusion of risk : The total risk of an organization is reduced as the losses incurred by one shop are covered by the profits made in the other shop.
(iii) Flexibility: A loss-making shop can easily be shifted to some other place or an be closed without affecting the profitability of the organization.
(iv) Economies of scale : Centralised manufacturing, purchase enables the organization to enjoy the economies of scale.
(v) Transfer of goods : The goods are transferred from the shop where they are not demanded. Thus, the chances of dead stock in these stores are reduced.
