Fixed Shop Retailers
Retail stores are known for selling goods and services to customers by using multiple channels of distribution with a sole aim to earn the profit. Retail stores can be of two types: itinerant and fixed. Fixed retail stores are top-rated in urban areas and large cities. Consumers in urban areas always desire to shop from fixed retail shops such as supermarkets and malls.
Let us discuss two fixed shop retailers that are large retailers and chain stores or multiple shops:
Large Retailers
Large retailers are also known as departmental stores. Department stores are considered as one of the important parts of the retailing industry. The stores are huge and provide a variety of products to the customers under one roof. These products are classified into departments and all these departments are located under the same roof. In urban areas, more departmental stores are being established because of their popularity among the masses.
A departmental store is an independent unit selling different products under one roof. The products may include womenswear, menswear, electronics, toys, etc. Some department store examples are Macy's, Big Bazar, Reliance Smart, etc.
Features
Some of the crucial features of departmental stores are:-
They are usually located in densely populated areas which turn out to be a great advantage for them.
Departmental stores goal is to improve the shopping experience of its valued customers by introducing different facilities.
Departmental stores are companies with shareholders because of the size of the operation. Needs of funding is significant in the case of these stores.
Departmental stores do not believe in middleman and operate retailing as well as warehousing functions.
Departmental stores follow the method of centralized purchasing.
Advantages
Advantages of departmental stores are:
The convenience of customers is one of the most important advantages of departmental stores. Customers can buy different type of products and fulfil all of their shopping needs under one roof. By visiting departmental stores, customers can save their time that they would have wasted in visiting different stores. Customers can save time and labour.
A departmental store doesn't only provide different products but also ensures customers variety in each product. For example, if a customer is buying a TV, then he/she gets to choose a product from different brands that are there in the store.
Departmental stores operate on a vast scale; thus, it gets the benefits of large scale production. When production is huge, the cost of production decreases that helps the company to sell the products at a low price and make profits.
Departmental stores are financially stable, which help them to run promotions for their company; this attracts the customers.
Disadvantages
Disadvantages of departmental stores are:
The departmental stores also provide many special services to its customers which results in an increase in their operating cost. A higher operating cost restricts the company to offer discounts to its lower-income customers.
The departmental stores are huge, which make it impossible to attend and assist each and every customer shopping in the store.
Establishing a departmental store requires a considerable amount of funding and a large place thus making it quite difficult. There is a lot of risk in this field as a huge amount of money is involved without any certainty.
Chain Stores or Multiple Shops
Chain stores are also known as multiple shops which function under one brand and have common ownership. This is branches or outlets of a single brand that are spread across the country. These type of shops were first established in America and now have become popular all over the world. Some examples of multiple shops are Croma and Dmart.
Chain stores have common ownership and do not have individual owners like in franchising. The looks and designs of each chain store are similar to one another. The display system, the colour of the walls, furniture and other arrangements are also kept uniform in all chain stores in order to retain a brand identity. Some of these chain stores examples are Dominos, KFC, etc.
There is a popularity of chain stores in India also. Many Indian companies are adopting this type of retailing for their companies. Some examples of chain stores in India are Reliance Fresh, Lifestyle, Dmart, etc.
Features
Some features of chain stores or multiple shops are:
Chain stores also follow the method of centralized purchasing because the head office sends the product to individual chain stores for sales.
The chain stores are located near populist areas with the idea of remaining close to its target customers.
The control and responsibilities of the chain store are in the hand of the branch manager or store manager. He/she is responsible for giving reports to the head office regarding the performance of the chain stores.
There is one head office.
FAQs on Large Retailers and Chain Stores Explained
1. What are large-scale fixed-shop retailers?
Large-scale fixed-shop retailers are retail businesses that operate from a permanent establishment and handle a large volume of goods. They require significant capital investment and deal in a wide variety of products. The two most common examples of such retailers studied in the CBSE syllabus are Departmental Stores and Chain Stores (or Multiple Shops).
2. What is a chain store or multiple shop? Provide some real-world examples.
A chain store, also known as a multiple shop, is a network of identical retail outlets located in different parts of a city or country. These shops are owned and operated by a single organisation and are managed from a central head office. They are characterised by standardised layouts and product lines. Common examples in India include Bata (footwear), Reliance Fresh (groceries), and McDonald's (fast food).
3. What are the main features of a chain store?
The key features that define a chain store are:
Standardised Appearance: All shops in the chain have a similar design, layout, and exterior look to ensure brand recognition.
Centralised Management: A single head office handles purchasing, pricing, and advertising for all branches.
Specialised Product Line: They typically deal in a limited range of products of a specific type (e.g., only shoes, only electronics).
Cash Basis: Transactions are generally made on a cash-and-carry basis, which eliminates the risk of bad debts.
Large Scale Operations: They are located in populous areas to attract a large number of customers.
4. How are departmental stores different from chain stores?
While both are large-scale retailers, they differ significantly:
Location: A departmental store is a single, large establishment in a central location, whereas chain stores are a network of smaller shops spread across various locations.
Product Range: Departmental stores offer a vast range of different products under one roof (e.g., groceries, apparel, electronics). Chain stores specialise in a single product line (e.g., only footwear).
Pricing: Chain stores have uniform prices across all outlets. Prices in a departmental store can vary, with frequent discounts and offers.
Customer Base: Departmental stores often target high-income customers with extensive services, while chain stores cater to a broader customer base with standardised products.
5. What are the key advantages and disadvantages of chain stores?
The main advantages of chain stores include economies of scale from centralised buying, uniform pricing, low risk of bad debts (due to cash sales), and easy brand recognition. However, their primary disadvantages are a limited selection of goods, a lack of personal touch with customers due to staff rotation, and inflexibility in adapting to local tastes and demands as all decisions are made centrally.
6. How do chain stores manage to keep their costs low compared to independent shops?
Chain stores achieve lower costs primarily through economies of scale. The head office purchases goods in massive quantities directly from manufacturers, securing significant bulk discounts. Additionally, costs for advertising, administration, and management are shared across all the outlets, reducing the per-store operational expense. This centralised model eliminates the need for multiple wholesale intermediaries, further cutting costs.
7. Why are all products in a chain store, like Domino's or Cafe Coffee Day, priced the same across all its outlets?
This is due to the policy of centralised pricing. The head office sets a uniform price for all products to maintain brand consistency and ensure that customers have the same experience regardless of the outlet's location. This strategy simplifies management, strengthens the brand's identity, and prevents internal competition between different branches of the same chain.
8. Is a supermarket like DMart or Big Bazaar considered a chain store or a departmental store?
This is a common point of confusion. A supermarket like DMart is best described as a hybrid model, but it functions more like a chain store. It is a 'chain' because it consists of a network of near-identical stores under a single brand with centralised purchasing and management. However, each individual outlet operates like a 'departmental store' by offering a wide variety of product departments (groceries, apparel, household items) under one roof.
9. What is the core business principle that drives the success of a chain store model?
The core principle behind the success of a chain store is standardisation and scalability. By perfecting a single, efficient store format with a specific product line and a strong brand identity, the business can be easily replicated and expanded ('scaled') across numerous locations. This standardisation in operations, from store layout to pricing, allows the company to achieve massive economies of scale and rapid growth, which an independent store cannot.
