Retail Stores

Savita Mahendru

Asst Lecturer in Commerce�HRMMV

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Instore-Retaling

1. Department Stores

2. Super Markets

3. Discount Houses

4. Chain Stores

5. Multiple Shops

Department Stores

• These are large scale retail stores selling under one roof and one control a variety of goods divided into different departments, each of which specializes in an individual merchandise.
• Converse is of the opinion that a department store is a retail shop handling several classes of goods including fast moving consumer goods, each class being separated from others in management, accounting and location.
• It is viewed by Clarke as that type of retail institution which handle a wide verity of merchandise under one roof which the merchandise grouped into well-defined departments which is centrally controlled and which caters primarily to women shoppers.

• Thus a department store is a retailing business unit that handles a wide variety of shopping and specialty goods and is organized into separate departments for purposes of sales promotion, accounting control and store operation.
• Recent trends are to add departments for automotive, recreational and sports equipment, as well a services such as insurance, travel advice and income-tax preparation. Department stores are distinctive in that they usually are oriented towards service. They are usually shopping centers.

Classification of Department Stores

• These stores may be classified either according to ownership or income groups to which they appeal.
• On the basis of ownership these are :
• The independent;

(ii) The ownership group; and

(iii) Chain department Stores.

Independent stores are owned by a financial interest which does not own other similar stores Ownership group stores are those stores which were formerly dependent but now have been combined. Chain department stores are those stores which are centrally owned and operated.

b) On the basis of income groups, These stores cater to the middle and high income groups. They usually handle good quality merchandise and offer maximum service to the customers. Other stores cater to the needs of the lower income group people.

c) Sometimes there is also to be found what are called leased department stores. Although it appears to most customers that all departments in a department store are owned and operated by the store, that is not always the case. The operations of certain departments are sometimes turned over to leases and such departments are called leased departments.

Characteristic Features of Department Stores

The chief features of these stores are:

1. These are integrated stores performing operations in addition to other retail stores such as wholesaling.
2. Goods are divided into different classes with different locations and management within the store itself.
3. These stores are distinguished by the nature of goods they self and not by the varieties they keep for example, drug and variety stores carry a wide variety of goods.
4. The store is a horizontally integrated institution. It brings together under one roof a range of merchandise offerings comparable to the combined offerings of many stores specializing in single or fewer merchandise lines.

Location of Department Stores

• The success of a department store depends much on its location, availability of space, the area and community to be served and ability to attract customers are the important factors to be considered before establishing a store at a particular place.
• Special Consideration should be given to accommodation so as to allow every possible amusement facilities. Considerable space should also be allotted for show room displaying stores merchandise.

Merits of Department Stores

1. Large department stores buy in large quantities and receive special concession or discount in their purchases. Many of them purchase direct form manufactures and hence, middleman's charges are eliminated.
2. Department stores are in a position to pay cash on all or most of their purchases and this gives them an additional advantage of picking up quality goods at cheaper rates and at the same time stocking the latest style and fads.
3. Customers can do all their purchases under one roof and it appeals to people of all walks of life.
4. The organization is too large to provide expert supervision of various departments for the adoption of a liberal credit and delivery service for large-scale advertising.
5. When customers enter the store to deal with one department they are frequently induced by the advertisement which the display of goods offers to make purchases in other departments as well.

Limitations of Department Stores

Department business organizations are not free from abuses. There are certain specific limitations from which such institutions suffer such as: 1. The cost of doing business is very high due to heavy overhead expenses.

2. Because of their location in a central shopping area they are of not much advantage to the public because goods required at short notice are always purchased from the nearest traders.

3. There is lack of personal touch and personal supervision which is to be found in single line.

4. When hired diligence is substituted for the diligence of ownership, loss and leaks are likely to occur.

5. Many customers abuse the liberal services extended and take advantage of the policy of the 'customers is always right'.

Super Markets

These are large, self service stores that carry a broad and complete line of food and non-food products.

They have central check out facilities. Kotler defines supermarket as 'a departmentalised retail establishment having four basic departments viz. self-service grocery, meat, produce and diary plus other household departments, and doing a maximum business.

It may be entirely owner operated or have some of the departments leased on a concession basis.'

Characteristic Features of Super Markets

Chief characteristic features of supermarkets include the following:

1. They are usually located in or near primary or secondary shopping areas but always in a place where parking facilities are available.
2. They use mass displays of merchandise.
3. They normally operate as cash and carry store.
4. They make their appeal on the basis of low price, wide selection of merchandise, nationally advertised brands and convenient parking.
5. They operate largely on a self-service basis with a minimum number of customer services.

Advantages of supermarkets

1. Super markets have the advantage of convenient shopping, permitting the buyer to purchase all his requirements at one place.
2. Super markets also stock a wide variety of items.
3. These markets can sell at low prices because of their limited service feature, combined with large buying power and the willingness to take low percent of profit margins.
4. Shopping time is considerably reduced.

Limitations of Supermarkets

1. The large and extensive area required for a super market is not available cheaply in important places.
2. The products which require explanation for their proper use can not be dealt in through the super markets.
3. Customer services are practically absent.
4. Another limitation of the super market is the exorbitantly high administrative expenses

Discount Houses

• These are large stores, freely open to the public and advertising widely.
• They are self-service and general merchandising stores. They carry a wide assortment of products of well known brands, appliances, housewares, home furnishings, sporting goods, clothing, toy and automotive services.
• They complete on low price basis and operate on a relatively low mark-up and a minimum number of customer service.
• They range from small open showroom to catalogue type order offices to full line limited service, and promotional stores. They buy their merchandise stocks both from wholesale distributors and directly from manufacturers.

Chain Stores or Multiple Shops

• A chain store system consists of four or more stores which carry the same kind of merchandise are centrally owned and managed and usually are supplied from one or more central warehouses. A chain store is one of the retail units in chain store system.
• Chains have been interpreted as a group of two or more reasonably similar stores in the same kind or field of business under one ownership and management, merchandised wholly or largely from central merchandising head quarters and supplied from the manufacturer or orders placed by the central buyers.
• In Europe, this system is called as Multiple Shops and the American call it as "Chain Stores". Under the multiple or chain shop arrangement, the main idea is to approach the customers and not to draw the customers as it as is practiced in the case of department store. In order to draw more customers, attempts are made to open a large number of shops in the same city at different places. In India apt example for this retail system are offered by 'Bata Shoes', 'Usha Sewing Machines' etc., such multiple shops have 'centralised buying with decentralized selling". Fundamentally, they specialize in one product but with all its varieties or models.

Chief Features of Chain Stores

The chief features of chain stores are:

i. One or more units may constitute a chain,

ii. They are centrally owned with some degree of centralised control of operation.

iii. They are horizontally 'integrated' that is, they operate multiple stores. With addition of each new store, the system extends the reach to another group of customers.

iv. Many stores are also 'vertically integrated'. They maintain large distribution centres where they buy from producers, do their own warehousing and then distribute their own stores.

Advantages of chain stores or multiple shops

1. Lower selling prices. This is mainly possible due to economy in buying operation.

ii. Economy and advertising. Common advertisements covering all the units are feasible and this reduces advertisement expenditure.

iii. Ability to spread risks. Unlike the department store the principle here is not to "lay all the eggs in one basket". By trail and error, a unit sustaining losses may be shifted to some other place or even dropped. iv. There is flexibility in working.

v. Since it works only on cash basis, bad debts as well as detailed accounting processes are avoided.

vi. Central and costly locations are not essential.

Limitations of chain stores or multiple shops

1. Lower price is a false claim. According to Stanton "Price Comparison is not possible, as such stores are handling only limited items".
2. Inflexible in practice. Multiple shops deal in standardised products onlywhich creates inflexibility in offering wide varieties.
3. Personnel Problems. Being a large organisation, it is always susceptible to problems associated with large scale business.
4. Poor public image. Various consumer services such as credit facility, door delivery etc. are completely absent in chain store. The present day consumers prefer to have more services than quality in addition to desiring low prices.