Chain Stores or Multiple Shops: Features, Advantages, Limitations

Chain Stores or Multiple Shops

A number of identical retail shops with similar appearance normally deal in standardised and branded consumer products established in different localities owned and operated by manufacturers or intermediaries are called as Chain stores or Multiple shops. In USA, these are known  as chain stores but these are popular as multiple shops in Europe. They deal only in particular line of product and specialise in the same. Many such shops are in India. For example : Bata.

Features

i. Location

These shops are located in fairly populous localities where sufficient number of customers can be approached.

ii. Nature of product

These shops deal in a particular product line and specialise in the  same  product  i.e, standardised and branded consumer products.

iii. Centralised management

The manufacturing or procurement of goods for all the retail units is centralised at the head office, from where the goods are despatched to each of these shops.

iv. Fixed price

The prices of goods are fixed and all sales are made on cash basis.

v. Role of Sales personnel

The sales persons play an active role in helping the consumers to complete their shopping i.e., in the slection and choice of their goods as per the tastes.

Advantages

i. Economies of large scale

Multiple shops are  owned  and  operated by manufacturers or intermediaries. Centralised and bulk buying, results in lower costs.

ii. Elimination of middlemen

Goods are sold in multiple shops at relatively low prices. By  selling  directly to the consumers, it is able to eliminate unnecessary middlemen

iii. No bad debts

All the sales are made in these shops on cash basis only. So, no bad debts will arise and no reduction of working capitals.

iv. Convenience in shopping

Shops are located in all important areas. Therefore, customers are not required to travel long distances for long distances for making purchases.

v. Public confidence

Multiple shops enjoy public confidence due to fixed prices, standard quality, uniform appearance and selection of goods with the help of salesmen.

Limitations

i. Limited variety

Multiple shops deal only in limited range of products.

ii. Absence of services

Customers do not get credit, home delivery and other facilities.

iii. Lack of personal touch

The owner loses direct personal contact with the customers. The paid staffs do not take personal interest in each and every customer.

iv. Inflexibility

All the branches centrally controlled and uniform policies are adopted for all the shops.