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Types, Features, Advantages, Limitations - Fixed Shop Large Retailers | 11th Commerce : Retailing

Chapter: 11th Commerce : Retailing

Fixed Shop Large Retailers

The retailers having permanent establishment and dealing in large scale are called Fixed shop large scale retailers.




Fixed Shop Large Retailers

 

The retailers having permanent establishment and dealing in large  scale are called Fixed shop large scale retailers. They are popular due to urbanisation, modernisation and other reasons. The most common forms of large scale retailers are as follows:

1.        Departmental Stores

2.        Chain Stores or Multiple Stores

3.        Super Markets

4.        Consumer Cooperative stores

5.        Hire purchase and Instalment Traders

6.        Shopping Malls

7.        Mail order houses

8.        Automatic Vending Machines

9.        Tele-marketing

10.   Online Shopping


 

1. Departmental Stores

A Departmental Store is a large retail establishment  offering  a   wide   variety  of products, classified into well defined departments. Each department specialise  in one particular line of product aimed at satisfying every customers’ needs under one roof. Each department is like a separate shop with centralised purchasing, selling and accounting. Administrative activities of the departmental stores are managed by a General Manager. The General Manager appoints department managers of each department.


 

Features

 

i. Large Size:

A department is a large scale retail showroom requiring a large capital investment by forming a joint stock company managed by a board of directors. There is a Managing Director assisted by a general manager and several department managers.

ii. Wide Choice:

It acts as a universal provider of a wide range of products from low priced to very expensive goods (Pin to Car) to satisfy all the expected human needs under one roof.

iii. Departmentally organised

Goods offered for sale are classified into various departments. Each department specialises in one line of product and operates as a separate unit.

iv. Facilities provided:

It provides a number of facilities and services to the customers such as restaurant, rest rooms, recreation, packing, free home delivery, parking,etc.

v. Centralised puchasing

All the purchases are made centrally and directly from the manufacturers and operate separate warehouses whereas sales are decentralised in different departments.

 

Advantages

 

i. Convenience in buying

The departmental stores provide great convenience to all the members  in  a family in buying almost all goods of their requirements at one place. A large variety of goods available in all the departments enable customers to save time and no need to run from one place to another to complete their shopping.

ii. Attractive services

It aims at providing maximum services and facilities to the customers such as home delivery of goods, execution of telephone orders, rest rooms, restaurants, salons, children game centres, etc.

iii. Central location

These stores are usually located at central places so that more people can approach easily.

iv. Elimination of Middleman

A departmental store combines both the functions of retailing as well as warehousing. They purchase directly from manufacturers and operate separate warehouses. It helps in eliminating undesirable middlemen between the producers and the consumers.

v. Economies of Large Scale Operations

The Departmental stores are organised at a large scale i.e., buy goods in bulk, therefore they enjoy the benefit of special discount. In turn, the customers get their goods in quality and lower price.

 

Limitations

 

i. High cost of operations

A departmental store requires a large building with ample parking at a central place. It has to  incur  heavy  expenditure on salaries, maintenance of building, customer services, advertising, etc. As a result, establishment and overhead cost of operations are very high.

ii. Higher prices

Due to high operating costs, prices of goods in a departmental store are comparatively high. Only rich persons can afford to buy goods at a departmental store.

iii. Distance

It is located at a central place of a city, away from people living in suburban areas have to travel a long distance to reach the store.

iv. Lack of personal touch

The management of a store finds it very difficult to maintain personal contact with the customers. The salaried staff may not take interest in securing the satisfaction and goodwill of the customers

v. Difficult to establish

A large amount  of capital investment and  a large number of specialised persons are required to establish a departmental store.

vi. High risk

Due to central location and large scale operations, risk of loss is very high

Change in tastes and fashion and market fluctuations may lead to heavy loss.

 

2. 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.

 

3. Super Markets

 

A Super market is a large retail store selling a wide variety of consumer goods on the basis of low price appeal, wide variety and assortment, self-service and heavy emphasis on merchandising appeal. The goods traded are generally food products and other low priced, branded and widely used consumer products such as grocery, utensils, clothes, house hold goods, electronic appliances and medicines. For example : The Nilgiris


The important characteristics of a super market are listed below:

1.        Supermarkets are generally situated at the main shopping centres.

2.        The goods kept on racks with clearly labelled price and quality tags in such stores,

3.        The customers move into the store to pickup goods of their requirements, bring them to the cash counter, make payment and take home delivery.

4.        The goods are sold on cash basis only. No credit facilities are made available.

5.        Supermarkets are organised on departmental basis.

6.        It requires huge investment.

 

4. Cooperative Store

 

A  consumers  cooperative  store  is  a  retail organisation owned, managed and controlled by the consumers themselves to obtain products of daily use at reasonable low prices. Its objective is to eliminate profits to middlemen by establishing a direct contact with the manufacturers. People belonging to middle and low income groups , at least 25 persons have to come together to form  a voluntary association and get it registered under the Cooperative Societies Act.


The capital of a cooperative store is raised by issuing shares to members. The management of the store is democratic and entrusted to an elected managing committee, where one man one vote is the rule. The cooperative stores are very famous in Tamilnadu. For example, Kamadhenu and Chinthamani cooperative supermarkets in Chennai, Karpagam in Vellore, etc.

 

5. Hire purchase and Instalment Trade

 

Hire purchase trading is a system by which the seller agrees to sell the articles to the buyer on condition that the payment of the article will be made in a fixed number of instalments till the sale price is paid. Though the buyer gets possession of the goods immediately on signing the contract the ownership does not pass on till the payment of last instalment. The buyer prefers to pay a lump sum or a part of the price initially i.e., down payment and the balance in instalments as per the contract. The seller continues to be the owner of the article till then. If the buyer commits a default in payment, the seller is entitled to repossess the article. It is also a form of credit sale. Only durable articles like television, air conditioner, refrigerator, washing machines, etc., are suitable for hire sale.

Instalment system is a type of purchase in which the price amount of the product is not paid initially but in instalments. It is also called as deferred payment system. Under this system, title or ownership of articles as well as possession is passed on to the buyer as soon as the first instalment is paid. On default of payment, the seller cannot seize the article but recover the dues through court.  


6. Mail Order Houses

 

Mail order houses are the retail outlets that sell their merchandise through mail. There is generally no direct personal contact between the buyers and the sellers in this type of trading.

Procedure

a.        Advertisements provide information about the products to consumers

b.        Order receiving and processing

On receiving the orders, the goods are sent to the customers through the post office by Value Payable Post (VPP).

c.         Receiving Payments

The customers may be asked to make full payment in advance or at the time of receiving the goods In this arrangement, there is no risk of bad debt. Perishable goods like milk are not suitable for sale by mail order. Suitable goods are books, watches, etc.

 

7. Automatic vending machine

 

Automatic vending machine is a new form of direct selling. It is a machine operated by coins or tokens. The buyer inserts the coin or the tokens into the machine and receives a specified quantity of a product from the machine. AVMs are placed at a convenient location such as railway stations, airports, petrol pumps, etc.


Example Aavin Dairy Milk through AVMs

 

8. Shopping malls

 

Shopping malls are developed due to change in departmental stores in modern time. A shopping mall functions in a multi-storey building. Many small to big shops are commenced under the separate ownership. Various types  of  branded goods of daily requirement and luxurious products are available.Modern facilities such as refreshment hall, entertainments for children, wi-fi, auditorium, etc. are provided in shopping mall.

For example, FORUM in Chennai.

 

9. Telemarketing

 

Telemarketing can be divided into two parts.

 

i. Telephonic Marketing

Potential Customers are contacted through telephone or mobile to provide information about the products. Willing customers visit the office and place the orders. This method is useful for loan, financing, insurance services, credit card, etc. No middlemen in this marketing and cost reduced accordingly.

 

ii. Television Marketing

In this  method,  customers  are  attracted by providing full information  of  product or service through TV demonstrations. Customers are given either phone number or name of the website to place the order. Payments for these products are made through two methods.

i. Advance payment by debit/credit card. ii. Payment in cash at the time of delivery.

For example- Tablemate and other home appliances

 

10. Online Shopping or Internet Marketing

 

The manufacturers or the intermediaries place the advertisement of their products on different media of internet like e-mail, portal and browser. Sometimes, they have their own website like Flipkart, Amazon, Snapdeal. etc. The customers compare the products of competitors by observing such advertisements and select the product through internet and make the payment through online or cash on delivery.


Because of the absence of middlemen, showroom expenses, etc. products areavailable at cheaper price in comparison to local market. Customers also get after sales services.

 

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