After reading this article you will learn about Multiple Shops:- 1. Meaning of Multiple Shops 2. Types of Multiple Shops 3. Features 4. Advantages 5. Disadvantages.
Meaning of Multiple Shops:
A multiple shop system is a network of number of branches situated at different localities in the city or in different parts of the country. All branches are under central ownership and control.
It is a compromise between large-scale and small-scale organisation; it tries to secure advantages of both and eliminate their disadvantages. For instance, management, purchases and control are centralised while sales are decentralised and carried on a small-scale.
Types of Multiple Shops:
i. Manufacturers’ Organisation:
When a manufacturer wants to approach consumers directly, he starts his own retail branch shops either in different localities of the city or the State or even in the whole country. Thus, a manufacturer undertakes all the three functions of producer, wholesaler and retailer.
ii. Retailers’ Organisation:
The chain stores may be owned by a big retailer and all the branch shops may be chained together and brought under one unitary control. The multiple shops of retailers can obtain their supplies directly from different manufacturers instead from wholesaler. They buy in bulk, and perform the work of wholesaler particularly transport, warehousing, risk bearing and financing.
Features of Multiple Shops:
i. Multiple shops, specialise in one or a couple of lines of goods. The range of articles is strictly limited. The articles sold through all branches are of like nature and uniform price. Usually, a well-known article or service is sold by them.
ii. They try to give maximum local convenience to the customers. In each residential area, we may have a branch shop.
iii. Management and control are centralised.
iv. Purchases are centralised and carried on by the Head Office.
v. They concentrate on a few standardised articles which require no special selling effort. Articles are usually necessaries of life giving quick turnover and having a steady demand.
vi. Selling activity is completely decentralised and branch shops are just like ordinary retail shops.
vii. The buyers do not require much pulling through advertising campaign.
viii. All sales are strictly on the cash basis and no credit is granted to customers.
Advantages of Multiple Shops:
i. Multiple shops owned by a manufacturer eliminate all kinds of middlemen between the producer and the consumer.
ii. Multiple shops have the benefit of specialisation in a particular line of goods.
iii. Articles are sold at uniform prices in all branch shops. This creates public confidence. Goods are of standard quality.
iv. Economies and advantages of large-scale organisation can be secured.
v. Advantages of decentralised selling also can be secured. Failure or closure of one or two branch shops will not affect the entire organisation adversely. Concentration of all business at one place and consequent, locking up capital at one place in the case of department store becomes very risky, because if after a certain period the situation loses its old importance, the future of the store becomes very dark.
vi. They have common advertisement for all the branches as they are under unitary ownership.
vii. All branch shops usually have uniformly external and internal display. Even the furniture and fixture are of uniform, colour and design. This makes identification of the branch shop very easy, e.g., a branch shop of the Bata Shoe Company can be easily recognised in any locality.
viii. Multiple shops try to give maximum local convenience just like other retail shops. In every important locality there will be a branch shop.
ix. Shortage of stock at one branch can be remedied by transfer of stock from branches having surplus stock.
x. As sales are strictly on cash basis, there is no risk of bad debts.
xi. As there is no extra cost of services and comforts (as in the departmental stores), multiple shops can have more benefits. Similarly, there is saving of middleman’s commission. Hence, they can pass on this benefit to customers in the form of reduced prices.
Disadvantages of Multiple Shops:
i. In so far as the branch shops are situated in the interior, they do not attract large number of customers and they suffer from the same handicaps as a centrally situated department store.
ii. Such shops deal only in a few articles and only in well known brands. So buyers have limited choice. They cannot make all their purchases at one place.
iii. As purchases are centralised and carried on a large-scale, great accuracy and judgement are required in purchasing goods. If market conditions go against the expectations or if fashions and tastes change suddenly, there will be no sales and the danger of dead stock at the head office may lead to heavy losses.
iv. As there are many branches, a system of strict super-vision and control through district and regional inspectors becomes necessary. Even then there is always the possibility of fraud.
v. Branch Manager of a shop is just a head salesman. He has no initiative. He has no voice in making purchases and fixing the prices of goods. A ‘Buyer’ of department store has full voice in his purchases.
vi. The multiple shop business has to buy in bulk, do the work of the wholesaler, provide large warehouses and transport to the various branches, and has to bear considerable risk of loss. If it acts as a manufacturer also, it has to perform all the functions itself.
This means that it cannot have the advantages of specialised marketing services rendered by wholesalers and retailers. It may have big gross profit. But its net profit may be modest.
vii. There is no credit system. The cash and carry system may be burdensome for many customers.
viii. Multiple shops sell standardised goods. They cannot give satisfaction to peculiar local or individual demands.