List of top six retail organisations:- 1. Departmental Store 2. Multiple Shops/Chain Shops 3. Mail Order Business 4. Consumers’ Co-Operative Stores 5. One-Price Shops 6. Super Bazar or Super Market or Combination Store.
Retail Organisation # 1. Departmental Store:
A departmental store is a large scale retail organisation having a number of departments under the same roof, each confining its activities to one particular branch of trade. All these departments are centrally organised and are under one united management and control.
The unique feature of departmental store is that it offers the widest possible range of goods and services at one place. There may be separate departments for electrical goods, cloth, medicines, readymade garments, groceries and so on. The fundamental objective of a departmental store is to provide a large variety of merchandise ‘from a pin to an aeroplane’ at one place.
Some of the important definitions are given below:
1.According to P.D. Convers,- “A departmental store is a retail shop handling several classes of goods including women’s wear or dry goods, each class being separated from others in management, accounting and location.”
2. According to Clark, “A departmental store is that type of retail institution which handles a wide variety of merchandise under one roof with the merchandise grouped into well-defined departments which is centrally controlled.”
The departmental stores originated in the middle of 19th century in European countries. Bon Marche was the first departmental store which was established in 1852 in Paris (France). Then came Louvre and Printemps in 1855 and 1865 respectively. Today there are departmental stores of world-wide repute such as Harrods, Selfridges, Bon Marche, Roebuck, Gamages, Sears and Borcelona.
1. They are large scale retail organisations.
2. They have a number of departments organised under one roof.
3. Each department specialises in a particular kind of trade.
4. They are generally located at a central place.
5. They deal in a wide range of products ‘from a pin to an aeroplane’.
6. A huge amount of capital is required to establish a departmental store.
7. Control and management of departmental stores are centralised.
8. Running expenses of these stores are very high due to high rents, advertising, etc.
9. The aim of departmental stores is to provide quality goods and services to the customers.
1. Economies of Large Scale:
Departmental stores buy large quantities, with the result that it can avail the economies and benefits of large scale. This reduces their costs and increases the profits.
2. Convenience in Shopping:
Departmental stores enable the customers to purchase all their requirements under the same roof and the customers need not go from one shop to another to make purchases. This saves the time and labour of the customers.
3. Wide Choice:
These stores keep a large variety of products and offers an opportunity to the customers to choose goods of their liking from a large stock of goods of different brands, designs qualities, styles, etc.
4. Economy in Advertising:
One department advertises for other departments. A customer who enters a departmental store to buy some goods in induced to purchase some other goods also displayed in the store. Moreover, a departmental store can advertise on a large scale thus saving in advertising costs.
5. To Provide Recreational Facilities:
A departmental store also provides recreation facilities to the customers. This recreation facility removes the boredom and fatigue associated with continuous purchasing of a long duration.
6. Use of Specialised Services:
The stores can afford to employ specialists with expert knowledge. This saves in many costs, attract the customers and increases the sales.
7. Liberal Services:
The departmental stores provide many unique services to the customer as free home-delivery, after-sale service, restaurants, recreational facilities accepting telephone orders, etc.
Departmental stores suffer from the following disadvantages:
1. Huge Capital is Required:
A heavy capital investment is required for the establishment of departmental stores. Moreover, the cost of running the business is very heavy and the customers have to bear this burden.
2. Higher Prices:
Due to high costs of operation, the prices of goods in the departmental stores are comparatively high. Thus, only the rich people can afford to take the benefits of these stores.
These stores are generally situated away from the residential areas. Therefore, people living at a distance cannot take the benefit of departmental stores.
4. Lack of Personal Contact:
The owners of the different departments in the departmental stores cannot make personal contact with their customers. The employees make the sales who may not care for the satisfaction of the customers.
5. Lack of Co-ordination:
A departmental stores runs many departments. It is difficult to control and supervise the various departmental stores.
Retail Organisation # 2. Multiple Shops/Chain Shops:
A multiple shop system is a network of branch shops operating under a centralised management and dealing in similar lines of products. These shops are situated at different localities in the city or in different parts of the country. Multiple shops deal only in a limited variety of products. Such multiple shops are very common. The shops are located near the residential areas.
Some of the important definitions of multiple shops are given below:
According to P.D. Converse, “Number of retail stores operating under a common ownership and management constitute a multiple shop or chain store.”
According to James Stephenson, “A multiple shop consists of a number of similar shops owned by a single business firm.”
According to J.L. Fri, “Chain store is a group of stores handling similar lines of merchandise with single ownership and centralised location.”
According to S.E. Thomas, “This is a system under which there is large number of retail shops owned by the same proprietor which are scattered over the various places of a particular city of a country and are engaged in the same line of activity.”
According to F.H. Nysteom, “Chain store is a retail organisation composed of two or more retail stores owned by and operated under one management.”
According to Federal Trade Commission, “Chain store is an organisation owning a controlling interest in two or more establishments which sell substantially similar merchandise at retail prices.”
Thus, chain stores have been interpreted as a group of stores which deal in the same type and quality of merchandise. They have a centralised management and ownership and get their supplies from head/central office. Bata Shoe Co., DCM, Mafat lal, Tata Shops, etc. are the examples of multiple shops.
1. Multiple shops specialise in one line of product.
2. Multiple shops aim at eliminating both wholesalers and retailers.
3. The prices charged for goods sold in multiple shops/chain stores are the same everywhere.
4. They deal on cash-and-carry principle.
5. All the multiple shops are decorated in a similar manner and follow the uniform practice evolved by the central office.
6. Same types of goods are sold in each shop and are of daily use.
7. Purchases of these shops are centralised.
8. There is a high degree of uniformity in the goods sold by all the branches of multiple chain stores.
1. Cheaper Prices:
The profits of middlemen are eliminated as direct contact with the consumers is established. With the result of it, goods are made available at cheaper prices.
2. No Bad Debts:
Multiple shops do not make credit sales. All the sales are made on cash basis. Therefore, there are no bad debts.
3. Economy in Advertising:
Advertisement of goods is done centrally. Each shop advertises goods for others. Since the benefits of common advertising are available to all the branches, there is a considerable reduction in unit cost of advertising.
4. Regular Flow of Goods:
Multiple shops provide regular flow of goods. Shortage of goods at one branch can easily be met by transfer from other branches having surplus stock.
5. No Fear of Over-Stocking:
These shops get their supplies from the head office as per their requirements. So there is no fear of over-stocking of goods.
6. Public Confidence:
Uniformity of prices and quality of goods sold helps in winning public confidence.
7. Near to the Customers:
These shops are located near to the residential areas to provide more services to the consumers. This considerably increases sales turnover of these shops.
8. Standardised Goods:
The goods sold in these shops are of standard quality. There is no fear of cheating at all.
9. Easy Identification:
Uniformity of window dressing and shop decoration at all these shops makes identification of branch shops very easy. For example, branch shops of Bata. DCM, etc. are quite open to the people.
1. Heavy Investment:
The establishment of these shops requires a heavy capital investment. It is not possible for every man to start these shops.
2. No Credit Facility:
These shops sell on cash basis. There is no facility of credit sales. Hence it cannot entertain poor people.
3. Limited Choice:
Such shops deal in a limited range of products which reduces consumer’s choice.
4. No Home Delivery:
Such shops do not provide home-delivery service. It discourages some customers to buy from such shops.
5. Lack of Personal Contact:
There is a lack of personal contact with customers. The owner cannot attend personally to his customers and remove their difficulties.
Retail Organisation # 3. Mail Order Business:
Under mail order business, orders are placed by post or mail and goods are received by registered parcel or V.P.P. (Value Payable Post). Under this, the seller makes advertisement of his products and the intending buyers respond to such advertisements by requesting for catalogues and price lists from the seller.
Mail order houses maintain mailing list of potential customers. They send the catalogues etc. through mail. Buyers do not inspect goods before purchasing. They place orders on the basis of advertisement. After orders are received from the customers, the goods are dispatched by V.P.P. or registered mail.
According to S.E. Thomas, “Mail order business may be briefly described from the buyer’s point of view as ‘Shopping by Post.”
1. There is no need of middlemen in mail order business.
2. The seller need not to have any shop.
3. Under mail order business, order are placed by post or mail.
4. The goods are despatched by V.P.P. or registered mail.
5. No need to keep the goods in godowns.
6. Mail order business is based on advertisements.
7. No need of large amount of capital.
Characteristics of Goods Suitable for Mail Order Business:
All the goods are not suitable for mail order Business.
Mail order commodities should possess the following characteristics:
1. They should not be perishable.
2. They should possess the features of grading and standardisation.
3. They should be of lesser weight.
4. They should be valuable.
5. They should be in great demand.
6. They should be of the type that can be understood fully from description.
7. They should be identified by brand name.
Advantages of Mail Order Business:
I. Advantages to Sellers:
1. Less Capital Investment:
Heavy investment is not needed in mail order business. Sellers need not to make stock of the goods.
2. No Bad Debts:
Under this system, goods are despatched by V.P.P. Therefore, there are no bad debts.
3. No Need of Decoration:
Under this system of retailing, the seller need not to spend money for shop and decoration of shop. He can set up his office at any place.
4. Area of Operation is Wide:
Area of operation of mail order business is very wide and not restricted to particular area or locality.
5. Elimination of Middlemen:
Mail order business eliminates the middlemen because goods are directly sent to the customers.
II. Advantages to Customers:
1. Home Delivery:
The buyer is not required to go out to get the delivery of goods. He can get goods at his residence. It saves the time also.
2. Cheaper Goods:
Because of non-presence of middlemen, goods are received at cheaper rate.
3. Standardised Goods:
Mail order business is done only in those commodities which possess the feature of standardisation. This has created confidence among the customers to make purchasing through mail.
4. Money Back Guarantee:
Money back guarantee is generally given to the buyer. The buyer can return the goods if goods are not upto the mark.
5. Wide Range of Choice:
Mail order business offers a wide range of choice regarding goods to intending buyers.
Disadvantages of Mail Order Business:
The mail order business suffers from the following disadvantages:
1. There is the absence of personal contact between the seller and the buyer.
2. The buyers cannot inspect and select goods before purchasing.
3. No credit facility is allowed.
4. It is not suitable for illiterate customers.
5. Mail order business is based on advertisements. A huge expenditure on investments is done.
6. There is a risk of damages and loss of goods while in post.
7. It is not suitable for heavy goods.
Retail Organisation # 4. Consumers’ Co-Operative Stores:
Consumers’ co-operative stores are organised as co-operative societies by consumers to eliminate the middlemen and obtain their daily requirements at fair prices. The co-operatives are registered and they have their share capital divided into shares.
These shares are bought by every type of consumer whether rich or poor. Every member, irrespective of the number of shares that he holds, has one vote. The idea of giving ‘one-member one-vote’ is to treat all the members on the same footing.
Consumers’ co-operative stores purchase goods in bulk and sell them to the members and non-members at a cheaper rate. Consumer exercises total control over the affairs of the co-operative stores. The surplus earned from the business are distributed among the members in the shape of bonus. Some of the surplus is spent on the welfare of the members.
1. It is voluntary association of persons and is registered under the Co-operative Societies Act.
2. A co-operative store has a share capital divided into shares of small denominations, say, Rs. 5 or Rs. 10.
3. The membership of consumers’ co-operative stores is open to all adults.
4. The stores make bulk purchase directly from the producers and sell them to the members on retail basis.
5. Every member, irrespective of the number of shares that he holds, has one vote.
6. The surplus earned from the business are distributed among members in the shape of bonus.
7. The members elect the office bearers and executive members to supervise day-to-day activities of the store.
8. Democratic control is exercised.
9. Liability to the members of store is limited to the extent of their contribution.
10. Co-operative stores sell goods on cash.
1. Consumers’ co-operative stores eliminate middlemen. This results in assured supply of goods to consumers at reasonable prices.
2. The control is democratic and no single group can secure control over the affairs of the consumers’ co-operative store.
3. The purchases are made in bulk and therefore trade discounts are available to such stores.
4. Since the consumers themselves control the affairs of the co-operative stores they can assure themselves of quality goods free from adulteration.
5. The surplus earned from the business are distributed among the members of the stores.
6. Consumers co-operative stores also encourage people to save and invest more and more in co-operative effort.
7. Advertisement expenses are less.
1. Consumers co-operative stores lack adequate funds.
2. Management of these stores is in hands of amateurs. Thus they are unable to control the affairs of the co-operative stores effectively.
3. Consumers’ co-operative stores cater the need of small and medium income groups.
4. Members are not aware of the basic principles of co-operation.
5. The store personnel lack business training, experience and ability.
6. There is too much dependence on the loyalty of the workers.
Retail Organisation # 5. One-Price Shops:
One-price shops usually sell small articles at the same price. Such shops contain large variety of articles as pens, knives, handkerchiefs, etc. These articles are sold at the same price and the price is usually very low, e.g., each knife for 50 paise.
In India the hawkers and peddlars usually sell these articles crying at the top of their voice:
“Herek Mal Pachas Paise”
1. The sales are made on cash basis.
2. The profit margin is low but the turnover is large.
3. The buyer can pick and choose the articles.
4. Such shops deal in articles of cheap value.
5. The most distinguishing feature of such shops is one-price.
6. They attract only poor section of the society who cannot afford costly articles.
7. There is no bargaining between the buyer and seller.
8. These shops are sometimes temporary.
Retail Organisation # 6. Super Bazar or Super Market or Combination Store:
It is a large scale retail organisation specialising in necessaries and convenience goods. It is housed in a very large-sized premises. It generally deals in numerous varieties of food products, like vegetables, eggs, bakery, fruits, etc.
According to an American scholar, “A super market is a large store selling primarily groceries, meat, perishable produce dairy and bakery products, located usually on the outskirts of a suburban residential area close to main artery of automobile traffic and maintaining a large parking space, super markets operate their principal departments on usually a self-service basis and arrange a bare minimum of fixtures and requirements.”
According to Prof. Frank J. Charvat, “A super market is a departmentalised retail food store having four basic food departments, viz., self-service groceries, meat produce and dairy plus any number of other departments with the establishment doing minimum yearly volume of $ 5,00.000.”
According to M.M. Zimmerman,”A super market is a departmentalised retail establishment having four basic departments, viz., self-service grocery, meat produce, dairy products plus other household departments, doing a maximum business. It may be entirely owner-operated or have some of the departments leased out on a concession basis.”
Super markets came into existence in the U.S.A. during the Great Depression of Thirties.
1. They are located in the main shopping centres.
2. They deal on cash-and-carry principle. No credit is allowed.
3. The chief characteristic feature of a super market is the absence of salesmen. In other words, there is no selling counter of selling assistants to help customers.
4. The products are kept on open shelves.
5. Large sales and lower operational expenses increase the profits of super market.
6. They use mass display of goods, have low prices and operate on the basis of self service.
1. The customers are free to pick up the goods according to their own likings with out salesmen’s canvassing.
2. Low overheads. Thus, goods are available at cheaper rates to the consumers.
3. Super markets sell only on cash basis. Thus there are no losses on account of bad debts.
4. Supermarkets operate on a large scale. They get all the economies of large scale buying.
5. These markets are situated at convenient places and within the reach of buyers.
6. It enables the customers to buy all the goods at one place.
7. These markets have good profits because of large sales and lower overheads.
1. There is a lack of personnel contact with the consumers.
2. These markets do not allow credit facilities to the customers.
3. A huge amount of capital is required.
4. These markets are not suitable to sell the products where sufficient explanation is required to be given to customers
5. It requires a large and extensive premises for its operation.
6. No proper guidance is available to the customers because no salesmen is employed.