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Limitations

However, there are certain limitations of this type of retailing. These are described as follows:

(i) Lack of personal attention: Because of the large-scale operations, it is very difficult to

provide adequate personal attention to the customers in these stores.

(ii) High operating cost: As these stores give more emphasis on providing services; their

operating costs tend to be on the higher side. These costs, in turn, make the prices of the goods
high. They are, therefore, not attractive to the lower income group of people.

(iii) High possibility of loss: As a result of high operating costs and large scale operations, the

chances of incurring losses in a departmental store are high. For example, if there is any change
in the tastes of customers or latest fashions, it necessitates selling of such out-of-fashion

articles in clearance sale, to reduce the huge inventory of goods built up.

(iv) Inconvenient location: As a departmental store is generally situated at a central location, it

is not convenient for the purchase of goods that are needed at short notice. In spite of some of

these limitations the departmental stores have been popular in some of the western countries
of the world because of their benefits to a certain class of customers.

2. Chain Stores or Multiple Shops:

Chain stores or multiple shops are networks of retail shops that are owned and operated by

manufacturers or intermediaries. Under this type of arrangement, a number of shops with
similar appearance are established in localities, spread over different parts of the country.

These different shops normally deal in standardized and branded consumer products, which

have rapid sales turnover. These shops are run by the same organization and have identical

merchandising strategies, with identical products and displays.
Some of the important features of such shops may be described as follows:

(a) These shops are located in fairly populous localities, where sufficient number of customers

can be approached. The idea is to serve the customers at a point which is nearest to their

residence or work place, rather than attracting them to a central place.