Welcome to this class on the features of Chain Stores: We will be looking at the meaning, advantages and disadvantages in this class.
Table Of Contents
- Meaning of chain stores or multiple stores.
- Features of Chain Stores
- Advantages of chain stores
- Disadvantages of chain stores or multiple stores.
Chain Stores or multiple stores
A chain store is a group of stores of essentially the same type owned with some degree of centralized control of operation and selling the same range of products. It is a chain of similar shops with identical store design, layout and stock display, each selling limited cohesive range of products. It operates multiple outlets, e.g, Lennard, leventies, shoprite, UTC, which are scattered all over the country while the head office supplies goods to the branches.
Features of Chain Stores or multiple stores
- Identical store design: Chain stores are known to have identical store design, layout and stock display.
- Administration form of administration: Chain stores have centralized form of administration and workshop has headquarters were the manage the business.
- Operation of multiple outlets: They have similar stores scattered all over the country.
- Advertisement: Group advertisement and promotional activities are used by headquarters.
- Central bulk purchase: The headquarters usually purchases and distribute goods in bulk to other chain stores all over the nation.
- Chain stores are located in cities: Majority of the chain stores are located in major cities, towns and urban centers.
- Similar range of products: Chain stores sells similar ranger products or line of merchandise, i.e, they deals in one type of commodity.
- Manufacture it’s own Goods: Most chain stores do manufacture their own products they said to customers.
- Operate uniform prices: Chain stores operate the same price all over the nation in all other shops.
- Possibilities of staff and goods transfer: Most goods and staff can be transferred from one shop to another since they are the same in all part of the country.
Advantages of Chain stores
- It achieves economic of scale: Chain stores can achieve economics of scale through centralized distribution system.
- Cheaper prices: Chain stores buy in bulk which ensures low or cheaper prices.
- Easy identification of shops: Chain shops are built and painted with the same design and painting and this makes it easy to be identified by customers.
- Easy movement of staff: There is flexibility in movement of staff from one branch to another.
- Operate Cash and Carry system: Problem of bad debt cannot be experienced because the system of cash and carry usually applied.
- Continuous patronage: Since stores are scattered all over the country, customers can easily locate them anywhere, this ensures continuous patronage.
- Central advertisement: The headquarters usually advertised goods centrally, hence the promotional expenses are spread over multiple outlets.
- Spreading of risk or losses: Chain stores can spread risk or losses over different stores in many different markets.
Disadvantages of chain stores or multiple stores
- Does not permit credit sales: Chain stores does not permit credit sales because the operation is on Cash and Carry basis.
- Managers has no control over goods: Managers in the branches have virtually no control over the goods they are selling.
- Delay in implementing decision: There may be delay in implementing decisions because instructions must be received from the headquarters.
- Less personal relationship: There is less personal relationship between the shop attendants and customers.
- Extra cost of transportation: Extra cost of transportation will be expended on transportation and handling of goods from head office.
- Limited range of products: Multiple stores concentrate on narrow or limited range of products and thus make it difficult for customers to have all the goods they need in the same place.
Revision Questions
- What is Chain stores or multiple stores?
- What are the features of a chain store?
- State the advantages of chain stores
- State the Disadvantages of chain stores.
In my other next class, we would look at features of supermarket, advantages and disadvantages. To join the class [Click Here]