DISCOUNT HOUSES, FRANCHISING AND VARIETY STORES
A discount house is a retailing business unit that features a large variety of products which they sell on a low price basis and operate on a low markup with minimum customer services. This system of retailing is very popular in America. They give discount by reducing their overhead cost and by buying in bulk. They are institutions that sell a wide variety of goods at less than traditional retail prices.
Features of Discount Houses
- Offer low price: Discount houses are known to offer low prices for goods offered to their customers.
- Operate on discount basis: Discount houses offer discount to customers on the goods they purchased.
- Purchases are in cash basis: The purchases in discount houses are made in cash.
- Low mark-up: There is low mark-up with minimum customer services.
- Wide varieties of goods: Wide varieties of goods are stocked for sales.
Franchising is a type of retail operation in which a conditional right is given to the retailer to market the franchise (company’s products or services) under the banner of the franchiser. The franchiser supplies the name, products, goodwill and general know-how and the franchisee provides the capital and enters into a contract to use the franchiser’s services in a manner agreed upon.
Advantages of Franchising
- It requires relatively low capital to start.
- Management skills are taught.
- It gives exclusive selling rights for a specific geographical area.
A variety store is one which handles a wide assortment of goods not necessarily related to each other. Examples are toys, cosmetics, hardware. A group of variety stores may constitute a chain.
Features of Variety Stores
- Wide range of unrelated goods: Wide range of unrelated goods are stocked for sale.
- Absence of credit: There is the absence of credit and delivery services.
- Limited direct advertising: There is limited direct advertising.
- Sited mainly in urban centres: They are mostly sited in major urban centres.
- Counter service: Counter service and display are provided.