Large scale retailers achieve their growth by increasing the physical size of their units to cater for more customers. Large scale retailing could exist as:
- Chain or multiple stores.
- Departmental stores.
- Super markets.
- Mail order.
- Discount Houses.
- Hyper market.
- Variety stores.
- Retail Cooperative Society.
Chain Stores or Multiple Stores
A chain store is a group of retail stores of essentially the same type centrally owned with some degree of centralised 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, Leventis and UTC which are scattered all over the country while the head office supplies goods to the branches.
Features of Chain Stores
- Identical store design: Chain stores are known to have identical store design, layout and stock display.
- Centralized form of administration: Chain stores have centralized form of administration and workshop as headquarters where they managed 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 distributes 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, town and urban centres.
- Similar range of product: Chain store sells similar range of products or line of merchandise i.e. they deals in one type of commodity.
- Manufacture its own goods: Most chain stores do manufacture their own products they sell to customers.
- Operate uniform prices: Chain store 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 parts of the country.
Advantages of Chain stores
- It achieves economics of scale: Chain store can achieve economics of scale through centralized distribution system.
- Cheaper prices: Chain store buys 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 advertise goods centrally, hence the promotional expenses are spread over multiple outlets.
- Spreading of risks or losses: Chain store can spread risks or losses over different stores in many different markets.
Disadvantages of Chain stores
- Does not permit credit sales: Chain store does not permit credit sales because their 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 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.