Department Stores: Features, Advantages and Disadvantages

Department stores are extensive retail establishments that have multiple stores housed within a single large building.

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Department stores are extensive retail establishments that have multiple stores housed within a single large building.

Notable examples of department stores include A.G. Leventis, Kingsway Stores, S.C.O.A., U.T.C., Chellarams, and others. These stores provide a diverse range of goods and services under one roof.

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Leventis Stores, Calabar — 1965. Image Credit: A.G. Leventis (Nigeria) Ltd.

Read: Multiple Shops | Features, Advantages, and Disadvantages

Features of Department Stores

  1. Physical Structure: They are typically situated in spacious buildings.
  2. Departmentalization: These stores are organized into separate departments, each specializing in specific product categories.
  3. Specialization: Each department focuses on selling a particular type of product. This enhances consumer choice.
  4. Departmental Managers: A dedicated manager oversees each department’s operations.
  5. Independence: Departments operate independently as self-accounting strategic business units.
  6. Personnel Structure: Departments include floor supervisors, cashiers, and sales attendants under the management of a departmental manager.
  7. General Manager: The store is overseen by a General Manager who coordinates the activities of all departmental managers.
  8. Wide Product Range: Department stores offer a diverse array of goods.
  9. Fixed Pricing: Goods in department stores carry fixed price tags. The need for bargaining is thus eliminated.

Read: Supermarkets: Features, Advantages and Disadvantages

Advantages of Department Stores

  1. High Turnover: Department stores experience rapid turnover due to their varied product offerings.
  2. Economies of Scale: These stores benefit from large-scale purchasing, resulting in lower prices.
  3. Direct Buying: They purchase directly from manufacturers, reducing intermediary costs.
  4. Employment Opportunities: They provide numerous job opportunities for a variety of roles.
  5. Convenience: Customers can find a wide range of products under a single roof, streamlining their shopping experience.
  6. Strategic Locations: They are often situated in prime business areas.
  7. Cross-Promotion: Products in one section promote those in other sections.
  8. Profit Distribution: Profits from profitable departments can offset losses in others.
  9. Additional Services: Customers can enjoy services like restaurants and restrooms.
  10. Land Utilization: They maximize land usage efficiently.
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Disadvantages of Department Stores

  1. Capital Requirements: Establishing and maintaining department stores necessitates significant capital investment.
  2. Limited Credit: These stores may offer limited or no credit to customers.
  3. Higher Prices: Overhead costs, such as rent, can lead to relatively higher prices.
  4. Customer Courtesy: Floor attendants might not always provide adequate customer service.
  5. Operating Hours: Many stores are closed on weekends and public holidays.
  6. Employment Impact: The self-service model employed by these stores might limit job opportunities.
  7. Accessibility Challenges: These stores might not be easily accessible to all customers.
  8. Elitism: These stores can be perceived as catering primarily to a more affluent clientele.
  9. Fixed Pricing Disparity: Fixed price tags may clash with consumers’ inclination to bargain.
  10. Return Policies: Some stores may not facilitate easy returns of purchased goods.
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