21 Advantages and Disadvantages of Chain or Multiple Stores

The number of retail stores operating under common ownership and management constitutes multiple stores or Chain store. A multiple or chain store consists of a number of similar shops owned by a single business firm.

Advantages and Disadvantages of Chain or Multiple Stores
Advantages and Disadvantages of Chain or Multiple Stores

Advantages of Chain or Multiple Stores

The main advantages of chain or multiple stores may be explained as under:

1. Advantages of Large Scale Production

Since a large number of multiple or chain stores are established at various places, goods are produced or purchased by the central office of these shops at very large scale.

Thus, the owners of these stores get all the advantages of large scale production.

2. Need for Minimum Stock

Goods to all the stores are supplied from head office and these shops can get the goods of their requirements at very short notice.

The head office maintains minimum stocks and meets the requirements of all these stores.

Related: 31 Factors Affecting the Choice of Distribution Channels (Explained).

3. Economy in Advertising

Since all the shops deal in the same line of products, the central office can adopt a common advertising program for all the stores.

The advertisement made by the central office is the advertisement for all the stores.

Thus, the owners of these shops get economy in advertising.

4. Lower Selling Price

Since the goods are purchased and sold at a large scale, it reduces the cost of production and procurement.

It also enables the owners to sell their goods at reasonable prices.

5. Ability to Spread Risk

The principle of operating multiple or chain stores is not ‘to lay all the eggs in one basket’.

Since multiple or chain stores are located at different places, the risk of owners spreads all over the country and they can shift a unit sustaining a loss from one place to another.

Related: 15 Functions and Services of Retailers with Examples.

6. Speedy Turnover

Since multiple or chain stores are located in different localities and are in direct touch with the customers, they are in direct touch with the changes in the needs, demands, and fashion.

Therefore, they maintain the stock which can be sold fast, and thus, these shops can achieve speedy sales.

7. No-Risk of Bad Debts

Since the multiple or chain shops sell only for cash, there is no risk of bad debts.

8. Efficient Management

Highly qualified and experienced managers and employees can be appointed for the management of these shops.

It helps these shops to be managed very efficiently and effectively.

9. Research and Development

Since multiple or chain stores is a large scale retail organization, It provides an opportunity for undertaking research and development.

The owners can develop new models.

Related: 29 Important Services of Wholesaler in Marketing (Explained).

10. Elimination of Middlemen

Multiple/chain shops is a retail organization, the main object of which is to eliminate the middleman.

This organization helps in establishing direct contact with the manufacturer with consumers.

11. Easy to Recognise

Since all the multiple or chain stores are exactly similar in design, color display, and decoration, etc.

need and importance of chain stores
need and importance of chain stores

It becomes very easy for consumers to recognize these shops.

12. Availability of Standard Goods

Customers feed that these shops deal in standard goods only and for this reason, they prefer to purchase the goods from these shops.

Related: Top 17 Advantages and Disadvantages of Departmental Stores.

13. Uniform and Fixed Prices

Goods are sold at all the shops throughout the country at uniform prices and prices at these shops are always fixed.

For this reason, customers do not feel any need for bargaining at these shops.

14. Nearest to Consumers

As these shops are established in different parts of Different cities of the country, goods are made available to the consumers nearest to their home.

Disadvantages of Chain or Multiple Stores

Main disadvantages of chain or multiple stores/shops can be explained as under:

1. Need for Heavy Amount of Capital

As a large number of shops are established under this form of retail Trade Organisation, it requires heavy amount of capital.

2. Lack of Credit Facilities

As multiple or chain stores sell only on cash payment, a large number of customers who want to purchase goods on credit, cannot do so from these shops.

Related: 13 Main Types of Retailers in Marketing (With Examples).

3. Lake of Personal Services

As all the employees of multiple or chain stores work on a paid basis, they do not take pains in selling the goods and customers feel the lake of personalized service.

4. Inflexible in Practice

Multiples or chain stores deal only in standard and selected goods.

These shops Do not maintain variety. As all the shops are controlled from the central office, these shops cannot adjust to local conditions.

5. High Operational Costs

Chain stores are a large scale retail organization. Large scale operations create the problem of supervision, control, and coordination.

It increases the costs of operation considerably.

Related: 14 Principles of Planning – Explained with Examples.

6. Heavy Loss on Change in Demand

If the demand for the product being dealt with by the multiple or chain stores’ changes.

The organization has to suffer heavy loss because the total quantity of such product with all the shops throughout the country is always very high.

Thus, now you know the advantages and disadvantages of chain or multiple stores.

3 thoughts on “21 Advantages and Disadvantages of Chain or Multiple Stores

Leave a Reply

Your email address will not be published. Required fields are marked *