Top 17 Advantages and Disadvantages of Departmental Stores

A Departmental Store is a large establishment having in the same building a number of departments, each of which confines its activities to one particular branch of trade and forms incomplete unit in itself.

advantages and disadvantages of departmental stores
advantages and disadvantages of departmental stores

A Departmental Store offers many other facilities, such as recreations facilities, restaurants, postage, and telegram, telephone, and toilets, and many other facilities, etc.

Advantages of Departmental Stores

A Departmental Store is a large scale retail trade Institution.

Main advantages of this form of retailing may be explained as under:

1. Economy in Large Scale Buying

A Departmental Store purchases the goods in bulk quantity. It increases the bargaining power of the store. Manufacturers allow heavy discount to the Departmental Stores.

In addition to this, purchase in bulk quantity saves freight charges and carriage and cartage, etc.

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

2. Economic in Advertising

A departmental store is a large scale retail organization.

Therefore, it can afford to have effective advertising through various media of advertisement.

Large-scale advertising reduces the cost of advertising and increases its effectiveness. Departmental Store can perform sales promotion functions also side-by-side.

3. Economy in Overheads

As a Departmental Store carries on its business on a very large scale and the store is divided into several departments, overhead expenses incurred by the store are spread over a number of departments.

In addition to it, general overheads of Departmental Store are also reduced to a minimum because of large scale trading.

4. Services to Customers

Departmental stores offer valuable services to customers. Almost all the goods of daily use are provided to them under one roof.

Once a customer entered a Departmental Store, he does not need to move from one shop to another for buying his requirements.

He finds all in Departmental Store that he needs.

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

5. Service Element

Departmental stores offer many other services to customers other than offering goods of their needs.

The facilities of postage and telegram, telephone, toilet, restaurant, playing games, etc are provided by a Departmental Store.

6. Assured Sale of Standard Goods

Departmental Store deal in standard products only. It develops faith among Consumers that they are getting the full worth of their money.

7. Effective After-Sale Services

Departmental store’s do not only sell but provide effective after-sale services also.

Customers are given a guarantee for a certain period of time and if they feel any problem during this time, they can go to the store and get their problem solved.

Related: 15 Functions and Services of Retailers with Examples.

8. Helpful to Customers in Making Selection

Departmental Stores serve not only as a big market but also as a faithful friend.

These stores maintain large varieties of goods and help customers in making a selection. Top departmental store name list by countries.

9. A Symbol of Modernisation

In big cities, departmental stores are becoming more and more popular among consumers because these stores are developing as a status symbol.

Consumers feel it pride to go into Departmental Store for making the purchase.

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

Disadvantages of Departmental Stores

Some of the Important disadvantages of departmental stores are as under:

1. Need for Heavy Amount of Capital

Heavy amount of capital is required to be invested in a Departmental Store.

supermarket advantages and disadvantages
supermarket advantages and disadvantages

Therefore, it cannot be started by a person of Limited financial resources.

2. Lack of the Facility of Credit

Departmental Stores sell goods only on cash or online payment.

It makes it difficult to purchase from departmental stores for the customer who wants to make the payment on a monthly basis or on credit.

Related: Top 9 Advantages of Logistics or Physical Distribution (Explained).

3. Heavy Operating Expenses

As a Departmental Store is operated large scale and many facilities are provided to the customers, it increases overheads of the store considerably.

In addition to it, a Departmental store stresses upon advertisement, sales promotion, proper display, and decoration, etc. It also increases its overheads.

4. High Prices

It has been a General complaint against the working of departmental stores that the prices of commodities at these stores are higher than the market rates.

Its main reason is heavy amount of expenditure incurred by the stores.

All the overhead are added to the cost of commodities and it increases their price.

5. Lack of Personnel Services

Customers of a Departmental Store are attended by its employees who do not care about the feelings and emotions of these consumers.

Thus, the consumers of a Departmental Store with a lack of personal service.

Related: 37 Essential Qualities of Successful Entrepreneur (Must Know).

6. Social Discrepancy

Departmental stores are suitable only for rich people because the price of commodities sold at stores is generally higher than the market price.

Fo this reason, the consumers of the low or middle-income group cannot afford to go to these stores.

7. Located at Central Place

Departmental Stores generally located at the central place of the city.

It makes it difficult for most of the consumers to come and purchase from these stores.

Related: 16 Need and Importance of Business Environment (Updated).

8. Difficult to Manage

As a Departmental Store is operated at a very large scale, it becomes very difficult to manage it properly.

Thus, now you know the advantages and disadvantages of departmental stores.

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