Departmental stores are basically large, fixed establishments that deal in a wide variety of products. The following points highlight the features of a departmental store:
1. Central locations: Department stores are generally located in central areas so as to attract a large number of customers.
2. Defined hierarchy: The management in departmental stores follows the same hierarchy that is generally followed in any joint stock company. That is, the top management consists of a board of directors, with the managing director, the general manager and the department managers under it in that order.
3. Absence of middlemen: Departmental stores purchase goods directly from manufacturers and sell them to customers. Thus, they eliminate the role of middlemen.
4. Centralised purchase with decentralised sales: In a departmental store, the purchases from manufacturers are handled by a single division that follows a centralised purchase policy. On the other hand, the sales are handled by the respective sections of the departmental store, which follow a decentralised policy for sales. Differences between Departmental stores and Multiple shops
|Basis of difference ||departmental stores||Multiple shops|
|variety of products ||They offer a wide variety of products to customers.||They deal in a single line of product and specialise in it .|
|customer services||They are located in central parts of cities so as to attract a large number of customers.||They offer limited customer services.|
|Location ||They are located in central parts of cities so as to attract a large number of customers.||They have multiple locations - that is, they are spread across cities or towns.|
|pricing policy ||They do not follow a fixed pricing policy as the prices of products vary across departments.||They follow a fixed pricing policy across all the shops that are parts of particular chain.|
|cost of failure||They have a very high cost of failure because of the huge initial and operating expenses.||They have a limited cost of failure because that initial investment is very large and the losses of one shop can be covered by the profits of others.|