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Discuss the features of a departmental store. How are they different from multiple shops or chain stores?

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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 storesMultiple 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 servicesThey 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 failureThey 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.

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