Chain stores or multiple shops is a retail organization composed of two or more retail stores, owned by and operated under one management.
A chain store is the number of retail stores operating under common ownership and management constitutes a chain.
Characteristics of Chain Stores or Multiple Shops
Following are the most characteristics of chain stores or multiple shops:
1. Large Scale Retailing
It is basically a system of large scale retailing.
Such stores deal with articles for everyday use.
They are branded, they have a quick turnover and are of standard quality. It eliminates middlemen.
2. Approaching the Customer
Under the chain shop arrangement, the main idea is to approach the customers and not to draw the customers to it as it is practiced in the case of the departmental store.
In order to approach more customers, attempts are made to open a large number of shops in the same city at different places.
The chain store goes nearer to customers inviting the buyers for shopping.
Such types of stores can be found in residential areas. they eliminate middlemen.
3. Same Lines of Products
Chain stores handle a single line of products. They specialize in one or two articles.
The articles are sold by all the similar shops.
They concentrate on a limited number of merchandise.
4. Convenience Goods
Products of chain stores fall under the category of convenience goods which are required by almost all people.
Chain stores deal with a limited number of merchandise.
They create a specialization in which they deal.
Chain stores are characterized by a high degree of standardization.
They sell standard products through standard procedures.
Chain stores have the uniformity of shops and their identity.
The layout of shops, the design, color, counter arrangements, products, racks, promotional tools, and materials bear the identical features.
Uniform shapes are found there.
As such, customers can easily recognize the shops.
8. One Ownership
The chain store system has many shops under one ownership.
Chain stores are owned and operated by a manufacturer or a group of manufacturers.
9. Centralized Buying
The central organization in the chain store buys the products and supplies them to all the branches.
The managers of the individuals’ stores have nothing to do with the purchases of products in which they deal.
10. Decentralized Selling
The shops under the chain store system are established in various cities and in various areas of the big cities to sell the merchandise.
The selling function is decentralized.
11. Uniform Prices
The prices of multiple stores remain uniform.
Selling prices are stamped on the article, which is sent to branches.
The articles are sold at the market price.
There is a fixed price policy for all the shops.
12. Cash Dealing
Chain stores operate on the “cash and carry” principle and do not allow credit.
The goods are sold on a cash basis and delivered at the shop itself. Home delivery is not practiced.
13. Central Management
Although the day to day managerial activities of chain stores are decided by local managers, the matters of important decisions and policymaking are centralized at the headquarters.
Strategic decisions are made at the Head Office.
The operating policies typically are standardized for all the units in a chain.
14. Minimum Size of Chain
Technically, two or more stores constitute a chain. Regarding the size of the chain store system.
Many small merchants that open several stores in shopping centers and newly populated areas do not think of themselves as chain, however.
Consequently, it might be more meaningful to consider a larger number of stores as a reasonable minimum when categorizing a retailer as a chain.
15. Horizontally Integrated
Multiple shops are operated horizontally. The addition of new stores increases the customers.
Central management buys in large lots.
It creates specialized and centralized merchandising, buying, promotional activities and central administration spread over to all chain stores. 31 Factors Affecting the Choice of Distribution Channels (Explained).
16. Vertically Integrated
In the chain store system, large distribution centers are established.
To store the merchandise, a central system has the arrangement of tucks or station wagons by which goods are distributed to various chain stores.
In every respect, the stores are integrated into the central office.
Thus, now you know the characteristics of chain stores or multiple shops.