Pros and Cons of Multiple Stores

Multiple stores are shops with other branches in many places especially selling one type of specific product. Examples of multiple stores include Bata shoe shops that only sell footwear. They are mainly large in size and specialize in a certain product. They are decentralized but they are managed centrally.

They only allow cash sales and they display their products uniformly. They receive supplies from central places and they have uniform prices on their products.

Pros and Cons of Multiple Stores

Pros of Multiple Stores

  1. Economy in advertising

The multiple stores enjoy the economy in advertising. This is achieved by one advertisement resulting in sales all over. As their shops are found in many places and offer the product at a uniform price, this enables customers from all over to get access to the product at the same price.

  1. No risk of bad debts

As the shops do not offer goods on credit, there is no risk of bad debts hence it has minimal expenses on the follow up of the customers to pay the debts.

  1. Speedy turnover

As the shops have branches all over and are supplied from the central point, it makes the product to be sold all over hence they experience high turnover.

  1. Able to spread risk

The shops have branches in other places hence in case of anything bad happening it only affects one shop with its stock but the other shops will not be affected hence the risk is spread all over.

  1. Advantages of large scale production

The shops enjoy advantages of large scale production as they will be able to produce goods in large quantity for the purpose of distributing them to other branches hence they enjoy the advantages of large scale production.

  1. Efficient management

There is efficient management in that the stores are managed centrally hence they only receive guidelines from one point.

Cons of Multiple Stores

  1. Needs a high amount of capital

The stores need a high amount of capital for them to be started because their production is large and they also need to meet the transport cost of the products from the central place to other branches.

  1. High operational cost

The stores need a high amount of money for them to be operated as they will need someone to manage each branch and also pay the workers who work at each branch.

  1. Heavy loss on change of demand

When the demand for the product goes down then the store runs at a loss as they will not be in a position to meet its expenses.

  1. Lack of credit facilities

The stores do not offer goods on credit. This makes it hard for those customers who do not have enough money to purchase the goods from the stores hence they only encourage a few customers to buy the goods from the stores.

  1. Lack of personal services

They do not offer personal services and this may make it hard for the customers to understand how they can use the product hence they do not prefer the stores.

Summary

The multiple stores only earn a profit when there is a high demand on the product they deal in but in case the demand goes down then they are bound to run at a loss.

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