CHAIN STORES VS DEPARTMENTAL STORES — SIMILARITIES AND DIFFERENCES

Chain stores are collections of shops owned by one firm and selling the same goods.

Chain stores may also be defined as a group of retail outlets distributed over a locality, specializing in the sales of a particular type of product.

Chain stores are sometimes called multiple shops.

On the other hand, a departmental store is a retail outlet which sells a wide variety of goods, under one roof.

Departmental stores get their name from the fact that various departments, each specializing in the sale of one particular type of goods, sell goods under one building.

This post will explain the similarities and distinctions between chain stores and department stores

Similarities Between Departmental stores and Chain stores

1. Both are forms of large-scale retailing: Department stores and chain stores are both examples of large-scale retailing because they carry out their operations on a massive scale.

2. Both have Centralized management: Both departmental stores and chain stores have centralized management and control

3. Both have large Operating costs: Both departmental stores and chain stores have large operating costs arising from their large scale of operation

4. Requires large capital: Large amount of capital is required to start a department store or chain of stores.

The large capital requirements arise from the fact that both must buy a large number of goods before beginning business operation.

5. Centralized purchase of goods: The central management makes the product acquisition decisions for both chain and department stores

This allows both to enjoy the economies of scale of large purchasing of goods.

Differences Between Chain stores and Departmental stores

1. A department store has various departments housed within the same building, whereas a chain store has numerous branches spread across various localities.

2. Each branch of chain stores sells the same products, as opposed to a department store, where each department specializes in selling a particular category of products that are distinct from those offered by the other departments.

In short, chain stores sells a variety of the same type of product whereas departmental store sells a variety of different type of product.

3. In a department store, each department sets its own prices for the products it sells.

In contrast, the head office of chain stores set the price at which goods are to be sold uniformly in all branches.

Simply put, a departmental store have variable prices depending on the department while chain stores have uniform prices.

4. Chain store branches typically share the same design and appearance.

This contrasts with a department store, where each division is distinguished from the others by having a unique design and appearance.

5. Since similar goods are sold in all chain stores, a customer can pick up goods they have purchased in one branch from a different branch.

This is not possible in departmental store because different department sells different kinds of goods.

6. A chain store has branch management, but a department store has departmental management.

7. Chain stores specialize in selling one specific category of products, typically those made by a manufacturer

For example, McDonald's restaurant mainly deals in Fast food.

In contrast, department stores sell a wide range of products, such as food, drinks, furnishings, and personal care products

Macy's, for instance, sells a wide range of products, including cosmetics, clothing and accessories for men, women, and children, as well as home furnishings and other consumer goods.

8. Department stores typically offer consumers convenience amenities like ATMs, restaurants, telephones, and restrooms in addition to their regular sales of goods and services.

Except for restrooms, which are deemed vital for customers' convenience, chain stores normally do not offer convenience services.

9. Despite the fact that they occasionally have branches, department stores are designed to be in one location so that a large number of customer can be attracted to them.

Chain stores are not centrally located and usually have branches so that they can approach a large number of customers.

Therefore, while having branches is required for chain stores, it is not required for departmental stores.

10. Department stores faces more risk than chain stores because a fire disaster could destroy all of their inventory and infrastructure.

Remember that all stocks and property of departmental stores are usually located in one place.

On the other hand, chain stores face less risk than departmental stores since they have multiple branches and are not houses in a single structures

So, a fire disaster will only affect one of its branch

11. A chain store aims to bring products closer to the customer through its branches, whereas a department store aims to satisfy all consumer needs under one roof.

12. A departmental store may provide credit facilities to some of their regular customers whereas chain stores do not provide credit facilities to their customers.

READ ALSO: SUPERMARKET VS DEPARTMENTAL STORE— DIFFERENCE AND SIMILARITIES

Tabular comparisons of Chain stores and Department Stores

Features Departmental storeChain stores
MeaningA retail outlet with many departments selling different types of goodsA network of retail outlets which are distributed around a locality
Operating costsHigher than that of chain storesLesser than that of a departmental store
Large scale retailingYesYes
Require large capitalYesYes
Bulk purchase of goodsYes, as purchases is made centrally by the management of the storeYes, as purchases are made centrally by the Head office of the chain stores
Have branchesNo; not compulsoryYes, because that is the whole essence of chain stores
Identical appearanceNo because each department has a different product designYes because each store has the same product design
Deal inDifferent variety of goodsOne type of good
Uniform pricesNoYes
Offer convenient servicesYesNo
LocationCentrally located, as the whole idea of a departmental store is to satisfy customer needs under the same roofDistributed across a locality as the whole idea of a chain store is to approach the customer in their place of work and residence.
RiskInvolves higher risk than chain storesInvolves lesser risk than a department store
Credit facilityAvailable for a few trusted customersNot available; deal mainly on a cash basis


To sum up, the primary difference between chain stores (multiple shops) and department stores is that the former have branches that are dispersed over a nation or region, whilst the latter have departments housed under a single roof.

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