Although there are various advantages of departmental store, it has some disadvantages such as huge capital requirement, limited customers, no personal contact, high operational costs etc.
The main demerits or disadvantages of departmental stores are as follows:
The main demerits or disadvantages of departmental stores are as follows:
1. Large investment of capital
Large amount of capital is required to operate departmental store. The business entrepreneurs having limited capital cannot operate departmental stores.
2. Limited number of customers
Departmental store attracts mainly rich class customers. poor customers hesitate to enter departmental stores. It becomes difficult for some customers to buy goods from departmental stores, they feel uneasy to buy goods, takes longer time and prices of goods is higher in departmental stores.
3. Lack of personal contact
Lack of personal contact is another disadvantage of departmental stores. The businessmen of departmental stores cannot establish personal contact with customers. Moreover, as employees operate departmental stores, they do not pay attention to the department of departmental store nor do they take interest in sales promotion. As a result, business may get badly affected.
Compared to other retailing institutions, high cost goes in the operation of departmental stores, because they provide more facilities to customers. Most rent for building, advertisement cost, expenses for the control of employees, etc. also cause increase in operation cost.
5. Unsuitable location
Mostly, departmental stores are established in the center of cities. Some customers may feel easy but many others cannot reach or feel uneasy to go to departmental stores. As a result, they buy necessary goods at nearby retailers. Due to crowd, jostling, hub-bob, difficulty in parking etc. some customers do not like to go to departmental stores.
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6. Difficulty in management
Departmental stores are difficult to efficiently manage and run smoothly. Very efficient, skilled and able manager is needed. Otherwise, it becomes impossible to operate departmental stores.
