Disadvantages of Department Stores
Department stores are not without disadvantages which are as follows:
1. Excessive expenses
2. Compelled to lower prices
3. Divided purchasing power
4. Unattractive to some customers
1. Excessive Department
Stores incur high expenses in establishing and conducting their Expenses business because of which they are found in limited numbers. The reasons for a high cost are as follows:
a. They are usually established in big and posh shopping centers where the buildings are very costly. Therefore, even the initial establishment cost is very high and a great part of investment is siphoned off by the building.
b. Services like credit, home delivery, air-conditioning, and sales returns incur much expense increasing the cost of doing business.
2. Compelled to Low Prices
They do not allow the merchandise lying unsold on racks or after a particular period of time, and try to sell such goods even at a lower price – Prices or through clearance sale. As soon the racks are cleared they are replaced with fresh merchandise. The practice of lowering prices causes lower profits.
3. Divided Purchasing Power
Although their purchase bill goes into millions of dollars, purchases per department remain low that results in lower quantity discount and loss of Power buying command.
4. Lack of Attraction for Some customers
Some customers dislike purchasing from the department store for the following reasons:
Customers Sales staff doesn’t come up to their standard.
Self-service prevents some customers to buy from here because they want personal attention.
Most of department stores comprise many floors where customers don’t like to go, because going up and down there requires much time and labor.