What are the disadvantage of departmental store?


A departmental store suffers from the following limitations:

1. High cost of operations:

A departmental store requires a large building at a central place. It has to incur heavy expenditure on salaries, maintenance of building, customer services, adver­tising, etc. As a result, establishment and overhead costs of operations are very high.


2. Higher prices:

Due to high operating costs, prices of goods in a departmental store are comparatively high. Only rich persons can afford to buy goods at a departmental store.

3. Distance:

A departmental store is located at a central place. It is away from people living in suburban areas. They have to travel a long distance to reach the store. People living in far-flung colonies and middle class may find it more convenient to buy from local retail shops.


4. Lack of personal touch:

The management of a departmental store finds it very difficult. To maintain personal contact with the customers the salaried staff may not take interest in securing the satisfaction and goodwill of customers.

5. Difficulty in coordination:

It may be difficult to ensure effective supervision and coordi­nation between a large numbers of departments. As a result wastage and pilferage of goods may be high. Customers may misuse liberal amenities.


6. Difficult to establish:

A large amount of capital investment and a large number of specialised persons are required to establish a departmental store. There is limited scope for departmental stores in developing countries like India.

7. High Risk:

Due to central location and large scale operations risk of loss is very high. Changes in tastes and fashion and market fluctuations may lead to heavy loss.

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