Departmental stores are not free from limitations. The limitations are as follows:
1. High cost:
One of the major disadvantages of such stores is that the cost of doing business is very high. Due to excessive departmentalisation and additional facilities offered, cost of such business remains high. In order to cover such costs, goods are generally sold at a high price. As a result, only rich customers who care for quality and services take the advantages of departmental stores.
Image Source: sastratechnologies.in
ADVERTISEMENTS:
2. Local inconvenience:
Since departmental stores are situated at central shopping areas, people living at distant places can not avail the services of such stores. For buying daily use goods and frequently purchased items, such stores are of little use since the customer cannot go to a long distance to purchase daily use items. Rather, customers prefer purchases from nearby shops.
3. Higher rent for premises:
ADVERTISEMENTS:
As departmental stores are located at central shopping areas, the rents of such premises are usually very high. This also adds to the overhead expenses.
4. Lack of personal touch in selling:
In departmental stores, there is always absence of personal touch in selling because of hired salesmen, managers and supervisors. These hired personnel with different likings and temperaments cannot provide personal attention to the customers. On the other hand, a small retailer can pay personal attention to the needs of the customers.
5. Lack of proper supervision:
ADVERTISEMENTS:
There is always a lack of proper supervision in the departmental store operations because of the expenses of the business. Management has to depend upon managers and supervisors who may lack interest in the business.
6. Large capital:
Departmental store requires large amount of capital for establishment and operation. In fact, a departmental store cannot be started with small capital.
7. Higher risk of loss:
Risk of loss is always higher in departmental stores. Due to undersale, some departments may face loss. Sometimes the departmental store has to sell the old stock at reduced prices to replace the old goods. This clearance sale may also lead to heavy loss.
8. Limited scope in India:
Departmental stores have not been popular in India. It cannot be opened in remote villages or small towns. They require huge capital and high managerial talents, which is lacking in India.