A retail establishment that offers a wide range of consumer goods in different areas of a store with each area specializing in a product category, is called a department store. Department stores made a dramatic entry in major modern cities in the middle of the 19th century. Their entry marked a new era and permanently changed shopping habits – thereby reshaping the luxury and service industry.
What Do Department Stores offer?
A department store is generally designed to offer a wide variety of goods like:
- DIY Products
- Gardening needs
- Home Appliances
- Sporting Goods
- Photography equipment
- Baby Products
- Pet Products
Most consumers generally check out near the front of the store. Some traditional, high-end department stores include sales counters within each department. Some stores are a part of a large retail chain, while others are stand-alone independent retailers.
Types of Department Stores and Their Features
There are a few different types of departmental stores that are usually found in a city. These include:
These are usually retail chains that feature and sell products at a lower rate than the market price. They usually provide a large discount on buying bulk quantities of a product.
Off Price Stores
These are stores that are owned by a particular brand or a conglomerate and sell products of that particular brand or conglomerate. In these stores, consumers can buy directly from the manufacturers, thus availing themselves of discounted products from that brand.
These stores are owned by a single manufacturer brand and feature and sell products only from that brand. They stock a wide range of products from that particular brand.
Junior Departmental Store
These stores are smaller in size, and specifically feature products of a higher price range, usually not found in regular stores. The different departments of these stores usually operate independently but under a single management.
Category Specific Stores
These departmental stores only store large quantities of category-specific items. All products related to that specific category can be found in such a store.
Such stores are the largest format of a departmental store and double as a warehouse for various brands. They store and sell products in bulk quantities. Their operational method is also a little different from the other types of stores.
How to Start a Departmental Store?
The basic objective of a departmental store is to act as a universal supplier for a large variety of merchandise under one roof.
However, its primary identity is that of a business model that needs to register a profit. Anyone who works in retail will say that the top three important things to keep in mind while starting a departmental store are “position”, “position” and “position”.
Apart from this, there are various things to consider when starting a departmental store. These are:
The place where the store is to be located plays a vital role in the success of the store. While choosing a location, it is important to note that the competition around is low and that the store is located in close proximity to high footfall areas and residential localities. The rent of the place should not be very high.
The amount of initial investment that is required rather depends on the type of store that one intends to open. The consideration of investment depends on whether the departmental store is a franchise outlet or a self-starter.
- Considerations for a Franchise Outlet:
- The initial fee and ongoing royalties to the franchisor.
- There are specific needs for the size and the interior design of the store.
- There might be pre-conditions on a certain product sale.
- There might be costs involved in setting up the technology required.
- Considerations for a Self-Starter store:
- Costs involved in renting/purchasing the store.
- Costs involved in interior design.
- Finding distributors for good quality products offering good margins.
- Recurring business costs.
There is a need to prepare an exhaustive list of inventory needed for the initial stock and recurring replenishing. Also, an understanding of the consumer preference for brands and products. Also, it is eventually more profitable to directly deal with the manufacturers rather than middlemen.
Licenses and Documentation
There are several types of licenses and documentation required to start a departmental store.
- Identity Proof
- Registered Office address proof
- Address proof
- GST Certificate
- FSSAI License – for food products
- Shop and Establishment license
- Fire Licence
- Any other Licences as per local regulatory laws
Staff Requirement and Hiring
Depending on the size of the department store and the volume of business, the number and type of staff needs to be decided. The store requires sales staff, billing staff, security staff as well as inventory staff. There might even be a seasonal requirement for contractual staff.
The most important activity for a business to thrive is marketing. The target audience and potential customers must be engaged with direct and indirect marketing, print advertising and social media marketing.
Advantages and Disadvantages of a Departmental Store
When chalking out the various requirements of starting a departmental store, it is wise to also take into consideration their many advantages and disadvantages. These are helpful in making informed, well-thought-out decisions that have a great impact on future success.
Advantages of a Department Store
- Shopping Convenience
- Wide choice of products
- Economies of a large scale
- Liberal services of home delivery, accepting orders from multiple sources like phone, email, WhatsApp, etc.
- Central location
- The economy of Advertising multiple products
- Large sale volume
Disadvantages of a Department Store
- Localised service
- High Operational cost
- Higher price due to high operational cost
- Absence of personal contact
- Lack of coordination among different departments
The concept of departmental stores has developed over time and taken various shapes. Technological innovations have also impacted the way departmental stores operate. The new breed of departmental stores have adopted the Omni-Channel mode of retailing to cater to the internet-savvy customer where convenience and ease of ordering online and delivering offline have become the norm. Other innovations, such as artificial intelligence-based checkout counters that reduce human intervention. Going forward, there will be many more advances in the way departmental stores function. The key is to keep abreast of the changes and incorporate those that are most advantageous to the store.
What is called a departmental store?
A retail establishment that offers a wide range of consumer goods in different areas of a store with each area specializing in a product category, is called a department store.
What are the items in the departmental store?
Items in a departmental store vary from store to store. It is generally designed to offer a wide variety of goods like Clothing, cosmetics, furniture, home appliances, sporting goods, and more.
How do I start a department store?
The steps involved to start a department store are:
- Finding a location
- Planning investment
- Planning of inventory
- Licenses and Documentation
- Staff Requirement and Hiring