Tied shops are a type of small-scale retailer with shops
These are shops that mainly sell the products of one particular manufacturer or are owned by a specific supplier of certain goods.
The shops are owned or controlled by the manufacturer and are thus tied to the manufacturer. The manufacturer/supplier designs the organization of the shop and its appearance e.g. painting hence they look alike.
The supply closely supervises the shops. Examples of tide shops include; Bata shops which sell shoes made by Bata Company, petrol stations like National, kenol Kobil, and total energies
Advantages of Tied shops
· Availability of goods is assured at all times since the manufacturer ensures a steady supply of goods to meet customer demand
· The manufacturer/supplier can easily give credit to the shops due to the contractual agreement between the tied shop operator and the manufacturer
· Customers can return or change faulty goods at any of the shops provided they provide a valid receipt of purchase
· The shops are easily identifiable due to their similarity in design and branding.
· Traders are financed by the manufacturer hence aid in financing
· They get loyal customers who keep buying their branded products due to consistent products quality
· Advertisement expenses are met by the manufacturer where the manufacturer carries out promotion for the goods hence making the tied shop operator focus on sales of goods
· They get technical advice from the manufacturer hence aid in the proper handling of goods
· Some operate from permanent premises owned by the manufacturer and hence enjoy lower operating costs.
Disadvantages of Tied shops
· Decision-making is slow because the manufacturer must be consulted which requires confirmation that takes time.
· The variety of goods is limited hence customers’ choice is limited to available products only.
· The shops cannot sell goods from any other manufacturers even if customers require them hence limiting the operator of the tied shop.
· Prices are fixed by the manufacturer and sometimes profit margins may be low hence resulting in a lack of competitive pricing which could lead to loss of customers.
· They inhibit the retailer’s creativity and innovations due to the specific design to be maintained hence limiting the shop operator’s choice.
· There is a likelihood of disagreements between the manufacturer and the tied shop owners which could lead to the closure of the tied shop.
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