Tied Shop

Tied Shop is a business that has agreed to sell only a particular supplier’s products. It refers to a type of retail shop that is tied to stock and-sell goods of a particular manufacturer solely. It enhances its sales in preference to other goods. It is a public house rented from or mortgaged to a brewery with or through whom the local proprietor is pledged to do all his liquor buying. This type of business is usually found when a shop takes the sole selling agency of a particular commodity especially jewelry and fancied articles.

A tied house belongs to a farmer or other employer and is rented to someone who works for him or her.

Features

  • ​Dealership can be withdrawn if operators stock competing products.
  • The owner is normally the manufacturer.
  • Sells products from a single manufacturer.
  • Shops usually have the same design
  • Prices of goods set by the manufacturer
  • Prices of goods set by the manufacturer.

Advantages of Tied shops

  • The availability of goods is assured at all times.
  • The supplier carries out promotion for the goods.
  • The manufacturer/supplier can easily give credit to the shops.
  • Customers can return or change faulty goods at any of the shops.
  • The shops are easily identifiable due to their similarity.
  • Traders are financed by the manufacture
  • They get loyal customers who keep buying their branded products
  • Advertisement expenses are met by the manufacture
  • They get technical advice from the manufacture
  • Some operate from permanent premises owned by the manufacture.

Disadvantages

  • They are not permitted to hold or sell goods from other manufacturers.
  • The similarity of the goods may discourage buyers from buying more
  • Making decisions may take time as the manufacturer may need to be consulted.
  • If the manufacturer fails to bring or supply goods in time to the retailer, it may lead to losses.
  • Decision making is slow because the manufacturer must be consulted
  • The shops cannot sell goods from any other manufactures even if customers require them
  • Prices are fixed by the manufacture and sometimes profit margins may be low
  • They inhibit the retailer’s creativity and innovations
  • There is a likelihood of disagreements between the manufacture and the tied shop owners.