page_title: Paul Nystrom
section_title: Organization of the department store
hierarchical_section_title: Paul Nystrom / Work / The Economics of Retailing, 1915 / Organization of the department store
caption_attribution_description: English: Chart showing Internal Organization of Department Store, 1915
context_page_description: Paul Henry Nystrom was an American economist, and professor of marketing at Columbia University. He is most known as pioneer in marketing, and for his The Economics of Retailing and his Economics of Fashion.
context_section_description: In chapter 12 Nystrom described the organization of the department store and introduced two types of organizational structures. He introduced the department store as "a retailing institution that deals in several lines of goods, each line separated or 'departmentized' from the rest, both in location within the building and in the concern's accounting and management systems. Each department is considered practically as a store in itself, and in large stores each has its separate organization of buyer, or department manager, and salespeople, much the same as any independent store."
  About the organization he explained:
  "In a department store, each department or section is considered as a separate specialty store or shop. Its accounts are kept separate, and under normal conditions it must stand on its own feet ; that is to say, it must pay its own expenses, and its prorated share of the general expenditure for rent, light, heat, power, insurance, office up-keep, and so on. In addition to this it must seek to make a net profit.
  Each department has its own organization for buying and selling goods, consisting in the former case of its manager or buyer and necessary assistants such as assistant buyer, head of stock, and salespeople. In these respects the department is exactly like a specialty store, but the accounting, advertising, stockroom work, credits and collections, handling of the cash paid out and received, and the delivery of the goods is done for the individual department by special departments organized to serve all of the merchandise departments in the store. The specialty store, selling one line, has its own accounting, advertising, credit, cash, and delivery departments, but in a department store of forty sections, for example, there is but one of each of these departments to serve all of the forty sections."
  More specific on the charts, he noted:
  "The charts will make these relations more clear and indicate the difference between specialty store organization and department store organization. In Chart 1 the single merchandise department of the specialty store is served by all of the surrounding departments. In Chart 2 the merchandise departments A, B, C, D, E, F, G, and H are all served by the same number of special departments, excepting that one new one has been added, viz., merchandise manager. This official acts as a sort of head buyer for all departments, apportions the buying funds among the departments, advises the buyers, gives approval or disapproval to department sales policies, and so on."
caption: Internal Organization of Department Store.
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