Reduced Costs

• Centralized decisions reduce overhead, including cutting down on the number of employees involved in buying merchandise and other decisions, according to "Retailing Management." With concentrated leadership, fewer people participate in decision-making, and front-line employees take direction from leaders at the top. By centralizing, you can also cut down on the amount of office space and resources used in the field or at the store level to develop and implement plans.
  
  

Lower Supplier Prices

• A major advantage of centralized buying activities is that it gives your company greater leverage in negotiating with suppliers. One buyer representing several hundred or several thousand stores has a better ability to negotiate volume deals and discounts than many localized buyers making deals for their individual areas or stores. It is also easier for a single buyer or buying group to build long-term relationships with suppliers, which may lead to loyalty discounts.
  
  

Optimized Decision-Making

• Having your most talented buyers, human resource professionals, finance people and other specialists actively involved in all critical decisions is a primary reason why many companies choose centralization as a strategy. When you decentralize and empower a larger pool of people to make high-level decisions you are at much greater risk of poor decisions and mistakes. Having your top talent making all key decisions also improves consistency across the company and brand.
  
  

Increased Efficiency

• Concentrating decisions reduces inefficiencies that emerge in communication and implementation when many people at various levels are involved. One standard operating policy set at the top and well communicated is much simpler and easier to implement across the company, notes "Retailing Management." Ongoing debate about what to do in various situations and time-consuming back and forth is eliminated when central leaders make decisions.