THE CHAIN STORE 1. Rise of the chain store.—The newest competitive factor in the retail field is the chain store. Quietly, without ostentation, the foundations for the chain store system of retailing were laid almost as far back as Civil War times when the Great Atlantic and Pacific Tea Company and, later, a few other com panies began to extend their operations over wide sections of the country. For many years the pioneers in the field conducted their business with profit to themselves and with constantly increasing efficiency, without receiving much attention from manufactur ers, from legislators or from trade journals. The public patronized the chain stores in increasing num bers, and other forms of retail establishments with which the chain stores came into competition gradually awoke to the competitive strength of the new method of retailing. Until comparatively recent years, how ever, the growth of chain stores was gradual and un ostentatious. They were not given general consid eration either as a menace or as an opportunity by the other factors in the merchandising field.
2. Kinds of chains.—The awakening of general public interest in chain stores dates from the remark able spread Of the five-and-ten-cent store idea, from the spectacular rise and success of the United Cigar Stores Company, and from the increasing application of the chain plan to groceries and drug stores. Even this development, however, has not centered upon the problem of the chain store the same degree of popular interest as that which has attached to the better un derstood methods and problems of the mail-order houses and-department stores. A few chains are na tional in scope, but most of them are local, and the weat majority of the latter are confined to the East. Countless communities know nothing of thain stores. The idea is spreading; the West and the country towns are being invaded, and it is high time for manu facturers, jobbers and retailers, as well as for the buy ing public to give careful thought to this newest and, in many ways, strongest factor in retail competition.
There are four kinds of chains. First come the retail corporations owning many stores. Well-known examples are the F. W. Woolworth Company, United Cigar Stores Company, Childs Company (restau rants), and the Owl Drug Company on the Pacific Coast. Next in importance are the manufacturers'
chains of retail stores or branches. Among the bet ter known are Browning, King & Company (men's clothing) , Huyler's (candy), W. L. Douglas Shoe Company and the Singer Sewing Machine Company. If we confine the term chain stores strictly to stores that are under one ownership and direction, then re tail corporations and manufacturers' chains are the only ones properly included. The term is commonly used, however, to include two other types. Retail buying associations or combines are growingly im portant competitive factors. For example: the United Drug Company (Rexall stores), American Druggist Syndicate and the United Buyers' Service for variety stores. Finally, there are consumers' co operative retail chains. They consist of several stores, owned cooperatively by consumers, and operated to a varying extent on the chain-store principle. Altho common abroad, such chains are in their infancy in this country. In addition, there are various inter mediate types, such, for example, as certain loosely connected systems of dry-goods stores which, while commonly owned, exercise relative independence in operation. In this and the following chapter the first two types are chiefly considered. The latter two are considered in Chapter XIV on Substitutes for the Middleman.
3. Importance of the chain-store movement.—The independent retailer sees in the chain store a worthy competitor. In some fields the chain store has revo lutionized retailing, has sent many old-line dealers to the wall, and has forced many others to do a new type of business. The jobber sees in the chain store an organization that deprives him of much of his best business and that usurps jobbing functions and jobbing profits. The manufacturer who advertises and trade-marks his goods finds many chain stores unwilling to cooperate with him. If they handle his products, he often believes them guilty of price-cut ting and substitution. Finally, the consumer, whose interests, of course, are paramount, finds that many chains deprive him of some of tbe forms of retail serv ice to which be has been accustomed, others add new kinds of service, and nearly all of them use the low price appeal in one vvay or another in order to get his trade.