4. Magnitude of the movement.—Few people have any conception of the magnitude of the business done by the chain-store system of the country. One chain alone, the Woolworth five-and-ten-cent stores, in 1916 did over $87,000,000 worth of business. This enor mous total resulted from the sale of such widely varying articles as jewelry, sheet music and confec tionery. A few chains are said even to surpass these tremendous figures. Altho it is impossible to quote accurate figures, owing to the rapidly changing con ditions in the field and to the difficulty of secur ing complete statistics, it is safe to say that in the United States there are more than 2,000 different systems of chain stores, each one with three or more stores, and aggregating at least 25,000 stores in all. This total is relatively insignificant when compared with the total of three-quarters of a million retail stores in the country. Moreover, the strength of the chain stores is largely concentrated in a fevv lines in the cities, and in a relatively few cities at that. The largest number of chains is in the grocery field, prob ably 500, or a quarter of all the chains, with a total of about 8,000 stores. This is only five per cent of all the ,E,Trocery stores in the United States. But in the few cities where chain groceries are largely concen trated the chains often do twenty-five per cent of the business, and in Philadelphia their share is said to be as much as seventy per cent. It is this intensive char acteristic of chain-store competition, together with the rapid spread of the chain-store idea into new sections and new lines, that makes the chain store something to be carefully considered in any scheme of distribu tion.
5. Some better knor.cn importance of the chain store can be judged from the number of stores operated by some of the better known sys tems in 1916. Great Atlantic and Pacific Tea Com pany (groceries, national in scope), 2,339 stores; Louis K. Liggett Company, operating the Riker negeman, Riker-Jaynes and Liggett's drug stores (local New York and New England), 139 stores; United Cigar Stores Company (national), about 1,000 stores; Owl Drug Company (sectional, Pacific Coast), 22 stores; F. W. Woolworth Company (na tional), 805 stores; S. S. Kresge Company (5-and-10 cent, national), 152 stores; Baltimore Dairy Lunch (national), 117 lunch rooms; Childs Company (na tional), 86 restaurants; J. C. Penney Company (small town department stores, sectional, the far West), 126 stores; R. II. Long (Waldorf Shoes, national), 47 stores; W. L. Douglas Shoe Company (national), 101 stores; the Regal Shoe Company (national), 48 stores ; W. T. Grant Company (25 cent stores, sectional, the far East), 24 stores.' Some few years ago a list was prepared of over fifty different lines of business in which chain stores were found. Apart from the corporations mentioned in the preceding paragraph, the list gave some other important chains with the number of stores at that time as follows: James Butler (groceries, local, New York), 238 stores ; Scotch Woolen Mills Com pany (tailors, national), 117 stores ; Gately's Credit Clothing Company (national), 115 stores; Union News Company (news stands, sectional, the East), 900 stands; Singer Sewing Machine Company (na tional), 800 stores.
Notable also are the two great retail buying as sociations in the drug field: the United Drug Com pany (Rexall stores), stock in which is owned by over 7,000 druggists in all parts of the country; and the still more extensive American Druggist Syndicate, formed by an association of 16,000 retail drug stores. Both of these chains, while known partly as cooperat ive buying organizations, also engage largely in manu facturing, and the Rexall stores have advertised their products nationally.
6. Tendencies in the are several noteworthy tendencies that must be considered in a study of chain stores. Among the most impor tant is the tendency to consolidate competing chains. For example, the Kroger Grocery and Baking Com pany, starting as a local chain in Cincinnati, in 1908 absorbed the 60 stores of a local competitor, and more recently has acquired rival chains of grocery stores in St. Louis and Detroit. Early in 1016 the L. K. Liggett Company, owning 45 drug stores in Boston and vicinity, acquired a controlling interest in the 107 stores of the Riker-Hegeman and Riker-Jaynes drug chains in Greater New York and New England. The Liggett Company, in turn, is owned by the United Drug Company, stock in which, as has already been stated, is largely owned by about 7,000 widely scat tered retail druggists.
Another significant development is the expansion of certain chains, by means of agencies, into small communities no one of which could support a separate store of the chain. The United Cigar Stores Com pany follows this policy. Another important move ment is the control of entire factories by some of the retail chains. Such movements have suggested to some people that retail merchandising in certain lines will ultimately be concentrated in the hands of a few great chain systems. Whether this will happen or not, the development of the chains is sufficiently sig nificant to warrant careful study of their strength and of the possibility of successful competition against them on the part of independent retail units. In the present study of these problems we shall draw our il lustrations largely from the type of chain stores previ ously designated as retail corporations—a type in which there is central ownersbip and direction, and no necessary connection with any factory. Much of' what is said, however, applies equally to other types— manufacturers' chains, retail combines and coopera tive chains.