THE CHAIN" STORE—Continued 1. Price advantage.—The size of the chain-store systems and their peculiar advantages in buying give them certain advantages in selling. One of these sell ing advantages has to do with prices, and the other with service. The average consumer believes that all chain-store prices are low. Prices are low in many cases, but there are many chains in which there is no attempt to appeal on the price basis. The James Butler grocery stores in New York get trade largely by a low price appeal; the Park & Tilford stores, on the other hand, do not cater to the low price trade. Even when price is the bait, it is,not clear that all of the goods sold by the chain store are sold below the prevailing market price. Generalizations are not possible, and yet it is probably true that the majority of chains try to create the impression of low prices, and that many of them do offer some or all of their goods at low figures. The factors that make the low price appeal possible in chain stores are chiefly the following: 2. Good buying.—The opportunity to buy goods at low figures and to pass on the advantage to con sumers has already been noted. This is perhaps the only advantage which the large chain store naturally has over its small independent competitor. Its other apparent advantages are such as might be utilized by the well-ma,naged independent, either acting alone or in cooperation with other similar stores.
3. "Loss is said that tbe chain store often makes a habit of cutting the profit on standard and nationally advertised goods, and then, to make up the loss, takes a long profit on its own privately branded lines and on unbranded goods. Some chains have used this method of offering "leaders" constant ly, and other chains have done it at times. However, they are not alone in the practice; department stores and mail-order houses frequently bid for business by offering low-priced standard "leaders," attempting thereby to create the hnpression of a general low level of prices; and many independent stores do the same thing. The opportunity to do it on a large scale, nevertheless, probably is greater in the case of the store or chain of stores backed by large capital than in the ease of the small independent dealer who must make, or who thinks he must make, every cent of his capital bring him an immediate profit.
4. expenses and the heavy The chain stores are commonly thought to operate on a low expense basis, and the low expense, in turn, is supposed to be reflected in low prices. In some ways chain-store management permits the cutting of ex penses. For instance, the chain store usually carries a minimum of stock. It has facilities for getting ad ditional stock quickly from a central warehouse, and the individual store does not tie up its capital in excess goods to satisfy future demand. The central ware house must have the goods, but storing in a warehouse is ordinarily cheaper than storing on the shelves of a. store ; and, where several units in a chain of stores are located in one city, the city superintendent usually has better facilities for accurately measuring and pro viding for future demand than has the buyer for a single independent.
Another opportunity for cutting expenses lies in the chain's standardization of methods. For example, in the five-and-ten-cent stores, and in some of the grocery chains, the selling methods have been so standardized that salespeople require the minimum of personal initiative as well as little supervision by the management. Low-salaried people may often be employed both for selling and for supervising the sell ing in the individual stores. It should be noted, how ever, that in many of the chains the selling ability required and the wages paid compare very favorably with those of the best of the independents.
Another way in which some chains cut expenses is by the elimination of some so-called standard items of service. Several chains, notably the Penney depart ment stores ( formerly the Golden Rule stores) in the far West, do not deliver goods. Others deliver only purchases above a certain value, while others make a charge for delivery. Perhaps the majority of all chains do a strictly cash business. The saving in the cost of keeping book accounts, of making col lections, and the avoidance of credit losses constitute very real elements of expense saving.