Other chains grant to the store managers and sales people a large measure of individual initiative. They encourage the development of brains and ability in every way possible, seemingly without losing any of the efficiency of careful organization. In both types of stores there is one outstanding advantage which the small independent dealer cannot have. A chain of stores is a big business ; it does business on a large scale; it can pay large salaries when necessary. Accordingly it can employ high-salaried men in all ex ecutive positions to study, plan and direct the work of subordinates all the way down the line. Salaries are not the only measures of ability; and the supreme ability of an executive at the home office may not be reflected in the activities of his subordinates in dis tant chain stores. Nevertheless, the chains, theoreti cally at least, have an advantage over some of their smaller competitors to the extent that high salaries can command men more skilled in competitive strat egy than can smaller salaries or small profits.
9. Advantages in advertising.—In many ways the chains have strength in advertising. The mere num ber of the stores is a continual advertisement which suggests success and business on a large scale—two things which always attract trade. Moreover, the fa miliar store front, carefully standardized with a view to its effect on the public, is like an old friend to a consumer moving to a new tovvn or to a new part of a town; he is inclined to patronize it instead of going to a strange store. The individual retail store is often a poor advertiser. The manager of a chain store may know just as little of advertising, but there is a man at headquarters who knows much about it; he can aid the local manager with his advertisements or prepare them for him. A small independent store cannot advertise largely in the papers of a great city; it would not pay to do so; it must often confine itself to small space. A chain of stores with many branches in a city can advertise largely in the locality ; it can erain attention and interest thru the mere size and number of its announcements. If a chain is widely spread over the country, it may even advertise on a national scale in mediums of general circulation.
Not all chains advertise in newspapers and magazines, however. Many of them limit themselves to such devices as coupons, premiums, and trading stamps. In this they have no advantage over the independents except when the chains own their own coupon or trading-stamp system, thereby being able, if they want to, to pocket an extra profit or to pass on a saving to customers in the form of greater premium value.
Accounting.—The final common source of strength in chain stores lies in their accounting meth ods. Continual, automatic stock-taking and careful accounting are fundamentals in most chain systems. Many retail stores know little of these things. Drug
gists, for instance, are often priniarily professional men, and only incidentally merchants. Many retail crrocers are former salesmen who have had little chance to study accounting. Manufacturers of store equip ment are doing yeoman senice in educating retailers in better methods of accounting, but the carefully or ganized chains have still the advantage over most in dependents. Accounting in the chain system is by no means an end in itself, but is used constantly to di rect the selling campaign. A falling off in one store today must be accounted for, and if the falling off continues,' something radical must be done about it. A good retail accounting system shows what lines are profitable and what are not, it directs attention to waste, it gives accurate costs of doing business, and reveals many other things which are vital to retail successes.
11. Weakness of chain stores.—The chain-store pathway is not entirely smooth. There are plenty of stones scattered around to trip the unwary. Not all chains are successful. Many have fallen by the way side, and the reason usually has been—weakness in personnel. This difficulty has already been sug gested. A hired manager is usually not so efficient as a man who works for himself. A great, machine-like organization is likely to have some weak cogs that weaken the whole structure. Employes who are too cheaply paid cannot be depended on to give the serv ice that more self-respecting salespeople will give, even when the work is thoroly standardized. The constant problem of the chains is to get good man agers. The human problem is the difficult one to solve, and the inability to solve it is usually the cause when chains go under.
Another weakness of chain stores is the temptation to expand faster than capital permits. One store is a success; the proprietor adds another. It, too, is a success. The owner seems to see unlimited easy money, and branches out faster than he is warranted in doing. This difficulty is certainly not a necessary one and most chains successfully avoid it.
12. Meeting chain-store competition.—The advan tages of the chain store in competition are many and important, but this does not mean that the individual store owner who is suddenly confronted by chain-store competition need sell out to the chain system, or stoically stick to his shop and await a more or less lingering business death. In increasing numbers the independent dealer is joining with his fellows in co operative associations, which give to their members many of the advantages of chain stores. The chain's advantages are largely due to the size of the buying units rather than to mere central ownership. As far as this is true, the cooperative buying associations will prove strong competitors of the chains. The coopera tive groups are to be considered in more dethil in the chapter on Substitutes for the Middleman.