Not all dealers can belong to cooperative groups, however. That the dealer competing alone need not despair is proved by the thousands who are doing busi ness successfully in competition with even the great est of the chains. Two bases of competition are open to him—price and service. As far as price may be based on quantity discounts in buying and on secret discounts the independent dealer cannot compete with large chains. But low prices based on quick turn over and low profits are as possible to him as tbey are to the chains. The independent usually does not try to compete on a strict price basis, however. As one chain-store official has put it: The chain store may be able to undersell the independent, but it can't "over-serve" him. The small profits of the chain store business necessitate the most rigid economy in operat ing—economy which must be extended to the labor item. The labor item is almost an unsolvable one for the chain store, for low wages and loyalty rarely go hand in hand. The chain is likely to be deficient in two great fundamentals —personality and personal service—and these are the inde pendent retailer's salvation.
13. Learning from the chain.—Many keen busi ness men welcome chain-store competition because it wakes up the trade, starts people to buying new things and more things, and lifts the level of retail efficiency. If chain stores have done nothing else, they have been great educators of retail merchants. The dealer who keeps his eyes open and studies the methods of his chain-store competitor, unconsciously puts himself thru a course of training that makes him a better merchant and enables him to compete. with the chain store on its own basis of service. There is no reason why any dealer cannot adopt the same means of cut ting down expense that are employed by chain stores, except of course such savings as are attributable solely to large-scale organization. In many lines it is only the merchant who refuses to change his ways, who is blind to new methods in merchandising, and who really prefers to complain rather than to compete, that need fear ehain-store competition. The individual
store owner always has the advantage in that his busi ness is his own—it reflects his own personality; and if his personality is right, he can gain a personal hold on his trade that is unattainable by the paid manager of a mere link in a great machine-like chain of stores.
14. Chain stores and the inanufacturer.—The manufacturer, perforce, must take a keen interest in the development of chain stores. If he is a national advertiser he often looks on the chains with distrust and suspicion. So many chains have built business on the basis of cut prices, particularly on nationally advertised goods, that the manufacturer often con siders them a menace. Furthermore, the common practice of chains of putting out and pushing their own brands of package goods means a decreasing market for the advertised goods with which the pri vate brands are in competition. Again, some manu facturers dislike the chains because the chain buyers often insist on prices lower than those that independ ents will pay.
On the other hand, the chains unquestionably pro vide a tremendous outlet for an enormous variety of manufactured products. Somebody must supply them. To some extent the chains are providing their own sources of supply thru acquired or controlled factories, but it is not conceivable that these factories will ever entirely, or even largely, supplant the need of goods from independent manufacturers. Thou-11 sands of manufacturers find in the chain quick, sure and profitable markets for their products; and, be cause of their size and their great influence in mer chandising, the chains are bound to be considered carefully as possible channels of distribution by every manufacturer who has anything to market that the chains will handle.