CHAIN STORES are groups of retail stores engaged in the same general field of business that operate under the same ownership or management. Chain stores have come to epitomize the vertically integrated big businesses of modern mass distribution, and their strategies have shaped mass consumption.
Modern chain stores began in 1859, the year in which the Great Atlantic & Pacific Tea Company opened its first grocery store (A&P). F. W. Woolworth, the innovator of five-and-dimes, opened his first variety store in 1879 in Utica, New York. Chain-store firms grew enormously over the next few decades, both in sales and in numbers of stores, and by 1929 accounted for 22 percent of total U.S. retail sales. Growth was most dramatic in grocery retailing and in variety stores. But chains also proved successful in other fields, including tobacco stores (United Cigar Stores), drug stores (Liggett), and restaurants, like A&W root beer stands and Howard Johnson's.
The popularity of chains was not the result of extensive choice or services; executives limited the range of goods stores sold and kept tight control over store design and managers' actions in these relatively small-sized stores. Low price was the biggest drawing card, and ads prominently featured sale items. Lower costs and lower prices were the result of these firms' investments in their own warehouses and distribution networks and of "economies of scale"—lower unit costs through high-volume sales.
Growth also depended on several other important strategies. Chains lowered labor costs by adopting self-service, encouraging customers to choose goods for themselves rather than to go through a clerk who would procure goods from a storeroom or locked case. Firms also developed specialized techniques for choosing store sites. Executives fueled the real estate boom of the 1920s in their fevered search for sites that would attract the maximum possible number of potential customers—so-called 100 percent locations. Finally, in their ongoing attempts to increase sales, chain stores proved willing to sell in African American and white working-class neighborhoods. These actions won them the loyalty of shoppers who appreciated that chains' standardized practices generally translated into more equal treatment of customers than did the more personal, but sometimes discriminatory, service in grocery and department stores. Promises of autonomy and independence were especially compelling to the women customers targeted by grocery-store chains. Thus, social dynamics as well as low price help to explain the success of chain stores.
In the 1920s and 1930s, independent druggists and grocers urged Congress to pass legislation that might halt or slow the growth of chain-store firms. Neither the movement nor the resulting legislation—notably the Robinson-Patman Act (1936) and Miller Tydings Act (1937)—proved effective in stopping the growth of chains or, more importantly, in providing significant help to smaller, independently owned stores. Indeed, chain-store firms won government support by proving themselves useful partners in new attempts to regulate consumption in federal and state food-stamp and welfare programs, new sales taxes, and wartime rationing and price controls.
A more serious threat was the growth of a new kind of store—the supermarket. Supermarkets were often run as very small chains or as single-store independents and were physically much larger than chain stores. A single supermarket sold many more goods, and many more kinds of goods, than did most chain stores of the interwar era. These stores were often located in outlying urban areas and in the suburbs. Large chain-store firms at first balked at the notion of building fewer, but larger, stores. By the 1950s, however, most chain grocery firms were building supermarkets, and chain firms in other fields, particularly variety and housewares, also came to adopt these strategies. Large self-service stores built on the fringes of cities or in suburbs came to define mass retailing.
By 1997, the U.S. Census Bureau determined that "multi-unit" firms—firms that consisted of two or more retail establishments—made more than 60 percent of all
retail sales. Even independently owned retail businesses were often affiliated through voluntary chains, cooperative wholesalers, or franchise systems that clearly recalled chain store firms. Thus many stores, regardless of the type of ownership, came to resemble one another in terms of the way they looked and the strategies they employed. Americans' experience of shopping had been transformed by the rise of chains.
Deutsch, Tracey. "Untangling Alliances: Social Tensions at Neighborhood Grocery Stores and the Rise of Chains." In Food Nations: Selling Taste in Consumer Societies. Edited by Warren Belasco and Philip Scranton. New York: Rout-ledge, 2001.
Tedlow, Richard. New and Improved: The Story of Mass Marketing in America. New York: Basic Books, 1990.
See alsoRetailing Industry .
A chain store consists of two or more retail outlets, operated by the same company, which sell the same kind of merchandise. The innovation of the chain store was conceived by American businessmen George Gilman (1830?–1901) and George Huntington Hartford (1833–1917) who, in 1859, set up the Great Atlantic & Pacific Tea Company in New York City. Better known as A&P, the stores proliferated rapidly, and other chain stores opened their doors for business, such as W.P. Woolworth (established 1879) and J. C. Penney (1902). The early twentieth century saw tremendous growth of the chain stores: Between 1910 and 1931, the number of A&P stores grew from 200 to more than 15,000. Department stores, also a byproduct of the late-1800s, catered to middle and upper class customers. Chain stores, including Woolworth's "Fiveand-Dimes" (which sold many items at low prices), served lower-income consumers.
Chain stores offer consumers many advantages and operate within all major retailing categories (including grocery stores, department stores, drugstores, as well as apparel and food outlets). Their system of centralized, mass buying allows them to acquire merchandise from manufacturers and wholesalers at reduced costs. Savings are passed along to the consumer, who pays less for the item. Further, chain stores can economize on advertising: A single ad placement promotes all the stores within the chain. During the 1920s independent retailers rallied against the chain stores, claiming they had unfair advantages. This argument has resurfaced off and on throughout the twentieth century as chain stores entered into more and more retailing sectors including hardware, jewelry, furniture, music, and books. But the only federal legislation that constructively attempted to regulate the chain stores came in 1936: the Robinson-Patman Act, which tried to control competition. Today chain stores account for roughly one-third of all American retail sales.
See also: Department Store, Mail-Order House