Chain stores begin
Chain stores emerged as a significant retail phenomenon in the early 20th century, with notable growth particularly during the 1920s when they accounted for nearly half of all consumer sales in groceries and a substantial share of sundries and nonprescription drugs. These stores, while locally owned and operated, followed policies set by a parent company, allowing them to leverage economies of scale and national branding. The Greater Atlantic and Pacific Tea Company (A&P), which began in 1859, exemplified this model, expanding to over four thousand outlets by 1920. The rise of chain stores was fueled by an increase in the prosperity of middle- and working-class Americans, who sought the familiarity and convenience of chain stores as they moved to suburban areas.
By 1930, chain grocery stores dominated the market, with over 65,000 outlets. However, their growth spurred concerns among local independent merchants, who argued that chains monopolized supplies and undermined small businesses. Investigations into their practices revealed that while chains provided real benefits to consumers, they also faced criticism regarding their impact on local economies. Ultimately, chain stores contributed to a shift in consumer culture, increasing the material standard of living while promoting cultural uniformity across different regions. The retail landscape continued to evolve post-World War II, moving towards larger supermarkets that catered to changing consumer needs.
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Subject Terms
Chain stores begin
A significant phenomenon in the 1910s, chain stores underwent explosive growth during the 1920s, accounting for close to half of consumer sales in groceries and a significant portion of sundries and nonprescription drugs by 1930. The lower costs and more ready availability of consumer items made possible by chain stores contributed to a higher material standard of living for Americans.
A chain store differs from a single business with multiple branches in that each store is locally owned and operated, but the store policies are determined by the parent company. Chain stores are able to take advantage of economies of scale in procuring merchandise and benefit from national advertising and brand recognition.
Chain stores were already a feature of the American business landscape before the outbreak of World War I. The earliest, the Greater Atlantic and Pacific Tea Company (A&P), started out in New York City in 1859 as a single store selling mainly tea imported directly from China. By 1920, the company had over four thousand outlets throughout the United States and offered a full range of groceries at economy prices. Other chains already successful in 1920 included Woolworth’s, Kroger, J.C. Penney, and Walgreens. In the decade that followed, chain stores rapidly expanded throughout the United States.
The Spread of Chain Stores
During the 1920s, a general increase in the prosperity of middle- and working-class people created a huge demand for mass-market consumer goods. Many people were moving into new suburban neighborhoods, away from familiar local businesses, and found in the chain stores something of the familiarity and predictability they had left behind in the old city neighborhood. The chain stores’ lower prices—achieved through bulk purchasing, dealing directly with the manufacturer, and more streamlined retailing, including prepackaging and self-service—were a large draw. The chain store of the 1920s was a relatively small establishment, offering a limited range of merchandise. Most people still shopped on foot, so stores were tied to neighborhoods.
The numbers of stores in the larger and more enduring chains peaked around 1930. Between 1915 and 1930, the number of chain grocery stores in America increased tenfold, while the sales volume per store remained relatively flat. After 1940, the numbers declined, while total sales and sales volume per outlet both increased sharply. In 1930, chain groceries were the largest chain-store sector, with 927 chains and over 65,000 outlets. A&P, the largest chain, had more than $1 billion in annual sales. Other chains included tobacconists, shoe stores, apparel, bakeshops, restaurants, and an auto parts supply chain. In 1925, Sears Roebuck, already a large mail-order firm, began opening retail outlets.
Chains helped institutionalize features that were only incidental to the main product being sold but came to be associated with a particular type of business, such as the variety store lunch counter and the drugstore soda fountain. Drugstores became the usual outlet for a variety of consumer products because local blue laws permitted them to remain open on Sunday.
Backlash
The exponential growth of chain stores and their increasing share of the retail market came, to some extent, at the expense of local independent merchants. These complained, not without justification, that the chains monopolized supplies, sold at a loss to put local merchants out of business before raising prices, skimped on wages, and returned less of their profits to local communities than local businesses.
In 1928, the Federal Trade Commission (FTC) investigated whether the growth of chains was producing monopolies or violating antitrust laws, whether the claimed savings represented real results of greater efficiency or unfair trade practices, and whether there was an overall benefit to the consumer. The FTC found no chain qualified as a monopoly, the benefits to the consumer were real, and unfair practices that existed were not limited to chains. In the late 1920s, state and local legislators sponsored many bills aimed at curbing the spread of chain stores, but few became law; of those that did, many were challenged successfully in court.
Impact
Chain stores increased the material standard of living for the average American family and provided greater individual freedom of choice in consumer goods. They contributed to cultural uniformity and blurring of regional differences by favoring large manufacturers and national distribution networks over local products. Of the hundreds of retail chains operating in 1930, only a few survive today as distinct entities. Many businesses closed their doors during the Depression, and when the consumer economy revived after World War II, the trend was toward supermarkets and larger retail establishments offering a greater range of goods under one roof, catering mainly to shoppers with automobiles.
Bibliography
Lebhar, Godfrey M. “Chain Store Progress.” Chain Store Age 6, no. 1 (1930): 31–32, 63. A good contemporary review from the industry perspective.
‗‗‗‗‗‗‗. Chain Stores in America, 1859–1962. New York: Chain Store Publishing, 1963. Provides the industry perspective with many statistics. Offers good if biased coverage of legal battles in 1920s and 1930s.
Plunkett-Powell, Karen. Remembering Woolworth’s: A Nostalgic History of the World’s Most Famous Five and Dime. New York: St. Martin’s Press, 1999. Concentrates on the shopping experience and the social role of Woolworth’s, with many illustrations.
Randall, Geoffrey, and Andrew Seth. The Grocers: The Rise and Rise of Supermarket Chains, 3d ed. London: Kogan Page, 2011. Emphasis is on Great Britain, with one section dealing with chain store development in the United States.