Chain store

A Target chain store.

Chain stores (also called retail chains) are a range of retail outlets which share a brand and central management, usually with standardized business methods and practices. They are a type of business chain. Such stores may be branches owned by one company or franchises owned by local individuals or firms and operated under contract with the parent corporation. Features common to all chains are centralized marketing and purchasing, which often result in economies of scale, meaning lower costs and presumably higher profits.

By 2004, the world's largest retail chain, Wal-Mart, was the world's largest corporation in terms of gross sales.

History

Retail chain stores in the United States expanded in the early 1900s, but A&P grocery, Woolworth's and Sears Roebuck had their origins in the late 1800s. In the early 1900s, mail-order companies began taking retail business from local stores, which tended to be expensive and offer limited selection. Department stores also expanded during this period, taking business from small specialty shops. In 1929, North Carolina and Indiana taxed chain stores (defined as a second store owned by a single owner), and other states followed.

The internet has led to new methods for chain store promotion and shopping. Most business chains have a website allowing customers to purchase their goods through the internet. Many restaurant chains make their menus available online for pre-purchase or browsing. Supermarkets allow their groceries to be delivered by purchase through the company's website. Websites such as Amazon.com allow chain stores to list their items on there for the convenience of the customer, and other websites browse chain stores for the cheapest price listing of a particular item.

Overview

There are different type of chains that describe what kind of products the company creates. Business chains encompass many industries, including music, clothing, and electronics stores. Restaurant chains are a type of business chain, but they create a different kind of consumer product than traditional business chains, and therefore operate under different guidelines.

Business Chains

A business chain is a network of physical business locations, which all provide similar services or products, and share a brand. A retail chain is a type of business chain. They inevitably also share some degree of central management, supply chains, training programs, personnel, etc. They tend to either be parts of a single company or franchises, in which individual store owners license the use of the shared brand, training, and know-how. Chains of both main sorts tend to make purchases and licensing agreements as a single entity. Exceptions to these generalizations include Steve's Pizza in New York and EasyPizza in London. Even two stores or restaurants or businesses owned by the same person or group can constitute a local chain. Some large chains — McDonald's, for instance — are among the largest retail businesses in the world.

Restaurant Chains

A restaurant chain is a set of related restaurants, usually with the same name in many different locations either under shared corporate ownership (e.g., In-N-Out Burgers in the U.S.) or franchising agreements. Typically, the restaurants within a chain are built to a standard format and offer a standard menu. Fast food restaurants are the most common, but there are also midscale upscale establishments (T.G.I. Friday's, Ruby Tuesday, etc.). Restaurant chains are often found near shopping malls and tourist areas.

The proliferation of chain restaurants (and other chain businesses) is becoming an increasingly controversial trend worldwide. A common concern is nation-wide homogenization of culture, low wages often paid to employees of chain restaurants, and the furthering of suburban sprawl. In the U.S., a movement is building among communities and independent businesses opposing this trend. Examples include the American Independent Business Alliance, The New Rules Project and the Council of Independent Restaurant Associations.

Criticisms of Chain Stores

Some argue that the standardized products which result from such centralization are culturally detrimental; for example, chain music stores are frowned upon by some for stocking works of more popular music if they exclude less well known, usually independent artists. Critics of chains allege that they are economically damaging to communities because they extract capital that otherwise would recirculate in the local economy with independently owned businesses.

The displacement of independent businesses by chains has generated controversy in many nations and has sparked increased collaboration among independent businesses and communities to prevent chain proliferation. Such efforts occur within national trade groups such as the American Booksellers Association and Council of Independent Restaurants of America as well as community-based coalitions such as Independent Business Alliances. National entities like the American Independent Business Alliance and The New Rules Project promote these efforts in the U.S. In Britain, the New Economics Foundation promotes community-based economics and independent ownership. Studies have also suggested that the probablity of success with opening an independent non-franchise business is greater than opening a franchise business. While there may be more franchises to contend with, the presence of the independent business is also a draw for the consumer.

References

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