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.

Chain stores create an unprecedented convenience for contemporary society. Chain stores consistently carry the same merchandise, which means that it is easy to find desireable products by the type of chain store. An electronics store will have the same stock in one location as it does in another location, making them recognizable and dependable. Large chain stores carry many types of item in one place, becoming a primary store for all necessary products.

Chain stores can also launch innovative new products with a higher chance of success due to customer traffic and in store advertisements. Franchises can also bring local products to different areas: a product made popular in a set location has the ability, through chain stores, to reach a much wider audience. These companies also increase economic competition; various franchises will compete with each other by lowering prices, much to the benefit of the customer.

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.

Examples of Chain Stores

Below is a small list of business and restaurant chains:

• Best Buy
• Boscov's
• Checkers
• Chick-Fil-A
• Costco
• Dave and Buster's
• Kroger
• Olive Garden
• PetSmart
• Rock Bottom
• Target
• Trans World Entertainment
• Waffle House
• Wal-Mart

Criticisms of Chain Stores

As chain stores have become established in towns and cities everywhere, some lament the loss of the small "mom and pop" shops that may be unable to compete with the larger outlets. On the other hand, chain stores can prove beneficial to the local community by offering a wide variety of products and services, job opportunities, and often lower prices.

It can be argued 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.

Locally owned stores, even if they do charge more for what they sell, may be better for a town than chain stores, because local owners are more involved in civic affairs and because they conduct more of their own business locally.

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 probability 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.

Conclusion

Chain stores can be seen as a representation of a consumer driven capitalist society. They stock commodities that come to define social status, making chain stores social institutions that shape the cultural landscape. Franchises sell products that consumers need and want, but they are also responsible for telling consumers what they need and want.

Chain stores have also been criticized of eroding community character and weakening local economies. Communities that once had small independent stores which were run by members of that community are now being pushed out of business by massive strip malls and franchises. Tax incentives and development subsidies give national chains an edge over small businesses. Chain stores are also criticized as "category killers," major chains do not only aim to move independent businesses out, but to eliminate them completely, making the major chains the only competition. Ideas that chain stores bring in new community revenue are faulty, chain stores simply take money consumers would have spent at other stores. No new revenue is being generated, it is simply old revenue in a new place. If a chain store undercuts the competition and, within a few years, does not meet national standards, that store will close, leaving an empty building and no other option in the area due to the closure of small businesses.

With the rise of chain stores comes a homogeneity of society: the same products are desired by the population because of their availability in these stores, and the more people purchase these commodities, the more people will want them. Large chain stores carry more general merchandise; instead of specializing in one area, they have multiple brands for a variety of items. This is seen as an efficient way to attract customers to a store; two customers that may be looking for different products will end up at the same store, providing business for that chain that may have been lost elsewhere. Chain stores are a welcome part of society by the consumer because they create jobs and house mass quantities of products in one convenient location.

References

ISBN links support NWE through referral fees

• Engdahl, Kirsten (Editor). 2006. Are Chain Stores Ruining America?. Greenhaven Press. ISBN 0737730951
• Mitchell, Stacy. 2000. The Home Town Advantage: How to Defend Your Main Street Against Chain Stores and Why It Matters. Institute for Local Self-Reliance. ISBN 0917582896
• Mitchell, Stacy. 2006. Big-Box Swindle: The True Cost of Mega-Retailers and the Fight for America's Independent Businesses. Beacon Press. ISBN 0807035009
• Shuman, Michael H. 2006. The Small-Mart Revolution: How Local Businesses Are Beating the Global Competition. Berrett-Koehler Publishers. ISBN 1576753867

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