Chain Store

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One Brand, Central Management, Standard Methods

A chain store is not defined by size alone. It is defined by connection: retail outlets that share a brand and central management, and usually have standardized business methods and practices. The shared brand means the same name, signage and identity appear in different places. Central management means pricing, buying, presentation and operating decisions are coordinated from a head office rather than left entirely to each shop. Standardized methods mean those decisions are then applied in a repeatable way, so a customer moving from one town to another finds a familiar store. An independent retailer, by contrast, trades under its own name, buys for itself and sets its own practices, even when it sells some of the same goods as a chain.

That model extends well beyond general retail. The same characteristics apply to chain restaurants and some service-oriented chain businesses. A restaurant chain is a set of related restaurants with the same name in many different locations, either under shared corporate ownership or under 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 example, but more upscale establishments also operate as chains, and restaurant chains are often found near shopping malls and tourist areas. Franchising is a variation on central control rather than an exception to it: individual operators run locations, but within a shared brand, format and menu set by the chain.

History, Scale and the Independent Response

In the United States, chain stores began with the founding of the first, and eventually the largest, chain, the Great Atlantic and Pacific Tea Company, A and P, in 1859. Growth was rapid in the following decades. By the early 1920s the United States boasted three national chains: A and P, Woolworth's, and United Cigar Stores. By the 1930s chain stores had come of age and stopped increasing their total market share. Legal resistance appeared early: court decisions against the chains' price-cutting appeared as early as 1906, and laws against chain stores began in the 1920s, along with legal countermeasures by chain-store groups. Scale continued to grow over the long term, and in 2004 the world's largest retail chain, Wal-Mart, became the world's largest corporation based on gross sales.

The displacement of independent businesses by chains has generated controversy in many countries, and has sparked increased collaboration among independent businesses and communities to prevent chain proliferation. Such efforts occur within national trade groups, as well as community-based coalitions and independent business alliances. National organisations promote these efforts in the United States, and in Britain community-based economics and independent ownership are promoted by foundations concerned with local economies. For clothing shoppers and apparel businesses, the practical point is the contrast the definition creates: a chain store offers consistency, central buying and a recognisable brand across many locations, while an independent store offers local ownership and individual character. Both are retail, but they are organised in opposite ways, and telling them apart starts with asking who owns the name, who manages the store, and whether its methods are standard across a network.