*****Characteristics of Chain Stores
Chain Stores have become a go-to place for customers around the
world for ful illing their multiple shopping needs. As such, it
becomes essential for us to understand the main aspects of chain
stores and why they are so popular among shoppers. The
characteristics of the Chain Stores are as follows:
Large Scale Retailing – Chain stores are basically a system that
involves large scale retailing. These stores mainly sell articles of all
kinds, from the ones which are used every day to the luxury items. It
tries to cater to customers who are looking for a one-stop shopping
experience to ful il all their needs. These stores are branded, their
turnover is pretty fast, and they maintain a decent standard when it
comes to the quality of products as well as the shopping experience.
Approaching a Customer – The success of any chain store revolves
around the manner in which they approach the customers and try to
address their shopping needs. This approach is very different from
the departmental stores who focus more on drawing the customers.
Chain stores try to approach more customers at a time by opening a
large number of shops within a city or town but at different places.
This way they can go nearer to where the customers live and make it
more convenient for them to approach the stores. They operate
primarily in residential and of ice spaces, thus completely
eliminating the middlemen while also providing great discounts to
the customers.
Same Line of Products – Chain stores generally focus on handling a
single line of products. They mostly specialise in one or two articles
for a product line. The articles are sold by all the similar shops. They
concentrate on a limited number of merchandise products that are
related to the convenience goods category because they are always
in demand among the consumers. These goods ensure a high
turnover and are a constant source of revenue for the store.
Specialisation – The chain stores deal with a limited set of
merchandise products. It helps them to focus on a specialised line of
goods that they can deal with, that are also popular with the
customers, thus ensuring high turnover.
Uniformity – These chain stores focus on standardisation and
uniformity. They have a uniform logo, colour, product line, layout,
colour, counter arrangements, etc., to help customers recognise and
associate with these elements easily.
Single Ownership – Under the chain store system, there are a
number of shops, but they are all managed by a single manufacturer.
Chain stores are owned and operated by a manufacturer or a group
of manufacturers. The advantage of single ownership is that there is
a proper chain of command for everyone who works in the
organisation and ensures a smoother work low in the company.
Centralised Buying and Decentralised Selling – The central
organisation in the chain store buys the products and supplies them
to all the branches. The shops under the chain store system are
established in various cities and in various areas of the big cities to
sell the merchandise. The selling function is decentralised.
Uniform Pricing – One of the central characteristics of chain stores
is that their pricing for a particular product or service remains
uniform across multiple stores. The pricing is decided by the central
of ice, which they stamp on the article, and then it is sent to the
different branches and stores.
Dealing with Cash – Most, if not all, chain stores are operating on the
cash and carry model. They do not allow credit sales for anyone. The
goods are sold in the retail shops and delivered to the customer.
There are no facilities for home delivery that are provided by the
store.
Central Management – It is important to note that the chain stores
are generally controlled by a centralised management system. The
daily managerial activities of these stores are under the supervision
of local managers. But the important decisions and the
policymaking process is under the purview of the headquarters. The
headquarters are responsible for making strategic decisions. They
also deal with the operating policies, which are standardised across
all the units of chain stores.
Minimum Size – Technically, the chain starts with two stores, but it is
up to the management on how many chain stores they want to
operate at a point in time. Many small merchants who open multiple
stores in the shopping centres or newly populated areas do not see
themselves as chain stores. But it is more meaningful to look at a
larger number of stores as the minimum criteria for categorising
any retailer as a chain.
history *****
In 1792, Henry Walton Smith and his wife Anna established W.H.
Smith as a news vending business in London that would become a
national concern in the mid-19th century under the management of
their grandson William Henry Smith.[2][3] The world's oldest
national retail chain, the irm took advantage of the railway boom
during the Industrial Revolution by opening news-stands at railway
stations beginning in 1848.[3] The irm, now called WHSmith, had
more than 1,400 locations as of 2017.[4]
In the U.S., chain stores likely began with J. Stiner & Company, which
operated several tea shops in New York City around 1860.[5] By
1900, George Huntington Hartford had built The Great Atlantic &
Paci ic Tea Company, originally a tea distributor based in New York,
into a grocery chain that operated almost 200 stores. Dozens of
other grocery, drug, tobacco, and variety stores opened additional
locations, around the same time, so that retail chains were common
in the United States by 1910. Several state legislatures considered
measures to restrict the growth of chains, and in 1914 concern
about chain stores as a factor in passage of the Federal Trade
Commission Act and the Clayton Antitrust Act.[6]
Post card ad listing eight cities and towns where Dewachter Frères
offered "ready-to-wear clothes and by measure for men and
children," c. 1885
Isidore, Benjamin and Modeste Dewachter originated the idea of the
chain department store in Belgium in 1868,[7][8] ten years before
A&P began offering more than coffee and tea. They started with four
locations for Maisons Dewachter (Houses of Dewachter): La
Louvière, Mons, Namur and Leuze.[7] They later incorporated as
Dewachter frères (Dewachter Brothers) on January 1, 1875.[9] The
brothers offered ready-to-wear clothing for men and children and
specialty clothing such as riding apparel and beachwear.[8] Isidore
owned 51% of the company, while his brothers split the remaining
49%.[9] Under Isidore's (and later his son Louis') leadership,
Maisons Dewachter would become one of the most recognized
names in Belgium and France with stores in 20 cities and towns.
Some cities had multiple stores, such as Bordeaux,
France.[8][10][11] Louis Dewachter also became an internationally
known landscape artist, painting under the pseudonym Louis
Dewis.
By the early 1920s, chain retailing was well established in the
United States, with A&P, Woolworth's, American Stores, and United
Cigar Stores being the largest.[12] By the 1930s, chain stores had
come of age, and stopped increasing their total market share. 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.[13] State taxes on
chain stores were upheld by the U.S. Supreme Court in 1931.
Between then and 1933, 525 chain-store tax bills were introduced
in state legislatures, and by the end of 1933 special taxes on retail
chains were in force in 17 states.[14]
**** meaning
A chain store or retail chain is a retail outlet in which several
locations share a brand, central management and standardized
business practices. They have come to dominate the retail and
dining markets and many service categories, in many parts of the
world. A franchise retail establishment is one form of a chain store.
In 2005, the world's largest retail chain, Walmart, became the
world's largest corporation based on gross sales.[1]
Chain stores or multiple stores are retail networks owned and
operated by manufacturers or intermediaries. A number of shops
with similar appearances are established in localities spread across
the country under this type of arrangement. These various stores
typically sell standardised and branded consumer goods with an
elevated turnover of sales. These stores are managed by the same
company and have identical merchandising strategies, along with
identical products and displays
De inition: A chain store is de ined as a retail outlet of a larger irm
that sells the same or comparable goods as other retail outlets of
the same company. All chain stores of a parent company or brand
have a central management system as well as a standardized store
layout, product offerings, and signage.
The irst chain store was opened by A&P grocery in 1859. The
company built multiple stores in the Northeast and eventually
became the largest grocery store chain in America. A&P was able to
open so many stores and become successful due to the economies of
scale that came with mass production and distribution.
Nowadays, chain stores are often found in malls and shopping
centers. You might be familiar with some popular and large chain
stores such as GAP, Forever 21, H&M, Sephora, and Macy’s. The name
of the world’s largest retail chain store is Walmart.
features****
1. Accessibility: These stores are located in reasonably populated
areas where a suf icient number of customers can be approached.
Rather than attracting customers to a central location, the idea is to
serve them at a location close to their home or workplace.
2. Cost reduction: Merchandise manufacturing/procurement for all
retail units is centralised at the head of ice from which goods are
dispatched to each of these shops based on their needs. As a result,
these stores’ operating costs are reduced.
3. Centralised Control: Each retail store is directly managed by a
Branch Manager, who is held accountable for its day-to-day
activities. The Branch Manager sends daily reports to the
headquarters regarding sales, cash deposits, and stock
requirements.
4. Supervision: The head of ice monitors all of the branches and is in
charge of formulating policies and ensuring that they are
implemented.
5. Transparency: The prices of goods in such stores are ixed, and all
transactions are conducted in cash. The cash lows from
merchandise sales are deposited daily into a local bank account on
behalf of the head of ice, and a report is sent to the head of ice in
this regard.
6. Regular Inspection: The head of ice usually appoints inspectors
who are in charge of the day-to-day supervision of the shops,
including the quality of customer service provided, adherence to
head of ice policies, and so on.
7. Prices: Prices of goods are centrally ixed at all the stores.
8. Window Dressing: All the stores are decorated in the same setting
and style.
Advantages of Chain/Multiple Stores****
1. Economies of scale: Since central procurement has been used, the
multiple-shop organisation bene its from economies of scale.
2. Elimination of Middlemen: The multiple-shop organisation can
eliminate unnecessary middlemen in the sale of goods and services
by selling directly to consumers.
3. No Bad Debts: Even though all sales in these shops are made in
cash, there are no losses due to bad debts.
4. Transfer of Goods: Goods that are not in demand in one location
may be transferred to another location where they are in demand.
This reduces the possibility of dead stock in these stores.
5. Diffusion of Risk: Losses in one shop may be offset by pro its in
other shops, lowering an organization’s overall risk.
6. Low Cost: Due to centralised purchasing, elimination of
middlemen, centralised sales promotion, and increased sales,
multiple shops have lower business costs.
7. Flexibility: Under this system, if a shop is not pro itable, the
management may decide to close it or relocate it without affecting
the overall pro itability of the organisation.
Disadvantages of Chain/Multiple Stores
The disadvantages of Chain/Multiple Stores are as follows:
1. Limited Selection of Goods: Some multiple stores only sell a
limited number of products. This is especially the case of chain
stores, which are owned and operated by manufacturers and, as a
result, primarily sell their own products. They do not sell products
made by other companies. As a result, consumers have a limited
selection of goods. This is not the case with retailer-owned chain
stores like Big Apple or Reliance Retail, which sell products from a
variety of manufacturers.
2. Lack of Initiative: The personnel in charge of the multiple stores
must follow the instructions issued by the head of ice. This makes
them accustomed to looking up to headquarters for guidance on all
matters and takes away their initiative to use their creative skills to
satisfy customers.
3. Lack of Personal Touch: A lack of initiative in employees can lead
to indifference and a lack of personal touch.
4. Dif icult to Change Demand: If demand for the merchandise
handled by multiple shops changes quickly, management may be
forced to incur huge losses due to large stocks remaining unsold at
the central depot.
5. No Credit Facility: Credit facility is not provided by
Chain/Multiple stores as they deal on cash basis, and because of
this, it discourages certain class of customers.
6. Huge Capital Requirements: Huge capital is required in the
establishment of Chain stores. So, chain stores may be run only by a
company, which has considerable inancial resources.
types**
1. Business Chains
Business chains are retail outlets that are owned by the same
company. For example, Gap Inc. owns Old Navy, Banana Republic,
and Athleta.
2. Franchises
A franchise is a type of chain store that is owned by an individual
but operated under the name of a larger company. For example,
7-Eleven is a franchise chain store.
3. Licensees
A licensee is an individual or company that has been granted the
right to use a company’s name, logo, and/or trademark. For
example, Warner Bros. licenses its name and characters to
companies that produce Warner Bros. branded products.
4. Restaurant chains
Chain restaurants are a type of chain store that specializes in food
service. They all will have shared corporate ownership, and a
standard menu, plus they will be present at many different
locations. Some examples of popular chain restaurants include
McDonald’s, Burger King, Wendy’s, Dairy Queen, and KFC. Chain
restaurants are often found in malls, shopping centers, and highway
rest stops.
5. Grocery chains
A grocery chain is a type of food retailer that sells packaged food
and household items. Chain stores are often part of a larger retail
corporation, such as Walmart or Kroger. These stores generally have
standardized operations and procedures, and they sell products
from the same manufacturer.
