Chain store is one of a group of retail stores whose activities are supervised or coordinated by a centralized managerial body. The stores that make up a chain typically share a brand name and sell the same types of goods or services.
Chain stores have several advantages over independent stores. For example, a chain can buy large quantities of goods for all its stores at once, and receive a discount for placing a large order. This system enables the chain to offer lower prices. Chain stores can also share costs in such areas as accounting and advertising.
The Great American Tea Company became the first chain-store company in the United States. This company, now the Great Atlantic and Pacific Tea Company (A&P), was established in 1859. Other early chain-store companies included Montgomery Ward and Company (1872), Woolworth Company (1879), the Kroger Company (1882), and Sears, Roebuck and Co. (1893). Walmart Inc. is the largest chain-store company in the world.
Today, there are three major types of chain-store companies. These types are (1) corporate, (2) voluntary, and (3) franchise.
Corporate chain stores
are owned and operated by a parent company, such as Walmart Inc. or L Brands. A manager who is supervised by the chain’s central office controls each store. This office may decide such matters as store hours, advertising, merchandise display, and pricing for each store.
Voluntary chain stores
are important in the retailing of groceries and hardware. In voluntary chains, the managers of the stores are also store owners. The owners have agreed or volunteered to adopt methods of operation that are similar to those used by the corporate chains. Owners of stores that are in voluntary chains agree to buy the same kind of goods, buy from the same wholesale merchants and manufacturers, advertise alike, and display their goods in the same way. IGA food stores and ACE hardware stores are examples of voluntary chains.
Franchise chain stores
operate according to business agreements called franchises. Under such agreements, a store or other business pays the franchise company a certain sum of money and promises to give the company a percentage of the store’s future profits. In return, the business—or franchisee—receives such benefits as managerial aid and advertising assistance. The franchisee also has the right to use the company’s name. Most franchise companies have a name that is well known. Examples include McDonald’s Corporation and KFC Corporation (Kentucky Fried Chicken).
