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What is a Chain Store?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 28 September 2016
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Chain stores are businesses that operate a number of local retail establishments in different geographical locations. In most cases, each of the stores carry the same merchandise, and may even utilize the same floor layout and display strategies as the other stores in the chain. The concept of the chain store has been around since the 18th century, and has become a major retail model over the last several decades.

While there is some difference of opinion in the origin of the chain store, many sources consider the model to have begun in the United Kingdom. Launched in 1792, the WH Smith chain store opened several locations that sold reading material as well as pens, quills, writing paper, and similar products. Over time, the chain grew to include locations all over the world, and is still in operation.

The chain store model has been utilized for other types of retail businesses. Restaurant chain stores are very common in many parts of the world today. Often, the restaurants are constructed with a similar layout, make use of a common menu, and even coordinate the selection of colors and the placement of seating so that the look and feel of each restaurant is the same, no matter where the restaurant is located. If is not unusual for the same vendors to be used to supply food to each of the restaurants, where it is prepared using similar equipment and the same recipes.

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One of the most popular examples of the chain store today is the discount retail model. As with the restaurants, retail chains tend to utilize the same store layout in all locations, carry the same product lines, and in general keep the operation as uniform as possible. One of the advantages of this approach is that the corporation can order merchandise in much larger volumes than stand-alone retailers, a factor that often makes it possible for the big chains to sell the same goods at much lower prices. For people who are on limited budgets, the ability to purchase more with the same amount of money is often a major attraction, and has led to the emergence of large chains across the world.

While there are advantages to the chain store model for both business owners and consumers, there are also some drawbacks. Chains can drive smaller competitors out of business, ultimately limiting the shopping selections of consumers in some areas. Often, those smaller competitors are locally owned businesses that must either adapt or close in the face of the competition. In recent years, trade groups have emerged as a way of helping locally owned businesses compete with the big chains, by combining their purchasing power to secure products for sale at lower prices than could be managed alone. This has helped some stand-alone businesses hold their own against the larger chains, and thus continue to offer consumers a wider range of alternatives when it comes to shopping.

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Mor
Post 3

@Fa5t3r - The only thing is that chain stores often become large enough to take over the production side of the business as well as the sales. So they might actually end up owning the farm that produces the eggs, thus shutting out small farmers and small businesses from easy access to them, even if they manage to form a collective.

Fa5t3r
Post 2

@umbra21 - Well, for one thing smaller stores can concentrate on items that larger stores can't. A chain store is going to have to stick with mass produced items because their advantage lies in every store being the same and that requires conformity. Truly artisan-created objects are not going to be able to fit into that kind of set-up.

Another option is for smaller stores to work together as a collective to get the same buying power as bigger chains. If a hundred restaurants all bought their eggs together from the same place they would be able to get a lower price per egg the way that a chain store might. They could then distribute the eggs to each other and use them in unique ways.

umbra21
Post 1

I'm not against the idea of a chain store in theory, but in practice it almost always seems to end up being a mistake. The advantage is that chain stores can afford to make large, bulk purchases of either goods or materials and so can sell items more cheaply. This means that they can outbid smaller stores which then drives those out of business.

I just don't know what the answer is though, since any laws regulating this kind of thing end up creating an artificial situation that leads to problems as well.

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