Economics and Business

Bessemer Steel

When did chain stores begin?

The innovation of the chain store, technically defined as two or more retail outlets operated by the same company and which sell the same kind of merchandise, was made by American businessmen George Gilman (c. 1830–1901) and George Huntington Hartford (1833–1917), who in 1859 set up the Great Atlantic & Pacific Tea Company in New York City. Better known as A&P, the stores proliferated rapidly, and other chain stores, such as W. P. Woolworth (established 1879) and J. C. Penney (1902) opened their doors for business. The early twentieth century saw tremendous growth of the chain stores: Between 1910 and 1931, the number of A&P stores grew from 200 to more than 15,000. While the department stores, also a byproduct of the late 1800s, catered to middle-and upper-class customers, the chain stores, including Woolworth’s “five-and-dimes” (which sold many items at such low price points), served lower-income consumers.

Chain stores, which operate within all major retailing categories (including grocery stores, department stores, and drugstores, as well as apparel and food outlets), offer consumers many advantages. Their system of centralized and mass buying allow them to acquire merchandise from manufacturers and wholesalers at reduced costs; this savings is passed along to the consumer, who pays less for the item. Further, they experience economies of advertising: A single ad placement promotes all the stores within the chain. In the 1920s independent retailers rallied against the chain stores, citing they had unfair advantages. This argument has resurfaced off and on throughout the twentieth century, as chain stores entered into more and more retailing sectors, including hardware, jewelry, furniture, music, and books. But the only federal legislation that constructively attempted to regulate the chain stores came in 1936: The Robinson-Patman Act tried to control competition. Today chain stores account for roughly one-third of all American retail sales.

Shoppers in a crowded Woolworth’s. Department stores emerged in the mid-1800s.

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