Chain stores history
The name given to retail stores that establish branch operations in multiple locations, often across state lines. Originally, the term was applied to department and grocery stores that began expanding and later was applied to large all-purpose stores that sold more than one line of merchandise. Usually the stores were an expanded form of a well-known, established retailer.
Chain stores were established in the late 19th and early 20th centuries, but the 1920s proved to be crucial to their development. After World War I, many stores began expanding into branches in order to capitalize on the prosperity of the 1920s. Among the first were retailers that had started as catalog merchants. SEARS, ROEBUCK opened its first branches in 1925; Montgomery Ward began in 1926. The grocery, or food, chains were already operating extensive branch operations. The GREAT ATLANTIC & PACIFIC TEA CO. had 14,000 branches nationally by the late 1920s, while Safeway and Piggly Wiggly Stores expanded regionally. Clothing retailers such as J. C. PENNEY also expanded rapidly during the decade.
The expansion of the stores was aided greatly by the popularity of the automobile, which allowed people to drive to the stores in order to shop. The combination of the two helped revolutionize American life and contributed to the development of the suburbs. Most of the original stores were located in major cities, and they viewed the development of the suburbs as a natural expansion of their urban business. But the movement was not without its critics, many of whom maintained that the stores were destroying the small-town character of rural and semirural American life. The stores began a political and public information campaign to fight these attacks in the 1920s.
Many of the chain stores were financed by smaller Wall Street investment banks in the 1920s such as Merrill Lynch, GOLDMAN SACHS, and LEHMAN BROTHERS. Critics held that Wall Street was helping to destroy small-town America and that the chain stores were behaving like monopolies. The same criticism was also leveled at banks and movie theaters, both of which were also expanding. The chains became a major public policy issue in the 1930s, with critics claiming that they were destroying the American way of life by ruining small businesses while sending profits out of the community to big cities such as New York and Chicago. There was also an element of anti-Semitism in this attitude since similar arguments were leveled against Jews in Germany, who either owned or operated many large retail establishments.
Banks and cinemas ultimately faced either antitrust charges or antiexpansion legislation designed to prevent them from crossing state lines or insisting on exclusivity by showing only studio-produced films. The MCFADDEN ACT was seen as an antibank expansion law by many when it was passed in 1927. In 1936, the chain stores faced their greatest challenge when the ROBINSON-PATMAN ACT passed Congress. The act was aimed directly at the chains and became known as the “chain store act.”
The stores kept expanding after World War II despite the protests and legal challenges. The stores moved into the suburbs with the general expansion of the suburbs in the 1950s and 1960s and became anchors at many newly built shopping malls. The major chains developing in the post-1970 period, such as Wal-Mart, heard similar complaints as they expanded around the country in the 1970s and 1980s. Their critics maintained that they were driving small merchants out of business by undercutting prices and establishing themselves through economies of scale that smaller merchants could not match.
See also K-MART; MERRILL, CHARLES; WALTON, SAM; WARD, AARON MONTGOMERY.
Further reading
- Hendrickson, Robert. The Grand Emporiums. New York: Stein & Day, 1979.
- Mahoney, Tom, and Leonard Sloane. The Great Merchants. New York: Harper & Row, 1966.