The terms chain store, mass merchant and big box store are often interchanged, but each has its own meaning. Merriam-Webster Dictionary defines a chain store: a store that has the same name and basic appearance as other stores that sell the same kind of goods and are owned by the same company.”
BusinessDictionary.com defines big box store as one “characterized by a large amount of floor space (generally more than 50,000 square feet), a wide array of items available for sale, and its location in suburban areas. Big-box stores often can offer lower prices because they buy products in high volume. A mass merchandiser is defined as “a store that sells large quantities of different products to a large number of people.”
No better source than the United States government defines a general merchandiser and various other business enterprises as follow as Retail stores that sell a number of lines, such as dry goods, apparel and accessories, furniture and home furnishings, small wares, hardware, and food. General merchandise stores are subdivided into three major groupings: department stores, variety stores, and miscellaneous general merchandise stores. Each of these three groupings has different characteristics.” General merchandise stores are divided into three general categories, (Department stores, by far the largest of the three, accounts for over 89 percent of total employment and almost 80 percent of total sales within the general merchandise industry. A department store carries men’s, women’s and children’s apparel, household appliances or other home furnishings, and various other lines. These stores are generally arranged in departments with individualized accounting. Department stores usually provide their own charge accounts, deliver merchandise, and maintain open stocks. After a disappointing performance in the second half of the eighties, department stores have increased their market share during the nineties. In 1998, department stores accounted for 10.1 percent of total sales and 17.2 percent of nondurable sales. The rise of discount department stores (or “superstores”) such as Wal-Mart, Target and K-Mart, have contributed to the overall growth of the industry by posting better than industry sales increases every year in the 1990s. Technology advances and continuing change will keep costs, and therefore prices, down, which should lead to strong sales in the future, (2) Variety stores, the smallest component of general merchandise, are defined as retailers who do not carry a complete line of merchandise, are not departmentalized, do not carry their own charge service, and do not deliver merchandise. As such, variety stores have been performing quite poorly in recent years. Since the mid-1980s, annual variety store sales have grown at a meager rate of 1.0 percent. Variety stores’ share of all general merchandise sales has fallen from 7.2 percent in 1980 to 3.3 percent in 1998. The growth of specialty stores and superstores is the major reason behind the demise of variety stores. Although the major attraction of variety stores is lower prices, not carrying complete product lines have made these stores especially vulnerable to superstores, which carry every product in a category at relatively low prices., and (3) Miscellaneous general merchandise stores, as similar in structure to department stores, except they generally have fewer employees.
The chain store, was the forbearers of all mass merchants, particularly the giant discount department stores, and huge hypermarkets. Chain Stores in America in Chapter 2, The Birth of the System, divides the concept into three periods:
“1. 1859 – 1900, the period in which the pioneers in several important chain-store fields got their start and had their early development. 1900 – 1930, the period in which the chain-store idea captured the imagination of many alert retailers, brought hundreds of new chains into existence, and witnessed the expansion of the system at such a rapid rate and on such a conspicuous scale as to threaten its destruction.
- Since 1930, the period in which the system had to fight for its very existence but emerged the stronger for its experience and better equipped to fill its particular niche in the distribution set-up on a sound and abiding basis.”
John P. Nichols, in his outstanding book on chain stores, refers to chain of stores operating in China 200 years before Christ, a chain of drug stores founded in Japan in 1643, mercantile operations of a chain-store character carried on by the Fugger family in Germany and the Merchant Adventurers in England, the chain of outposts developed in Canada by the Hudson’s Bay Company, chartered in 1670, and the fact that our own Andrew Jackson at one time owned a small chain of retail stores in Tennessee.
A&P is generally acknowledge as the first chain store in America. In a small store at 31 Vesey Street, New York, it opened in 1859 by George F. Gilman and George Huntington Hartford. Ironically, this was a portion of the same parcel of land that the ill-fated World Trade Center and now the Freedom Tower was located. They established their business to sell tea to the public and realized that they could sell more if the price was more than competitive by trekking down to the docks in lower Manhattan buying the tea directly from ships arriving from China and Japan and cutting out some of the middlemen’s costs and profits. It took more than a century when Walmart was launched in 1962 for a company on the move to stand up and refuse to buy from distributors. Of course, an establishment like Walmart with well over 100,000 SKUs (single keeping units, or different products) accepts the fact despite its public persona that it is not economically feasible to deal directly with the manufacturer of every small product in its assortment.
The company began as Gilman & Company . By 1865, they had no less than 25 stores in operation and in 1869, assumed the name of the Great American Tea Company. In order to increase foot traffic they decided on a line of groceries, figuring that if they could sell tea at reduced prices, they could sell other items at reduced prices also. However, reports are that they were content just to break even with their grocery sales, and use them as lost leader. By 1880, the chain had grown to 100 stores. One hundred stores in only 21 years was quite an accomplishment in the late 19th century, but nothing compared to what was to come, opening an average of 50 stores a week for a whole year!
Other grocery chains came into existence during that period, to say nothing of the appearance of the first Woolworth store, in 1879, and the early development of the Woolworth chain and other chains in the 5-and-10-cent-store field, of which more will be said later. In 1872 saw the second oldest chain was organized, Jonas Brothers Tea Co., of Brooklyn, which was later to become the successful Grand Union Company one of the iconic supermarket chains.
Ten years later, in 1882, was sown the seed of the present Kroger Company, which with 2013 sales of over $92 billion dollars., making according to the respected research firm Delotte relief on heavily by the National Retail Foundation the third largest supermarket in the United States, the fifth largest in the world and even the twenty third largest company of an genre in the world.
That year, Bernard H. Kroger, of Cincinnati, 22 years old, with a couple of years of experience as a grocery clerk, opened a store under the name of Great Western Tea Company. It made a profit the very first year and, before very long, a second store was opened and the combined profits made a third store possible. Although the rate of expansion was necessarily slow, by 1891 the Great Western Tea Company had seven stores and by 1902, it had 36. That year it became the Kroger Grocery and Baking Company. Its growth thereafter was more rapid. Indeed, the day was to come when it would have more than 5,000 stores. Today, as a result of the trend toward larger but fewer stores, the Kroger company, as it is now called, operated 1,354 stores with annual sales of $1,842,342,667 by 1961. The year before the retail revolution was truly acknowledged. As stated above, sales have increased about 50 times that amount by 2013 and the number of stores presently stands at 38,000.