1 / 1 h SOME FACTORS IN THE DEVELOPMENT OF CHAIN STORES GEORGE ROBERT MACH B. S., University of Illinois, 1921 THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE IN BUSINESS ORGANIZATION AND OPERATION IN THE GRADUATE SCHOOL OF THE UNIVERSITY OF ILLINOIS, 1922 URBANA, ILLINOIS Digitized by the Internet Archive in 2016 https://archive.org/details/somefactorsindevOOmach /"S Ta 1 9aa M 18 I UNIVERSITY OF ILLINOIS THE GRADUATE SCHOOL I HEREBY RECOMMEND THAT THE THESIS PREPARED UNDER MY BE ACCEPTED AS FULFILLING THIS PART OF THE REQUIREMENTS FOR Recommendation concurred in* Committee on Final Examination* •Required for doctor’s degree but not for master s 509407 INTRODUCTION . In T:eginning a study of chain stores it is essential from the outset to have clearly in mind a definite idea of what the term ’’chain store” riieans. One may pick up half a dozen hooks on merchandising and find in them perhaps half a dozen different definitions. ITystrom, in his Economics of Retailing, de- f fines a chain store system as a nuiiher of retail stores operating under one management.^ Obviously such a definition excludes groups of stores v/hich are separately ov^ued and managed, as the Rexall drug stores and the Winchester hard- ware stores. Butler says that if we confine the term strictly to stores ’’under one ownership and direction,” then retail corporations and manufacturers ’ chains are the only ones properly inclu-ded. He would include retail huj^ing associations, or ’’combines, " as the Rexall dr’j.g stores, the American Drug .Syndicate, and the United Buyers ' Service; likewise consumers’ cooperative retail chains. 2 Copeland says that a chain store system is a group of scattered stores with a single ownership and centralized management.'" Cheringtcn realized the diffi- culty of giving a hard and fast definition.'^ For the purpose of this study chain stores will be defined as a group of stores all centrally ov/ned and operated, or collectively ovmed and managed for the conmon benefit of all the members of the group, or separately ov/ned but ov/ning stock in a corporation for v/hich they act as exclusive agents. The chain store is not a modern development in our system of distri- bution. Credit is usually given to the Great Atlantic and Pacific Conpany for 1 Economics of Retailing, 1915, p. 216. •2 Butler, llarketing Methods, p, SO. 3 Marketing Problems, p. 8. 4, Elements of Marketing, p, 30. having started the first chain store systeir. y;ith the establishing of a srmll tea store in New York City in the year 1859. Basically the principle dates back about 150 years when Benjamin Franklin operated a chain of seven printing shops with a separate partner for each. The plan v/as very siinils-r to one used at the present time by the J. C. Penney Company (Department stores), except that Franklin finally retired from each firm.^ Most of the early development took place in the East, v;here v/e find such pioneer organizations as the Jones Tea Company of Pennsylvania (Grocery, 1872), James Butler of Brooklyn (Grocery, 1882), the V.'oolv/orth 5 and 10 cent stores (lS79) , and the Douglas Shoe stores (1876), and in more recent years the Liggett Drug stores, the United Cigar Stores, and the Baltimore and Childs restaurant chains. The chain store movement spread over other sections of the country at a later date. There are no official figures showing the extent of chain store grov;th. Hurd and Zimrcennan in Printers* Ink*^ estimated that there were approx- imately 2,000 chain systems with over 25,000 stores. In 1915 Boyd's City Dispatch advertised that it could supply lists of over 10,000 chain systems. It should be taken into consideration, however, that the latter figure includes many chains which have only two or three stores in the organization. In a recent address before the National Chamber of Commerce^, Nystrorn said that there are nov/ probably over 2,000 chain organizations in this country, with a total of over 100,000 retail outlets. In an address before the Ari'.erican Economdc Association Alfred K. Becktaann, secretary of the National Chain Grocers' A.s- sociation, said that less than 75 chain grocery organizations operate about 1" J. P. Heaton, Manager Bureau of Information and Investigation, Boston Chanher of Commerce - in Current Affairs, September 12, 1321, p. 1. 2 September to December, 1914, 3 Mercantile Co-Operator, June 5, 1922, p. 6. > , \ y ■.li'iU >v If Vi \ ♦ w fc; L -. 1 - j> *. • rV'“\ Vi’v '<' ■rW' V ■ 4 I t . A •, t. ■' ' •< »>A>'^ * ' ' •r \.( -» Uft,. U»^ t • •» ■ \ I' Vi. . i - . . v,‘ j.;s:-<^'l,' . *•■ ‘ ■ ’■ ' V >^U>* ' "' '• i;:' '«»l 1 • / . ,' ■ > i ' ;vi'._.. >1. 'i- '»•« t k '.{.- '. i .r . , ‘IW ! ^ > V • » 4 4. f V <4 *. 4 / { ' ■‘f‘ hi r '“.s'il ‘> », ‘v: V,1 .;• l.,.i. I' < •! , : j V ’ * < j >•./• i- tf < . Hi . ’1 ',\ M -- f r., (•"«,!.. ;. . 1 ;' 4 ' \ i i4\' , )f ■ ■ i t ' ■•■ - ^ <' 3 50,000 stores.^ Such figures as these do not give as comprehensive an idea of the grov/th of chain stores as might he desired. The tables and charts on the fol- lowing page contain figures from authoritative sources and are intended to give a concrete idea of the enormoiis growth in the chain store field. In view of what ha.s been said above, it is interesting to note what is the attitude of jobbers, manufacturers, and retailers toward chain stores. By going over the literature of the subject it is possible to find a great variety of attitu.des on the part of each of the three classes mentioned, some of them denoimcing the chains, others assuming an air of indifference, and still others upholding the new system of merchandising. In the case of the jobbers it is rather difficudt to find pointed statements which would be of value in a treatise such as this. However, a few are available in the wholesale grocer;/ business. Theodore V.liitmarsh, president of the National Vliolesale Grocers’ Association makes the statement that the chain store is not to be regarded as a serious menace to the stmll grocer even with their "jnfair practice of "loss-leaders. "2 Nelson Gray, secretary of the V/holesale Grocers' Association, points out that it is folly to think that chain stores are only ten:porary factors in the food trade. He says that they are a legal and business proposition that has the endorsement of many manufacturers. "The question that confronts the wholesale grocer is not how to prevent the chain store, but hov/ to adapt his and his own cmistomers' business to meet the nev; conditions. "2 A large wholesale grocer ran this advertisement in a trade 1 Pittsburgh, December 28, 1921. 2 Modern Merchant and Grocery Nor Id, August 28, 1916, p. 17. 3 Modern Merchant and Grocery World, January 31, 1916, p. 6. S teres 35 0‘s ISO 160 140 120 100 80 60 40 # 20 280 220 210 200 260 28 I jk. ^ I f I t L I i f i I, < 1 “ / f / / I 7 . ’V ; • * ■» ■) 4 t \ \ : 1 - 'V -i i •=> ~V- * ¥ (- - i- < •», • t T . ‘i‘ < ■ - V. -*1*. _ . O . ores i r. 8 The followlrxg tables are self-explanatory : GROCEEIES Chain Independent Total Chains Stores Stores Greater IJ. Y. 13,513 17 680 12,833 Chicago 7,510 10 130 7,380 Philadelphia 5,200 9 1,262 3,938 Boston 2,829 10 456 2,373 TOBACCO Greater H. Y. 2,394 9 439 1,955 Philadelphia 2,350 5 45 2, 305 Chicago 1,100 9 172 928 Boston 308 2 16 292 DRUGS Greater IT. Y. 2,281 11 82 2,199 Chicago 1,106 4 17 1,089 Phi ladelphia 921 12 53 868 Boston 314 0 34 280 FIv’E-AI'ID-TEIT-CElTT STORES Greater IT. Y. 225 15 50 175 Chicago 150 3 25 125 Phi lade Iphia 145 4 20 125 Boston 32 2 7 25 EIETEN YEARS IIT RETAIL GROCERY TRADE GREATER lIE\-r YOEIC 1903 1914 Increase Per cent All stores 8,750 13, 513 4,763 54 Chain stores 215 985 770 360 (Graphic and Statistical Sales Helps, p. 107; Shaw Pa’olishing Company) jo-urnal; "The chain store... is threatening the survival of the individual mer- chant. Let us hecome ycrxr ally to comhat this evil by suppl 2 ^ing your require- ments in the grocery line...."^ As regards their attitude toward chain stores, manufacturers fall into two classes, i.e., those v/ho sell to chain stores and those who do not. Without going into the advantages and disadvantages of selling to chain systems it can be said that the former class sees in chains stores a ready market, wide distribution, and cash. So we find many manufacturers w'hc sell their goods, either in whole or in part, in this way. But there are some manufacturers who will under no conditions sell to chain organizations. More than that, there are some who vigorously fight the chain stores. A typical example of this class is the Kellogg Toasted Corn Flakes Company, whose attitude is shown by the fol- lowing statements extracted from a letter sent to its jobbers; "We have announced to the trade quite firmly that we will not sell the chain stores ':jntil either the government forces us..., or the chain stores become such a dominant factor that we cannot refuse longer to sell them direct.... Any jobber is blind who shuts his eyes to the increasing iranace of the chains...." The remainder of the article is a pilea for the support of retailers and jobbers. 2 The attitude of the retailers has been as varied as that of the jobbers and manufacturers. In the first place, there have been retailers who threw up their hands and quit as soon as a chain store opened its doors near their location. Such retailers spent their energy in denouncing rather than progressing. The attitude of the second class of retailers is illustrated in the case of the merchant who adepts the policy of laissez-faire when a chain . 1 Modern Merchant and Grocery World, Februarjr 5, 1917, p.l5. 2 Printers* Ink, September 17, 1914, p.23. .-a "i ^ opens a store near him. It is possible to find many examples of this class, the outstanding characteristics of v;hich are lack of adaptation to new circum- stances, and a decrease in sales and profits. The third type comprises those merchants who are so alert and progressive as to be able to see the advantages of chain store methods and apply them to their ov/n business. These are the merchants who learn from chain stores and consequently welcome them as instru- ments for generally raising business efficiency. A high official of a prominent chain system is often quoted as asserting that he could open an independent store next to one of his chain stores and almost force the chain store to close its doors. It is a pretty generally accepted fact that chains are maldng in- dependents better merchants.^ In connection with this phase of the problem it might be well to examine some of the iiterat’ore of the Illinois Chamber of Cormc-erce. This or- ganization has been for a long time interested on the subject of "The Relation of the Chain Store to the Coimunity." A cori 2 ::itt 8 e was appointed by the Illinois Chai'nber of Coxiraerce several months ago to study the "Chain Store .'Tvil." The coimr.it tee found that eighty-three out of 261 chain stores in forty-five Illinois cities outside of Chicago are members of local chaimbers of coxnmerce; but of the eighty-three the managers of forty-one rather than the concerns themselves, hold mexabership. Forty- three of the fort 3 ^-five towns reported that such large chains as V/oolvxorth and Kresge belong to the Chamber of Coxamerce. The findings of the committee are given in full: 1. Changes in the personnel in chain stores are more frequent ; therefore the local chain store manager does not become a part of the coiaaunity. 1 Printers’ Ink, Ai:ril 5, 1917, p. 101 2. Profits are not invested in the local coirjr.iunity. 3. There is no personal comra-oiiity service rendered by the chain stores, 4. The chain store contribates very little money to the coirii'anity . 5. Thera is not the close personal contact betv/een employee and employer in the chain store that there is in the local store. 6. Hecognition of service of the employee is slower in the chain store, due to the standardization of wages and methods of ad- vancement . Mr. J. J. Burgess, president of the Rock Islcand Chamber of Cocmerce, concluded the article in the following mianner: "Chain stores have no interest in yo-or tov/n other than the profit that they can gain there. They do not ac- quire any property. The miaiiagers do not become home owners. They do not, as a rule, do their banking in your own town any longer than is required to secure a draft to send their money back to headquarters. They do not, excej^t rarely, assist yo'or newspapers to exist, so that you will have a medium of publicity when you waiit to boost something for the good of your tovm. They ;vill never enter into any collective trade expansion work. It is said that a man who will take no part in civic affairs or advancecient is stealing a ride on the chariot of progress. The chain stores are those people. The reinainder of this introductory chapter is to give, in a general way, the plan of the study. The thesis is divided into ten chapters, not including introduction and conclusions, and presents a fionctional study of chain stores. ITo attempt has been made to cover the entire field - it v/ould take perhaps several years to do this - but i’ather to present sor’e of the out- standing methods of perforiiiing the various functions. Consequently each chapter may be taken as a separate study. 1 Illinois Journal of Comr:.erce, June, 1932, p.7. t 4*- 13 and "CO” uiaans that a consolidation has taken place. Thus, if the name of an organization is followed hy "I", "P", "C", "R", and "CS", it means that it has passed through five stages of development, viz., individual proprietorship, partnership, incorporation, reincorporation or recapitalisation, and consolida- tion.^ F. Woolworth Campar^y 5-and- 10 I P C R CS S. S. Kresge Company II It I! I P C R CS United Cigar Stores Tobacco C R CS W. T. Grant Company Dep ' t I •D X C United Drag Company (Eexall) Drags c R CS Kroger Groc'y £; Baking Co. Groceries I P c R CS Great A. & ?. Tea Company II I P c E CS J. C. Penney Comijany Dep' t I p c R Piggly-Wiggly Stores Company Groceries c R CS Owl Drag Company Drugs c VM L. Douglas Shov; Company Shoes I c p Regal Shoe Company II P c R Mr. Bowers' Stores Company Groceries I c Jones Brothers Tea Company It I P c R CS From: these results it is per:. .issible to conclude that the re has been a more or less general tendency in the evolution of the organic structures of chain systems, and that this evolution has been in fonr steps as indicated above. The reason for t/iis common evolution can clearly be seen by examining the finan- cial history of one of the typical chain organizations and citing other exangsles, 1 This information was obtained from Moody's Manual, 1905-1921, and by means of questionnaires. 2 ' '' • r t i ■ i I I J , ! i i ‘ i \ 4,i- ' (V../ /ci 1 “ u — 1 4 * '1* .Hi- i, V ... r '• ; / i( i r-, I . ' ! .1 • I • .-i 14 The S. S. Kresge Company was formed i :divi dually hy Mr. S. S. ICresge in 1897, and ncw^ operates a chain of 1S9 Five and Ten Cent Stores in 171 cities and tovms located in 24 states. Between 189? and the date of its incorporation, 1312, the comreaij?’ opened on an average four stores pier year solely throiigh the reinvestment of surplus earnings. In 1912 the company was incorporated rath a capitalization of $2,000,000 C’.Tioulat ive 7?^ preferred stock andOS, 000, 000 common stoclr. In an analysis of the company the statement is given; "The nev/ money provided hy the sale of this stock, together with the use of surp'lus p^rofits, en- abled the corrpany to broaden the field, of its chain rmch faster.... The intro- duction of new capital also enabled the company to develop more profitable ter- ritory, and to op^'erate under more satisfactorj^ conditions afforded by larger quantitative purchasing and a relatively lower cost of operation per store." In 1915 the company was reincorporated and the authorized $5,000,000 of couuon stock raised to $10,000,000. Lilcewise in 1920 the cora.:on stock was increased to $20,000,000, and $3,000,000 of bends were sold to bankers. In both cases the ad- ditional n.oney was used for providing additional merchandising facilities - for empans x on . A study of Liany other chain systems has revealed much the sarie devel- opment as above. Tliat this evolution in chain stores has been perfectly natural and logical is evidenced by the fact that in all the organizations studied the prinury reason for passing through the various stages was to get outside capital with which to facilitate op'arations. A secondary reason was that the fo\inders of chain 1 April, 1922 George H. Burr and' Corapany, Investment Eard^ers, New York 3 F. 7'. Woolworth, V/. T. Grant Cavpany, '^hs Great Atlantic and Pacific Tea Company '!J. L. Dcruglas Shoe’ Company, Regal Shoe Compai-iy, Jones Brothers Tea Company, Nroger Grocery and Banlcing Cor;.pany, J. C. Penney Corr,p)any, United Drug Company, and United Cigar Stores of America. 1 U. [ tl 4 . . 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Same as District Superintendent I'o . 2. Same as Superintendent under District Superintendent No. 2. Each Superintendent oversees from 15 to 25 stores. ^ ^ ' Cm I ^ I?^ I'. r ?■' .*i- [• . ' 1 1, : i . . 1 .i- n. 4 I - : 'iAitii^i'l A k ^ * X ■r>‘' ?■ - . >• I ■> } ' rm rv p- i ^v3« ■!,.( % ■ ; .♦ V , t , > ) ■. 1 ^ , ' > t,"-^ ^ 1 . - > .; n‘ ' ^ i *’ • .•■•'V » V ■ ** ' iti ' * nk ' 4. ■' {, K' !•’ » •? ■ ' ‘, 1 1 t > 1 u , , i'-l' r,i' ,. • '> 'Z i' ' ■ ^• * '- '■ -'V » '■ • • *' *X- ■ f .< ' < '. j i 1 !• . V ■ ' ■ I . '/ 'v( ■« • 1 ' : j '*1^ ■^f; ' f J CTl^TSR II Ylhen Hurd and Zimmerman, investigators for Printers' Ink, made their report on chain stores, (1914) they erni;hasized the jiower which large capital- ization gives to such organizations. Since that time this Importance has be- come even greater. Chain stores now, more than ever, fall under the class of ’^big business," as is seen by the self-explanatory table on the follo;ving page. Since financing is properly included ajKong the various functions of cnain soores, and since it is so much emjjhasized by investigators, it might be v/ell here to inquire into the methods used.^ The first of these methods has to do with the reinvesting of surplus earnings. Practically all chain systems, especially those starting as individ\ial proprietorships or partnerships, hxave used this basic method of financing. The fundamental factors in this method are those of setting aside a certain part of the net earnings each year into v/hat might be termed an "expansion fxmid, " and building or acquiring new stores as fast as is justified by the size of the fund. One of the best examples of this type of financing is contained in an analysis of the S. S. ICresge Company Pive and Ten Cent Stores. ^ Spealcing of the financial history of the company, the statement is made; "... Betv/een 1897 and tne date of its incorporation in 1912, the coi'pany extended its chain of stores solely through the reinvestment of s’orplus profits, adding only the nuraber of stores which net profits from, the preceding years justified...." The same is 1 As linder Organization, it is very difficult directly to learn v/hat are the methods of the various chain systemis. In the preparation of this section it nas been necessary to gather most of the material indirectly through the various financial services and financial papers. There has been no attempt to rr^ake a complete analysis of the whole field, for, as the reader will real- ize as he precedes further into the chapter, it would involve many scores of pages and the results would not be commensurate with the effort required. However, the m.aterial reported on is sufficiently representative so that from, it may be deduced the fact that there are two general methods of financing. 2 George H. 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Between 1884 and the date of its incorporation, 1S02, the only outside capital injected into the Business was when Kroger took in a partner (1884) with $350.^ This method was also used By the Great Atlantic and Pacific Tea Company from 1859 to 1901. Until recently the entire issued stock was held By interests identified with the com- panj'’. In the last few years, however, it has Been necessary for the company to p seek outside capital to the extent of one-half its outstanding preferred stock. The W. T. Grant Comijany, 1^ to $1 Department Stores, operated on its ov/n capital from the start, 1900, to three years after its incorporation in 1901. ^ The five largest Philadelphia chain grocery systems have recently comBined to form the American Stores Company . These are the Acrae Toa Con;pany, The Bell Company, RoBinson and Crawford, George M. Dunlap Company, and the Childs Grocery Corripany. Kot one of the companies has had to Borrow a dollar for extension or improve- ments. Today we see raany chains springing up here and there, organized along corporate lines and depending largely upon syndicates. Banks, and even the gen- eral puBlic for their capital. But conditions aro-*and the latter part of the nineteenth century were quite different. This difference is pointed out in an article published in Printers' Ink,^ which states that time was when Bankers were rather unenthusiastic over chain store financing. Railroad earnings could Be computed and industrial undertakings had something substantial luider th.em. But new commercial ventures like chain stores depended more than either of the classes upon personal ability, quick turnovers, anticipation of popular tastes, 3.nd fashions. A single mistake in B'oying might ruin a chain. For these reasons Bankers preceded with caution whenever the financing of chains was concerned. 1 McClures, January, 1914, p.lOS. 2 Moody's Manual, 1916-1921. 3 Interview with Mr. Brady, Inspector for the Company. 4 Chain Stores and the High Cost of Living, Garnault Agassiz, p. 17. 5 October 29, 1914, p. 80. 23 The second ir^ethod is closely allied with the method treated in that it is a combination of reinvesting sxu*2->lus earnings and outside capital. This method has three separate aspects: (1) Taking in partners who can make an investment; (2) Borrovdng from banks; and (3) Selling stocks and bonds. The first aspect has already been referred to above in the discussion of the ICrcger C5-rocerj’’ and Bailing Conpany. Some other corrpanies which have used this method are: F, IV. Woolworth Company, W. T. Grant Company, and the J. C. Penney Companj'. In the case of the J. C. Penney Company this method varies to the extent that if a partner has not sufficient money to make the investment it is- loaned to him by the compariy with the condition that it is to be paid back out of the net earnings of his store. The Continental Grocery Stores, Inc., requires each mianager of its 100 stores to parchase stock to the amount of $1,000. However, this is not prirr.arily for the purpose of getting outside cap- ital, but rather to bind the managers more closely to the system. That the second aspect of this method is of less imrjortance than it was forraerly, was intimated by the stateraent that bankers were rather 'onenthusias- tic about chain store financing. There is no doubt that at least the larger chain systeias could get bank loans much more easily today than a fev/ decades ago. This is, of course, due to the fact that they have established theK:selves more firmly not as "f ly-by-night" ventures but as responsible business units. As a matter of fact, these orgaiiizations are rarely short of working capital, as may be seen from the data on the following page selected at random from Moody's Manual for 1921. The third and most important method of getting capital is that of selling stocks and bonds, primiarily stock. Stock is disposed of in four ways, 24 CJS cr>i 3 I U2l *§> o o o o o o r*^ o o o o o CV3 o o o t- o o o o o o o o o o o o o o o •• «s m, «D o to o o o o -i* o c~ o 00 o o •• *« o C\I o iH lT> lO 00 col Wi COj oi Oi E^i COi g “i oJ ll o] Mi Oi +*! •ri* CQ-. bC •ri O fci o| Si s ^'1 ■sdj CJ; p; tj! s co_ wt ffi ua Cj H-Jj Wj -P :3! ‘-'1 ot o! coj o| o> in o O o CO lT> o to c- o •• •• «« o CO CO o CO c- Q CO M 00 C3 ♦* •% •% 0% iH 'it o CN2 o o 00 pfd common slue tn o o o o c > •* •k -o t> in o o o o o CO O oi CO > 0} © -p C $-1 © to o O -ri -p -p p •H CO CO ai 1 — 1 > o p Pi S O 0} o • Jh O in Pi P CO ©o o o X-m S4 o • t) o CO •H CO P •e!) S3 CS C!i © rH B-< o • P Q o -t: o o p • P «M 1-3 © Ci *ri o © o • s Si tsJ CO ci Pi • © p © m Si •JiS • Pi o o o © p M o CO 5-« «a © © >» Si o to © 0^ m w o • s: to © Si o © c ^ fi CO O Si © CO O 0i Si P Si tiO © •o O CO • • © © liC *H CO o Si p rri P O o •H O S3 Si ci 9 • p S3 O © s m CO M CO :=) •S: CO United Drug Co • 45,000,000 8,839,570 68,500,000 ( Rexall Stores) t \ I I. * L • X. I 0:eY AND Lo TO rO; K:'. i'Un^;rJD TO THE ClkCULAriON Di'.SK B- HTE C LODI No H>jUu LACr! DAT hijliAse Do not leave this lilii^DIu IN A UAiEtEL OVERNIGHT OH fAi\r. IT OUT OH i’Ho BUILDING 25 throoTcgh, (1) Sliareholders ; (2) Employes; (3) Bankers or syndicates; and (4) The general public. Probably all chain stores give to their shareholders and employes the first chance to subscribe to new issues of stock. In some of the systems in- vestigated employes were pem:itted to bioy stock on the installment plan at prices considerably below the r.;arket. Perhaps the most common method of floating issues of stock is through bankers or dealers in stocks and bonds. Bankers and financial houses often be- C0E;e interested in the chains, sometimes even to the extent of interlocking directorates. There are tv/o bankers in the board of directors of the Woolworth Company. Often stock and bond houses become attracted to the chains and special- ize in their stocks, as for exaiaple, George H, Biur and Company/, also Merrill, L^^lch and Company handling Kresge stock, and M. L. Meyer and Company, Inc., In- vestment Bankers, handling that of the Cox Cash (Grocery) Stores. Another plan is to sell the stock in small blocks to the public. Thus the United Drug Comp'any raises money by selling stock to druggists. The American Drug Syndicate sells its stock to iroggists and physicians, in this way gaining the good will of many physicians. The Owl Drug Company scatters its stock broadly in small lots. The Continental Grocery Stores, Inc., has sold small lots of stock to over 4,000 families. Printers’ Ixik^ suggests that the reason for distributing stock broadly and in small lots is to make it appear as thcji^ the chains are not embodiments of ”big business.” I'liile this may have been the 1 November 5, 1S14, p. 64. iTiotivating force some decade or two ago, today chains generally will adri'it that they are arixioas to secure as maroy "share -hoi ding boosters" as possible in the neighborhoods where their stores are located. Nothing has been said about the part played by bonds in the financing of these enterprises. Not raich can be said except that preferred stock takes the place of bonds in niost cases. Chain stores with outstanding bond issues are rare. Occasionally some chains float bond issues when they need capital for ex- pansion. In 1316 and 1917 the Great Atlantic and Pacific Tea Company issued five-year gold notes to the extent of ahr.ost $5,000,000 "to provide f'onds for the establishment of nev/ stores in sections of the country hitherto uncovered."^ Prom what has been said it may be concluded that the general tendency is for a chain to finance itself first by reinvesting s-o.rplus earnings; but after it has reached a certain limit in size outside capital is necessary. The outside cajjital comes into the business at time of incorporation and recapitalization. 1 Hoody’s Manual, 1916. 27 CE/\PTER III Periods of readjustment in "business are accompanied by a realization on the part of merchants and manufacturers of the necessity of iriiproving busi- ness methods. It might be stated, parenthetically, that this statement does not apply so rmach in the case of chain stores for, as is generall 3 ’- conceded, their methods are very, efficient . Aside from the fact that selection of sites is one of the most important functions of a chain organization, there are two justifi- cations for a treatment of this subject here, /in the first place, the amaant of rent paid for a site usually varies directly with the value of that site for any particular business./ The implication hers is that a man cannot afford to pay a proportionately higher rent ’unless he can correspondingly increase his sales or cut down some other item of expense. In other words, the business man is (or sho'old be) paying special attention to his expense budget in this period. Since rent ranks second only to salaries in practically all types of bu.siness, it is evident that a study of the relation of rent to sales is necessary at this t ime . /in the second place, since chain stores use efficient r-ethods in selecting sites it may be inferred that a study of these methods should prove profitable to a merchant, v/hether or not he expects to expand, or to the pros- pective merchant. I It is probabl 2 / true that every merchant makes some sort of a business analysis before he locates his store - even a newsboy does this v/hen he locates his stand; but how scientific these analyses are is a different ques- tion. Charles C. ilicholls, Jr., President of the Chain Stores Leasing Company, and one of the foremost authorities in the United States on the selection of sites for chain stores, sets forth several principles to be talcen into considera- tion in selecting retail chain store sites. ^ 1 Retail Ledger, Second November Issue, 1921, p. 6. 28 />-I. Ascertain the population of the tov/n or district ••2. Deterii:ine the character of the people l- 3. Investigate the main industries to see whether the location is good for men or women 4. Analyce hank clearings 5. Find out how manv different kinds of industries there are and detem:ine the proportion of employers to employes. In the same article Mr. Nicholls points out that chain stores analyze more carefully than any other organizations this problem of selecting sites. A summary of some of the specific principles considered hy Mr. Nicholls is given here : 1. Close attention to the physical condition of the buildings, the street level, location of windows and doors, the height of ceil- ings, the size of the posts and whether or not the buildings have available baseiiiGnts, These are necessary in the case of the five and ten cent stores, department stores, and some others. 2. Women v/ill walk to a basement more readily than they will take an elevator, or clirub a flight of stairs, especially if they can catch sight of the merchandise dov/nstairs. 3. Men will v/alk up one flight of stairs to save money. However, the increased amoimt of advertising necessary makes it doubtful whether second-floor locations are more econonucal in the long run. 4. The traveling population may be analyzed into three distinct types. The first of these is the class of people which comes prepared to buy. The second, or "drop-in" type, is comi^osed of transients. Drug and cigar stores are the only ones that can reasonably expect 39 some of this trade, "Station- traffic" consists of commuters; they can rarely be expected to purchase. 5. Undesirable locations can often be detected by watching carefully the advertising of local merchants, noting what part is that of the merchant who must coax people to come to his store. 6. Different classes of people freq’aent different blocks. One block may be favorable for the sale of high-priced goods, while in another nothing but cheap goods can be sold. Likewise, some blocks are given over exclusively to women's trade. 7. The shady side of the street is usually the women's side, and rents are about 35 per cent higher. Notable exceptions are Tremont Street, Boston; and iv'iain Street, Rochester, where the de- partment stores started on the sunny side in the first place and drew trade across the street. 8. Chain stores look for a location near another store in the saK.e line. This is especially true in the case of five and ten cent / stores. Ex^ptions are Scruggs, Vandervoort and Barney, of St. Louis, who moved to Tenth and Olive Streets, two blocks from any other retail stores; also Sanger Brothers, of Dallas, Texas, who went from the main business district and drew other stores to their neighborhood. 9. Cigar and drug stores nmst locate near a heavy traffic point. A cigar store can rarely pay expenses unless it is on the corner. Drug stores can often use an inside location if they are not more than a few feet from the heavy traffic highway, 10. In general, advertising merchants can afford to take a chance on location. Non-advertisers must anticipate where traffic is going to center during the whole term of their lease. 30 I/Iention has already been made of the important relationship which exists between the arfto’ont of rent paid and net sales. Practically all the larger chain systems have given this relationship a manerical correlate. Charles Nicholls, Jr., gives the following average per centages of net sales which chains in various lines can afford to pay for rent.^ him i of Sal es Shoe Stores g Department Stores 3 Specialty Shops (lion-advertising) 8 5 and 10 Cent Stores (lion- advertising) ... 5 Drug Stores 10 Candy Shops 10 Pruit Stores 10 Grocery Stores 10 Cigar Stores 6-8 Barber Shops 12 Clothing Stores 5 Restaurants and Cafeterias (keepiing open long hours) 6 -12 That the work of selecting sites has been spiecialized to a high degree has already been inferred. Four general methods of handling the problem are taken up in the order of their increasing specialization. Locating and renting is done by: 1. Some member of the firm, 2. Real Estate department, 3. Subsidiary corporations, or 4. Independent leasing companies. 'F: ^ 1 , 1*V t i I Li- 31 The first r^thod is con'ir;:On to srriall chain systems. It is the first evidence of specialization and api:lication of the principles of scientific managerr.ent which pertain to standardization. Some merr:ber of the firm, because of his aptitude, is chosen to look for new locations. In some cases he may de- vote only a part of his time to the matter; but as the chain of stores extends itself he is reoprdred to give more of his time. Next it logically follows that he may train one or more assistants to take care of the grov/ing volurae of de- tails. At this point comes the transition to the second method. Separate real estate dei;artruents are organized for effecting econ- omies in time and money. In fact, this is the essence of specialization. Kov/- ever, expansion of the chain likewise carries v/ith it the impilication referred to in the first method, viz., that the work can be performed more economically by means of further specialization. The third and fourth methods are more or less interrelated in that the evolution under discussion may include either, but not both, of the two. Ilov/ever, this aspect will be treated under the policies of various tj’pical chair- organizations and exaiiiples given of subsidiary realty corporations and independ- ent leasing companies. Chain stores us\\ally try to obtain long-term leases but will often buy buildings outright in order to get desirable locations. The Childs Company (Restaurants)^ has been known to v/ait as long as five years to get a suitable location. The company ovms the buildings where many of its stores are located, as for example the site at 194 Broadv;ay, New Yoi’k. The ground is assessed at $925,000, and the three-story building certainly cost not less than $73,000, ifiaking a total investment of $1,000,000. Interest on the investment is $60,000. 1 Printers' Ink, November 12, 1914, p. 65. :S?igfarr*s!=;=^ 32 The ajan^jial gross earnings are about $600,000. The difference, $540,000, is a large one out of which to talce net profits. The real estate subsidiary of the Guilds CoiT'pany "clocks" and analyzes the x-'®opls passing a certain point daily. Leases run from 21 to 99 years. It has data on all available sites in the country. Kaufman Brothers (Nev/ York, Hatters) generally go where rents are nignest because they feel they can do business there. In fact, increased sales due to superior locations cut their operating cost to about 20fb.^ Some low-priced grocery cha,ins select sites on the basis of their deliveries in certain sections. 1/hen deliveries to a certain section reach a certain point a new store is op'ened there and the driver put in as manager. Ee tries it out for thirty days and if it does not pay the store is closed immed- iately.^ The United Cigar Stores of America^ do not hesitate to open a store directly across the street from one that is already in operation if the traffic past the new place seems to warrant it. When this is done sales never fall off in the first store. The "clocking" is performed by ruen from the United Merchants Realty and Irmprovement Company, who study carefully the general trend of traffic. They also estircate the hours during the day when a certain nximber of people will pass a given spot, and they study such local conditions as proximity to manu- fact\iring plants, factories, or other large enterprises. A condition avoided in opening a store is that of raising it either a step above or below the street. Stores are floored exactly to the street level. Another policy is that of placing the entrance to one side so that the center of the store can be seen and easily reached from the street. 1 Printers’ Ink, November 12, 1914, p. 85, 2 Ibid, p. 55. 3 Adu.inistration, l arch, 1921, p. 229. 33 It has "been said that the realty subsidiary of the United Cigar Stores is the most profitable part of the business. The only information available is that in 1913 it paid a $500 cash dividend on its $100,000 of comion stock. The fourth method is e;cer/;plified by the Chain Stores Leasing Company, of which Mr. Charles C. Nicholls, Jr., is president. This company handles and advises on real estate all over the country for a number of large chain systems, including the Schulte Cigar Company (of which Mr. Nicholls is vice-president), the T. Grant Company, the Bond Clothing Company, and others. This company, which has offices in large cities all over the co^mtrj'', has detailed data on hand concerning sites for all sorts of businesses. 1 Printers* Irdc, November 12, 1914, p. 58. 34 lY. One of ths irost difficult prol:lerr,s with which chain store officials are required to cope is the selection of Hianagers. It is practically irupossilole to find ready-made rnaiiagers "because of the complexity of the worh, and hecaase such men can ordinarily make more money by opening stores for themselves. So, as might well be expected, the common practice is to train employes up to a point where they are capable of taking charge of a store, lhat this method of makir.g managers is significant of the high degree of standardization found in chain sp'-stems will be brought out in the discussion of the selection, training, and promotion of employes. In all systems investigated the general method of training men for maiiagers was the same. It is X-''s^i^'‘issible, therefore, to treat the subject rather generally at first azid later shov/ l:cw the r.iethod works in some typical chain or- ganizations. It is characteristic of all these chains that the prospjective manager nxist start at the very bottom, which is usri.ally the stockroom. At first he op-ens boxes, carries stock, acts as Janitor, and doss odd Jobs of all sorts. Yliile working in the stockroom he learns the stock, hov/ it Is packed, what assort- ments it comes in, and how it is arranged. After some time - in some cases two or three months, and in others a year or more - he receives his ne:ct step) in training, which is learning how to display goods. Training along this line con- sists of breaking up window displays a:id learning sorce of the fundamental prin- ciples of window trinniing. At this time he becomes either a clerk or an assistant manager. P/hile assistant manager he acts as floorv/alkor , directing people to and fro, gats change for clerks, and assists the clerks dm’ing rush hours. All the 35 while he is learning the paper work, window trirrring, interior display, which are the duties of a manager. In some chains the manager is req'iired to do most of the e.d'ncational work, b.it in the majority of cases printed pamphlets, hocks, and even complete husiness training courses are prepared "by a sp'ecial department of the orgaiiization headed hy an educational director. Vhien the assistant manager is thoroughly trained, and this is usually determined hy the manager and inspector, he is ready to take charge of one of the smaller stores. After demonstrating his ability in the small store he is given a larger one. In the ?. Fcolv/orth COnpaaiy^ the method is practically identical with that outlined above. Unless a man possesses more than average intelligence it takes him about three years to become an assistant manager. Tlie prospective manager gets educational helps, from time to time, in the form of manuals, bocks and pamphlets. Ee is also encouraged to re.ad business books and magazines. Ills compensation during this period is very small. Tl-ie theory is that if a man is paid low wages he will work harder to gain proiiiotion. In one to tbjree years, de- pending on his ability, he becomes a manager. As manager he gets a nominal v/eekly salary, scarcely large enough to live on. Sut he is compensated in addi- tion to this according to his ability. Each manager is guaranteed a certain salary. In addition he receives a percentage of the net profits of his store. Years ago this contrdssion was 49^, later it v/as reduced to 35^, and now it- is said to be S^. It is said that a mianager usually earns twice his guaranteed salary after the first year. In one instance last year a manager of one of the largest stores earned over 025,OOC. • In the r. 1. Grant Compaioy^ the method is sirrdlar to that of the voolwoi*th cnain, but promotion is much faster. After two years the average man 1 Interview with local manager. 2 Interview with ’Ir. Er .f r ..'4:^’ ir< . ; ..'4^/ ' 'A ' 'l *' :♦ ■' * I I f ■Av; • V-'>4 ■ ■ * ' ^ ' j ^ *TT * / f Jii ^ J" . Mif , .w' • V „ vT- h 3u tecowea a r.ianager of one of the sr.alleot stores, after having passed an eigl'.t weeks' edncational course at the Hew York office. There are five grades of stores: A, E, C, E, and E, A "being the "best and E the poorest. E^.e new inanagsr tal^es charge of an "S" store until he has made a "D" store of it. Tl.en he is pushed up to a "D" store, etc. After managing an "A" store for five years he is ready for an executive position on the staff. Tl'.e method of the Grant chain is peculiar in that the r.anager has charge cf the education of all his errplcyes. lie gives tallos at "banquets held for the employes once a week. It is interesting to note that four phrenologists are employed "by the company for the x'urpose of ascertaining the efficiency of clei’ics. It is dou"':tfrJ whether this is an effective test.^ The principles in the Penney Corrpany ■ method are practically the same as in the other methods discu.ssed. TI:at there is a difference in the working of the plan, however, is s'.ov.Ti "by the fact that last yeai’ the la’oor turnover was only Prospective managers are selected with great care. It is a policy of the co:iipa:'.y never to hire a nan vvl'^o s.okes cigarets, drinlos, or has no religious fa-ith. The educational department, under a prondnent educator, has worked cut a very coniplete "business training course which covers all phases of retailing and store nanagernent. All erployes are encouraged to talce the lessons, which are sent to the main office a,s completed. I.Ianagers are j;aid a s:i3all salary 'beside their dividends. Clerks receive a salary and bonus according to lengf': of ser- vice. T::e partner-raanager plan of promotion is one of the clcaract eristics of the company. Briefly, the plan is as follows: After a nan has proved his ability he is mad.e head clerk and later given a try-out store to m.anage. If he 1 Stax’ch, Educational Psychology, p.39. 2 Interview with local manager. K.akes gccd as manager of the try-oiit store h.e hecomes manager of a new store, with the gnivilege of buying a one-third interest in it with monej'" loaned him by the company, to be repaid from future profits. Tl:e new manager i:^.-ediately be- gins training clerks for managers of new stores, blien they talce charge cf stores the manager who trained them receives a one-third interest in their stores. Tlie process is repeated continually, each manager receiving a one-third interest in the next two "generations" of stores, i. e. , in the stores of the maiiagers he trained and in the stores of the managers trainedby his previous clerks. In conclusion, attention is brouglit to the fact that most chain stores do not make any spiecial effort to educate their clerks. Obviously/, this is due to the high degree of standardization found which malces it possible to employ low-priced sales help. ClUFTED. Y, Tlie general opinion is that the greatest advantage of the chain store rests in its ability to secra’e quantity prices. T ere is no doubt that the simple principle whereby tv/o stores by pooling their pnrchasos are able to secure lower prices exists in tho case of the chain store, Tlie buying advantage is uore eppai'ent when the fact is considered that seme chains for several hundreds, or even thousands, of stores. In this connection it is wortlijo to note that direct buying connections are made possible with manufacturers. P-arthermore , as will be seen later, the departmental bn^rsrs can go to the manufacturers and buy scientifically . Txie charge is often made against the chains that because of their enormous p’ur chasing and distributing power they 'ire often able to cornrrsnd "in- side prices." Tnese "inside prices" taloe various forms, the -ost conraon of which are secret discounts in addition to the reg-oJar quantity discounts, and long datings on bins. Vdiatever iLsy be the aavguments for or against quantity prices, it is ce-.-tain that chain stores are getting the benefit of them. It is likewise true thau these discounts cannot be increased indefinitely as the quantity in- creases, but only to a point where the law of increasing returns ceases to apnly. mere are four sources from which chain stores draw their suppolies: 1. Tl'e "ccirimon" source 3. Surp?lu3 stocks of manufacturers and jobbers 3. Controlled output of factories (usually for one year, but sometimes for only two or three months). 4. Output of acquirei factories. I J. ' 39 I/lost c’r^ain systems "bTiy at least some of fieir items in tlie sa:..e way the individual merchant dees, vis., "hy criering froi-i various manufacturers according to tlieir needs. T::.e only difference is that the chains huy in larger quantities and consecraently get lower nrices. Again, like fie department store and some few of t' e largest re- tailers, f e chain is able to secure the surplus stock of manufa-cturer s and jobbers at low prices for cash. Incidentally , it might be added that a,ll chain systems investigated sell for cash and are consequently able to buj' for casli. ^inother source is the controlled cut put of factories. Ilany chains control part or all of the o’utput of marq- factories, llr. V. V.’oolworth is reported as having been the originator of this nlan. It is said that when he approached the president of a manufacturing concern and asloed for his lowest cash price for a yeai^'s outp-ut he was lau^ued at. Todaj” all of the chains in- vestigated control at least part of the outwaf 6f one factory, and seme, the United Dri^g Company for example, control the entire output of a dozen or more. Hie fourth method has evolved naturally from the third. At first the out';.'ut of factories v/as controlled, but later the factories were acquired. In many cases the chains have bought just enough stock in manufacturing concerns to acqfuire control. Hie advantages of s’uch an arrangement are obvious. Perhaxis one of the outstanding factors in the success of c::ain store buying is that expert buyers are able to forecast market trends and b-uy accordingly. Hie buyers are specialists. In some cases they buy only one partic- ular line, such as shoes, notions, cotton goods, etc. Another advantage, alre.ady referred to, is that each buyer Icriows his market thoroughly and is on the spot with Ms check book whenever exceptionally good offers are male. In the majority of cases these b^uyers have been stock beys, store managers, and inspectors, and 41 has I'eached the prescx-ihed nxinircuKi. Such actions, however, are watched very care- f’j.ir.y frorr. the district office, and a reT^riinand is in order if his Judgroent proves had. If the store 'nanagor has a demand for an article which the 'bu2/er cannot readily obtain, he may purchase the article locally. Hov/ever, sn:,ch cases are rare. ■Warehouses are located in ITew York City, Dallas, and San Francisco. Fnese are used merely for storing articles of v.h.ich there is a surplus due to t„e fact that it is sometir.es necessary fcr the buyer to take very large quanti- ties in order to get the best prices. Ordinarily, however, drop shipments are made from the factories to the v.'arious stores. However, when stores order less than case lots the tra,ffic men at the warehouses break up the cases and send to the stores the quantity desired. Incidentally, it right be added that the Woolworth chain owns no factories but controls the entire output of several, and a large part of many. Before a buyer closes a contract for new articles he sends saigples to tne different stores. Each o^anager signs up for the quantity he believes he will be able to sell. The orders are telegraphed to the buyer, and he closes the deal. T-vice a year, and sornetires oftener, the buyer makes foreign trips. One Ox 0 — e so ^rips xs to C^lna and Capan, and the other covers Surc''^G, '"•r'^ncioal — ly Fr.ance and Oermary. In these co-ontries ha visits the ex'-.ibitions at which the prcnir.ent manufacturers displa^y their goods. lJuch is often said about the use of loss-leaders in chain stores. - 1 . t-.e . ool^/ox^t— Cxiain there is a de^'^inite policy that each store ro.anager '..ust order loss-leaders to the extent of five per cant of his last vear's sales. * ■. \ ■ • .-.-v \ ii* J. .i Ic i lUi o‘ r ■ .'/■•>! 't I «4 • •r < i •> J# : i ■■ 1 '. •»a f ' ' 1 '.V • ’!■ i .1 . . ^2 The J. C. Penney Conpany^ maintains tliree 'o-uying offices, viz., hew York City, St. Lonis, and St. Paul. f'-S 'brying force consists of ahoiit twenty hvyers. Some of these have heen trained in the Penney system as mariagers, but many come from retail establishjnents, mail order houses, and jobbing concerns. It should be stated at the cutset that manager-partners are not required to buy their goods of the J. C. Penney Con^anj''. It is rare, however, to find a manager who doss net take advantage of the enorm;Ous purchasing power of the Penney organization. riany of the buyers are interested in the stores, since the^^ have the sane opportunity that luanagers have to acquire an interest. Obviously there is an advantage in such an arranger-ent . TliS buyers go cut into the market and malce puurchases. Pvery day a printed sheet is sent to each of the stores containing a list of new purchases and the s-rrulus of old purchases. T.iese lists contain the following information: Pate ITarce of articles Op-a^tity of eac’’* article At what warehouse the items are located, or if at the manufactur- er's wareho*ase, the address cf manufacturer. Cost price Suggested sel.ling price (Most stores u.se' the suggested price, but vary from it when the occasion demands) . Puere are, in addition to the dans'- lists sent cut by the main office, speci-al, seasonal lists, which are sent out from time to time. 1 Interview with local manager. 43 T:ia store Manager malies np his order frora his record of previous sales and his estimate of what the natural increase should hs. In doing this he is aided hy the Daily Report which he sends in to the main office. Tl:is sheet is r«^led non zont ally, one line for each department, and has four vertical rul- ings. Hie four vertical spaces are ''-eaded "Amount G-oods Purchased," "Amount C-oods Received," "Amount Goods Transferred to Other Stores," and "Orders Can- celled." At the hcttom of the sheet is placed the aisount cf the day's sales in e ach dep ar tment . lh.e order is sent to the .main office (IJcw Ycrh City), where it is approved oy the Ilerchandise Ilanager before it is passed on to the buyers. Ship- ments are always made in case lots direct from the factory, store managers break- ing them up among themselves. Hvice a year. Spring and Pall, buying conventions are held at ITew York City, St. Louis, Missouri, Salt Laice City, YtA:, Portland, Oregon, and St. Paul, Miruiesot^ in the order mentioned. Tlien the convention is on in a certain city, store managers from that partinular district get together and order their goods from tne samples laid out. Some of these sarmiles are stock items, but many cf tnera are t..ie wares of manufacturers who are seeking to sell. As soon as the conventions are over the b-ayers consoli-’ate the orders of all the stores and close tae deals \vith the manufacturers. Goods are charged to the stores at cost rlus a, small percentage for handling. Hie H. T. Grant Company's^ method is similar to the methods alread^^ discussed. However, there are seme differences. Most of the goods purchased by the seventeen buj^ers ai'e sent to the fourteen warehouses and distributed from there to the stores. Hue goods are billed to the stores at cost plus seven per- cent for .iaxidling, packing, and reshipping. Hne daily letters are sent from the 1 Interview with Ik. Prady, inspector for the cempanju 44 warehouses. The "buyers get a straight two per cent . corar.issiorx on all goods pur- chased. Should any of the goods urove unsaleable they ai'e auctioned off and the particular buyer charged v/ith the' net loss. In the ISroger Grocery and Baking Cowpary^ the buyers are part of a separately organized wholesale bu.siness. That t?~.e wholesale business is managed efficiently is shovm by the fact that goods are billed tc the stores at cost ”lu3 three to five per cent. /.ll of the chains discu-ssed so far have done their buying central- ly, i. e., through the r.air office. At this ~'cint it is proper that attention be paid to another uethod, inasiruch as it promises to present some important problems in t:^-8 f>ato3 development of chain stores. This method has alread.y been referred to as being characterized by decentralization. The nest irnportant chain using this system is the Great Atlantic a:id Pacific Tea Company. Before dis- cussing the buying system of this chain it might be well tc consider some of the underlying factors which have brought about this decentralization. Tr.e first factor has already been discussed. It is simply that after a certain quantity has been reached the manufactm’er s can no longer afford to give increasingly lov/er prices. Again, as the chain e:xpands into gigantic proportions it is physically irapossible tc supply its needs from one factory, or even section of the country. In addition to this, s^-.ipping and warehousing ex- penses become greater as the ends of the c'''’.ain become more distant from the cen- tral buying i^oint. Hiese are the factors, then, which have brought about the change in the largest chain system in the v/orld. Until recently the buying method of the Great Atlantic and Pacific Tea Company^ was very similar to the methods already discussed. But t’le enormous 1^ Printers' Ink, ITovember IP, 1914, p. S4. 2' Interview with local manager. , > Kj \. aj- •.-’KJ* . il • f ' / V -Tr ... I . ' ■■) ',. ■> f • ■':r '> .»• +* 4 I *r "n* It .' ( ; . ;'«• "H O J( ■■4 r -• ♦ t ;: /' ■' i,' '.i''-:t . . ■'^, ^^7. ' 7 I 7.' ■. •:'V' ■ r »:■. jt; v;i . '.'Jiv-' o " '»-tw1 • •„.,' • • .. * ■ 4 ' .r •" 4. • • ' 45 grov/th has rcade it wise to dscertralize its hj.ying operations hj the establis/- Ksnt of disti’ict '-varehcnses with resident h'.'iysrs in nan^/ of f^'ie larger cities. These resident b'.yers receive orders from the store rrai-iagers of their districts an.l do f’'e h-r'ing in the same general v;ay as in the other s.ystens outlined. Tl.e hryers are paid on a commission "basis. All goods are hilled to the stores at retail nr ices. The advantage here is that accounting both at the store and at the main office is simplified. Little mention has been made up to this point of the erctent to -iv-n Grains are engaging in rnanufact'oring. The enormous iiicrease in the arrount of mamif'',cturing done can he seen hy looking over tl.ie stock in chain stores, especially grocery and drag. A recent inspection of the local A. d: P. store shewed that perhaps fifty per cent or more of the articles ai’e manafactured by, or under close sr.pervision for, the company. Tliere are two reasons for this increase in manufactrring. First, it is generally conceded that chains make more money on t— eir ovai brands, and second, it is '■ rfxtically impossible to btiy goods from several different mairafacUu’er s w]:ich are s-afficiontly uniform to be sold under one brand. -i.n coni^lasicn it mig..t be stated that there seems to be a farther tendency in the chain store field toward integration. T!:is is esp.ecially nre- ncrnced in the .grocer- and drug chains. r..is tendency toward ac opairing sources • of supply has been motivated naUu’ally by the desire on the part of tdie chains (1) to obtain a double profit, both on the manufacturing and the retailing, aiol (2) to malce sure of a source of supuly. In spite of tho criticism presented by both retailers and mam- fact^ares in regard to the unfair buying practices of chains, there is one aspect which has proven beneficial to the cons'jimer, viz., the education, on the part of experts in t’le e^iiloy cf chain syster^is, of rnanafacturer s in cntting down tl:.ei cost cf prohjicticn throu^a increased efficiency. One has hut to go to one of the Five and Ten Cent stores to convince hir:self of this fact. There he v/ill see nany articles which, before these stores handled them, sold for twice as much money - or more. 47 CHAPTER VI. It is not the piirpose of this chapter to determine whether chain stores price their goods lower than those of independents.^ The parpose is rather to make a survey of the field and to present soiae of the outstanding points in connection with this important part of selling. One of the most ir.portant factors in pricing is that of turnover. Other conditions equal, a merchant can as well afford tc turn $1,0CC worth of merchandise tv/elve times a year with a net profit of two per cent as to turn the same amount of goods six times a year at a foiu: per cent net profit. A compari- son of turnovers oetween index^endent s and chains in some typical lines reveals a marked difference in their rate.^ Line Inde':endent s Chains Grocex'y 8-20 40 (high) Tobacco 4-20 50 (high) Variety goods 8-10 10 - 12 Drugs 3-4 12 The fact that the difference is small ’between independents and chains in varietx'" goods is due to the education the former get from such variety goods Jo-otars as Butler Brothers. Tnere are t’u’ee outstanding factors accounting for the rapid turn- overs in cnains: In the first place, the 'b\ij.’‘ing is sc efficient that unsalsa'bie goods rarely rem.ain on shelves. Second, the methods of display and arrangement 1 It is impossible tc make generalizations of this kind without su’bstantiating t— em witc a multitude of statistical data. It would "be necessary to collect data on tnousands of articles in various lines and compare average nrices in chains with those of independent retailers. 2 Printers' Ink, December 3, 1314, p. 65. ,Sv‘^v Til i »i .^i.. ™ ’’^ // iai >’.4!' ■■■ '•' .r, •« . / '^'T;' i- ■ '■«♦', .'.'.'ii^U , '?■ >.' ■ B' i I Ii'.:j,;.';\' •v.;W- '■', , i, fop-*' ■;y'S. ^'li!^‘lv . v>V> '-^r^v V . .'M, *S* ■ "' • , „ . a >1 i n >^|^riHi»^>V< ■■•* •’#\')« ^i-, r'<^i r ’ >’•■ ' 9j:s i ; -m' | Tp • r r : ' ■/^< i y_^ i^l.- Aji^TT; '.' /f»^' r'4,! ,l.i. ifct- .iic . ’«■'# „ ' . ..r'^,,, , fv. ' i V ^ '» 'TV/ ■ C 1*1)1 fe'f'‘. "Wf rj: *i Vl 'C4. Vj ''vv/ .'t' .Mr :b:j !«sia.V ' %>.' . 'a.' ? 1 I '^i-.i- ‘'i hIV H''- .11 ', :'■ ■ mV r.K>i mr • ■ • . ’ ^ • r ■ II r '.i WiBP* y-'f • ■’'! ■ ' L'-' ' ' r . I3AQE ,.,: ■ , ■„^. . iA\ . . /^. .. , X?.-, ii^j|.R4jXi: 46 are ver^ effective in selling goods. Tliird, chains have a reputation for lov/er prices. 1 discussion of the first tv;o factors has teen talcen up elsewhere, aiid the third has been referred to in the heginning of this chapter. The following statement is made:^ ”It is obvious that the chain does price very low on a score or more of nationally advertised brands in its line v;hich have standardized values and known prices, and also on certain goods where costs ai’e more cr less IcnoWi’n to crastorn, but it is possible for one to satisfy himself by shopping .around and inquiring of any retailers, jobbers, and manufacturers that the majority of chains do, as a matter of fact, in many instances price higher on other goods and get a larger profit on their ov/n private brands than do the independents in their nei^fcox-hcod cr in similar neighborhoods." Tliere are four general methods of pricing: 1. Certain percentage over cost of goods and cost of doing busi- ness. 2. Tlie application of the first method to unbranded goods, but maintenance of jjricas on all nationally advertised brands and on private brands. 3. Largely based on competition and custom. 4. Standard pricing, goods being bought to sell at a certain price . Mr. Bowers' Stores, Inc., uses the first method exclusively. Ill goods are marked up to bring a 12^ to 15p gross or a 2)j net profit. Tl'.e second method is used quite extensively by independents; only a few chains use it . 1 Printers' Ink, Peoember 3, 1914, p. 66. . . 4 ^ 49 T;i 0 third method is used wher. "buying is irregi'.lar or speculative and competition is keen. Srocery and drug chains use the depart.'isnt store scheae of shoppers in keeping tab on their competitors' prices. Special sales and all special offers come under this method. Examples of these are t?ae "1 cent sales” of the Eexall ■dr'ag stores, in which instance the purchase of an article at the regular price carries with it the privilege to Vay another one for one' cent addi- tional, also, the special offers of the United Cigar Stores. At certain times these stores have clearance sales of pipes, for exarqr.le, and each purchaser is given a certain percentage of his purchase in tohacco. Althougla prices are main- tained, in the finad analysis this is a form of price-cr.tting. Tlie fourth method is "best exeim:>lified hy the buying of the Five and Ten Cent stores. In this case, no matter what is paid for the article, it must be sold for five or ten cents, so pricing is the constant factor while buy- ing is the variable. Another example of this method is seen in the practice of buying men's clothing to sell at a standard price. Host chains, especially in the drug and grocery lines, cut prices consistently. However, :k. Bov/srs' Stores, Inc., v;as the only chain found which does tuis on all articles. The general practice is to cut prices on established, nationally advertised brands - where the cut can readily be seen by tie public. In the majority of chains the advertisements refer r.ostly to well kncv.n brands arid staples. However, when a chain becomes very strong, as in the cases of the Sreat Atlantic and Pacific Tea Conp^an^r, the Hexall stores, and the United Cigar Stores, it is no longer necsssarj^ to feature such articles most prominent ly in the advertising. It is interesting to note the change mads by the S. S. ICresge Cor:3pan’’’ during the recent period of high prices. Variety goods stores were faned v/ith the problem of either discontinuing some of the lines which could no longer 50 "be "bouglit to sell at ten cents, or changing their v-olicies so as to sell goods at more than the nsual ten cents. The Ilresge Compai'iy established its "G-reen ■Fircnt” stores, selling in them articles up to $1.00. Tlie res^jilt was that while some of the variety goods chains were forced to discontiirae several items, Eresge was able to keep them and sell them at a slightly higher price. Two conclusions are possible: (l) Tne ccmnon practice of chains is to cut jjrices on standard articles and maintain prices on their cv/n brands, and (2) Whether or not chains sell at lower prices than independents, neverthe- less, they have the reputation, gained largely through advertising, of selling at lower prices. r-'i”,' ,, .>■' ^ .;;T.‘ . 'h;' ■»«!_■' V, ; F' WM-" ■,:■ ‘,a A "-I-'' -V' ' - \ > i Mimm f4-’P ,.j;> • J'-i'l ' vifiS,.,;, ,■, 'St-j i 1 1 , ■. :: . . . ■"■^'' ' !yf-» : . ■ h. :ra 3.^- „ji«. I' tt . ' n ' l*l.‘ * p \ . ■■■ '• '■ ' ,y* ' '■' '■•■ ‘p lA.fi i* 4‘.^ i ' L ' ' ' ■ ' ‘ ■^'' ' ^ Vi rS iW-*^ ■' <". ^ 'i ? • ,> Si 1 ^ :"‘ 'fel. VSraTO*’ , , '■ '5 it,"i -r .e;, . , of’:. , -i'Tt-j? ■V <” -j^ • ^ '‘J5 •‘•la -'J?..*' X, '/ , V /.'■ . ’.'fijt :■ '*V2 ■ ' • :?\ilf I "I . » ‘ ^Jk»* ■ . w n-j ^.: - A . ; . ‘hi < > .V/ . .. '*' •', t.te¥^ . ■'.^' 'W m (>v: fp" :' Sj;^ 3, ay- j|.!' ■ 'V i ■> ' t .' ♦ u '''. . 10 ''''' ' Wii-"' ►' y^ 4\ v'lV ^/3P: ! ‘ •At' . _>: •'^ > ! •}’ < ■ ‘ Si. Jvi. A 0 fj rbj; > Ik ,k^r'''"w^ .VL mi iVii' t r .1^, ■■>•■■ ,m •r'^ yp H>;%v- ,'.V.^ 7 r^- V- 7. '•H L ^ A- ifT-lil* ' '»•. > i".. ■A, t -;ff, k, . » •■ fit ?a '3'- 51 CHAPTER VII . Selling forces are of two kinds - personal and inpersonal. The fornicr deals with the personnel, from the rmanager to the lowest paid clerk. It has al- ready "been shovm that standardization "balances these personal forces in chain stores to a large degree. But the impersonal forces, which include v/indov/ dis- plays, interior merchandise displays, and the efficient arrangement of counters, ta"bles, shelves, etc., are of vital importance. "... Fully forty per cent of our total sales may "be traced directly to shop arrangement, " says a successf’:! retail- er. The man who visits a store planning on purchasing a shirt seldom realizes hcv/ cleverly that departn.ent is located so that he rrnist pass collars, neckties, socks, etc. in order to reach it. This is one of the fundarrient a 1 principles ob- served by chain stores (and many successful independents) in planning the arrange- ment of their stores. Another principle to be kept in mind is that window dis- plays must be supported by an attractive store, for no matter how efficient the arrangeir.ent, or how good the window displays, an unattractive store will not draw trade . That chain stores have made infinitely more progress than independents in this matter of arrangarent is apparent even to the most casual observer. If anyone is skeptical on this point, let him enter one of the stores of any chain system; three things will strike him favorably as soon as he enters the door - and often before - cleanliness, order, .and the ease with which he can make his way from counter to counter. Store arrangements have been so highly systematized that in almost any chain an employe who is transferred fi'Orr. aie store to another can start work imniediately - he knows that the goods are in the same relative places as in the 1 Shaw Conpany, How to run a store at a profit, p. 53. ■'■/ifjj ^ '" ' ' 'V- I ' ... . ' .:' ■:'! f.';. ' .. . ..._■ .V''' . Ir V V - • ' '■ > ' * '< '*" ' "V ^ '^' ''r'.’ J ’' , "■ ' B*"''' " •• ;’■?■' ' ', >. . ^-i’3/t. iatt* . , ‘ AfvfcP''^ , - A '' ..3T .* ‘ '■ M .... , , . r'!*: _ '■," . u 1 . ' Jkaift .>■• t ‘i ,. ,j ", .V ? r>: ’ ’’ ' • ’ r S' ' ■; y| ' • '; : ‘-.' ' * 'i « ;., '|;.^|i,. ‘ ^ ' ' -V - ' '. '. . 1 J «•''■'■ \“^ '■ ; ’■■'la ““ • fk>4A.u, .f;ti.i ; ,.r: " 1 ' ' . ■ • M A, j-. ilh*AyT n;i‘!^tiifijlii^,.i'tih».t ' iW'ltrf -.'i ''..;'1h.,- .'.'I ■ , >V'.. ' . '■. 'V4^|j^<9r ‘ ’TV''! •i‘>. -.,.j. -> ,iv ; fiV' ♦ >.'■? , ‘■. n-* ti fi;0^ rA ,‘:U> '.•^’ ' 't/ .,vffr^^vV^pf f f.. - . - S' H ' ;. 4af ’ ^ f4 W' 44 '*■ • ' .- W .V' ... .iV'r,-, ■;' ■■;. • I ,’.'! 0 *tm£' . ’J' r'.% '. '' ' ... i ju > iiu t" t ,j i‘ j i ... . .. 52 store from which he cair.e. There is another advantage in that a custcnier entering a United Cigar Store, for example, knows exactly in which part of the case his favorite cigar is. As mi^t well he expected, all chains investigated have a special de- partment to taice care of the problems connected with store arrangement. Building a store exactly to one's requirements is a simple matter; remodeling an old store so that it v/ill exactly meet the needs of the chain store is a rciatter calling for greater skill. The chains have acquired just such skill. Recently the writer was interested in v/atching the Great Atlantic and Pacific Tea Company's man re- model a vacant building. The man arrived on the scene early one afternoon, laid out his blueprint and sawed the lumber for the shelves and counters. By noon of the third day the store was ready for business. The shipments of stock and fix- tures were so tinned that the manager began his work of arranging stock on the prescribed seventy-two feet of shelves even while the service r'an was yet at work. Practically all chains now use this standardized method of oi^ening nev/ stores which seeixis to have originated with the S. S. Kresge Company.^ Perhaps no better idea of the details of arrangement can be had than by exan.ining into a system, the success of which depends largely upon arrangement. Clarence Saunders, of i.lemphis, Tennessee, inventor of the Piggly-Uiggly system of self-serving stores, explains^ that he adopted the na.me "Piggly-Wiggly" in order to have a nam^e which would be distinctly individual. Under this system provision is made for an arrangement which utilizes as efficiently as possible all floor space, and which provides for the selection of goods by the customers v/hile they maice a circuitous path thrcu^ the store. Gastomers are provided v/ith baskets while in the store, into which tiiey put the merchandise selected. 1 Printers' Ink, November 12, 1914, p. 69. 2 Modern Merclnmt and Grocery '’orld, November, 1917. 53 the end of this circuitous i>ath the custorriers pass to the checking and settle- ment station. The Saunders Self-Serving Store, one of the elements in the system', was patented October 9, 1917. It is "an apparatus for vending merchandise ar- ranged in merchandise display cabinets or holders at distances apart fonrdng aisles, with passage ways at alternate ends of the adjacent holders, a turnstile at the entrance, with another turnstile at the exit, whereby customers that pass thro^igh the store are controlled, and in which there is a packing, checking and settlement station adjacent to the exit." Other details of the system are: 1. The Saunders Self-Serving Store furniture. 2. Mirrors in diamond-pointed ends of the main display cases. 3. Swinging price tags in each compartment division. 4. A special price holding device for use on sack flour. 5. A tv/o-sided display refrigerator. 6. A two-sided display case for cured meats. 7. Specially designed hami rack. 8. Sugar bins. 9. Bins for package goods. 10. Candy case. 11. Mince meat and pickle stand. 12. Frait strand. 13. Bread stand. 14. School supply and stationery stand. 15. Broom and mop rack. 16. Bargain display rack - all of which are constructed in such a manner as to secure mximurn efficiency. L V'' ' \ - i i \ ^' -?. ■ . c-‘ c<.'. ’,' . ''Vipyt •»<*■*, '•■• ■ ■ T' . V 'V' * V ’ \a* ^ ^ ;> V • 1 ■ ■' ^■! : ' i 1 ; dtj ^ i > ■if ' * - . ■ ; . ■' i'( A .)r T f . S •*;?. ■:-y . '. i' 54 17. Specially constracted stock room f-ornitm-e with removahle tray combinations. 18. Specially constracted potato, orange, and lemon bins; also nieat and lard counters for stock room. 19. Specially constructed stock room, counter with bins above and below providing a dual capacity for econor.Ty of time in assembling at one point, articles to be weighed on automatic weiring m.achine and also those articles that can be weighed only by hand methods. Some interesting and instructive facts can be determined by a study of the arrangement of goods in chain stores. More attention has been paid in the Five and Ten Cent stores to the scientific arrangement and display of goods than in any other line. The reasons for this are obvious, viz., most of the goods sold in these stores are convenieiice goods, and the sales help is of a low grade. Thera are three general factors in the arrangement of Five and Ten Cent stores. In the first place, everything on sale is displayed v/here it can be plainly seen. Second, despite the large volume of goods displayed, the general appearance of the store is orderly. Again, the arrangement of counters and fix- tures is such as to make it easy for the customer to pass from counter to counter without undue effort. Aside from, these general factors sane specific ones brought out in the investigation are sumriarized as follows: 1, Five and Ten Cent stores almust invariably have two entrances, one on either side. If the store is on a corner it has a third entrance /the side. This is due to the fact that the stores are located on streets where the traffic is heavy. So two or three entrances make it easier for people to enter. 2. Candy counters are always found just inside the entrance, v/here the sight and smell of the candy attracts people passing outside. \ i . ' '■ \ \ . < •'i . . 56 Candy and cakes are often displayed in several different parts of the store, 3, Toilet articles and drugs are given a place almost as prominent as candy. In the larger stores they are directly opposite one of the eatraiices, hut in srr.aller stores they occupy the counter dir- ectly hehind the candy, 4. The soda fountains and I'unch counters of the larger stores are usually placed opposite the right-hand entrance and against the wall, because this side is less congested than the left. In this way they draw not only the people who are in the store but also an appreciable amount of trade from without. The largest V/oolworth stores also have cafeterias which take up part of the second floor. However, it is said that the cafeteria is maintained more for con- venience of the customers than for profit, 5, Notions occupy a prominent position in the front part of the store because they are such common articles of purchase, 6, Drygoods, millinery, and glassv/are are usually found on the second floor or in the basement. People will walk up or down a flight of stairs for these goods because they are more nearly shopping than convenience lines, 7. In general, shopping goods are so located as to necessitate the customer's walking past as many other lines as possible. This is why hardware, garden goods, etc., are in the back of the store and related lines are around therri, 8. In stores having basements, stairways are found both in the front and in the rear of the store. Stairways are always very wide and so arranged as to enable several lines of merchandise to be seen 56 from above. Ixi drixt; stores this natter of arrangenient has also received consider- able attentiozi but apparently not so much as in Five and Ten Cent stores. There are two reasons for this: first, the nuaber of lines in the drug store is smaller, and second, personal salesrrianship is an important factor. However, some princi- ples of arrangement were noted in this investigatioii and are sumEiarized here: 1. Counters and cases are arranged around an open middle space. Ex- cep't for an occasional magazine stand, the center of the floor is kept open. So the line of passage is along the counters rather than between them as in the Five and Ten Cent stores. This is explained by the fact that the drug stores pay twice as iruch rent in proportion to sales as Five and Ten Cent stores and conseq^uent- ly must confine themselves to less space. 2 . Cigar stands are found just inside the entrance, on one side. This is because men insist upon convenience. 3. Soda fountains usually occupy a prominent place near the entraxice, for the purpose of dra\'dng trade from the street. However, in sonB cases the fountain is located crosswise in the rear of the store. In the latter case it attracts the customer who is already in the store rather than the passerby. Indications are that the location near the entrance is the t'ore profitable one. 4. Patent medicines and prescriptions are usually near the rear of the store. The reason here is that people are willing to v/alk. back for tliese, v/hich might be called quasi -shopping goods. 5. Such convenience goods as toilet articles, including perfumes, manicure supplies, etc., ::ire conveniently located not far within the entrance. 57 6. RvJb'ber goods, on which there is a large margin of profit, are displayed more conspicuously than in the average store of the independent druggist. 7. In general, it can he said thiit some effort has been rra.de to dis- play goods in such a way that one article suggests another. How- ever, it must be borne in mind that the chain store druggist re- ceives considerable sales training and consequently suggest ions are made rather by word of mouth. In conclusion two facts should be pointed out: (l) The matter of store lay-outs has been developed and standardized to a high degree by chain stores, and (2) Low-grade sales help is balanced by this standardization of arrangement, which is one of the Important factors in selling. i w>-- .'•f>4 , -:r i?^-x\’'-si' a: V. V c j^fi i V -V Bh -t^' -(feu: ; ^ro!- .•■>w7'. ■¥'/.. ''^ aA- ' '. ■■T»i ,.., I ft V':’Mf\ ■V'l'l? '\m' . ca ff- ^ , ,.. . i .. .. •• ■■ •.i:/’.a „J[-l' Jffe.9 i'Xt ct . ,;t :*..;i.,_. ’■ ■ *■■ .1^5^ ^ if ^ ^.,TP’*' , \ X' t*s.f*it- 'W •/■ |b> I 1 j *'" ‘ -t - ^ •' j >''' * j Ij vV'i-*; . 7;-^ :, - Ct> : h.& ho&ttXi^ ■ 1 ■1 _V>l7 ,...,» „ , , - ' .’*> 4i^,,^..^.. , 1 nHS \ii 'i'%yftf!^'jA'<'' ''h#|.fi'i '1 • ' I ■;-'‘l, M'‘ ^ i . !"' . • ‘ t'(l> ■m ,■!»' i.’^ ■ . V • ;y t>n , 7 . ', • ,'! |‘^* ' V 'i .11 fT. JN' , A -..il' 'jr ' t ■■ :, •; 3 i' 'H _v *j -»/, I ' .4; ,7/S'' 0 W' %T^vr^: ic I 'I ' ifl iwi ijaM'iu * * '] J 58 CIIAPTER YU I T^iere is a general tendency among independent retailers to con- duct their husinesses without adequate accounting systems. Since the advent of the income tax there has heen some inprovement in this resx:sct, hut it is safe to say, even if they had uniform systems of accounts, they do not know how to use them to get desired resr.lts. Chain stores, on the other hand, have efficient acco'anting sj'-stems which give a maximum of information in simplified form. Accounting performs four irrporta:it fi^nctions: 1. Provides a knowledge of actual operating costs. 2. Gives statistical information as to the financial status of the company. 3. Locates leaks in the business and is t?ae means of their eliimina- tier*. 4. Provides a scientific oasis for buying. First, since cha,ins operate on a low margin of profit, it is im.- perativo that they know^ their operating costs. 'P..9 United Cigar Stores, for exai:p;le, knows that when the percentage of rent to sales exceeds Sp in a certain store somaething must be dons to increase the sales. Second, statistical information is necessary/ for a comprehension of the financial status of the corapany. Tiie directors and stockholders of a chain insist on knowing whether tlie business is making money and at what rate. Tnird, in the h;ands of exf-^ert accountaiits a scientific system of cost accounting can be made to shew leaks in t’ae bmisiness by analyzing the various 9:qvense3 and by checking reported irrentories against physical. Li . « • ,ri ^sfT( * ft X' i'._ ■'-• ii^U i >. ?« .» >1- —i' ^'1 it JQbMiM tB V -5^ />«*. 1'#^ 'V r. ?.J . ^ It ‘r' 1 ^ .vr * «:? .’I'- .•} M ly^ ' i '* Ji tj_j*tr •'■ !i-Ai ■’’^ " '-V » JJw>* • V IV 1< ■•'««:'. tv 0^4 * ^ ■ ■ ■ ' ^ • • ''--t^,'.:^ 1 < :^w.. i (f ii' t J*'*''- :: 4^ V.T, V'vf '■*•.' - '" ''' 'fiA^ ■• 'f ‘ ■ >iu io'jlJL *i > iV, ( ■> , » ' • '' ^Ik. ri ^' Jr, '" '■ :■ T , '.. jJ:. ■ ■ ’ ■ '■ v.'^ ' Hr i!> ' vfl ■ . □inn W' s t V. J? ^ ti^il 52 Perhaps the :nost iKportant f-anction of accounting is to serve as a ’oasis for tuying. In all c’io.in systen-s statistics! departir.ents ar-e iiair.tained v/liic* do nothing tut compile elatcrats, yet simple, statistics on all phases of the tusiness. Vhelan, the foremost executive in the United Cigar Stores Company' of Anierica, has evolved pjerhaps the most complete statistical method in use among chain stores,” Without leaving his deslc lie can refer instantly to data which will tell ’lim exactly how mar,^'- cigars of any rarticulai* "brand v;ere sold in ai'^'’ of his stores on any day, and what the p:er cent of increase was over the previous year. In all chains sucl. comparative data are used in determining sales quotas. Invar lahxy tne general accounting is done at headquarters, store managers "being required to keep only records of goods received and sold, and an expense account. Every store manager is req'aired to send to the main office a daily or weekly report of sales, summarized by departments. Eness reports s’ncw amount of goods ordered, ar/iount recei-'.-ed, and balance on hand. This balance is checked with an inventory report made monthly by the store manager. Cash is us’cally deposited ddly in a local bank: and the deposit slip mailed to the trea^ar- er. In some cases a draft is sent. An elaborate system of accounts is kept at the main office. In 2 one c.iain the following records and reports are kept: 1. Daily recei\?-ing sheets. Shcv.lng, by departments, all goods re- ceived frcrn all sources of supply. 2. Daily sales report. Showing receipts, by depai’tments. 3. Contingent fund report. Showing pa^rr.'.ents made for various e:c'enses. 4. V’eekly pay roll renort . 1 System, hay 1216. 2 Swinney, herchandising, p. 317. so Conclusions here are hardly necessarj^. Ilov/eyer, one iriportant point hrou^it out deserves emphasis, viz., that the reporting system developed "by the accounting departments of chain stores is invaJuahle in that it shows the condition of all stores at all times. 51 CIIAPTEI IX T.iat inspection has played an important part in the development of chain stores cazi he seen h^’’ examining first the reasons for its existence as a fanction, and second, the riethcds used. Keference to seme of the characteristics of chain stores f-arnishes a good basis for the discussion of inspection. In the first place, a high degree of standardization is alw.aj'’s found. This cannot he maintained hy the low class of help unless some all-inclusive system of inspection is inaug’arated. Tloe fau.lt is net due directl 2 ^ to the store manager for he is alwa^rs striving to maintain the ^■‘ign standards required. It is due rather to the psycholop'ical fact that low-grade help will not perform in tho best manner unless it is constantly s-rper- vised and its ^7ork inspected. It cannot be expected that tho manager will de- tect eac"'-? and ever^A deviation from the standard. Sc it is necessary for the in- spector to look with perspective or. the vdiole situation and point out the details v/hich do not conform with set standamds. Again, there are many points on which the manager ma;/ become lax, s"ach as piling goods too high, permitting dust tc collect on ther.;, etc. Such matters are noticed and corrected by the inspector. Since chain stores operate on a low margin of profit it is neces- sary that all sources of loss be eliminated. Hiis is especially true in ccmecticn with weighing and measuring. Another characteristic is the substitution of window displays for advertising. Esi^ecially in the case of Five and Ten Cent stores the inspector m.ust pay particular attention to the window displays and de- termine whether they follov/ the general policy of the company and the dictates of reason. 62 V.ith cne exception (J. C. Penney Conipany) all chains investigated x'.ad systems of inspection. Por the most part there is not r.aich variation in the methods used, so a rather general treatment is permissible here before consider- ing the methods used by some typical chains. Tl.e following qaestionriaire form of outline^ gives a very comprehen- sive idea of hew the inspector goes about his work. If the outline seems long it umst be remembered that the work of th.e inspector is long and tedious. I. Information gathered before visiting the store 1. 3-eneral rejjutation of the business aiid the -management 2. Personal habits and hone life of t’le manager II. General information gathered at the store 1. Checking of accounts and cash registers 2. Condition of the manager's desk 3. Personal appearance of manager 4. Comparison of sales wit): quota III. Information as to the stock 1. Are goods piled right? 2. Are there anj^ faded goods on display? 3. Are goods displayed too long? 11. Employes 1. Are they q-aalified? Heat? Intelligent? Aggressive? 2. Are they cai’eful in weighing, meas^aring, counting, use of twine, paper, etc? 3. Are they s-afficiont for the volume of 'trade? V. Tl:e next move is a general survey of 1. Counters 2. Sign sets 1 Pi sic. Peta l 1 Selling , p. 313. 63 3. Price tags 4. Qaai'itity of tools in t'.'e stock room 5. Fixtures - windows, cash, and sign VI . In spe c t i cn of windows 1. Are t?'.ey clean? 2. Are goods seasonable? 3. Are sufficient profit-malcing lines displayed? 4. How often are they changed? VII. Inspection of counters 1. Are goods seasonable? 2. Are they in good order? Are there any broken goods? /a-e any goods soiled? Are they ari’anged separately? Are they in the right places? 3. Aire the counters arranged in such a manner as to secure greatest efficiency’'? VIII. Aittention is also given to 1. ITuniber and kind of complaints per week 2. Co'npetition 3. Shifting of pupxilaticn 4. Undeveloped selling possibilities. In the larger chains the work of inspection is iierfomed by highly specialized inspection departments. For example, in the Great A^tlantic and Pacific Tea Coirxj-any there is a general field supper intendent at the home office. Under him, in each of the fifteen district offices, are general shaper intendents. Under th.e fifteen general superintendents are forty-four s'aperintendents, each supervising about seventy-five stores. There are about six assistant S'o.ner intend- 34 ents under each S’.iperintenden't. Each assistant, or inspector, visits twent^^-five stores once a ir.ont’n at irregi’dar intervals. In the case of the V'oolworth and Ihresge stores each inspector visits about tv/enty stores each month. As a matter of fact, inspection once a month is the rule in all chains investigated. In some cases the inspector is required to moke a formal inventory, as in the United Cigar Stores of Ainerica. /in interesting point brought cut in the investigation is that in every instance the inspectors v/ere promoted from store managers. That this is perfectly logical, however, can he seen when one considers v;hat on intimate know- ledge of the stock and policies of the organization the inspector rust have. Mention has already 'been made of t!:e fact that the J. C. Penney Company has no system of inspection. As was explained under Ci^ganizaticn, this companj'' differs greatly from others in that it is an ingenious combination of a corporation and partnership. Since the Penney managers are partners in the busi- ness and receive reiomeration accordingly as net profits are made in their stores, the necessity of insp^ection is obviated. 'Tliile formal conclusions ai's not necessary in this chapter, it might be well to emphasize the fact that inspection is a necessary f'anction which cannot be eliminated unless, as in the Penney system, something else is dene to take its place. ' ■ Vp-v" •■»'• •»*•*• • ~ ^j-4- . » W*-- i.* ■^T'. *. »,i*A '■ }): 36 111 1918, the Childs Coupany (restaurants) began large-scale advertising in the local papers.^ At first this advertising was very general, btit it has , gradually hecorie quite specific in nature. It is reported that its advertising has been ver;^ sxiccessful from the beginning. In the last few years man;y- advertisements featuring Woolworth products have appeared in magazines. Their wording has been such as to give the impression that they originate with, and are paid for by the V.’oolworth organization. As a matter of fact these advertisements are vol'untarily initiated and paid for in every instance by the manufacturers of the articles advertised.^ Another fonn of chain advertising is that which featiires a few products, Examples of this kind are the Great Atlantic and Pacific Tea Company, which has been using rrnich newspaper space to advertise its leader, Bokar coffee;^ and the United Drug Company, which advertises nationally perhaps less than a score of its products, usually concentrating attention on one product at a time.*^ I'To doubt every chain which does any appreciable amount of advertising has a more or less definite advertising appropriation. In the case of the United Cigar Stores Company two per cent of sales is charged against every store for the advertising fund."' Since two per cent is rather high it seems jiistifiable to believe that this incltides charges for the profit-sharing coupons which are an integral piart of the advertising policy of the canpany. The United Drug Company sets aside a certain per cent of profits each year for promotion work. The ad- vertising appropriation is planned one year ahead but is revised every three months 1 Advertising and Selling, January, ISIS. 2 V.'orld Retailer, June, 1922, p. 8. 3 National Advertising, J-^une, 1922, p. S4. 4 Cherington, Advertising as a Business Force, p. 20C. 5 Ibid, p. 175. 6 Ibid, p. 200. 6V From what has been said it is possible to generalize so far as to state that although there is evidence o: considerable chain store advertising, still in the aggregate it is not yory irriportant. Those lines in v/hich advertis- ing is used most are grocery and drug, while five and ten cent stores are the strongest non-advertisers. There are three factors which account for the small amount of advertising done by chain stores;- Cl) Their better locations obviate it to a certain extent a,nd the high rents forbid it; (2) V.'indow displa^/s take the place of advertising; and (o) host chain stores carry convenience goods, which, in contrast with shopping lines, require less a-dvertising. Although there is no statistical data upon which to base conclusions, it does not appear that chain store advertising will increase in the near fut’ure. Such an increase ir.ay be expected when ca-;*petition with other chains and with re- tail buying associations becomes ver,y keen. At the present tim;e there are no indications that such a situation is near at hand. Only recently have retailers beg"m to realize the ah..ost endless pos- sibilities of window displays. As usual, the chain store has talcen the lead and shown what could be done with windows, hr. IJ. Mitchell, display manager for the Hexall Stores says:^ "Window advertising is tremendously valuable because it is done so close to the so-orce of supply that the people who see a display have no time to forget the article shown in the interval between seeing it and entering the store to b'oy." There are two reasons why chain stores have paid so cmch attention to their window displays. First, stores with good window space command s->ach high rents that it is a matter of economy to use the window space efficiently. In the of second place, window displays for the most part take the place /advertising, so it is imperative that they perform their Sanction as well as possible. 1 The V'.'orld Hetailer, April, 1922, p. 1. 68 There are three types of window displays:^ 1. Comriiercial 8. Educational 3. Suggestive The first type functions to sell the goods in the window. It is usually most effective when it is composed of a large quantity of an article Sxiov;n at a special price. Related articles are often placed in the window, but their number should never be so large as to detract from the main display. These disj-lays are especially effective if they are tied-up with the manufacturer’s advertising. The educational displ.oy is one which shows how a product is made or acquaints the prospective purchaser with some specific facts about, or 'c^ses of, the product . The third type is or^e v/hicli is used to suggest some definite fact or facts. For exaraple, last winter a fresh fruit display in a drug store was sug- gestive in that it showed that fresh fruit v/as used at the soda foimtain even in the winter. Chain stores generally use the coi.miercial type of display, although the educational and suggestive types are soi;ietimes used. Five and ten cent stores rarely depart from the ccru::iercial type of display. Both the ’foolworth and Kresge stores use the principle of mass display, although there are times when the suggestive type is used. An exariple of this is the display in the early spring which suggests household and garden articles. The educational type of display is used very rarely. This is on siccoiuit of the fact that chain stores will not carry articles which are not well knovm. The attitude of the F. W. Y.'oolworth Company is strikingly portrayed in a statement by the President 1 The Y'orld Retailer, April, 1922, p. 1. 2 Ibid, p. 8. 69 "...VJith any product the chances of interesting us are very r/uch better if the article is known to the public; and r.any prod’octs, no matter how rfier.it orious they may be... have no appeal at all for us unless they are well kno\'/n." The dnig chains are perharjs the greatest users of the educational type of display, especially in connection with appeals to the instincts of fear - as, for example, the display which points out the diseases carried by insects, and vanity - as in the case of the display illustrating the use of a cleansing cream. Before tailing up the consideration of how the problerf of v;indow dis- plays is met by some of the typical chain systems, it rr.ight be well to inquire into scfrae of the f'undamsntal factors considered by scientific window trimmers. Hr. '’'illiarn Gellar, the windov; display expert who arranges the windows for the Pennsylvania Dr'ug Company's stores, sa^rs:^ 1. Ihe location of the store rust be considered before the windows can be made to appeal to the maximum nurober of prospective buyers. 2. A knowledge of hvsman nature is absolutely necessary. 3. Too many different articles in a window are apt to confuse the prospective purchaser. 4. In residential sections displays should be concentrated on a fev/ selected a,rticles. . 5. Miscellaneous displays should be used in transient neighborhoods. 6. The displays must be seasonable. 7. Handsome displays do not always draw customers; they must convey a definite sales message. In all of the chains investigated there was some provision for the training of window trimmers. In the Woolworth and Kresge stores'^ the stock boy after being promoted to assistant manager begins to learn the details of 1 World Retailer, April, 1922, p. 10. 2 Intervie'ws with the local managers. 70 window triiiirina tjr tearing down old displays and assisting in putting in the new ones. These chains do not furnish plans for a standardized window display; each manager uses his own J-jdgir.ent in rralcing up the display. However, it v/as reported that the managers acquire such skill in determining which goods v/ill sell "best during certain seasons that as a result most of the stores show the sa.me goods during a given week. Md to this the fact tliat the nanagers gradually acquire definite methods of displa^s^ing and combination, and you liave another step toward the standardized display. ilany of the chains have standardized the Wfindov/ displays in all stores. I'-otable among these are the United Drug Company (Rexall Stores), United Cigar Stores Company of America, and the Great Atlantic and Pacific Tea Company. The United Urug Company started its sales pron'-otion service^ about 1913. The first move was to acq.uaint about 100 Eexall dealers in different sec- tions of the co-ontry with the service. The agreement at the tin-e v/as to pay $95 ann-oally for the service, if found valuable. That it was fo'und valuable is evidenced by the fact that there were 8,000 subscribers in 1918. Every two weeks each subscriber receives material and instructions for a new window disp'-lay, which has been worked out by a corps of experts at the main office. In addition to this, expert advice is given on such iriatters as business analysis, turnover, news- paper advertising, store fronts, interiors and displays, etc. Service r;en make i^requent personal visits to the stores. The plan of the United Cigars Stores of America is very siroilar to tin,t of the Rexall Stores except that standard practice is carried o\'tt tc a greater degree. The displays are designed in the same manner as those of the Rexall Stor:^s, but each store is required to install their, exactly according to the directions furnished. In addition to the displays window banners are used 1 /advertising and Selling, January, 1918. 71 to a considera’ole e::tent, which call attention to variows articles and special offers. The sart:e high degree of standardization, and nmch the san^e :r;ethcd, was observed in the display service of the Great Atlantic and Pacific Tea CoiJiparij'-. Here again the staiidard ir.ethod is used for devising displays, and each week in- structions sent to every store aanager. A cojy of the weel:ly display service sheet is appended here. It is reported"^ that the "Talking Point" plan (see page 4 of tajr.phlet) has resulted in a tremendous increase in sales of the articles featured. Prom the material presented in the second part of this chapter two conclusions are inevitable. First, v/indow displays to a large extent take the place of advertising; second, the systems of window display have reached a re- markably high degree of standardization and efficiency. 1 Interview with !Ir. Strabel, Local Manager. . aU The Window Display A GROCERY WINDOW DISPLAY SERVICE ISSUED EVERY WEEK BY THE GREAT ATLANTIC & PACIFIC TEA COMPANY No. 86 Chicago, III. and Cincinnati, Ohio July 20, 1922 AIN’T N aturc grand ! Six months ago we were battling with a blizzard and wishing for / % the good old Slimmer time. Now the twin pests, Heat and Humidity, bring a long- ^ ing for January’s snow, ice and cold. Hut all the wishing in the world won’t change 1he weather one jot — you’ye got to take it as it comes, but you can make hot weather a lot easier to endure by using good judgment about your own eats — and your recommenda- tions to your patrons. First of all, of course. Iced Tea and Iced Coftee will knock any thirst for a goal. Salads, Fresh Fruits, Oliyes, Spaghetti, Macaroni, and so on, you know the story if you’ll stop lo think a little about it. People liyc in comfort in climates a lot hotter than ours, hut they eat the right foods. The Great Atlantic ^ Pacific T ea Company NEW YORK CITY WINDOW DISPLAYS I (PLACE PRICE TICKETS | WINDOW NUMBEPv ONE | T his Ims Red Circle, 8 O’Clock and Eokar Coffee, cans and ])ackages of N. B. C. ^ Crackers. Paj)er is laid on the floor. Trij)le columns of Bokar stand in the front cor- ners with opened cartons at the base of the middle column. Two round baskets are in the middle, one witli 8 O’Clock and the oilier with Red Circle Coffee. Bags are arranged around | the baskets. Other bags form curved rows behind. Between the flaskets is a column of Bokar cartons. Other cartons are in the middle of the background on a box. At the sides are cans and jiackages of N. B. C. Crackers. Near the entrance Coffee is disjilayed. Place signs on the glass. j NUMBERTWO i I WEEK OF JULY 20th n KNK SPACES ARE SHOWN) I WINDOW NUMBER TWO i B aked T>eans, Canaied S]5a.gl\etti, Potted Meats, Devilled Ham, Pickles, Jams, Jellies, Mayonnaise and Salad Dressings, Vinegar, Peanut Rutter, Apple Butter, Marma- ^ lade, M. M. Creme, Olives, Ketchup, Chili Sauce, Shredded Wheat, Kellogg’s Corn Flakes and Puffed Rice arc shown. Pa])or is laid on the ffoor. In the middle near the glass Potted Meats and Devilled Ham are shown. Behind are Pickles. Nearby Marmalade and Jelly are displayed. Steps of Beans ' run down from the front corners, lower steps of Beans and Spaghetti are nearby. Behind the high stejrs are bottles of Vinegar on high boxes. Other steps of Beans and Spaghetti run down from these. ■ Olives stand on a box in the middle of the window. Farther back is a pyramid of Grandmother’s Beans. Bottles of Mayonnaise and Salad Dressing stand at the sides on low boxes. Higher boxes hold Ketchup and Chili Sauce. Puffed Rice and columns of Pea- ; nut Butter are in the middle of the background. In the back corners are columns of Shred- ded Wheat and Kellogg’s Corn Flakes. At the side near the door, IM. M. Creme, Apple • Butter and Jams arc shown. Place signs on the glass. THE WINDOW IDISPLAY The Talking Point the week of July 31st will be A&P Salmon Th IS IS the hnest Columbia River Salmon packed under our personal direction to insure the Quality. D isplay a few cans and suggest A&P SALMON to e\^er'^ customer. The Great Atlantic ^ Pacific Tea Company NEW YORK CITY 72 COITCLUSIOITS . Tnese have "been taken uij under the various headin«?s. However, several general conclusions are possible: 1. Alniost without exception all chains have been formed by in- dividuals who had succeeded as irnlependent retailers. 2. Tl'.ere has been a more cv less general tendency in the evolu- tion of the organic structures of chain stores. T}-ie step's have been (a) Indiviaual proprietor, (b) Partnership, (c) Corporation, (d) He incorporation, and (e) Consolidation. 3. Purtiier integration is pointed to by the continued expansion of Ci_&ins at a rapid rate, and by the rc.any large consolidations T’lis tendency toward consolidation will probably be pai'tly balanced by the creation of new chains. 4. Periods of depression have had practically no effect upon chain stores. 5. Vi'ithin the next decade there should be an influx of jobbers into tlie chain store field. Tliis seems inevitable because their customers are leaving them. Jobbers are the logical chain store operators. 6. Bu^^ing associations have been increasing, but it is not likely tha,t they will have a curtailing effect on chain stores for some time to come. T’ois is due mainly to the fact that chain stores v/ill be able to maintain a higher degree of efficiency for at least a considerable length of time. if ■> lV 4 ^' ^ \ * 4 ;vJS V 'r £9 5 f' , 7 ^ yff ‘ : s , I', « i' iVt jfl* r ^ '* 5 .* ■’ * ^ '■ ' »i 't V r^'> ,+^:- Vv.T; .'<' T■^< ■;,h,lik'A ' 4 &»< fT...-' ■^/i■ -TTlDt '(Ti iP' ; • W ' /■) , •;■ '.*L> >-i xvt i. ' ^i'-'Al &■ I/' i ■' J* • . .jj *'¥•5y^' m. ■.' - *• - » m 4 » -vil I .. Iti. . < > i ; .It;, ; :■■ ' •: ^ ' T>- *'■«*''• • // “* # '"^ • ‘ ‘ /r '** ^*^ * ’ " ' •' • 1 • ‘ • '*m' u .'Vie ■: 4 :> S) r' • , ■ 1 1* . I ^'1 '■ » 1 f '» t ■' "' ^ ^ i5a-,v -*; • l1 vn ';X;U'4ii7cu1- > *V*i» m M m" ■ ^ ,V.'^ ■'’r^c .#J '■Tl. ■'. 4 ,^.i '■•V" Cl{ du’ Mk I’lJA ;'!.'• ' r ' .(triit Ap'‘i- '-'i 45^^\L¥>‘ft' M '' ■ '■■h r: , '* 1 1 . 1 ^' M 4 . ffl'i'' U\ "*■•' II^. |;&rtppfi:’ M ]0 ISTA ..J( > 73 7. If chain store expansion continues at the present raj id rats it will not be long "before additional evidences will he seen of decentralized "buying. 8. The agitation against chain stores "by many Cliambers of Ccraoerce seems to indicate that chain stores will not meet with the average aiiiount of success in small towns. 9. Jo"b"bers have done much to educate independents, "’:ut efficien- cy, economy, and cleanliness will have to "be more firmly im- pressed upon them "before they can compete with the chains. 10. C}-:ain stores lose many good managers because they do not pay ths!:i well enough. It seems that the Penney System offers the best inducement to its managers. 11. Roger V'. Pabson su.ggests the possibility of chain store em- ployes forming a union as a means of gaiiiing increased recogni- tion. 7hth the present low standard of wages in most chains this would be neither impossible nor imiprcbable. 12. llaimfacturers' chadns will probably not increase. Theirs seems to have been but a temporai’y ir.ovs to gain control over pricing and distribution. Tnis seems especially apparent in the shoe tr.ade, where the national Slioe Retailers’ Association is bringing pressure to bear against the mairafactra-’er s' sh^ chains. 13. Investigation has shown that the majority of criains are still headed by the originators. TZiis might lead to the conclusion that the rapid ejq:ansion of chains has been due to the driving ' s r' ^ \ • ■. , -..-, 1 ^,.-^, ‘ r,'i^ * 1. ■■ 'J { ' \ f 1 » I t : i \ \ i \ I ») Iw ; # , . t W -y'l' ,'.'i ' • '. '' i'.:\- J I ; . f'.,' •l 74 force of these leaders and that chains v;ill sraffer a sliuGp v/he longer head the organizations. I-Ovvever, the policies of chain ly standardized that continued success maj;- he expected vdien th give way to the new generation. n these men no stores are sc high- e original leaders 75 BIBLIOGRAPin Book s Agassiz, G. , "Chain Stores and the High Cost of Living." But lei’, B. S. , "Llarketing ’.lethods. " Cl'.erington, ?. T., "Advertising as a Business Force." Cherington, P. T. , "Fne Advertising Book, 1916." Cherington, ?. T. , "Tlie Elements of Marketing," Copeland, H. T., "Marketing Prohlems. " Bavid, r. Ii. , "Eetail Store Management Problems. " Buncan, C. S. , "Marketing - Its Problems and Methods. " Field, C. C., "Retail Bu^'ing. " Fislc, J. F. , "Retail Selling." Gerstenberg, C. S. "Principles of Business. " Moody's Manual - 1905-1921.. Mystrom, P. F. , "T!:e Economics of Retailing. " Sliavv Ccn^p.ar.;^ - ("Graphic.ol and Statistical Sales Helps." ("How to R’an a Store at a Profit." Svvinney, J. B. , "Merchandising." 76 ?erlcdi cal3 Adruiiiistration, Ilarc’i, 1921, p. 229. Advertising ar.d Telling, January, ISIS. Current Affairs, Septei.ier 12, 1921, p. 1. Current Opinion, September, 1912, p. 211. Eeceraber, 1914, p. 436. I]ver 5 ^bGdy ' s I.Iagazine, 'Toverfber, 1916, p, 303. Illinois Journal of Conr_erce, June, 1922, p. 7. IlcClures, January, 1914, p. 109. Mercantile Co-Operator, June 5, 1922, p. 6. Modern Merc'aaiit and Grocery World, January 31, ISIS, p. 5. August 28, ISlo, p. 17. rebraary 5, 1917, p. 15. national Advertising, Jtine, 1922, p. 64. Printers' Irdc, IToveniber 16, 1911, 28, "Gigantic Woolwcrth Chain." December 7, 1911, pp. 4^1-46, "Welding First Links in a Chain System. " December 14, 1911, pp. 3-6,69, "United Cigar .Stores, Practices and Policies. " December 21, 1911, up. 36-42, "United Cigar Stores, Practices and Policies. " December 23, 1811, pp. 3-8, 66-67, "United Cigar Stores, Practices and Policies." ' m ' ■'T', ' : ;U' k.J j. [ - r. , *• t ' J a '• * 77 x-'r int er s ' InLc (Cont . ) Marc'r 21, 1912, pp. 3-lC, 117-118 , ’’Clxain Store Tconornies Practicable in ’.'any Lines. " Aug'ast 12, 1912, pp. 23, 32-35, ’’Setting "axiiircoix Sales 'Out of a Chain System. ” Jialj- 1C, 1913, px . 3-6, 27-28, ”Kcw to Start a Chain of Maxm- f acturer s ' St ores . ” July 17, 1913, pr . 36-40, "Some Essentials of Chain Store Management . ’’ July 24, 1913, pp. 3-8, "A Successful Profit-Sharing Scheme for Chain Stores. ’’ July 31, 1913, x-P* 55-58, "Some Pointers on Management . " Augast 7, 1913, x>P* 83-84, ’TLotail Chain Store Evolution." September 25, 1913, pp. 74-76, "Pexall aiid A.P.S. now National Advertisers. ’’ September 1C, 1914, p. 3, "V.ny Advertisers mst give Chain Stores Attention. " September 17, 1914, S3, ’’Advertisers and Dealers see Danger in Chain Stores." Septer.A)er 24, 1914, p. 22, "Reasons for Belief in this Danger." October 8, 1 c / F • 33, "Hew the Chains are taking over th Retail Field 11 October 15, 1914, P • 71, ’’’Humber of Chains in Each Field. ’’ October 22, 1914, P* 60, "Concentration of Ov/ner ship . ’’ October 29, 1914, p. 72, "Advaxotages in Organization and Financing. " x.cvemcer 5, 1914, p. 58, "Advantages in Financing." X, ,1 \ V \ t( « •> \ . \ ? ' ’^1 r f I. 1 M t- "^ • ? % *f "r t''* cv"' r * 9\ , t' u ■ 4 ' • » / • ■' ^ . M ■" , * ■'*i?,'A' '''■^ < 5 ' 1 ,.' ', V . • ' ,ih - ‘.' - .!' >'!' ( „■' 4 .; > J <1 i 1* ^ - 4 iki ' I , ;/ V y,- " ' . ' :!. 1 f. , . • • V 78 Printers ' Ir-li (Cont.) -Toverriber 12, 1914, T). 53 , ’’Ilethods of Picking Sites.” ITov ember IS, 1914, P- 64 , ’’Advantages in Buying. ” Pecemher 3, 1914, p . S'. ”Adv ant .ages in Selling. ” Bsc ember 10, 1914, p. 43 , ”Keei:dng up T rained Crgai-.ization. ” Becember 17, 1914, p. 20 , ’’Ermp 1 oy:.:ent o f Ac c ount i ng . ” Bee ember 24, 1914, p. 5S , ’’Surraary.” Janaai*y 16, 1913, pp. 3-! 3, 97-100, at your Branch Ilanager is lip *igainst . " i.iay 4, 1£16, p^j. 41-44, 49-53, ”IIow Penney Cliain finds and trains ProfitalDle Partners.’^ April 5, 1917, pp. 101-108, ”C:iains maiang Independents Setter Her chant s. ” Septeraher 13, 1917, pp. 83-84, 88, "L'ethods of the nan who Founded a Cliain of 3500 Stores.” Lecer^iher 20, 1917, p', 17, "In the Piggly-Wiggly Stores the Product has to Sell Itself.” i.Iay 23, 1918, pp. 3-3, 110-115, ’’Tremendous ITew hai’ket Spinings from Five and Ten Cent Store Expunsicn. ” April 17, 1919, pp. 19-25, ”IIow Foolworth Built his Fonderful pi st r ihut ing I.Iachine . ” January 8, 1920, pp. S5-66, ’’’Jew Rockefeller and \Tnelan Prug Ch.ai n s wc rr y Ilanuf ac tur er s . ” January 15, 1S2C, pp. 17-20, 177-180, ”Is Collective Buying the Answer to the Chain Store Ilenace?” x^ehraary i.9, 1920, p. 44, ’’Row to iCQep Informed on Chain Store Levelopnents. ” — 7 Printers' Iri; (Cent.) April 15, 1S20, pp. 153-154, "United Retail Stores Enter Mai:y Eields of Merchandising." April 28, 1221, p. 177, "Analysis of t"ie Chain Stores “by Yh ole sal e G-r o cer s . " Hair 12, 1221, pp. 17-18, "Phat the United Cigar Stores Company has Accomplished in 2C Years." Printers' Ink Monthly, Jnly, 1921, p. 22. Retadl Ledger, Second ITovemher Issr.e, 1921, p. 6. System, June, 1914, p. 537. LI^, 1920, p. 252. February, 1221, p. 185. April, 1922, p. 323. VJorld Retailer, A.pril, 1922, pp. 1-lC. V, 'or Id's Fork, April, 1213, p. G59. February, 1218, p. 352.