Chain stores

From CEOpedia | Management online

A chain store, or commonly referred to as a retail chain, is a type of business which has several locations and has management/activities shared between them. They are meant to control a large segment of the market for various goods or services. As of 2020, Subway is one of the biggest retaurant chain with over 42,600 locations.[1]

The Main Purpose of a Chain Store

The basic purpose of a chain store is to have a business that overwhelms the competition with the ability to have lower costs of operating, having a centralized management system, significantly lower costs of advertising, and flexibility of trying out numerous goods/services in different locations to appeal to the market segment. [2]

History of Chain Stores

A brief history of chain stores

  • 1670 - The Hudson’s Bay Company, a fur trading company is created.
  • 1680 - The Hudson’s Bay Company have a several number of locations in Canada.[3]
  • 1860 - J. Stiner & Company opened several tea shops located in New York, USA. Gave birth to the first chain stores in America.
  • 1900 - The Great Atlantic & Pacific Tea Company was created, and became a large distributor of tea.[4]
  • 2000s - Walmart becomes the biggest retailer with a revenue of $514.405 billion, as of the 2016 Walmart Annual Report. [5]

Advantages of Chain Stores

One of the main advantages of owning a chain of stores is that you are able to have your own private label. This means you develop or manufacture a product that only you can sell. With this you are building customer loyalty. With customer loyaly and high recognition globally, you develop devoted customers that flock to your products for usually cheaper prices.

Chain stores usually provide the same service anywhere. With strategic locations a customer can find the same variety of products, or services, that they can expect in the same store, just in a different location.[6]

Different Types

A chain of stores could be located in several industries. These include; the music industry, gaming industry, electronics, restaurants, clothing brands, etc.

Due to the "COVID-19 Pandemic", chain stores have seen a decrease of revenue in stores, but an increase in online shopping. Online shopping also falls into the category of a chain store, as most websites have many physical locations, distributors globally, and warehouses in key locations.[7]



Author: Krzysztof Nagaba-Poniatowski