In the chain-store system of merchandising we see the opposite extreme of coffee retailing. The wagon-route man features his delivery service; while in the chain-store plan, all customers must pay cash and carry home their parcels. Though the earliest established chain stores gave premiums, the practise has now been generally abandoned. Roasting, blending, and packing coffee in a large central plant, the chain-store operator advertises that he can sell coffee at a price lower than his competitors. As a rule, only one grade of coffee is offered for sale. While it is generally a good medium value, many consumers prefer better quality and go to the independent grocer for it. Others patronize the grocer because of his convenient delivery service, and because he gives credit on purchases. Chain-store organizations seem to be growing rapidly, however; the largest of the chains, the Great Atlantic & Pacific Tea Co., reporting in 1921 that it had nearly five thousand branches throughout the country, which sell 40,000,000 pounds of coffee annually. This chain has a capitalization of $12,000,000, and in 1920 sold $225,000,000 worth of groceries, as compared with $154,718,124 in the preceding year. This company opens about five hundred new stores every year.
The chain-store men are organized in the National Chain Store Grocers Association, having thirty members, representing 12,000 stores, operating in eighteen states. It is estimated that there are fifty responsible chain-store grocery organizations in the United States, representing about 30,000 stores. The chain-store grocer turns his stock over from twelve to twenty-five times a year, sells for cash, makes no deliveries, and claims to save the consumer an average of fifteen percent in buying. These stores do business on a net margin not exceeding three percent on sales, as against the average retail grocer's thirty percent, while their average gross cost of doing business has been stated as between thirteen and one-half percent (lowest) and eighteen and one-half percent (highest).
According to Alfred H. Beckmann, secretary-treasurer of the National Chain Store Grocers' Association,[337] "Public appreciation of the chain grocery store is rapidly growing. Ten years ago it was estimated that chain stores in what is known as the Metropolitan district of New York did about 121⁄2 percent of the volume of business in their line, while today it is estimated at about fifty percent".
It is estimated that the fifty-odd chain store organizations in the United States distribute through their 30,000 stores 270,000,000 pounds of coffee a year, or about twenty percent of the total amount consumed in the United States.
Starting in the Retail Coffee Business
The Familiar A & P Store Front
When taking up the retail merchandising of coffee, the practical grocer learns all he can about the popular grades to be had in the principal markets, and how the coffees are grown, roasted, blended, and ground. He also ascertains the best methods of brewing, testing out each grade and kind on his own table, if he does not have testing facilities in his store. He studies the relative trade values of different varieties of coffee, and the requirements of his particular clientèle.
An interesting analysis of some 250 grocery stores in the United States[338] made in 1919, showed that twenty-nine percent of the dealers bought all their coffee from wholesale grocers, forty-eight percent exclusively from roasters and specialty wholesalers, ten percent got over one-half of their coffee from wholesale grocers, and thirteen percent bought less than one-half from the wholesale grocery houses.