Milford chronicle., 1932-07-15
CHAIN STORES PURCHASE
MOSTLY FROM MANUFACTURERS
Federal Trade Commission Reports
On Main Sources OF Chain Store
Merchandise.


Merchandise.
Purchase from manufacturers
the most important source of chail
store merchandise, according to ;
recent report made to the Senate b,
the Federal Trade Commission.
Purchases from manufacturer
account for 20 per cent of the ag
gregate supply of all chain stores
the Commission reports. OF all re
porting chain store systems, 80 pei
cent buy from manufacturers. AS
closely as the Commission can as
certain almost 1,400 chains report
ing as to 25 kinds of business, man.
ufacture themselves only z per cent
of their total supply of merchandise
purchasing, in the aggregate, SO pei
cent. Less than IA per cent of all re-
porting chains engage in manufac-
turing. Chains in five kinds of bus
mess do no manufacturing. These
kinds are the lar-limit-varie-
ty, mems furnishings, dry goods,
general merchandise, and hardware.
In spite of this trend toward pur-
chase from manufacturers, the mid
dleman has not been wiped out of
the picture entirely. Wholesalers,
brokers and commission men, and
growers and their organizations,
each contribute approximately z per
cent of the total supply.
Through the wholesalers, all types
of chain stores bought 79 per cent
of their total purchases in the year
under consideration. Smaller chains
generally buy larger proportions of
their merchandise from wholesalers
than do the large chains. In four out
of twenty-five kinds of business less
than so Der cent of the reporting
chains patronized wholesalers, but
in IL kinds of business, more than
80 per cent of them do so. Dry
goods and general merchandise
chains purchase more than One-half
of their merchandise from whole
salers and in seven other kinds OF
business the proportion runs from
20 to more than 40 per cent.
During the interval from 1922 to
1928 an appreciable decrease took
place in the dependence of chain
stores upon the services of whole
salers. The proportion bought
commission men and bro
kers also decreased. Direct pur-
chases from manufacturers by 555
reporting chains, increased from
76.5 per cent of total purchases in
1922 to 81.2 per cent in 1928. The
brokers and commission mems pro-
portion fell off during this period,
while that of the wholesalers slip
PED from 13 to 8.5 per cent.
All the while the chain store sys-
TENS were increasing in size. The
chain stores reporting on purchases
in 1928 operated $3.50 stores. Their
net sales that year amounted to 3d.
954 ,939, 1926. The chains reporting for
both 1922 and 1928 operated 1889
stores, in the latter year with sales
piling up to $1,634,238,769
The combined average number of
stores operated by the grocery, and
grocery and meat organizations re-
porting sources of purchases in 1922
tllu 1870 luClGdSCu llOlll 1OsE W OOsO
stores per chain.
Chains in different lines of busi-
ness show marked differences in
sources patrOnized. Grocery chains
obtain 485 per cent of their mer-
chandise from manufacturers, the |
grocery and meat chains, 63.1 per |
cent from that source. Only one of |
he 10 wearing apparel groups pur-
chase less than 80 per cent from
manufacturers, while four of them |
purchase SO per cent or more. The |
hardware chains buy a trifie more |
rom manufacturers than from |
Several large grocery |
chains have developed broker or
ganizations of their own for pur-
chasing fruits and vegetables, but
It that these chains do not depend
on their adjuncts to supply
he articles which are demanded by
he public.
Variety end department store
hains do not appear to be expand
ng their manufacturing activities.
rather they are taking the initiative
4 directing the course of the manu-
acturing process without taking
,art in it themselves. One of these
arge chains claims that it has
ound it advantageous to sell some
# its manufacturing plants to in
ependent operators.
Direct buying from manufacturers
y 100 drug chains varies from SO
er cent in Photographic supplies to
8 per cent in tobacco products. To-
acco chains purchase at least 60
er cent of their merchandise from
The 20 variety
hains reporting, reveal consider
BILE variation in proportion of di-
sct buying of the lines specified,
lnging from AZ per cent of notions
} more than 80 per cent of music
nd candy obtained from manufac-
lrers.
One hundred dry goods and ap-
arel chains report variation in the
lying of several specific commod-
Y lines. AS with the variety chains,
)tions are purchased largely from
while 20 per cent and
ore of the wearing apparel lines
lndled by these chains are obtain