CHAIN STORES 
395 
of the grocery chains and the “one-cent sales” of the Liggett 
stores. The theory is to increase the sale of other goods while 
selling certain standard articles at no profit or a net loss, thereby 
increasing turnover for the general stock. The loss leader does 
not always entail a loss and it frequently results in a reduction of 
the expense ratio. It does raise the general problem of price- 
cutting, which is discussed in Chapter XXXII. 
“Cash-and-Carry.”—Excepting the installment furniture and 
clothing stores, chain systems operate almost exclusively on the 
cash-and-carry principle. This effects operating economies 
through— 
(1) The elimination of bad debts; 
(2) Taking discounts on purchases; 
(3) Simplified accounting and lower bookkeeping and billing 
costs; 
(4) Elimination of delivery, telephone, and other service 
expenses. 
The self-service system is a further extension of the cash-and- 
carry principle. The objective of self-service is, obviously, to 
reduce selling costs by the elimination of counter clerks. Self- 
service is still in the experimental stage, although it has been 
successfully applied to the merchandising of food products. 
Selling—The customary sales practices of chain stores have 
been indicated in discussing the types of goods handled and the 
question of pricing. It remains to emphasize the point that the 
chain system (in common with other retailers) looks to the 
manufacturer to promote his own brands—in most cases, to estab 
lish them—before seeking the chain-store outlet. Yet the chain 
stores will feature special sales of well-known brands and utilize 
newspaper advertising as means of placing their prices before the 
public. Newspaper advertising can be employed more effectively 
by a chain of stores serving an entire city than by the small inde 
pendent retailer who serves a limited neighborhood. And the 
large chain makes special efforts to promote its own products 
sold under private brands, usually because a wider margin of 
profit can be realized on a successful private brand. Where a 
chain is strong enough to develop private brands to a large extent,