Breaking the Chains? How Government Regulation Undermined Localism in the Retail Grocery Trade, 1920–50

By the 1920s, chain grocery stores had begun making significant inroads into neighborhoods and towns throughout the United States.  Independent grocers, who long had dominated retail trade, felt new pressures as they battled with chains for market supremacy.  In 1935, the federal government entered the fray with the Robinson-Patman Act when state-imposed, anti-chain taxes failed to stem the chain tide.  Designed to level the playing field between chains and independents, the Robinson-Patman Act suggested measures that would rebalance competition by tempering chains’ purchasing power.  On the surface, the measure appeared to protect localism and support small-town storekeepers’ longstanding roles as business and community leaders.  But where retailers believed federal regulation could eliminate the chain store menace, thus reaffirming local traders as the model of American entrepreneurship, government efforts to address “the chain store problem” ultimately failed either to protect local retailers or shore up their place in American business or small-town life. 
 This paper examines how and why federal and state efforts to intervene on behalf of local retailers unintentionally made chain grocers the new model for American entrepreneurship and enterprise in the grocery trade.  Measures such as the Robinson-Patman Act and anti-chain store taxes inadvertently worked against independent grocers by affirming the “efficiency” and “expertise” of chains.  Small, local businessmen long had represented American ideals of entrepreneurship. They were celebrated as much for their independence and perseverance as they were for their innovativeness and pioneering spirit.  Yet, government endorsement of chain grocers’ business methods ultimately helped national chain stores supplant local grocers as trade leaders.  As a result, the industry’s image of the model entrepreneur was refashioned from small-town independent grocer, to chain store mogul.