Organisational form and retailing development: The department and the chain store, 1860-1940

Alfred Chandler advanced the notion that after the First World War successful diversifying concerns in manufacturing shifted from centralised ('U' form) management structures to multidivisional ('M' form) product-based organisation. Precisely the opposite occurred in the retail sector, where the rate of turnover growth of department stores - a form of retailing based on a managerial arrangement analogous to the 'M' form of organisation in manufacturing - slowed considerably from the second decade of this century and that of chain stores - as exemplars of highly-centralised managerial decision-making - expanded rapidly. Various factors contributed to this phenomenon. However, this paper argues that the distinctive forms of organisation of the two retailing concepts made a major contribution to the different experiences of the two forms of retailing in the interwar era. The devolved managerial arrangement of the department store, which exploited economies of scope, was adapted to exploit retailing opportunities before 1914. Thereafter it proved an obstacle in retailing circumstances to which the highly-centralised control and merchandise specialisation of the chain-store organisation were more adapted.