Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-05-27
FALLING MARKET A fixture
FOR Is YfARS--NACkNTOSH
President of Advertising Clubs of the World Re-
views Business Situation in Great Falls
~ Luncheon Address.

% dDOtItTs duI So vi uhtit tuStt US
of shoes changed hands 13 times, ever,
one of the retailers taking his profit
before the case was broken open ant
distributed to the ultimate consumer
II doesn't take brains to buy on a mar
ket that jumps like that. All you have
to do is to buy all you can get and pay
for, with a certainty that you will make
a profit. AS for selling, you can't sci
the customers grab the stuff off your
counters.
Now. what is the effect of buying
and selling on a falling market? We
have just had a chance to see what
that means. We have to buy infinite ely
more carefully on a falling market. Let
us say we buy a hundred eases of mer-
cEandise this month and at the end
of the month we have so cases left
in stock. In the meantime, the price has
fallen $50 a case. Meaning that we
could replace the 80 cases we now
have in stock for $500 less than we
paid a month 60. Thus we have suf-
fered a loss of $500 ~overbought. Buying
close to your needs and estimating your
needs carefully enters into the question
of merchandising today.
No Buyers Strike
I'VE recognize today the fact that
retailers must estimate their possible
market more closely than ever before.
We don't have to talk to persuade the
retailer TO underbuy; in fact probably
81 per cent of the retailers today are
undertaking. They are afraid they may
not be able to sell. 1t is not so easy
to sell today because this very same
thought that Restraints the merchants
from stocking up is restraining custom
ers from stocking up.
There never was a buyers strike.
Buyers strike was a clever te1m but
what really happened was the individual
himself or herself stopped to think,
saying. Prices are falling fast; they
will probably reach the bottom in a
couple of months and put off buying
| until the bottom was reached. So | say
, the best message you can send out to
your customers is, If you people are
going to stop buying until prices reach
the bottom. you are going to stop
living. because the price line will go
down for 30 years. You might just as
well start buying right now because
while prices. including the price of labor
which is so large a proportion of all
costs, will keep on falling and the
value of the dollar, will keep on coming
up to meet them.
Most of the selling in America is
done. of course, by retail salespeople.
II isn't done by highly skilled speciality
statesmen. And those s~alespeople look
upon the proposition of creating de-
sire and concentrating it upon certain
goods as work. Human nature natural
ly flees from work and retail sales
people in the last four or five years
have not had to sell goods. Their time
has been taken up explaining why they
couldn't deliver them or in merely de-
llverlng them. / imaigne that condition
has been universal. As a result we find
today that we are obliged to meet an
increased resistance with a very much
lowered pressure.
Ohm's Law in Business
II like to lift a smile from the cleo
trical industry. The electrical people
have a law they call Ohm's law. Ohm's
law tells us that volume always EQUALS
pressure divided by resistance. Now
Ohm's law of electrical intensity applies |
just as thoroughly to selling. does it
not? Sales volume always must equal
sales pressure divided by sales resist
ance. |
There are just two phases of BUSH |
ness in America. if we make the divi- |
SION general. namely, production and
distribution. | presume nos of YOU
are more interested in distribution than
in production so let us consider dis |
tribution. ] like to compare the process
of distribution to the creation of a vast
pipeline leading from a great tank into
which the producer pours his manu-
featured article.
The first link in the pipe line of
distribution is the merchandise broker.
Then there is a joint of transportation
carrying on to the second link, the
wholesale house. Another joint of
transportation carries that link on to
the great Jobbing house, and again
there IS a joint of transportation which
carries on to the last link in the pipe
line. which is the retailer.
Now any manufacturer who thinks
that he has made a sale because he has
moved his merchandise out of this tank
along to one or the other links of that
IS making a great mistake. Brok-
ers, wholesalers. jobbers and retailers
not use merchandise; they merely
handle IT. Let a manufacturer move a
thousand cases of his merchandise into
me warehouse of a wholesaler and until
mat merchandise moves along the pine
line of distribution to the ultimate
consumer, the only effect is to clog the
pipeline at that point.
The Tap at the End of the Line
The only sale that really counts is
a sale made to the person who will
wear the stuff out or eat il or in some
way render the reproduction of that
merchandise necessary. The merchan-
disc must pass clear out through the
end of the pipe before the sale has
really been completely made. At the
end Of the last link in this pipe of dis
.trlbution, we have a tap. and through
that tap, 30 odd per cent of all mer-
sold in America must pass
and does pass into the hands Of the Ill
innate consumer. That tap is the re-
tail sales person behind the counter.
Experiments made recently have
us lin the case Of our expert
ments at leastl that this tap is just 4jI
per cent open today; that 81 out of 100
sales made by advertising are killed by
s~alespeople. Advertising seldom sells
goods. Advertising does not sell goods
in the case of the great mail or
der houses, perhaps. and the com
panies that deal directly with the Gus :
toner. All that advertising may dol
for most of us is to bring customers
into stores where s~alespeople may
either sell them goods or kill the sales,
as they did in IS per cent of the
cases of our test.
Business successful husineSs 10