Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-08-04
Why Many Stores Fail
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struction, whose causes and functioninI
were but hazily comprehended. SO TO
day, in the revelation Of frailtieS II
distribution, the flfst startled cutlery i
for the immediate destruction Of tn
Ailing ones, the elimination OF the use
less middlemen," the drastic amputa
ton Of temporarily crippled limbs Pc
fore their debilitieS have been ade'
auately analyzed and sensible efforts
made toward their cure.
It Is high time that we developed
more broadly in our analysis OF the
problems Of business the lease method
which q few of our leading universities
have already applied in this field
that careful, scientific scrutiny oil
actual experience which has been sc
long and successfully followed in tia
development OF our training in medi-
cine and the law.
Business has much to learn in Its
hatrospcction of its weaknesses and one
of its first lessons Is that nothing Is t.
be gained by hystericel melanchola, BY
giving way to vague, gfoundlesS fears
and calling for the prompt annihnation
Of chain stores or of jobberS or any
other unit. Above all things, 1t must
have every possible fact bearing upon
the difficulty which Is to 0e solved
Hence the Louisville survey.
Striking Revelation.
One of the first striking revelations OF
this INQUIRY as to the reasons for the
high mortality rate among small re-
tailers was the demonstration of the
amazing reluctance of the small store
keeper to force himself to answer the
simple poignant question: Am I max
ing any money, and, IL so. hoWP' APP
parently the usual procedure for him Is
simply to punch the mo sale" button on
the cash regiSter-n he has one-ano
look in the drawer.
A major problem of the Louisville
survey was to reveal the precise ele-
ments of the cost of distributing gro
ceries at retail The retailer alone Is
not always at fault in piling up these
excessive costs of his own operations, all
OF which, of course. must ultimately be
paid by the consumer.
For instance, there was one small
grocer whose average daily sales totaleo
about $40 (and, incidentally, about ~
per cent of the grocers In the country
operate on that very small basis. The
Investigators checked up as to the costs
incurred by the various wholesalers IN
the city whose representatives were call
ing upon this small dealer. The mml-
mum allowance for SalesmenS Trans
portation and time spent with tnat
merchant showed that the wholesalers
Of the city were expending about $3.50 a
day to sell this man, whose average
total transactions were only about $40.
Here we have q clear-cut illustration OF
the excessive costs involved in too much
selling"
Evils Of Nigh Pressure Sales.
Every so often some enterprising mer-
chant pats himself on the back because
of the high pressure craftsmanship OF
his organization. The Louisville survey
revealed instance after instance OF the
perils involved in such intensive selling
One of the Toe corner grocery stores N
the city whose affairs were carefully
scrutinized ordered regularly each week
two cases of canned corn AT $l4O .
case, Then along come one OF THESE
Suner-salesmen, who was anxious oc
show a fat order book on his return to
HEADQUARTERS. and overwhelmed the
helpless little corner grocer to such an
extent that he promptly ordered 81
cases-a stock SUFFICIENT to carry MIN
for four months, and that without any
particular saving or other advantage.
Thus this grocer tied up gooG por-
tfon of his slender week-to-WeeK re-
soSIrces. and, curiously enough, possibly
through force of habit. he still Kept on
hnying his regular supply apparently SO
a. to keep on friendly terms with ms
other sources.
Another interesting revelation OF the
survey was the amazing reluctance OF
inability of the average small retainer 10
cornprehend the necessity OF frequent
Teriod;cal Inventories. Too many OF
them thought this procedure was
nothing but an obnoxious nuisance
with no apparent benefit. One I'M
nortant phase of the whole undertaking
was. therefore, the thorough eoucatioli
Of every rroceryman on the value OF
these regular stOcktakings.
Store q Grocery Museum.
One store which is regrettably typical
Of thousands throughout the country,
was nothing less than miniature
grocery museum. 1t contained 1000
Inherent items, and, as In q museum, all
too many of these were dead, hope
lessly so. For instance, he had In MS
stockroom o few stray duSt-covered
cases Of canned white tunaflSh.
creature that has not even been caught
during the last three years. There were
other brands which had been dlscon-
tinued for two or more years, obsolete
connections, venerable specimens OF
long-extinct brands OF soap, neWnoer- ,
ing variety Of notions and small dry
aoods. and so on down the list Of the
full 1900.
Indeed, one Of the major lessons OF
tina survey involves this gravity OF the
oeril of obsoleScence. OF course, In the
dry goods trade, with its large element
Of changes in fashion, this factor Is
very high. It sometimes runs up to 70
per cent Of the total operations. ms
means that one-flfth OF the items
bought by the dealer have gone out OF
atyIe before he can dispose OF them.
Color obsolescence in hosiery Is espe-
cially striking. One moderately sized
dry goods establishment specializing In
a single line Of women'S silk hosiery.
identical in pattern and style, felt tnat
IL was compelled to handle no less tnan
60 different colors in that line during
single 19-month period Many Oh
these colors were in demand only lew
weeks before the trade calling tor them
disappeared entirely.
This period Of ObSoleScence involves
not simply the possible losses on lnVen-
tory with accumulations OF dead items
which must be cleared out at any price
but there is another factor which piles
up the costs of selling. In order To
keep abreast of these color demands
the dealer must have q great number OF
his purchases sent by express. For this
reason the transportation charges OF
this particular establishment revealed
that the hosiery department was payin&
more in express bills than all the resi-
of the store was called upon to advance
for freight.
Speeding Up Of Media.
with every new speeding up Of the
media for transportation and communi'
cation we md these new shortcuts
promptly exploited In conjunction witt
style changes. Several commercial aero
nautical companies are already derivini
o substantial proportion OF tner teve
nue. from shipments of hosiery, dres