Evening star., 1932-10-30
Continued From First Pagel

smalt towns ana rural areas, ana lIle
le.ailers in those little communities do
10 less than $500, ,0C0,C00 worth Oh .
business a year Any improvement in
this formidable total, whether due to
farm prlca recovery or to other factors, .
is bound to have prompt reaction upon
the general industrial and commercial .
outlook
One phase Of retailing which is apt
to be overlooked is the significance OF .
the buying power which 1t represents.
Even in this depression year of 1882
our retailers. according to John Guern- .
sey Of the Census Bureau, are buying
no less than 500 100000 worth Of wares
every business day. The further ac-
celerat.on Of that powerful force Is
bound 10 contribute substantially to the
general rcc0nstructiVe drive throughout
the country.
There has been r-uch recent diScu;-
sion CT the vial necessity Of strength
cning our credit strurturc, and many OF
the major efforts in the national p-O- .
gram for recovery are concentrated
along that line. III this connection 1t Is
interesting to note the relative import
ance Of the credit aspect OF the retail
field. which. as indicated above. rep
rcSents so large a portion OF our entire
business activity. There seems to be
n feeling in some quarters that much OF
our business grief originated in the
excessive OVereXpanSion Of credit SELL
ing by retailers. especially through the
installment system. As a matter Of fact.
tWo-thirdS of our total retail business
is done on a cash basis The remaining
"a per cent is split between open ac-
count credit ,2l per cent? and install
mcnt selling. which accounts for only
l3 per cent Of our total retail trade.
InstalIment Sales OF.
Our inStallment sales this year aC-
Cordng to competent experts. probably
will not exceed $4,000 600 900, or less
than half the total OF 1929. On the
whole it can be safely said that our
retail organization has kept the install
ment mechanism in reasonably good
control: the great bulk of our sales
under that system have been handled
by competent organizations with in
valuable aid from our we'll organized
and long stablished credit associations.
The experiences Of the depression have
taught these groups many valuable les
sons and it is fair 10 assume. there
fore, that as reconstruction proceeds
We shall ind the installment mech
anism playing its part in the controlled
acCeleratiOn Of the recovery.
Another significant element in gaug
ing the possibilities Of the retail pick
up as the upward trend gets under
way is the abnormaly low stocks on
shelves. both in stores and warehouses.
In such staple lines as textiles. leather
and rubber goods the inventory figures
arc from II to 30 per cent below those
of the more or less normal postwar
years Of l92325. This means. of course
that with the first sign OF reaWakening
buying interest on the part of con-
sumers. the resultant impetus will be
promptly passed back from retailers to
manufacturers and professors. This
depleted inventory situation. which is
of course. a heritage of the prolonged
period of decline. viii undoubtedly be
major element in speeding up Tecov-
cry once it is definitely under way
One carefully tabulated non-official
estimate indicates that there is now
deficit of at least $4,000 900 900 in po-
tential demand for consumer goods and
services. This total has been rolled
I'D by three years Of steady shrinkage
Of purchasing power and consequent
timidity on the part Of our consumers
Once that formidable tide of reserve
buying power is let loose upon our re-
tailerS it should promptly break down
the last remaining log Jam of the de-
preston and the smoothly flowing nor
nal currents of our business life ought
to find their proper channels soon
thereafter.
Peril of Overexpansion.
Among the more significant lessons
Of the depression from the point of
view of retailing is the demonstrated
yulnerabilty of many larger units and
1 correspondingly the Development Of un-
expected advantage on the part of the
smaller operator The trials of the
last few years have brought home
vividlv to many Of our large retailing
organizations the pointed lessons of the
law of diminishing returns-the perils
Of OvereXpanSiOn of volume with in
adequate attention to corresponding
growth of costs and consequent decline
IN ratio Of profits. To take a specific
example. the recent difficulties of more
than one retailing chain in connection
with the rigidity OF rental schedules as
fixed before the defation. have brought
out again the grave peril OF excessive
overhead costs, especially for unduly
expanded organizations. We have OBJ
served once more the sinister dangers
of mass mania
This does not mean, of course. that
all growth is dangerous; the significance
Of this development is simpl in the re-
newed demonstration that in many
phases of larger retail operations, the
zeal for rapid expansion in volume has
sometimes obscured the careful obser-
yation and control of factors of cost.
This axiom has precisely the same
potency whether it is applied to the
smallest Shopkeeper or to the largest
chain executives: there can be no sur
viyal OF business. regardless Of size, un-
less that fateful margin between cost
and income is vigorously maintained in
the right direction!
One of the most successful retail
chains in the country owes its long and
distinguished career to the vigilant de-
votion of every responsible executive in
the organization to this principle of
strictly tabulated costs. Coupled with
this has been a constant maintenance
of the principle of passing on to the
consumer every possible advantage
gained in improved efficiency. And,
after all. since we are a Nation pri-
marily of consumers rather than OF
shopkeeDars. the outlook is not likely to
be uncertain for any business. great or
small. operated on the one hand with
such prudent foresight and on the other
With s,rupulouS regard for the well
fare and good will of its constituencies
There have been many gatherings OF
the great in industry and trade. finance
and transportation during these mo-
mentOuS years since October, 1929
Numerous conferences and earnest ses-
sione have been held in Washington. New
York. Chicago and other strongholds OF
business power. Many of these have de-
veloped Invaluable contributions toward
the general betterment of our situation.
But as we observe and carry out the
results of the deliberations let us not
lose SIGHT of the far less spectacular
but none the less vital problems of un-
named and in many cases unorganized
hundreds of thousands of retailers-the
corner grocer. the small town druggist
and hardware dealer the woman selling
motions" the restaurant operator with
a modest neighbcrhCod trade.
Interests Hard to Identify.