Evening star., 1934-10-07
Survey of Comparative
Drug Store Earnings
By HARDEN CoLFAX.

Contrary to general belief, the pre-
scription department Of drug stores
and others generally associated with it
AS well as the soda fountain-are
profitable features, while the sundry
other items which at times seem to
make the corner drug store like a
small department store often account
for only a small portion of its business
and frequently bring losses rather
than profits.
| This is the outstanding conclusion
Of the eleventh and final report Of
| the national drug store survey con-
Quoted by the Bureau of Foreign and
Domestic Commerce for a committee
representing all the elements of the
drug trade. The survey was released
to the public this week by the De-
partment of Commerce
The survey, begun about year and
half ago, looked into causes of
failure, the packaging Of merchandise.
stock control and the keeping of
records. The drug store is typical
and representative American retail
business and its problems are similar
to those of others.
OF course, first Of all the druggist
must be a professional man trained
in professional, difficult task. In
the modern scheme of things, how
ever, he must also be a good merchant.
He sells everything, from thermom-
eters, perfumes and toothpaste to sta
| tionery and cigars, to say nothing of
soft drinks and quick lunches. What
part Of his trade and services are
profitable?
The survey just completed shows
that substantial revenues and profits
must be credited to the prescription
end Of the establishment In recent
years this part of the retail drug busi-
ness has accounted for Is per cent Of
the total sales of the test stores espe-
cially selected for study by the Ma
tional Retail Druggist Association. At
the same time it produced a net
profit of 8.8 per cent. The general
merchandise items were responsible
for net loss Of 1873 per cent, while
the toiletries departments scored a loss
of 6.2 per cent.
Our European contemporaries
sometimes poke fun at us for devoting
so much attention to the soda foun-
tain in our retail drug stores. This
survey, however, shows that in Amer
lean drug stores the soda fountain is
the largest single producer of sales
and profits. In the test stores the
fountain accounted for 26.1 per cent
of total sales and showed net profit
of 80 per cent. The tobacco depart
ment did not show such large per-
centage Of profit.
Many merchants have learned by
experience that q wide spread between
the price they pay for goods and the
price at which they sell them to the
public is not always reliable indica-
tor Of substantial net profits. They
have found that groups of articles or
commodities sold on a narrow margin
often bulk larger on the profit side
Of the ledger than do the goods which,
individually, show larger profit.
1t has been estimated that the items
dispensed over the counters Of the
retail drug stores in the United States
are advertised to the public to the
extent of nearly rs per cent of the
total advertising effort of American
| salesmanship. This survey of retail
drug stores shows that, in spite of a
generally lower average gross margin
on the nationally advertised brands,
these brands require less overhead
costs to reach the consumer. 1t is
pointed out that this low overhead
cost Of advertised brands is due to
rapid turnover and rapid selling time.
In other words, the consumer, knowing
the brands through advertising, ac-
| cepts them with less effort and ~sales
talk" on the part Of the clerk.