HOW TO RUN A STORE AT A PROFIT METHODS BY WHICH SDOY TWO RETAILERS SOLD MORE GOODS AT LESS EXPENSE p •^ok is DUE on the last date stamped below SOUTHERN BRANCH UNIVERSil V OF CALIFORNIA LIBRARY LOS ANGELES, CALIF. HOW TO RUN A STORE AT A PROFIT FIGURING EXPENSES AND MARK-UP— COUNTER AND WINDOW DISPLAYS— HOW A RETAILER IN CREASED BUSINESS 400% IN FOURTEEN MONTHS— SHORT CUTS IN HANDLING TRADE— LARGER NET PROFITS— TRAINING YOUR MEN TO SELL METHODS BY WHICH 62 RETAILERS SOLD MORE GOODS AT LESS EXPENSE A. W. SHAW COMPANY CHICAGO NEW YORK A. W. SHAW COMPANY. Ltd.. LONDON 1913 -10 ^^b THE MACAUNE OF DUSINESS SYSTEM "HOW-BOOKS" How TO Increase Your Sales How TO Increase a Bank's Deposits How TO Systematize the Day's Work How TO Increase tub Sales of the Stork How TO Sell Real Estate at a Profit How TO Sell More Life Inscrancb How TO Sell More Fire Inscrancb How TO Write Letters that Win How TO Talk Bcsiness to Win How TO Write Advertisements that Sell How to Sell Office Appliances and Supplies How to Collect Monet bv Mail How TO Finance a Bcsiness How TO Run a Store at a Profit Others in Preparation FACTORY "HOW-BOOKS" How to Get More Out of Your Factory How Scientific Management is Applied How to Get Help How to Cut Your Coal Bill How TO Handle Your Workmen How TO Systematize Your Factory Others in Preparation STAND-\RD VOLUMES AND SETS THE KNACK OF SELLING (In Six Books) BUSINESS CORRESPONDENCE LIBRARY (Three Volumei) BUSINESS MAN'S LIBRARY (Ten Volumes) BUSINESS ADMINISTRATION BUSINESS MAN'S ENCYCLOPEDIA (Two Volumes) BUSINESS LAW LIBRARY (Five Volumes) THE SYSTEM OF BUSINESS (Ten Units — Thirty Volumes) In Preparation 1H£ MACAZIME (/MANACtHIKT Copyright, 191S, bt A. W. SHAW COMPANY v\ ^3 CONTENTS PART I FIGURING YOUR EXPENSES AND PROFITS Face the Facts Chapter Page I Fixing Prices to Cover Expenses 7 II What It Should Cost You to Keep Store .... 17 m Where to Reduce Expenses 29 IV How to Reckon and Watch Profits 37 PART II HOW TO HANDLE YOUR TRADE The Store That Serves V Making Window Displays Draw Trade 45 VI Floor Plans and Store Lay-out 53 VII Giving Customers Prompt Service 61 VIII Storekeeping Short Cuts 72 PART III REPLACING GUESSWORK WITH FACTS Darrell Maxims IX What a Branch Store Taught a Grocer 83 X Bringing a Store System up to Date 89 XI Fitting Sales Methods to the Customer .... 95 XII Buying to Suit the Trade 105 4 CONTENTS PART IV MANAGING STOCKS AND EMPLOYES Advertise to Your Men Chapter Page XIII Storekeepinq Blunders to Avoid 117 XIV Winning over Your Sales Force 124 LIST OF CHARTS Chart i expense items your mark-up should cover .... 6 ii how four typical stores figured expense .... 18 iii m.^ximum and minimum store expenses 27 IV TAGS THAT KEEP STOCK , 31 V HOW TO KNOW TOtJR PROFITS DAILY 32 VI HOW SHOP, STORE AND OFFICE EXPENSES COMPARE ... 35 VII A CASH AND CHARGED SALES SUMMARY 40 VIII A MONTHLY SUMMARY OF PURCHASES 41 IX PLANNING YOUR STORE FOR MORE SALES 44 X WHAT BACKS UP YOUR ADVERTISING 47 XI HOW WINDOWS DRAW TRADE 51 XII RIGHT ARRANGEMENT OF FIXTURES 65 XIII WRONG ARRANGEMENT OF FIXTURES 67 XIV HOW TO MAKE FIXTURES SELL 68 XV HOW TO MAKE CURVES CHECK SALES SLUMPS 82 XVI TESTING FOR ERRORS IN STORE MANAGEMENT .... 116 XVII STOREKEEPING BLUNDERS THAT HURT PROFITS . . . . 119 Sf Part I FIGURING YOUR EXPENSES AND PROFITS Face the Facts rpiFTEEN years it takes to make a business -'■ man", says the manager of a great store; "five to know what goods and clerk hire total* five to know the cost to keep store; five to recog- nize profit and stand up for it." But you can bridge these years — ^you can stop guessing at success. While your compet- itors are still estimating their cost to sell, you can make your itemized expense sheet show your gain on every line you handle. When you "guess in" the dii^^^ence between buying and sale price, you "gae^s In" your profit. When you gamble on Exvense, you are gambling with your business dfo. Paper profits are no insurance for tho mer- chant who keeps his expenses in the dark or fears to face them. Turn the light on your business! Face the facts ! Itemize Expense, and make your price to cover. Think nothing of the large gross profit, for out of it must come all your running expenses. Know your cost to run and measure your success only by net profit. tui =.al hi: 111 EXPENSE ITEMS YOUR MARK-UP SHOULD COVER Expense Items Often Overlooked and How to Charge Them SeUiiig _ t Education of New Salc»p*-oplc i Number Traiacd New OrJcra r{ Chaiyc M Expense uniil Efficieat Figure Number of New Orders H Charge a^ Fxpensc Cost of Securing I Returned Goods — Figure Number of Returns Charge aa Expense Coat of Rehandling Include in Your SeUing Pnc Charge aa Advertising Extra Delivery _ Find Cost of Each Delivery Charge the Extras as Expense Opention-" Own.A Uhor Figure at Market Rates Charge as Elxpense Bad Accouots ~ Figure Yearly Loss Charge zs Experue and Improve Credit System *■ UOMC* - rl Estimate Losses and Thefts ] Rent of Building -j if Owned by f- tbe Retailer -J Charge to CoAt of Merchandise I -| Figure at Market Value I -J Charge as Expense : Interest oo Investment Figure at Current Rates Charge to Capital Account DeprecifltioQ — -j Figure on Equipment and Stock I Charge to Depreciation Account j Discount oo Purchases Take Maximum Discounta Credit to Discount Account CHART I: Overlook an expense item shown here and your net profit is cut that much — you pay the difference. You mxist make your selling price to cover all your running expenses before you can get sound profits and figure a safe mark-up ■II :iii CHAPTER I Fixing Prices to Cover Expenses APPLICATION and aptitude made a young man so successful as a hardware clerk that he started a shop of his own. He aiTanged that the field manager for the man from whom he bought his goods should price them for him. Delayed a couple of days, the field manager arrived and found the new store open, buyers plentiful and the youthful owner in a cheerful mood. "Got ahead of you this time," the young dealer ex- plained. "Won't have to bother you. My goods are marked — every last item — and selling like cakes." "How did you fi,gure your selling prices'?" The answer was characteristic of a great percentage of the men who guess at the running costs. "A friend of mine went around and priced everything in the other stores. Then I took the lowest prices on each article — and marked my goods. I ought to get plenty of trade." There you have it — the ' ' poor-house ' ' price that cleans out more business than any other form of mismanage- ment. To fix selling -prices, divide last year's ex/pense by sales. Add this per cent to your iiet profit and get when selling, this sum and the original goods cost. 8 EXPENSES AND PROFITS The same lottery is going on in nine out of ten retail businesses every day — business after business is operat- ing blindly; sapping not the public pocketbook but its own cash drawer; and cutting net profits because it guesses at expense. Some men don't know all the items of expense; others fail to record them; still others guess at some of them, "Wherever an item is overlooked or lost and not charged in with the prices asked, the merchant is paying for it out of his owTi pocket. Cost to run is as legitimate an. expense as the lumber in a chair; the starch in a collar; the wage of the clerk who fits your shoe. There is small chance of basic cost getting away; ma- terial and labor costs are apparent and recognized ; the selling price is based on prime cost. But the cost to run a business — its cost of living, disregarding ma- terial and direct labor which are re-sold to make income —is vague. Here is an open invitation to lose items. Even the names applied to these items show its unde- fined character. Some business men call it "burden"; others designate it ' ' general expense ' ' ; still others style it "non-productive costs"; and the majority colloquially name it "overhead." The title is vague because busi- ness men have not thought the idea out clearly. Usually unreliable expense percentages can be traced to one or more of five causes: (1) The accounting system may be at fault — the judgment that determines how such expense items should be charged is unsound. (2) Often a store manager, facing high expenses. Figure usual interest on the net amount of your total investment at the beginning of your business year, ex- clusive of real estate. SETTING THE PRICE 9 •decides to drop accounts and increase business — hoping to catch up with expense. (3) Sometimes, not bothering to figure his own costs, a storekeeper adopts a competitor's expense as his own. (4) Many men, thinking they know, are really figur- ing on a false " rule-of-thumb " method. (5) Some merchants even seem afraid to face their costs; they don't want to know. The first class is probably the most numerous — the men whose prices are too low because they do not in- clude every item, charge some wrongly, or drop others to make a showing. A Western banker took a laundry for debt. He put an acquaintance in charge, familiar with the mechanical side. At the end of the first month, his books showed a net profit of three hundred dollars. But a bank and a laundry are strikingly different from the standpoint of expense. The bank needs no heavy depreciation on equipment — the laundry grinds off a layer of assets with every turn of the power-drive. This laundry ran for six months- Then the wreck of a delivery wagon and the necessity of buying a new ma- chine exhausted the cash in the bank, and the owner began to investigate. The system of accounting had been showing as profit what was actually expense, chargeable as maintenance, depreciation, bad accounts, and so on — all legitimate items of expense which the manager had been paying out of his employer's pocket instead of charging in the prices. It is common for a merchant to say, * ' I can get around Figure all fixed expense, .inch as interest, taxes, insurance, water, lights or fuel, and prorate it over the business year in properly itemized weekly instalments. 10 EXPENSES AND PROFITS those high operating costs somehow," and, in the effort to evade percentages which he knows are high, to sink deeper and deeper into imaginary profits. "Increased Volume" Is a Deceptive Rainhoiv Unless Your Mark-up Is Sound and Profitable A selling agency manager of an appliance company found his profit for a half year to be $2,200. He needed $2,800 more to get the required $5,000 yearly profit and secure his bonus. Although he knew that selling costs were high, he decided that the best way to secure the profit expected was to crowd his men for a bigger volume, to offer a little more to customers, and push harder for business. He did not figure the additional expense in getting the extra business, and while he secured the gross sales desired, he found the expense had paralleled the increase. Come-backs from hasty sales, additional delivery bills, and money spent on new salesmen, made the extra sales cost even more than the regular business. The ever- present shadow, expense, made him lose. This is one of the serious fallacies common to many a business. If your store is not making a profit because of high expense, merely increasing the sales will not act as a remedy. You cannot increase your business without in- creasing your cost. Your clerical force can do just so much work; if more orders are secured, more men must be hired. If there are more packages to deliver, delivery costs increase in proportion. You may not need more department heads, but as business increases, one man Figure depreciation on all goo^s carried over for which you may have to take a reduced price and on anything deteriorat- ing or shotting wear and tear. SETTING THE PRICE 11 adds an assistant, another a clerk. Somehow, you have to pay for the extra work. One man found that a gross business of $180,000 estab- lished his net profit at ten per cent, in an industry where competition was strong and largest sales a talking point sought by all. "Now," he thought, "I can get the ad- ditional trade needed to put me at the top by adding this ten per cent net tc the basic cost on orders from new customers. My present organization can handle the ad- ditional business." He failed to make a distinction between the cost of get- ting the old business and the new, and his profits dwindled to the point where the original net was wiped out. But a good accounting system saved him; as his cut price campaign progressed, he discovered that his net profit was falling below ten per cent. A little study showed him that expenses had gone up. He quickly cui ofi' the non-paying business, sought a different point of appeal that allowed him to charge the higher prices, and covered the additional cost of getting new business. "Ride-of Thumb'' Methods and Guesses Give Dangerous and Deceptive Mark-ups Another type of merchant adopts competitors' figures. A young paper box maker started in business and began to figure on lots for large users. Contract after contract W*^nt to his competitors. Finally he lost an order placed by a friend of his ; he was able to ask why. "The price was lower," he learned. Further inquiry showed that the successful concern figure as labor, your services or those of any of your fiimily employed in the business, at their worth to others. Charge '•our expense account with these services. 12 EXPENSES AND PROFITS was paying substantially the same for labor and ma- terial. "'It must be, then,'' the young manufacturer con- cluded, "that I am figuring my overhead wrong. I know it must be less than these other follows' — I haven't their big organization, high rent or the expensive selling metliods they use." He guessed at what his running expense should be; cut his price to fit his competitors' — and lasted only as long as he could live on his meager capital and credit. A good worker who owned several patents and knew his trade thoroughly, started a business in a Western city. Material was cheap ; wages low. His factory oc- cupied an old building at a nominal rent. Power and heat were furnished by his wastes. He thought his ex- penses must be below the average, but to make sure, charged the customary trade "overhead," ten per cent. The plant expanded. But this blanket overhead per- centage stood. Products become diversified ; more capital was taken in ; a considerable line of credit established at a local bank. Then one day the company's balance was wiped out by a judgment in a casualty suit and the man- ager had to ask an additional loan. Demanding an accounting, the banker started a good cost man searching for the real figures. It was found that the hypothetical ten per cent was in reality eighteen and one-half per cent — almost double — and had been close to that for many years. This man had been paying half his running expenses out of his own pocket. Fif- teen years, he and his business wasted — victims of the Figure sums given to charities, associations and like causes, and subscriptions or assessments. Charge them to advertising or a special gift account. SETTING THE PRICE 13 ten per cent fetish. Seventy-five per cent of the men who annually go into retail business fail because they figure running expenses on the same basis. Fixed Overhead Charges Are Dangerous unless Frequently Checked with Expenses Too often a business man sets a fixed overhead on ex- pense and uses this as the basis on which to gauge his prices — when in reality he has not investigated to see whether it is correct for his business under the conditions to be met. The tradition of ''charging ten per cent to overhead expense ' ' has ruined more businesses than lack of capital. It does more to cloud the understanding of costs and put a business on an insecure basis than any other single factor. In a growing city, a successful grocery business was built up by a clever man. When he died his widow made the local bank trustee and went away to live. Profits continued for a while, grew smaller and then ceased. Finally the bank notified her of a big deficit. Together, she and the bank investigated- The store manager insisted that they were making money, but that the addition of new equipment was re- sponsible for the cessation of profits. It was found that he had figured his direct costs — ^such as purchases, labor, advertising — correctly, and then by adding twelve per cent, had planned to get more business by cutting prices. This looked safe on the basis of twelve per cent over- head^ but an expert accountant showed that he had not Figure as losses, merchandise sent out and not charged, goods lost, allowances made customers, accounts believed worthless, cashier's errors and unusual collection expenses. 14 EXPENSES AND PROFITS charged depreciation on equipment, office expenseit, sup- plies, interest on the investment and many miscellaneous items which, all together, brought the running expenses up to between twenty-six and twenty-seven, instead of twelve, per cent. Here was a manager, supposed to be competent, charg- ing prices for goods that took money out of the pockets of his employer with every sale. Little Items Often Overlooked Amount Frequently to Sums Which Endanger Your Profits Often the little items of seeming "outside" expense, which are in reality regular running costs, amount to an important sum when figured on a long time basis. The manager of the boot and shoe department of a "unit" store in a small Eastern city, put his yearly profit at $1,500 in a talk with a salesman friend. "And this is net," he added, "every expense figured in." A smartly gowned lady interrupted him to ask for a charity subscription. Without hesitancy, h^ handed out a five-dollar bill. The salesman, accustomed to exact accounting in his own road expenses, inquired, "to what do you charge do- nations — to advertising ? ' ' "Oh, I don't have any regular account. I turn lots of 'em down, of course, but in this case it's good business to give. It comes out of my own pocket anyhow. * ' The answer to the salesman's next question showed that these donations would average as high as $150 a year. He rapidly figured, on the basis of ' ' show me ' ' in Deduct your complete expense percentage and what the goods cost you, from the price of any article you have sold, and the result shows your net profit on the sale. SETTING THE PRICE 15 his own accounts, that "in ten years you pay out a profit of $1,500" — one full year's profit wiped out by not putting one item in the overhead. This merchant never stopped to think that everything must go into the cost of doing business — somewhere. If it is not included, there is no basis on which to add it to the prices of the goods. These items are not always small. "My expense isn't ten per cent. I know I am making good money," said an implement dealer who objected strenuously to the average of seventeen to twenty-two per cent suggested by his association as a proper charge for running expense. The association's secretary checked over the items of expense carefully and found that the dealer, since he owned the store, charged no rent ; that he figured no in- terest on his investment and no depreciation on his stock- The dealer explained that he wasi "leaving the profits in the business ; ' ' and asked, ' ' Why should I charge myself for the use of my own money in stock?" All he will actually have in his business in five years will be a run- down building, out-of-date machinery and some uncol- lectible accounts. In another village, a retired farmer with $5,000 in- vested in a vehicle agency, failed to charge salaries against his labor and that of his two strapping sons. "All that comes in profit," he explained. "I don't have to pay out any salaries. ' ' These dealers were not working for themselves, but for their customers. They were making less than a fair Go over carefully the selling price of the various articles you handle and see where you stand as to profits, and correct sell- ing figures if necessary. 16 EXPENSES AND PROFITS profit and could last only until overhead charges ate up their surpluses. It was just as if they were handing their gootLs to customers at cost. There is a type of man whose books show a profit, who has been drawing dividends, and who, therefore, says, * ' Vfl\y bother ? We are making money. For fifteen years we have made all the way from six to sixteen per cent. "We have more assets than ever. "What further proof do we need that our expense figures are right?" This merchant is as much a plunger as any of his fel- low retailers in the other classes. He may know his total costs and his total profits, but he doesn't know where he makes his profit or where the expense is going. Some one department or line of goods may be losing money — which another department must make up by abnormal profits. This isn't safe. A change of conditions may affect the profitable line and the business go to pieces with a crash. Lack of definite expense knowledge is a "blinder" to the retailer. Ask the manufacturer what his pay roll or department expense bills were for the month before ; he can tell you in odd pennies. Ask retailers what they pay for this or that article on a shelf; they know to the fraction of a cent. But ask these retailers the total of running ex« penses, cost of sales expense, difference between costs and selling price, items into which the cost of doing business is divided and their amount; above all, ask them what portion of their gross profit is actually net — and you will wait for an answer. They do not know the essen- tial of progressive retail management) — the cost of doing business. CHAPTER II What It Should Cost You to Keep Store AFTER twenty years in business, a retail firm in a Middle Western town found their net profits on the point of vanishing, though gross sales continued to in- crease. They were the "big store" of the county, hand- ling groceries, hardware, builders' supplies and farm im- plements. They sold at wholesale the first two lines to smaller stores in addition to retailing them, but kept one set of books which made no distinction between the wholesale and retail classes of trade. Nor was it thought necessary to separate departments until their dwindling net profits forced an investigation. Running expenses had been figured at fifteen per cent on sales for years. Yet the investigation and comparison of sales and invoices at once showed the average ' * mark- up" on wholesale groceries to be only eleven per cent over first cost, and on hardware, only eighteen per cent. Competition in the majority of cases fixed both wholesale and retail prices, and through handling branded and ad- vertised goods, the prices on their lines were nearly all fixed by manufacturers. 17 18 EXPENSES AND PROFITS HOW EXPENSE IS DISTRIBUTED WHERE THE ANNUAL BUSINESS WAS $11,000 Rent _ _ |..$420 Saliry to Self ^ 1 --'24. Salary to Help _ J...378. Advertising | 165. Heat and Light 1.. IJO. . Depreciation on Fixtures ...IfiO. Miscellaneous .. 75.. Total Expenses 3.9<;; .1.5% .1.2% .1.5% .7% J840.J. 4.69 . 832 .688 . 270 .175 . 80.. 220 .1.5^, .4% i.2';t ,3,105 SI. 200. .. 900 1,288 .352 ...200. -.100. .. 250 [ 8.7% \ . 1J% ...87ft. ...47o.l - 1.0% Percentage of Expense , Gross Profit Net Profit $1,320. . 18% .30^4 U% I $1,980 17% .28% 11% -17%. .26%. .$2,250 CHART II: How stores representing four typical classes of retail shops distribute their expenses is here shown. Whether you are keeping store in country or city, your business fits into one of these classes. You can thus compare your expenses with normal As matters stood, two-thirds of their stock was marked at eleven per cent above invoice cost, plus freight, or ac- tually four per cent less than the cost of the goods when delivered to a customer. While the question of how long they could last was a matter of simple arithmetic, ap- parently, inventories and bank balances showed that they were actually making money. Then they discovered, what was overlooked at first, that it cost less to sell at wholesale than retail, and there- fore merchandise sold wholesale at eleven per cent above first cost yielded a fair profit which was being eaten up by the growth of retail departments and lines that were hard to move. The non-profitable retail business had grown faster than the wholesale. Like hundreds of other stores that have been saved when on the verge of failure, a careful analysis of costs and selling conditions and a definite knowledge of * ' what it costs to do business" had to come. Three things were STOREKEEPING COSTS 19 IN SUCCESSFUL RETAIL STORES IN A METROPOLITAN DEPARTMENT STORE Rent Salaries Advertising Heat Light and Power Alteration and Displays (this includes depredation). Miscellaneous Deliver; and Equipment. Supplies _ Uwurance and Taxes General Expense Shrinkage on Stocks Loss on Bad Accooats . . . .6.00% ...25% .^.10% ._.so% .xoo% ....so% 9.35% Total Expenses . 6.00% .5.00% ..3.1«% .3-00% .2.00% - 9.35% .28.45% Gross Expense. Gross Profit ... Net Profit .28.45% 33.33 1/3% .4.88 1/3% figures and detect your storekeeping errors. If the figures differ widely, your net profits are probably being robbed by a deceptive mark-up and you should go over your methods of keeping shop and figuring costs. Check over your expense, frequently and make safe done at once : (1) Groceries, hardware supplies and implements were reco^ized as different commodities — needing vary- ing outlay of effort and expense to sell. (2) Retail and wholesale departments were separated and new percentages of cost worked out to cover each department, each line. (3) Classifications were worked out in the various lines which could carry maximum advances to make up for necessary minimums elsewhere. Rent, light, heat, taxes, insurance, clerk hire, delivery, shrinkage of stock, depreciation of fixtures, office ex- penses, partners' salaries, and all the other items that make selling expense, were for the first time included to get the revised percentages on the cost of running the business. Profit was added — like any other fixed charge. It was hard work at the start to figure how particular items affected individual departments and lines, and how 20 EXPENSES AND PROFITS to add this percentage in each case. But once on a definite basis — a report made up each month in the office — the old crude way of guessing seemed like a nightmare. With this infonnation at hand it was not difficult to work out a new sales polic}' — to push hardest on the lines and departments that were evidently bringing the best profits, to see that "fixed price" articles, carried as an accommodation, ought to take care of themselves. How to Figure Riinmng Expenses Tlmt Clear the ^Yay for a Sound Profit Every successful retailer has worked out some plan to show his running expenses, so that he can add an ex- pense percentage to invoice cost and freight, and clear the way for his profit. But, as in the case of this firm, a "blanket" percentage — which applies to all purchases, excepting only those that provide bargains, maintain fixed manufacturers' prices, or meet unusual compe- tition — is often used. This is one of the greatest sources of failure, because operating expenses do not follow an accepted line of uniformity. In the big city stores, where customer service has been developed to a high degree of perfection, the average operating expense often reaches twenty-eight per cent of gross sales. In stores separated from these only by the width of the street or the length of a block, with lower rents and less customer service, less aisle space, a smaller number and cheaper character of clerks, no special de- livery, no store policy for "returns," and lacking a dozen other "luxuries," this percentage of cost may drop five or ten per cent. A department store in a small city, with an annual business of $750,000, spent $112,500 in one year, making its running expenses fifteen per cent. Across the street, STOREKEEPING COSTS 21 a shoe store with annual gross sales of $20,000 was unable to reduce this percentage below twenty-two and one-half per cent, while in a Canadian town of three thousand, a general store with $30,000 annual sales, secured a run- ning expense of only eight per cent. It is easy to see that there is a big variation in the selling cost and running expense of different lines, and that a "blanket" percentage on running costs is always dangerous. It is equally easy to understand that the character of the store, the clientele desired, the conse- quent service and policies maintained, all enter vitally into the cost of running expenses. It is the small store that suffers by clinging to ac- counting methods which are not exact for its particular condition. It is the small dealer, more than any other, who must have an accounting system which shows how much more it costs to handle clothing than millinery, or groceries than drugs, and why. What Retailers in Country and City Have Found Their Rent Cost Them Rental is one of the first big items in the expense column of any retail store. While this is a problem to some extent, and the specific percentage that should be devoted to it is variable, it is a constant charge and other expenses must be regulated accordingly. It is usually safe to figure, however, that a good situation and high rental are more economical than a cheaper and inferior place, because of the increased volume of sales which the valuable location will bring. A dry goods firm in a small southern town paid $100 a month for a three-story frame building, 35x100 feet. Their sales averaged $150 a day — which brought their rental down to a low percentage- Their distance from 22 EXPENSES AND PROFITS the shopping: center made it necessary to advertise ex- tensively for trade. This unusual expenditure made up for the low i-ental — excess on the item of advertising should often be made to balance the saving on rental. And because of the necessaiy balance, a desirable loca- tion may often be the better investment. For the average small cit}^ retail store, four per cent is usually considered a safe figure. In a small country store, it has been known to sink with safety as low as two per cent. The retailer who runs a department store in a small city usually figures his rental close to six or seven per cent. In the case of the department store in a large city, rental often demands between four and five per cent, but the volume of sales against which this is figured is of course large. Careful investigation lias shown that the item of rent is the most uniform factor in expense, whether it be in the operating expenses of the village shop or the city department store. Why It Is Important to Get a Ratio Between. Gross Sales and Your Pay Roll Perhaps the second important factor in the cost of running a store is the pay roll. Clerk hire fluctuates from season to season, is usually governed by the demand for help, but often misses this mark and results in con- siderable waste. There should be a constant relation between sales and salaries. Few merchants realize this. A storekeeper often pays a clerk in the dress-goods department fifteen or eighteen dollars a week — because he makes a big book on Saturdays, though does little business other days — and hesitates at six dollars a week for a bright young STOREKEEPING COSTS 23 girl in the notion department, who does a fair amount of business every day. To some extent this is logical, for notions carry slight profits. Almost invariably the rule should be to base salaries on the value of individual sales. Well conducted stores figure that their salesmen will cost no more than five or six per* cent, and saleswomen not more than three or four per cent, of their sales. One way to assure this is to hold clerks to this standard. Sometimes in the larger stores, salespeople are put on commission or given bonuses. How to Plan Your Advertising Outlay within Reasonable Limits and Still Meet Competition The keener the competition, the more actively a re- tailer must advertise. Individual needs must be consid- ered here. Local conditions also enter into the prob- lem. A New England merchant did an annual business of $40,000 and spent $300 in advertising. Another appro- priated $1,200 and barely made the same turnover. A third found his advertising cost him $1,000, while his sales only reached $11,000. It is apparent that here is a question for study. A single line or the entire business can profit by a certain amount of publicity. To go beyond that point is clearly wasteful. Observation and analysis will show the point where advertising ceases to be a good investment. This is a law of diminishing returns — as yet little appreciated. A dealer in the Northwest, with a healthy business for a small city, had sales of $13,500 in November and $14,750 in October — with profits respectively of $1,368 and $1,445, or about ten per cent of the sales. 24 EXPENSES AND PROFITS The dealer distributed charges for this advertising among the dilTereut departments for each daj'- during October and November ; then struck an average on vrhich to base the division of his appropriation : Cloaks and suits 18% Notions 18% Men's clothing 16% Dress goods, silks, etc 13% Shoes 12% Millinery 7% Groceries 6% Other departments 10% 100% To test these figures, he took similar averages for normal months in previous years — then planned each month's advertising in advance on a basis of profit and made it a point never to go beyond these tested publicity figures. Many stores do a satisfactory business without exten- sive advertising. The appropriation of ten small stores scattered throughout the West, doing an annual busi- ness of from twelve to fifty thousand dollars, averages "two per cent. Five other retail houses, each doing in the neighborhood of $40,000, keep their appropriation around three per cent. A report, covering a period of fifteen years, showed advertising appropriations for one firm running as low as one and a half per cent, while tile high water mark was three and a half per cent. One year this organization did a business of $119,675 on an advertising expenditure of $4,188. Whether in the country or in the city, the newspaper advertising appropriation for the average store has been found to most profitably run about three per cent. STOREKEEPING COSTS 25 Insurance and taxes are also governing elements in selling cost. Most business men insure their stock to the limit allowed by the fire line companies. A small New York store pays $13,275 for rent, $9,750 for labor, and $8,912 for insurance. One Western firm that sets aside annually $4,000 for advertising, fixes insurance at $6,000. The common cost ranges between one and two per cent of the sales, while the small-town general store may often safely run as low as six-tenths per cent. Freight charges and cartage are usually added at once to the invoice cost of merchandise. While it is difficult to establish a fixed percentage on this item because of the varying conditions in different classes of business and at varied locations, an investigation of small general stores in the country showed that they would average between five-tenths and thirty-five hundredths per cent. A similar investigation among city stores, doing a business around $100,000, showed a percentage that ran close to three-tentlis per cent. Heat, light, power and office expenses are often charged under the head of ' ' incidentals, ' ' although many of the more progressive merchants are beginning to separate office expenses relative to the office work that is lost sight of when this item is not considered by itself. Heat, light and power have been found to average between seven-tenths per cent and one and one- tenth per cent — the smaller percentage applying to stores with sales running between $15,000 and $20,000 annually and located in the country. The larger figure especially applies to city stores where better lighting is used and power needed for various devices. If the office expenses include supplies of all kinds, postage, stationery, printing, and the like, as well as bad accounts, and the office force wage, this item, should 26 EXPENSES AND PROFITS run close to two per cent, although in a city store with gross sales averaging about $85,000 annually, where careful accounting systems and daily sales and cost records are maintained, this item fluctuated around two and eight-tentlis per cent. Delivery is still another item that depends largely upon the policy of the store. As a rule, the average for a city store will approach five-tenths per cent, while country store delivery will, because of the greatly de- creased amount of merchandise handled and the less perfect facilities, often average about two per cent. However, delivery charges range anywhere between five and ten cents per package — this item being susceptible to material reduction through the use of motors, motor- cycles and other modem equipment. Salaries and wages of the delivery force are usually included in this amount. There are a number of other items often overlooked, or merely covered by a blanket ' ' miscellaneous. ' ' These usually include depreciation of equipment; interest on the capital invested ; the salary of the owner or partners, carried as separate ledger accounts; and provisions to cover theft. Each of these items is important — as depreciation alone will average between one-half and two per cent, according to whether the store is in the country or in the city, the higher percentage, of course, applying to the first-cla.ss city store with modem equipment. The interest on investment for the average well conducted store in the country ran close to eight-tenths per cent, while it ranged up to nearly two per cent for the small city store. By methods of testing and comparison, it has been found that the more successful owners charge their salary at from one and two-tenths to one and one- STOREKEEPING COSTS 27 half per cent, though under one per cent is considered liberal in department stores with a large annual tum- HOWMAIN EXPENSE ITEMS RUN GROSS SALES GROSS SALES Stmttaple a57,- tuet — .Ki~. Ail««tidi>E _. t%~. Oelivefica ».•% — HMt LlKht lad Power —.7%^ Office Espeiue uuS..„ 2 SuppBe* DeprecUcioQ . _ _. . CntereitooCepiti] _«% 1 latvraiica uuj Texce SeluT of Owner Ll% I CHART III: These maximum and minimum percentages are the extremes between which the wise retailer holds his cost to do business. The two large squares represent gross sales. Each oblong represents ten per cent of this sales total, and the black por- tion shows the percentage of gross sales usually taken by the main expense items over. The item of "miscellaneous expenses," after these various "incidentals" have been segregated, will still run to an important figure. How to FiTid a Safe and Healthy Percentage of Expense for Your Business A general store in a small city, with a business of about $30,000, found its odds and ends of expense averaged about one and six-tenths per cent, while a de- partment store in the same city, with a turnover five times a-s large, placed its miscellaneous expense average close to five-tenths per cent. A department store in a small Western town did a business of $143,072. The cost price of the merchandise sold during this period amounted to $106,058, leaving a healthy gross profit of $37,014, or a shade over twenty- six per cent. The operating expenses of the business footed up to $29,627. 28 EXPENSES AND TROPITS The net profit for the year was, therefore, a little over five per cent of the sales, or $7,387. Inasmuch as the proprietor provided liimself with a liberal drawing ac- count, the showing does not seem to be unfavorable. While no provision seems to have been made for interest on the investment, advertising and clerk liire could prob- ably be safely cut sufficiently to cover this omission. A more careful inspection and analysis of the various items on this store's expense sheet would probably have shown some waste. In every kind of retail business the percentage of cost for running the business, which should be taken care of in the selling price, is fairly definite. Any decided variation on either side of this standard, when allowance has been made for the chang- ing factors individual to every business, means that the basis of figuring is wrong, that some link in the ex- pense chain is weak. Wrong figuring and wobbly ex- pense percentages are connnereial danger signals. Protect Your Mark-up THE only excuse for a price on goods that does not include the cost, sales expense and the proper percent- age of running expense, is to dispose of dead stock because it is store-worn or out-of-date, or to use the low price as a leader. CHAPTER III Where to Reduce Expenses OVER a thousand retail sales a day are made in a small shop, only forty feet square — a volume of business that could be handled profitably only by a scien- tific arrangement for cheeking up stock to keep it re- plenished just enough to meet the demands. A small shoe store does the business of the average shop several times its size by simply maintaining the maximum var- iety of stock on hand in minimum quantities and re- plenishing supplies promptly as goods leave the store. Always to have on tap a clean and orderly arranged stock of supplies, whether for the office or the store, though necessary for right stock keeping, is a matter of less importance than having enough and no more. Disregard of this fact is one of the biggest sources of waste in a retail store. Interest on every penny invested in more than a reasonable supply of any one item — just as paying too high a rental or making too big an adver- tising appropriation or allowing too high salaries — is a direct drain on net profits. The right quantity must, of course, take into con- sideration any ultimate advantage of price fluctuations, "quantity" purchases and the increased eost of handling 29 "30 EXPENSES AND PROFITS small orclei*s, as well as interest and storage on large shipments. Each of more than a hundred retail shoe stores owned by one company pays maximum net profits chietly because a stoekkeeping system is used that solves the "right quantity" problem. These stores are first stocked as nearly as possible with one month's supply. Then frequent small shipments keep up the stocks. A very simple system takes care of shipments. A ticket, giving the style, leather, width, length, stock number and price, placed inside each box of shoes, is taken from the box at the time of sale and sent to the cashier. These tickets then go to the manager and act as a guide to the day's order from the factory. The information given by the ticket is indicated in numbers, figures and trade names. In the example re- produced (Chart IV), ''bump" gives the style; "50 Russia," the last and material; "3 Foxed Blue," a de- scription ; and ' ' 731, ' ' the stock number. ' ' 9277 ' ' is the pair number and enables the salesman to match up rights and lefts. As a result, customers seldom fail to get their fit in any style, notwithstanding the fact that the quantity of stock is always down to the smallest possible investment — saving not only the interest on money invested in over-stocks, but also the rental on expensive store space. ]\Iany small stores may use a similar system to keep a trustworthy account of sales — an accurate description of the item on the duplicate sales check or on the price ticket, these tickets to be assorted and recorded as a guide to future purchases. The same slips also offer a cheek for the record of stock on hand, if such a record is kept, thus forming the basis of a permanent stock- keeping system that cuts down excessive cost on the items :WHERE TO CUT COSTS 31 of stock and rental. They should show the lines from which the sales are made. How a Progressive Haberdasher Keeps Store ivith Only One Day's Supply A well known shirt company has found it possible to operate in the best city locations without running the item of rental to an excessive fig^ure, by a similar plan. Only one day's quantity of each item is placed on sale at a time. When the last of each item is reached, the clerk fills out a special order blank for another day 's supply, which is brought in from a surplus! stock stored at an inexpensive stockroom in an- other building. The same system is followed in the surplus stock- -'9277 , Bump SftRiiSsia ■- 3 Foxed Blue ' -■ $3:85 room, where the supply of stock chart iv: This little tag is the basis of a money-making is carried for but two weeks shoe stock system ahead — orders going in to the manufacturers only as the amounts get low. This same scheme not only cute down the item of rent, but also of clerk hire. A small sales room requires fewer clerks than a large one, while the total amount of sales is comparatively greater for each clerk. Saving money by keeping just enough stock to meet a reasonable demand for the shortest convenient period of time, is a scheme that comes within the province of all kinds of retail stores where any number of lines of goods are carried. A Western retailer has found that it is possible to con- trol both costs and sales by means of a weekly "profit and loss" schedule. 32 EXPENSES AND PROFITS This embraces itemized department statements, which give statistics for , comparison and tabulated reports that offer immediate warning of appreciable drops in sales or marked increases in expenses. These statistics first offer a standard which can be fol- lowed at different periods of the year and under special conditions. Then any variation from this standard is clearly noticeable and action can be taken before any im- portant loss is sustained. A Southern retailer, using this weekly analysis of the store's business, was able to reduce his problem of buy- ing and selling to a mathematical basis. lie allowed sales to govern the purchases, though the volume was regularly swelled by forced price-reductions, which spelled, of course, a diminution in profits. For instance, in January land February, the two months in which spring buying is done, purchases ran high, while in July, one of the quiet months, they were, on the other hand, low. Each of these months showed a well defined percentage of the year's total sales as a guide, while during the months of March, April and May the CLASSIFIED Buying Selling Fixed and • & 1 1 1 1 a a. 3 1 c o a 3 ■> <: "a. Q .i |2 li c a 3 a u JlVH 1 ... ■ ■ 'kQ n ^i at li n f^j ■■ ^ "f If iro 1 ? ; •;« ^- •r V 7% n ■n ^ i^rf in t. fTT lliQ tf !k« in V ^ 9 ; a m t if ko .... 1 i<> l»7 lut:^ 'c n IJ fO a liO n 1 7J '(' ?o ^ iJ t ^ lit :a cv liO ffv ?J n /i / ^0 I t\ ■i 7f ^-LL ■ . _ _ _ -L. 1 _ _ _ _- « CHART V: Up-to-the-minute figures check on hidden expenses, give you the pulse of your business and put your credit on a firm foundation. A progressive retailer gets daily figures by classifying his expenses as here shown. It is only necessary to prorate your WHERE TO CUT COSTS 33 same plan of analysis showed that sales might be ex- pected to out-distance purchases by a definite margin. So erratic temperaments and personal opinions can be entirely eliminated in the matter of sales, purchases and expenses, and a safe basis used as a check. Cuts in the Elusive Overhead Follow Watching These Small Items By removing its shipping department and stock rooms from a skyscraper in Eighteenth Street, in one of New York's danger zones, a large mercantile house, with con- siderable wholesale business, was able to effect a marked saving in insurance rates when a model loft in South Brooklyn was taken for this purpose In the new loca- tion the conflagration risk was at a minimum and the insurance rate dropped from fifty cents to twenty-two and one-half cents per hundred. Many stores have added fire-proof ceilings and a sprinkler system and so reduced insurance rates to a considerable extent. The same opportunity is open to the majority of retail concerns, in the city or country. EXPENSE Management Delivery Discount c 'C i o 1 e a o. X (2 1 2I "5 "0 i» fifl Sio iOh (li ?7f OQ Jff- /(I liQ fo / (.1) to 10 f in /I Hi JO iO ^10 on /OL H'1 /" If ft ij, .!(? 00 ?ilo 10 J09 ye J pri (■ 10 (i H( h Y fo JOS HO /-.•? U-i rtf 70 n n ^<- JiiV 10 v-^ 'C '0 ^'1 {TV no /Jn 1r JJf n f 7!r ■ni i i(\ i/'' iO ti m (^ n ri trt V To 7 M ¥'/ vo ijy 10 /f7( /n H/t }0 ink TO t( (TO '})n ,ro JTV '<, lA '0 1 f / hi t>r> 1} UO (0 fvr iO in- HI )lA 111 Jh ir^ no do p i( tt ill V r H ro H(ii '0 I'm V mV h / 'if l) "f 1 '0 i( ^' to ,1/0 so ^10 It li 10 YV on ( V V ?1V vc ,YOI /Q Hi n jvr U 1 Tf' 7 ft 7(1 iOt p Yf y fo Y.I hi \o '(? V m )i •Jf i1'C Uif! JQ (iM w (Qlh n /<; ^ tlf 1 10 iM 10 y/c •5C Mi li? 1 •f: Yi Ih y Vc i1 '( li ,hv lo Jor H I UL __ JJL 00_ U. U -U. it. MJl R J^. iS. Jul. u fixed charges and add them to your daily expenses. The gross profits caa easily be fig- ured at the same time and arranged to give weekly and monthly totals. The returns are subtracted from the gross sales to secure the net sales, and hx your profit and loss 34 EXPENSES AND PROFITS By borrowing from the bank and discounting all orders, a. small retail store in the country was able to reduce the interest on necessary investments to an im- portant extent. Wliile this is one of the small miscel- laneous items, it is well worth considering. It is usually possible to borrow from the bank at the annual rate of six per cent or less, while the discount on purchases usually amounts to about two per cent a month, or twenty-four per cent a year. The delivery expense is another item which may often fluctuate decidedly. A grocer in the suburbs of a large city found that his delivery costs were running as high as two and a half and three per cent of his sales. An in- vestigation showed that the same territory was being covered two and three times a day by an inefficient method of routing the wagons and through the store's policy of delivering direct on rush orders. By carefully routing his w^agons, making two regular deliveries a day and using a motorcycle to handle special deliveries, this grocer w-as able to cut this percentage below one and a half per cent. Another retailer whose deliveries naturally divided themselves into two classes — those which went to cus- tomers within a radius of two miles and those which must be delivered a distance of four and six miles — found that his delivery costs were running unusually high because of the time required in making the long distance deliveries by wagon. He purchased a motor truck and started it on the long distance work, where speed was especially desired and stops infrequent, and left the nearby delivery work to the horses and wagons. The result was a decrease by half in the percentage of cost. The item of advertising is another expense that de- WHERE TO CUT COSTS 35 mands close watching. A furniture store discovered that by hiring" a man who had been especially trained in window trimming and who could devote half of his time TYPICAL SHOP AND OFFICE EXPENSE ITEMS Expense Items A Plumber's Shop $20,000 Yearly Volume A Retail Shoe Store $196,000 Yearly Volume A Real Estate Office $100,000 Working Capital Owners (Admioistrative) Salary $ 1300 00 $ 2500 00 $ 8664 00 Pay Roll 516 00 22384 00 19760 04 Rent, Including Heat 270 00 8500 00 2100 00 Delivery, Including Salaries Livery and Chauffcu.s Salaries in Case ol Real Estate Office 700 00 1990 60 9 7 3'2 84 Light 18 10 490 1 6 233 40 Postage and Car Fare 1 25 20 102 10 718 20 Advertising 1 1 7000 00 5909 52 Insurance 25 00 431 30 1 20 00 Taxes 30 00 482 12 1 200 00 Contributions and Dues 24 00 150 00 60 00 Interest on Capital 120 00 25 00 3000 00 Telephone 72 10 81 20 564 60 Misc. Supplies; Extra and Incidental Expense 515 40 1743 03 4789 76 Interest and Discount on Bank Loans 1000 00 Stock Depreciation and Reductions 250 00 5240 10 Interest and Depreciation on Fixtures 10 00 500 00 100 00 Total Expense i 3985 90 $ 55094 61 $ 56952 36 CHART VI: The actual expenses of a shop, a retail store and an office are classified here. Whether you are selling goods or service, you can decide whether your cost to do business is excessive by comparing it with these norma 1 figures to the windows and advertisements in addition to clerk- ing in the store, it was able to decrease the newspaper advertising appropriation by two-thirds. While the added salary of the clerk was a small extra 36 EXPENSES AND PROFITS expoiiso, the saving in the big item — advertising — was sufiieiont to reduce this cost from three and nine-tenths per cent of sales to about two per cent. The window dispLay is vahiabk^ in the small town as well as in the city, and very often if it is efficiently handled and the location unusually desirable, it can be made to care for the biggest part of the advertising. A laundry in a small city was able to decrease depre- ciation on equipment — an item often covered in miscel- laneous expense — by placing a blank report slip within reach of all employes, on which they could note any needed repairs. This lengthened the life of the ma- chinery and delivery equipment sufficiently to decrease the depreciation item nearly one per cent. A similar scheme used in the office of a dry goods store took care of supplies of printed forms, stationery, postage, pencils and typewriting supplies, and prevented waste and over-stocking of these miscellaneous items. Each member of the office force was required to turn in a weekly slip reporting the supplies he needed — the result was a saving of three-tenths per cent. Wherever there is an excess in an expense item, it is usually discovered through careful analysis and by watching the business. Frequent statements that in- clude every item of running expense are the safe way to locate abnormal expenses. Once known there are usu- ally a number of ways for meeting the difficulty and get- ting the expense down to normal. CHAPTER IV How to Reckon and Watch Profits MANUFACTURING, wholesale and jobbing houses usually know the exact profits that they realize on sales from day to day. As a rule, retail merchants largely base their estimates of profits on their experi- ence during past years — only to find that in many in- stances when the annual or semi-annual inventory is taken the expected profits in some mysterious way have dwindled. Two factors to determine the amount of gross profit that may be marked on any article are competition and expense. If competition is not too great, selling prices may be gradually raised until the mark-up safely ex- ceeds the percentage of selling expense. Where com- petition is keen, the safest remedy lies in an increased volume of business at a lower profit. An important step is to keep a record of the amount of the selling price that is lost by "mark-downs." For this purpose a form is often provided on which is recorded the quantity, description, selling price before reduced, the reduced price, and the extended difi^erence. By subtracting this difference from the original selling value, the net gain on the transaction and the percentage 37 '38 EXPENSES AND PROFITS of profit may be determined. This record is reported to the ofiSce each week. The amount of these reductions is then added to the actual sales of the department for the corresponding period and the result is the original selling value of the merchandise sold. If the selling price mark-up on the merchandise averages thirty-three and one-third per cent more than the cost, then, of course, by deducting thirty-three and one-third per cent from the original selling value, the cost value is obtained. If, in turn, this amount is deducted from the actual sales, the exact amount of gross profit is secured. The percentage of gross profit for the week is ob- tained by dividing this amount by the sales. The loss or gain is measured by the margin by which this profit exceeds or falls short of the cost of doing business. Here is a specific example that shows the method by which the difference between cost and value of the goods and the gross profit, is determined: Sales for the period 51,525 Reductions 224 Original selling value 1,749 Less 331/3 per cent 583 Cost value $1,166 Difference between cost value and actual sales, or gross profit 359 Percentage of gross profit 23%% Then, if it costs, say twenty-four per cent, to operate this department, the loss of the week would be one-half per cent, or $7.12. On the other hand, if no reductions had been made and the cost per cent to operate remained the same, the gross profit would have been thirty-three RULES FOR MARKING UP 39 and one-third per cent and the net profit $163.24. It will thus be seen that reductions must at all times be carefully recorded. Stock Records Which Check Merchandise and Watch the Clerk for You Progressive retailers, to keep track of profits, not only provide an accurate record of cash received and cash disbursed, but also a stockkeeping system that ac- counts for merchandise on the shelf in a manner to check employes who might sell goods worth one dollar for fifty cents. "No merchant can hope to realize more for his mer- chandise than he has marked it when it was placed in stock. Of course, the reverse is to be expected, for fre- quent price reductions are necessary in order to keep odds and ends cleaned up, and it is just as necessary to keep an accurate record of all selling price changes," says one retailer. This retailer does not find it difficult to keep his stock records straight, as he uses a system that keeps close tab on all his activities. He also places opposite each item on an invoice, after it is checked in, the selling price of that article. By extending these items, his book- keeper easily ascertains the exact amount of revenue realizable on each bill of goods. The gross profit and rate per cent are then readily determined. One invoice, of course, is not enough to judge the percentage of gross profit, so this merchant has a plan that makes a perpetual record. Double columns are provided for each department and each invoice is entered at cost and at selling value. In this way the merchant is able at all times to determine the average profits that are made by a department; if they are not up to the 40 EXPENSES AND PROFITS standard, he may take steps to change the condition. An Ohio hardware dealer, in a city of ten thousand, has perfected a system of keeping' track of the weekly department tnm-ovei*s of his business and uses the record as a guide in buying, charging and stock-keeping. So simple is the plan that it is practically self-operat- ing. "While devised by a hardware merchant for his special purpose, it can with but slight changes be adapted to any store. Hoiv the Sales Records of a Retail St&t-e Are Kept for Four Dollar's a Week In putting the scheme into operation, a complete in- ventory and classification of the stock according to de- partments is made. Each class of goods is defined by a general term such as "house furnishings" or "tools," and the initial letter of the term selected is used as a record mark in referring to stock. Month Ending B M T E F s c N G Total yn^..rl. /f/^. 3031. /srok no. i-o %^1<- 3ooo itUf J"br3 //.39J.r/ ^ L - LJ - CHART VII: Your cash sales may well be carried every day to the "Sales Book Sum- mary" shown here, and the charged sales at the end of the week. You can secure the department figures by dissecting your sales slips To make easy the work of clerks in entering records, the key-letter of each class is written or rubber- stamped on the shelves or on the packages in which the goods are wrapped. The classifications used by the orig- RULES FOR MARKING UP 41 inator of this scheme are : builders ' hardware, B ; house furnishings, F ; miscellaneous, M ; stoves, S ; Tools, T ; electrical goods, E ; china, C ; cutlery and giins, G ; bolts, nails and screws, N. These classifications can be Rough Estimated Cost Ca-^X^ ^ J-'i'm f jg /V/ v-z S'iO ^Ll^aJL lUA^2iJJl 'IM m /vv^»- f/ ro &L.a. illL /UiJiMaLUjJjS. x)6. sy /?,f/y Ka^.<^ ^ IM. 'f.n l./613}tiH1n ir v-y/- v/ ^y, a CHART VIII: This summary of purchases, or the "Purchase Book Summary," re- ceives the net monthly purchase totals classified by departments. It regularly gives quarterly balances, but totals can easily be ascertained at any time extended or modified to suit the requirements of any- particular store. Incoming invoices are checked by putting the key- letter for the class of goods opposite each item. The various amounts of goods purchased and stocked in each department, with the name of the maker, date of ship- ment and the retailer's number of the invoice, are car- ried to a "Purchase Book." A summary of totals is made for each supplier and each department in the store, and discounts are deducted according to depart- ments. At the end of the month, each classification is totalled, credits received deducted and the net total amount car- ried to a "Purchase Book Summaiy." The total amount of purchases made during the month in each department can be seen at a glance. A duplicate sales slip is made out for each sale with the class initial of goods sold entered on the bill opposite each item. Ad 42 EXPENSES AND PROFITS ordinary sales book system suffices for keeping these records. At the end of each day the bookkeeper totals the amounts sold for cash in each department by the sales slips and deducts charged sales. The cash amounts are carried to the "Sales Summary Book." Charged sales are entered in the Day Book and dealt with weekly. Entries in the Purcliase Book are based on delivery costs. Prices in the "Sales Summary Book" are the prices at which goods are sold. The plan yields prompt returns by putting the store- keeper in possession of full-figure facts about his busi- ness. Relying upon annual or semi-annual inventory taking is a dangerous practice, since small daily losses amount to a formidable sum when allowed to accumu- late for a period of from six to twelve months. Under the annual inventory system, before the leaks are dis- covered, the business is saddled with a deficit which takes months to overcome. Often recovery is impassible. At an operation cost of four dollars a week, this method of keeping track of sales, deliveries, purchases and stock on hand comes back to the owner many times multiplied in the shape of loss prevented and profits made possible by running the store on a basis of exact knowledge in- steaxi of approximation. Net Profit YOUR only way to get around high operating costs is to cut out the waste or to see that the high running costs are covered by the price. in urn Part II HOW TO HANDLE YOUR TRADE The Store That Serves "1\/^HEN your competitor across the corner ^ ' ties up his funds in mahogany equip- ment, keep yourself from the opposite extreme. Don't match positive waste with negative. Cripple your store with neither too much nor too little. Keep your balance. Pay your location, your building, your win- dows, your counters, your sales people, only for their effectiveness in serving your trade. Whole rows of thousand dollar display win- dows are blind to the wishes of those who pass. Entire advertising campaigns fail to tell the customer how he is to be served for his money. Many a merchant hires an orchestra to at- tract loungers, and forgets that little silent salesman — the price tag. Store arrangements that devour your time ride your pay roll. Mistakes that delay your customer drive him across the corner. The store that succeeds is the store that serves — that saves time and steps — that offers what customers want, and makes it simple, easy, pleasant, to buy and get away. g iirt - ■■■ Ill; PLANNING YOUR STORE FOR MORE SALES Millinery ''^ I Boya I [ Juolors Tables | " |" Tablea e i2 1 b u a e 2 o 2 II o -5 ■c a ^ « X .•/ ^' u = " O Display Space Furnisbiags Case Display Space u, a « Ic % 2 5! " = ;1 i;"5 V) u u o «5 ill CHART DC: This chart shows how a retailer made a floor plan increase his sales forty per cent. He placed articles of everyday use in the rear and led his customers to them through many attractive displays intended to suggest additional purchases III: III CHAPTER V Making Window Displays Draw Trade WHETHER you are retailing in country or city, the show window is a form of salesmanship which you can keep within arm's reach of the passer-by every hour of the business day. Windows are exceptionally good types of flexible salesmanship and unusually inex- pensive ones. It is true that all your competitors have this same form of salesmanship in their service. To overcome the apparent disadvantage, you are forced to use your win- dows with individuality. They must be taken into com- radeship with your salespeople. They must demonstrate with the pride of a clerk enthusiastic for the store that back of them stand the stock, the shop, the merchant out of the ordinary. To accomplish this and make your windows pull for net profits with their full power, it is necessary to con- sider them silent salesmen. They are dumb salespeople. The windows must for this reawn be made to talk in the manner of a dumb person — in motions, or demonstra- tions, or signs. Place something moving in the windows and they are 4& 46 HANDLING THE TRADE no longer dumb. Better still, have thera demonstrate your goods in the maJving or in some other way connect with your stock the selling appeal you give them. Then crowds will stop, A city music store dressed a window to represent a small, instrument-cluttered vio- lin shop. In it an old violin maker puttered about, repairing, rebuilding and varnishing, exactly as if in his attic shop at home. Hundreds of people stopped at that Avindow every business day. A member of an or- chestra which plaj^ed in the city during a coast-to-coast tour, inquired at his hotel where he could get a valuable violin repaired. "Why," replied the information clerk, "I passed a window at the corner of Spring and Essex Streets yesterday with an old fellow in it repairing vio- lins. It was certainly a dandy window. Those people should be live enough to help you out right." The musician found the shop and received good service. Concentrate on Suggesting Desires Your Stock Can Fill to the Customer's Satisfaction There is another fundamental rule to remember when working with your windows. The good salesman talks one thing at a time. A good window will usually feature but one attraction or line. You may use some secondarj^ sign or a moving object to attract to the display, but make the display itself concentrate on one subject. Give the customer's mind a single idea upon which to center. Your windows should stand on the street and pleas- antly, cheerfully, reasonably ask every person who passes to step in at your doors. Think of them in this light. It is then evident that they should, above all, be dressed with extreme care. They are not doing you justice if they display a generous stock of brass and nickel fixtures topped by bunches and heaps of stock — that is, unless WINDOW DISPLAYS 47 you are selling brass and nickel window fixtures. Hide the fixtures; if that is impossible, use something that goes naturally with the stock displayed. Hang the hat on a cane instead of a brass rack ; hang the summer dress over a June-day parasol, and discard the nickel poles. CHART X: The selling forces that attract customers from the trade territory of which your store is the enter. Each medium reaches its small or large circle of pros- pects; the salespeople using their persuasion with actual inquirers, tlic counter and store arrangement urging store visitors to buy, the window disphiy drav. 'ng in passers-by, and publicity carrying the magnetism of values throughout your town a^d its rural routes Trade springs largely from suggestion, if you stop to analyze it. April suggests new suits. A remark overheard on a busy street suggests that vou need new shirts. Windows are suggestion experts when properly 48 IDVNDLING THE TRADE equipped. Let them always suggest first of all, then give them stock to show and prices to quote which will fan suggestion into desire. A reasonably strong desire will persuade a passer by to come inside. This suggestive pulling power is shown, for instance, in the simple display of an Eastern furni- ture store selling a new make of reversible vacuum cleaner. In the center of the window a light red and blue ball goes spinning about a silver plate. Around it goes with a steady ease which apparently accomplishes perpetual motion. Of course, you quickly see the nozzle of a reversible vacuum cleaner is resting at just the right point on the edge of the plate to drive the ball. Back of the nozzle you discover Blake's vacuum cleaner pumping air through the nozzle; and in the center of the plate, constantly circled by the ball, this card : This is the Way to Get Around Dusty Cleaning Not perpetual motion — but a sure-fire way of securing dustless cleaning Come in and let us show you the cleaner pick- ing up little threads and bigger things The advertising man for this store was following a definite idea when he ordered this display. He had three fundamental purposes in mind : publicity, co-oper- ation wath clerks, and a tactful invitation to customers to visit the store. Displays of a similar nature can be made adaptable to windows of any size. You may dress your windows with technical correct- ness, and offer in them good stock at fair prices, but if you do not enliven them with originality, you lose half WINDOW DISPLAYS 49 their value. Either new ideas must be featured or old ones seen from a new angle. Without some assistance from outside, it is often difficult for the retailer to find original display subjects. Many manufacturers offer a display service which is especially valuable. Write to the manufacturers of your lines and find out what they can do to help you. They supply cards, models, samples and other materials. One large New York fur house plans and writes entire advertising cam- paigns for its retailers and on request sends an expert to go over the situation on the ground. Another unfailing source of ideas and suggestions is open. This is from current events of local interest. A confectionery in an Ohio town, for example, after sup- plying the pastries for an elaborate banquet held by a local organization, made an over-supply as a window dis- play, letting an attractive!}^ printed card tell the story: THE PASTRIES FOR THE BUSINESS MEN'S BANQUET WERE SUPPLIED BY THIS STORE. STEP IN AND TASTE SOME OF THEM. Incidents are happening at all times which may be connected interestingly with the goods that retailers display in their windows. By watching the most clever displays of various stores in his town, a shoe store pro- prietor found he could accumulate many clever display schemes which could readily be changed slightly and adapted to his own purposes. An inanimate object displayed in a store window may catch the attention of the passer-by. Put that object in motion and it holds his interest. Make a man or woman 50 HANDLING THE TRADE "do something" with that object and the passer-by stops to watch and then may be drawn into the store. Featuring Goods by Showing What They Do Usually Results in Increased Sales A grocery firm decided to acquaint the public in a town of seventy-five thousand inhabitants with the merits of a certain brand of boiled ham. Dressing a man to represent a t^^pical chef, he was put in the win- dow to cut slices of the ham for feminine shoppers, and some two hundred women patrons daily had a taste of this meat — a large percentage of them deciding it was "delicious" and purchasing. It was the combination of this scheme of display with the idea for touching the woman 's purse through her palate that made it an effect- ive "puller." A hardware dealer used this idea of "action in the display" to dispose of a large stock of safety razors. This dealer placed a card in his window which stated that he would pay ten cents for the privilege of shaving a man in his window. Some fifty applicants, eager to be shaved, were engaged and ten men were shaved dur- ing the hours of demonstration. This scheme proved a big attraction, and morning, noon and evening the pavement was crowded, a good per- centage of the lookers stepping inside to examine the big variety of razors on display at the side of the window. A concern selling vacuum cleaners used the same method to get customers in the store and sell them. A general store disposed of a quantity of kitchen utensils by an almost parallel plan. There are few lines of goods where some scheme of this kind cannot be applied as an effective "silent salesman." There is still another kind of window display that WINDOW DISPLAYS 51 can be used effectively to draw trade. This is to impress the passing public with the quality of the goods through a demonstration that shows how they are made. A shoe dealer secured several employes from a manu- facturer and enough machines for his purpose, and then started making shoes in his display window. The busy shoe-makers at their work attracted a good deal of at- tention — the scheme turned out to be a big factor in ad- vertising his goods and in pulling trade to the store. Many a buyer does not know he needs a certain article until its merits have been forcibly impressed upon him through some such show window demonstration as this. SLIOINS SASHES**- rixeD-^'* CHART XI: The idea back of this window lay-out taites advantage of the fact that display is of the greatest value when near both the goods and the customer. These dis- play windows are built into the doorway, and enclose a path to the counters Often the mere pricing of all goods in the window, where these prices are sufficiently unusual, serves as one of the most effective means of drawing customers into the store. It is true that many retailers object to the use of the price ticket on the ground that it places price above quality and only brings buyers into the store to get that one particular article. This is ail any kind of an advertisement docs — it depends upon the clerk or the display within the store to multiply a customer's needs when once he enters. 52 HANDLING THE TRADE TVhen the story told by the display window strikes close to a man's pocketbook, it hits the appeal that is often most vital. There are few lines of goods which do not demand that the prospective buyer look over a stock to some extent before purchasing, and an attract- ively displayed stock within the store creates the desire for other goods — that have not been cut down for ad- vertising purposes. But all schemes for drawing trade through price- marked goods on display must include a method of mark- ing the goods that is neat and attractive, such as varied colored cards that do not detract from the appearance of the goods, and cards with catchy words of selling talk in addition to the price. And whatever the scheme for making the show win- dow do its share of the selling work, it can only reach maximum effectiveness when coupled up carefully with the displays inside the store. For it is seldom that the goods displayed for advertising purposes are the ones that offer the big profits. Let the display window draw the buyers — then, once in the store, it is the work of the sales force and the store displays to create a desire for other and more profitable goods. LET your customer know that a personal interest attaches to him — a real personal interest that is not measured wholly by his orders and his dollars — and you will win in return that close personal association and active support that builds up business. — George H. Barbour CHAPTER VI Floor Plans and Store Lay-out THE retailer daily faces two problems — purchasing and selling. Successful purchasing depends entirely upon his knowledge of the market and his ability to forecast the immediate demand. Successful selling de- pends almost entirely upon the attractiveness of the store, the conveniences it affords, effective advertising, intelligent clerks, prompt deliveries, honest goods and innumerable other factors. Under the heading "selling forces" may be placed two factors — personal and impersonal. The first of these two elements deals with shop service fostered by the man- ager from the highest paid clerk to the cash girl. The impersonal forces include window decorations, merchan- dise displays, and the convenient arrangement of the various departments. "Stock displays," says a successful retailer, "are the greatest silent force in modem merchandising. They are the pace makers for the salesman and the sales- Avoman. Fully forty per cent of our total sales may be traced directly to shop arrangement," The woman who visits the store planning to purchase a gown does not realize how cunningly the department she 53 54 HANDLING THE TRADE must visit is located so that to reach the suit department she must pass both the millinery and shoe sections. After purchasing a suit, the season's latest hats entice her with their beautiful plumes and flowers. All along her way, in fact, bargains are lying in wait, making it easier to buy and harder to leave the store without making more purchases than she at first intended. How a Customer Is Induced by the Arrwngement of Goods to Make Umntended Purchases An Illinois merchant hit upon the plan of arranging shirts, ties, underwear and furnishings near the street entrance most frequented by men, realizing that the busy business man takes no pleasure in elbowing his way through crowds of women. Accordingly the men's wear is made most accessible and every art of the retailer is centered on making the displays so attractive that the customer who hurries in for a half dozen pair of socks will end up by buying a shirt and tie; so conveniently arranged, in fact, that they really sell themselves, the clerk merely taking the order. The merchant who appreciates the possibilities of sell- ing goods the visitor has not thought of buying, plans the store in detail with a system which would amaze the outsider who does not realize that she cannot buy even a spool of thread without walking past counters, tables and show cases, alluringly filled with novelties and dress accessories that catch the eye and stimulate the interest, and, if possible, could be turned into a purchase. To reach any department, she must run the gauntlet of alluringly displayed necessities. 'Some retailers have hit upon successful plans without appreciating just why their arrangements acted in speed- ing up salas, but the observing merchant daily asks his STORE LAY-OUT 55 department heads "Why" until he has established a number of principles applicable to extending the science of the store. The larger stores group their merchandise. One entire floor may be devoted to house furnishings. When the shopper is looking at rugs, it is easy to interest her in curtains, if they are just across the aisle. It is not from chance that carpets, draperies, furniture and clothing are located on upper floors. Experience has shown that customers go to a store with the fixed purpose of looking at these articles. The first floor must be reserved for silks, lingerie, novelties, and small articles of merchandise that the customer had no thought of pur- chasing before sight of them awakened the desire to buy. The department manager of an Indiana furniture store, approached the end of the season with a large number of cedar chests on hand. They did not sell. People either overlooked them or the surroundings were not right to stimulate buying. H^ had them placed three in a row on each side of the main aisle leading to the rug and carpet department and just in front of the elevator entrance. Across each chest he threw a handsome Oriental rug, leaving the lid of the chest open. The display immediately caught the eye of the women- going and coming from the carpet department and suggested the many uses there are in a home for cedar chests. The entire lot was soon sold — sales that were induced by proper arrangement. The question of color effects is followed with the skill of an artist by many efficient in the arrangement of goods. The large stores aim to dress their decorations in bright colors for half tone light and in subdued colors for broad daylight. On dark days brighter colors are thrown out whenever possible. The question of lights is no less im- 56 HANDLING THE TRADE portant and department heads make it their first duty to see that the proper number of lights are turned out and a strong color contrast secured. The most brilliant lights are provided for the china and cut-glass departments, while the furniture rooms call for subdued lights that emphasize general lines and effects, rather than details. Schemes That Add to the Convenience of Customers Increase Sales but Swell the Overhead A degree of privacy must be provided for in certain departments — for the customer is often flattered by hav- ing goods brought out and spread before her alone. Then, fitting rooms for trying on corsets, coats and other apparel are provided, and a "costume room" is found in the larger city stores where evening gowns may be seen in artificial light. The little ones are not overlooked either, for no matter how great the pressure for space may be, the shop-keeper finds a place for an infants' room where babies can be cared for while mothers shop. A play room is fitted up with swings, sand piles and amusement facilities that serve the purpose of entertain- ing the children and enlisting their services in advertis- ing the departments by teasing their mothers to shop there and coaxing their fathers to buy swings and de- vices they won't be happy until they get. Some departments are as much fixtures as the store itself, while others are moved weekly or even daily — a veritable game that the storekeeper plays with his cus- tomers to lead them here today and there tomorrow, thus familiarizing them with every nook and comer of the establishment. If a line of goods does not sell in one place, it is moved along to a more favorable location. The "bargain basement" is a permanent department in many stores, and even in the smaller shops the most STORE LAY-OUT 57 effective arrangement for moving slow, old or sluggish stocks that need to be disposed of quickly, has been found in such departments. People will go down-stairs to buy very readily where they would hesitate to go up, even in stores with elevator service. This has been demonstrated by retailers who have carefully studied selling. Women with, time for bargain hunting find the basement a field for careful and economical buying. Where goods are displayed on open counters, the buyer may pick over and choose from the stock in the easiest possible manner. Articles loosely placed over counters add the "charm," if such it may be called, of an abso- lutely free and unrestricted choice of the assortment. An Eastern druggist hit upon a very effective way to get the buyer's eyes on goods that he would not otherwise have thought of buying, and the plan has been copied widely. In many drug stores that dispense soda water and light lunches, tables for patrons are topped with a glass covered box, the glass forming the surface of the table; an excellent opportunity for displays of toilet articles and other goods that will appeal to the passing fancy is thus offered. Even though this method of dis- play is somewhat restricted to certain businesses, the idea may suggest other means for making the buyer see the goods — and seeing them so attractively placed that he or she will want to buy. In a small suburban to\\ai, the manager of a general store hit upon a plan to cleverly arrange his wares and get the most sales. Staples of the store's main stock — groceries — were all placed in the rear, except fruits and seasonable goods, which were shown in front. With the groceries in the rear, one entering the store would go the length of the aisle. Between the counters, tables were used to display mucilage, stationery, waste paper 58 HANDLING THE TRADE baskets, fancy goods, cooking utensils and many things that the housewife uses daily, but otlierwise might not have thought of or bought. This plan materially built up sales outside the grocery department. Opening the eyes of retail clerks to what the store is selling — establishing a connecting link between window displays and stock — is necessary if the full value of the window to the merchant is to be realized. Windoiv Displays Must Be Supported by an Efficient Sales Force and Attractive Store It has been said the human eye is the window of the soul. In business terms the window display is the eye of the store. Unless a permanent connection is made between the windows and the location of the stock, all the effort and art expended to secure attractive show windows is wasted. What an efficient clerk could have done may be drawn from the example given here. During a recent "silk sale" in Boston, a woman passed a prominent department store one morning. She had not set out to buy, but the rich display brought her to the window, and her eye fastened upon a beautiful black silk remnant there displayed. Instantly the shimmery cloth became the focus of her vague ideas about a gift for her mother — some suitable little souvenir to take back to the village home. She went to the silk counter and described the piece of goods. The clerk scratched his head and at random picked out several patterns of the same price. The woman insisted that she had not yet handled the same patterns shown in the window. The clerk got down an- other batch, with the same result. His manner grew less courteous, and he hinted that the woman had passed over what she wished without recognizing it. Twenty STORE LAY-OUT 59 minutes were frittered away for the shopper, a com- panion and the salesman. The counter was strewn with silks to be put away later. The shopper kept both her temper and her opinion, however. She declined to take what she did not want, merely to avoid robbing the "window early in the sale. She invited the clerk to the sidewalk and made him do what a clerk rarely does — look at the window display of his own store, the criterion by which customers judge the goods he puts on the counter. Moreover, the woman was right ; she had not been per- mitted to handle that particular leader. She carried away five yards of it. Whole rows of thousand-dollar display windows are blind on one side, and the proprietor doesn't know any- thing about the blemish. But here and there clerks as well as customers know the displays. In getting dividends from its show windows, a cloth- ing company in Chicago uses a method that is round- about, but effective. During slack hours — and this usu- ally means the early morning when the men's minds are keen-edged — squads of clerks are sent up to the store's "school of salesmanship." An "instructor" receives them and gives each sciuad a straight-from-the-shoulder talk on selling — on helping yourself, the customer and your employer. He teaches the salesman how to find anything in the store and how to direct a customer to any point ; how to do this courteously, without an air of superiority. And incidentally, how to match a. window display or climb into the window and get what a customer wants. More novelty attaches to the method followed by a large department store in the same city. Blanket ad- vertisements in the newspapers aim to feature something 60 HANDLING THE TRADE on every floor. Window displays follow this publicity closely. And the clerks know what is advertised. They know, because the "blanket" is cut into sec- tions, Avhieh the lioor-walkers on all the ten floors spread as news of the day's features. The matter does not stop even there, however. Routine puts the thing through. The advertising sections go to an attendant who gives graphophone announcements and concerts in the lunch rooms, one day to the men ; the next, to the women. Two horns are used, under the at- tention of the operator, who is behind a curtain. And between Sousa and Caruso, let us say, the clerk an- nounces by means of the second horn, that to-day, ladies' oxfords, tennis rackets and novels are "featured." It follows they are on display in the windows, under the eyes of the passing thousands, and are being asked for every minute. This speech tells only what the clerks addressed need to know; and coming like a song announcement, it "soaks in" and actually oils the wheels of salesmanship. Your selling force may not number into four or three or even two figures. Your annual bill for newspaper ad- vertisements and window displays may not span five columns in the ledger. It follows that lectures and graphophone schemes may be too pretentious for your business. Possibly what you will finally do is to get your clerks together for a minute some morning and say: "Notice that we're featuring the summer dress goods this week. People will be asking you for those choice pink and straw colors. Just stroll out when trade is slack, or at lunch time, get a breath of fresh air and — look them over. Then come in and locate them on the shelves." But do something! CHAPTER VII Giving Customers Prompt Service ONE of the greatest problems in most stores, regard- less of their size, is to serve customers with a maximum of speed during rush hours. The scant analysis given to this subject is apparent in many- stores, perhaps most conspicuously in the large stores during busy seasons or in crowded periods of the day. The congestion of urban population is blamed for most of this trouble, and no doubt some of the congestion in the stores would be unavoidable no matter what the methods. Much of it, however, could be eliminated. Under existing methods, it is often impossible during the rush periods to serve more than sixty or seventy per cent of the customers who go to a store prepared to buy goods. The remaining thirty or forty per cent, after trying with more or less patience to spend their money at one counter or another, go away, perhaps to com- plete their purchases elsewhere, or maybe not to buy at all. It follows, therefore, that speeding up the selling operations will not only reduce the clerk hire and the overhead ratio, but will add to the volume of sales. The manager in the shoe department of a metropolitan store increased his volume of sales about twenty per 62 HANDLING THE TRADE cent, because he found a means of gauging the waste mo- tion of clerks and eliminating most of it. He found that the advertising campaign brought people to the store but that the store selling mechanism could not take care of them. This waste was due almost wholly to a predomi- nating fault of merchandising: the slow pace of cus- tomers in going through the store. In the shoe depart- ment during special sales, one-third of the prospective customers left without buying. A custom was in vogue of keeping the cheaper grades of shoes upon counters that immediately abutted one another, without adequate departments to separate the sizes and styles. Double the necessary selling time was lost by the clerks in hunt- ing for goods, and twice as many clerks as were other- wise needed increased expenses. While measuring this loss the following time-study was made : Number of customers served by one clerk 5 Total time 181 minutes Average time per sale 36 minutes Total sales $9.25 This record was poor, showing a low average selling price, while an expensive over-head continued. Speed- ing up was what the department needed, especially since many dissatisfied customers took their cash away from the store because they could not be waited upon without undue loss of time. A time-study, after improvements had been made, .showed the following results: Number of customers served by one clerk 11 Total time 182 minutes Average time per sale 16.5 minutes Total sales $18.25 An increase of 120 per cent in the number of cus- tomers served, and almost 100 per cent in money PROMPT SERVICE 63 volume of sales, shows the increase in selling efficiency. The old and new arrangements in this department are shown by charts (Charts XII and XIII). Instead of the long counters on which collections of shoes were dumped, small detached circular counters were arranged in rows across the shoe section, each bearing a single size. During the rush of the special sales, the customers picked out the shoes they wished to try on, often without the aid of the clerks. Then, stepping to the seats, they are served in less than half the time formerly required. The change necessi- tated a very small investment in equipment, although the entire shoe section had to be re-arranged. Due to the arrangement of equipment, waste motion was largely eliminated, so that the continual sorting of stock by the clerks was done away with. ]\Iixing the sizes was prac- tically prevented by separating the circular counters enough to enable the crowds to pass between them. The greater part of the clerks' selling time could thus be de- voted to actual selling, and not to sorting goods or hunt- ing for them. Customers Turned Away ivithout Proper Attention Cut Profits and Weaken the Store's Reputation When large numbers of customers come to the store to buy — in response to advertising campaigns — and must take their money away again because they cannot spend it without a prohibitive waste of time and energy, the reasons should be ascertained. The immediate loss of trade resulting from such a condition is not the most important factor. If the number of persons leaving the counters without being served would forget the experi- ence, the loss would not be great. But they don't. When they wish to buy goods in this line again, they remember 64 HANDLING THE TRADE the lack of attention and trade somcAvliere else. Eighty per cent of the shelf room in a ribbon depart- ment was found to be wasted, owing to the scant facilities for getting directly at the stock wanted. Here the waste of time was very heavy, because clerks frequently had to remove many bolts from the shelves in order to reach goods in the rear of the spaces. To obviate this, it had been customary in some instances to leave the rear por- tion of the shelves entirely empty, heaping the goods on the counters instead. This, however, did not remedy conditions ; often it resulted in a mixture and tangle that reduced efficiency below the former plane. A study of one clerk showed these results: Number of customers served 10 Total time 59 minutes Number of minutes consumed in handling stock foreign to the sale in question. . .32 minutes Percentage of time thus wasted 54% Number of customers that might have been served with proper equipment 15 A plan was devised for revolving racks to take the place of the wasteful shelves. These racks were supplemented in some cases by special drawer-cabinets. The full degree of perfection in equipment cannot often be obtained, although the maximum may readily be ap- proached. The value of the majority of such plans is usually greatly lessened by the lack of comprehensive system based on motion study. In Manufacturing, Tools Are Carefully Selected; in Selling, Scarcely Considered From the viewpoint of efficiency, a great many retail stores are wretchedly equipped for doing business. In ■fee first plaoe, there is a lack of specialization in fixtures. PROMPT SERVICE 65 In other words, one form of shelving and compartments does duty for an indefinite variety of goods. In the manufacturing field, tools are highly specialized and the most skilled engineering attention given to them. In the selling field, tools are scarcely considered, though in reality they are as important as in manufacturing. SEATS SEATS ■'■■ m wk SEATS SEATS ISi . SEATS SEATS .i; 11^ SEATS SEATS ■;- ■ 1— ' == CHART XII: These fixtures in a retail shoe store are arranged the right way. The small circular counters (A) each display a single size. Customers can, therefore, make their selections without confusion and seek convenient seats to try on shoes The selling tools are the fixtures and general equipment. Nine-tenths of the display possibilities were found to be wasted in the study of a rug department. Visitors hesitated to call into service the clerk necessary to turn back rug after rug for inspection. The problem was not so much one of congestion as of clerk hire and the prop- er display of goods. It was seldom that the department became crowded with customers; more often it was empty. Customers usually came for the express purpose 66 HANDLING THE TRADE of buying:, although there was nothing to attract buyers. The casual visitor saw great staclvs of goods with only a rug exposed to view here and there. Many customers, whose eyes might easily have been caught by some de- sirable rug, took their trade elsewhere. A radical betterment has resulted from the installation of a hanger system which eliminates most of the waste motion. Swinging like clothes bars, these hangers sus- pend two iiigs from each arm, back to back. Con- cealed electric lights throw a strong radiance upon the goods. The great waste of selling motion that lay in the old method was found by time-studies. This observation embraced the operations of one clerk and his assistant during the sale of a 9x12 medium priced rug under the old system of piling the goods on the floor: Number of rugs turned back for inspection by the customer 52 Number of operations in which the turning of rugs was duplicated twice 408 Number of operations in which the turning of rugs was duplicated three times 106 Number of operations in which the turning of rugs was duplicated four times 60 Average time required to uncover rugs for inspection 3 minutes Total time 104 minutes By the hanger system, turning operations were done away with and the services of the assistant discarded. Re-inspections of rugs could be made vnth a saving of ninety per cent of time. Several customers were able to inspect rugs on a hanger at the same time and conduct their re-inspection independently of each oth«r. By this method one salesman, without a helper, PROMPT SERVICE 67 could effect a sale in fifty per cent of the time formerly required with a helper. The number of persons visiting the floor was also increased twelve per cent. How a Congested Drug Department Was Reorgan- ized and Its Customer Capacity TreMcd In a drug department, the congestion was commonly great in the selling efficiency of the clerks. A time- study determined that they were not doing within sixty per cent of capacity work. This was due in a great meas- ure to the time consumed in getting the goods from the Si A A B Ml Mm •;- -A- '^ SEATS , V, 0mmm''''w^ SHELVES CHART XIII: Retail shoe store fixtures used the wrong way are shown here. The long tables (A) are covered with stock displayed regardless of size. Confusion, delays and lost sales result shelves. Owing to the elongated dimensions, the clerks frequently took forty or fifty steps in securing goods. Experiments indicated that this waste could be cut down at least sixty per cent by re-arranging the counters. 68 HANDLING THE TRADE Under the new arrangrement, a clerk could stand in each of the sections and be within reach of most of the goods be sold. An overhead basket-carrier system handled his bundles. The width of the aisles for customers was AISLC FOR CLCnKS AISLt FOR CUSTOMCRS CHART XIV: These counters are arranged to increase selling efficiency by placing salesmen always within reach of the stock they usually handle. Portions of the counter are hinged so that clerks can get to their posts reduced, but the crowds turned out three times as fast. Goods were better selected and the use of purchasing cards — sometimes called transfer blanks or travel slips — encouraged a customer wishing to make purchases in two or more of the drug sections. Wrapping and money changing was speeded up to correspond with the in- creased selling facilities. Here is one of the time-studies relieved of complex de- tail. The clerk selected for this observation was con- sidered a good saleswoman and had been employed in the department for several years. She was unaware of the presence of the observer. The time selected for the observation was a busy afternoon when the counter was continually crowded with customers. Number of customers served 14 Total time 120 minutes Average time per customer 8.5 minutes Total sales ?5.76 A most significant time-study investigation covered a notion department where fortunately there was a strik- PROMPT SERVICE 69 ing opportunity for comparing the inefficient methods with relatively efficient operations in another store. In a similarly busy period an observation was made at the other store. The results follow : Number of customers served 26 Total time 120 minutes Average time per customer 4.6 minutes Total sales $8.84 Thus in the more efficient store the total sales during the two hours were about fifty-three per cent more than in the rival store, while the number of customers waited upon was greater by more than eighty-five per cent. Working at the same rate, these two clerks would have shown during a day of nine hours, results as follows : First Second Clerk Clerk Number of customers waited on 63 117 Total of sales $25.92 $39.78 For this disparity in selling efficiency, there was a clearly defined reason. It lay, first, in the equipment, and, secondly, in the instruction. The instruction, how- ever, would have been largely unavailing without the equipment as a basis. Yet it must be remembered that even in the more efficient store no actual time-studies had ever been made. The betterments had not come from analytical observations of motion, but from general con- clusions based on more or less accurate knowledge of motion. Time-studies in the more efficient store would reveal still further opportunities for betterment. Progressive Retailers Will Take Advantage of These Improvementii Resulting From Motion Studies The stores of the future will be different from those of today in many radical respects. Some of the im- 70 HANDLING THE TRADE provements which managers might install in planning a new merchandising building are siiraraarized here: (1) A closer relation between selling counters and stock room. "Waste motion remedied by stock rooms on the selling floors and extension of sell- ing space to portions of the higher floors, thus decreasing waste of time in replenishing stock. (2) Mechanical carriers between the stock room and store sections. (3) A heavy decrease in the quantity of stock on shelves and counters and an increase in the quan- tity in the stock rooms. (4) Mechanical carriers between the store sections and shipping departments, eliminating collecting and trucking of merchandise. (5) Re-arrangement of departments and different grouping of counters. (6) Adjustable shelves and partitions so that compart- ments and conditions can be changed at will. (7) Greater utilization of vertical store spaces with upper deck platforms in some departments and speeding up sales by clerk assistants. (8) The bridging of some aisles to facilitate the pass- age of customers during congested periods. (9) The construction of galleries on all selling floors to increase the selling space. The majority of these improvements result from time and motion studies. These studies are just as valuable in the small shops as they are in the large department stores. All sales, whether in village or city, are made along a railroad we might call Sales-Effort. ■ This road starts at Sales-Purpose ; its terminus is Sales-Completion. Time-studies show the quickest and the safest running schedule between the two points. PROMPT SERVICE 71 It is best to make the motion studies during special sales or the holidays, when the salespeople are working at capacity. This has two advantages. Fii-st, faults which hide themselves under daily routine become glar- ing when salespeople and equipment are pushed to the greatest efforts. Second, the results of time studies made of employes working under pressure give maxi- mum efficiency statistics which it would be difficult to estimate from figures secured under normal conditions. These maximum motion study figures must be reduced by a reasonable allowance before they are put into actual use. Otherwise, the salespeople will feel they are being unduly pushed. Throw on the Light KEEP your goods always before the public. Get in the glare of favor- able publicity. Make known the merits of your stock. Success comes by focusing the diver- ging rays of public opinion — centering the customer's choice on what you have to offer. Make your ability, your commodity, your service known. Every cent saved in shortened value, is lost in shortened trade. To keep up the sales — keep up the quality! Aim first to sell satisfaction; and the goods that give it will re-sell themselves. CHAPTER VIII Storekeeping Short Cuts EVERY dollar that a company saves on its cost of maintenance or production, represents interest for one year at six per cent on a capital of $16.66. Figured on this basis, it is obvious that any economy that elimi- nates a needless expenditure has a direct and important bearing upon the value of a business. A saving of even a dollar a day upon some apparently trifling detail may effect the theoretical value of the stock of a corporation over $6,000 — b, sum that is not to be lightly regarded by even a large concern. And the saving of a dollar a day is possible in offices, stores and factories of very moderate proportions indeed. The methods by which these elusive "unnecessary" ex- penses may be located and stopped must, as a rule, be devised by those who are intimately familiar with the detail work where the economies are to be effected, and who are in a position to suggest ways for accomplishing the necessary work by shorter or more effective routes. Re-arrangement of lighting and counter space are short cuts which saved one suburban retailer over six hundred dollars in eleven months. 72 SHORT CUTS FOR THE RETAILER 73 It is seldom possible for an executive head to point out the specific methods by which these detailed expenses may be reduced unless he is thoroughly versed in the routine of the department, however competent he may be to analyze the work of the department as a whole and establisli a standard of expense with which it must operate. A grocer in upper "Wisconsin employs two clerks, and when business is unusually brisk he turns in and helps with the selling end himself. Several months ago, he awoke to the fact that one of the clerks was selling a great deal more merchandise than the other, and more than he himself. At first he had no accurate records for comparison and only sensed that there was a difference in the way that Jim handled customers. "The difference was especially noticeable," he said, ** whenever there was a rush at the counters. I couldn't see that Jim was any quicker on his feet or any more deft at tying up parcels than Rob or I, but the impres- sion grew on me every day that he really did wait on almost twice as many people as either of us. He seemed to have a peculiar knack of being able to sell the goods without wasting time in putting up a sales argument. "I didn't allow any false sense of humility to keep me from investigating further. If my first sensing of the situation was correct, and Jim was actually selling more goods than we were, I wanted to know it and to find out why he was able to accomplish it. * ' I had never kept tab on individual sales prior to this. My only record of the daily sales of the store was a Figure what 'percentage each clerk's salary is to his sales — wasted time cost one retailer five thousand dollars before he discovered his loss. 74 HANDLING THE TRADE total record. I had no way of finding out which clerk had sold the most goods or how much any one of us had sold. I decided to get this information at once to see if it would back up my opinion formed from observation. "So I required each one of the boys to file his dupli- cates separately and record the total each day, and I did the same witli mine. I kept this up for a month in order to get a fair average record and found that, true to my hunch, Jim was selling more goods than Rob and I put together. Of course I didn't pretend to help in the selling except on rush days, but even at this Jim had Rob bested by over fifty per cent. "So I went to Jim. I didn't tell him that his sales were so far in the lead, but merely said that I found that he seemed to be able to take care of customers very rapidly and told him that I would be glad to know just how he did it. I evidently struck upon his pet subject, for he was all loaded for me and was able to tell me plainly and explicitly the secret of his quick sales. ' ' * ' When I put the question to him, he smiled and said : * You fellows do all your s'elling alone. I use an assistant. You have to take the time to convince a customer of the merits of the brand you sell her. Mine are already con- vinced. I make use of national advertising ; you do not. That is all there is to it. I push goods that are already favorably known to the consumer and he takes 'em with- out argument or loss of time. Consequently my cus- tomer is served and satisfied and out of the store, and I am busy with another one, before you have got your prospect convinced that your brand is just as good. ' Regular customers are worth from $15 to $60 each a year to you — find out if any are being driven away from your store by failure as to stock or service SHORT CUTS FOR THE RETAILER 75 "I tried out the clerk's idea and found that he was right. I had some articles in stock that I made a little more money on than on the advertised brands, and so I had always tried to push them with the trade, as I be- lieved they were just as good values for the money. But now I saw where I had made a serious mistake. To make an extra cent or two on a package I had actually been obliged to content myself with making fifty per cent less sales. I don't stock anything but well advertised brands any more, because it took me so much longer to make a sale when I had to convince customers (some- times against their will) of the merits of the goods. Every can, package and bottle on my shelves bears a trade-mark now and none of us waste any more time doing a work that the national advertiser is willing to do for us." Almost always there is a way to cut expense along some line that has escaped attention. For example, a furniture factory near the Ohio River had lost $8,000 to $14,000 a year for seven years. The owners, believing that loss lay partly in power, installed new boilers and then better machinery. Wages were cut and every outgo trimmed. Still the factory ran behind. In despair, the owners hired a successful manager at $10,000 a year, on condition that he make the plant pay. After a month spent in analyzing the situation, he con- cluded that the big expense lay in labor, much of which went to waste. Many piece-workers had been earning only .$1.2.5 a day, or less. The new manager fixed the reasonable minimum at $2.50. He did this to increase Don't let gross sales enter into your stock-turn figures — sim- ply divide your -purchases at cost for the period by the average stock on hand during the period at cost. 76 HANDLING THE TRADE the efficiency of labor at least 100 per cent in order to establish an equilibrium between machine capacity and overhead expense on one side, and labor on the other. To accomplish this he established a bonus system, and dis' charged all workers who did not prove capable of re- sponding to the increased demands. More than one- half of the workers were too old or too antagonistic, and new blood had to be instilled. For a time there was bitterness in the town toward the new manager. But there was no alternative except to close down the plant and throw all the employes out of work, and the men held their peace. Anotlier waste that he corrected was traced to incom- petent cutting, which caused a heavy loss in raw ma- terial. Added to this, and closely allied to the labor loss, was a big waste stock of goods spoiled in machining. A whole building was found to be filled with this ac- cumulated stock. Most of it was charged off and used for fuel. In the paint shop, the manager discovered by tests that some of the men dripped a quart of varnish a day apiece. No comparative records had been kept to reveal this loss. Failure to utilize waste material by turning it into by-products also made a considerable item. The second year after the change in managers, the plant earned $14,000 net; the fifth year showed a profit of $75,000. Minimum results from labor is the tragedy that occurs in too many businesses. This sort of loss is the most in- sidious, for it does not show on the records unless a Remember your expenses and net profits come out of your selling price and not out of the cost price. The selling price is 100%; cost equals 100% less your mark-up. SHORT CUTS FOR THE RETAILER 77 special gauge is devised. The futility of attempting to reduce expenses without a standardized table of costs, based on actual observations and tests, is illustrated by a retail mercantile house that had spasms of economy, but had never determined the proper percentage expense should bear to sales in each department. Thus one class of expense would be double what it should have been, while another was cut below normal, to the point of seriously affecting the efficiency of the entire house. Department Costs are Necessary to Locate Wastes and Properly Place Responsibility For instance, the same cut, ten per cent, was made in the sales department and in the stable. No comparative record was available to show what the bam expense ought to be, per horse, per wagon or per pound-mile of cart- age. There was no way to check up on teamsters who spent hours in the saloon, or on the bam boss who ob- liged his friend, the cab-driver, with a hundred pounds of free oats. Tlie foreman of the packing-room had already insti- tuted many economies, such as the use of paper cartons instead of boxes, and an original checking system, where- by one checker did the work formerly done by two. But his department was ordered to cut off a greater percent- age than the shipping department, where a re-arrange- ment and different routing would have saved much ex- pense had the head possessed the necessary initiative. The sales department got the brunt of the cut, al- though the traveling men had been kept down to reason- Walch Jor ovenreighls and ovcrmeasures — a quarter ounce over- weight cuts profits many dollars a year. Within a year, over- weights in lard cost a retailer seventy dollars. s 78 HANDLING THE TRADE able figures. The buyers were not molested, though they ran up extraordinary expense accounts, especially those who went abroad. There was no established percentage of buying expense. A certain department was showing good profits, so it was assumed by the head office that its high expense was all right. Another department, showing a small profit, was assessed twenty per cent. It was afterward shown that the ratio of the latter was al- ready far too low, while that of the former was excessive, notwitlistanding the profits. This business had been established many years, and might easily have determined the legitimate ratios of costs of the various departments, so that no department need be punished for the faults of another. It is obvi- ously difficult, if not impossible, to limit the expenses of a department \vithout a knowledge of its legitimate ex- penses. Checking Wasted Minutes among Salespeople Often Adds Dollars to Your Pro-jits One of the big items of expense, commonly unrecog- nized, is waste time. By changing the location of a stairway, a wholesale house saved four hours of sales- men's time a day, which in a decade would equal the time of one man for five years. But since the men in this establishment did not work by the hour, this esti- mate is approximate. The actual saving might have been much more. In the rush seasons, even the saving of a few minutes on each customer is important. The re-routing of delivery wagons saved one house Duplicate sales slips enable you to push the stock which moves and check bad buying — the cause of poor stock- ^ turns and dwindling net profits. SHORT CUTS FOR THE RETADLiER 79 the expense of a wagon. The manager of a retail store placed a curtained mirror where it was most accessible to his women clerks, saving customers annoying waits while the girls arranged their hair. A candy manufac- turer took advantage of the market and bought one hun- dred barrels of sugar for cash, but stipulated that de- liveries be made in ten-barrel lots to save re-handling. All of these were little cuts in expenses. A hundred such items loom big in the aggregate. A grocer, aroused by new competition next door, re- arranged his stock so that goods called for most often might be most accessible. Formerly he had kept his canned goods on inconvenient shelves, requiring the fre- quent use of a stepladder. Now he put a supply of this stock sufficient to meet rush requirements on display tables; during slack hours his clerks replenished the tables. This plan, followed wherever possible, often saved several minutes on a customer, and prevented him from walking out and buying at the next store. In a busy establishment, the quick dispatch of customers means money. A big lumber concern found that it had been losing t'lonsanda of dollars a year through waste of odds and ends. "When an order for special sizes of lumber was filled, the sawed off ends were discarded and either burned or carted away by the employes. The superin- tendent discovered this waste and directed that all the odds and ends were to be stored away in special compart- ments with the sizes marked on them. "Within a few months a big assortment of short sizes, some running as Take maximum dixoants on your bills; two per cent on a weekly stock-turn is one hwndred and jour -per cent a year from discounts alone. 80 HANDLING THE TRADE low tos two feet in length, Avcre held in stock. It was a. surprise to the superintendent himself to find how many, small ordera could be filled from these short pieces. A large toy novelty house estimated that its losses through breakage amounted to two thousand dollars a year. Some years this was increased half again or even doubled. The manager determined to make a systematic hunt for the cause. A good many of the articles were crushed in impacking and displaying, and others were broken by the customers who handled them. An investi- gation showed that employes were deliberately careless in many instances, and some were suspected of breaking toys purposely. A new rule was adopted. Every packer who broke a toy or article had to make a record of it in a book, and a small bonus was offered each month for the one who did not have his name entered in the book. Broken toys were no longer given to the employes, but were sent away to a charitable society that could make use of them. An invariable rule was made that no cus- tomer be allowed to handle the mechanical toys, and only clerks were permitted to make demonstrations. Within a year the loss through broken articles was re- duced one-third. The waste of facilities for poor displays, dingy stores, insufficient light and heat, icy sidewalks, dis- loyalty of overworked and underpaid clerks, is all nega- tive expense, but just as positive in results as if so much money had been throAvn away. Some merchants cut out practically all other avoidable expense and leave this, looming by itself. go Ml 9 ; Part III REPLACING GUESSWORK WITH FACTS Darrell Maxims ASK YOURSELF "WTHY" upon every de- tail in your storekeeping — every detail of your stock. SAVING MOTIONS and minutes will en- able you to handle a trebled business in your original store space. BUY WHAT your customers would buy for themselves if they knew the wholesale market. BEING CIVIL to the jobbers' salesmen enables you to stock at average prices. WHEN EMPLOYES can't see the reason for a new move, you must show them. Unless they believe in their proposition, they cannot sell it. KEEP RECORDS to show you what goods are wearing out their welcome on your shelves. YOU CAN make your monthly inventory serve two important uses; from it you can figure actual profits; from it you can deter- mine what stock is moving and what merely tying up capital. CHART YOUR SALES total for each de- partment and you get a vivid picture of how seasonable demands affect sales. ^ q Ill: :iii HOW TO MAKE CURVES CHECK A SALES SLUMP Sales by Months Jan. Feb. - Mar. Apr. May June ,JuIy AugT Sept. Ocu Nov. Dec. CHART XV: These graphs showed Darrell, a New England grocer, that he must expect sales slumps in the summer and make special efforts to attract trade. The small vertical squares represent the sales in dollars and ten of the small horizontal squares one month ■ui: :iiv CHAPTER IX What a Branch Store Taught a Grocer I HAVE been two kinds of store- keeper. For eleven years I was a guesser. My buying was by guess. My selling methods were guesses. I guessed at my cost of doing business — guessed at what my prices should be — guessed at my profits — and guessed where the money I should have made had gone. About each of these things, I knew al- most as much, I believe, as the average grocer of my class. But my information was neither exact nor specific — the only kind of knowledge on which a sound business can be built. Then I woke up. I began to ask my- self why my store was standing still and what I needed to change in order to produce results. I adopted a "why" at- titude towards every detail of my store- keeping and every article in my stock. I had read a lot about "modem meth- Darrell, a retail grocer in New England, here tells how he increased his annual sales from $37,000 to $ 1 27,000 and cut his average mark-up from about thirty- live to twenty- Hve per cent, with nearly a doubled net profit. He went over every detail of his store and analyzed it carefully. 83 M FACTS— NOT GUESS WORK He had blun- dered along for eleven years be- fore it broke upon him that if he knew ac- curately zi'hat was going on in his own store, he could smile at the "cash market" on the next corner. He said to himself, "This stock system is not right merely because I use it; this pur- chase method is not good be- cause I do it; ■ this equipment is not the best because I own it." ods" in retailing, but had failed to ap- ply this reading to my business. Until, in the smoking compartment of a train, I talked for an hour with the buyer- manager of a western department store about merchandising. From him I got five ideas: first, to > "t rid of traditions and personal likings or prejudices in making decisions or purchases; second, to buy nothing you can't sell at a profit, either in money or advertising, and to judge every article bought from the customer's viewpoint of values ; third, to turn your stock as often as possible ; fourth, to give full and exact measure but no more at each sale ; fifth, to know your costs and what makes them, and to cut them to the lowest point without sacrificing quality and service. He did not state these principles for- mally ; I am only telling what I got out of his talk, then and later. Coming back to my store, I tried to apply these ideas. My first effort was to size things up as would an outsider with a fresh point of view. I began with my customers. The store served an ex- clusive neighborhood — one of Boston's better suburbs. My people were intelli- gent and discriminating. They wanted the best meats and groceries in the market. They also wanted prices. To offer them so-called bargains would be to oft'end them ; they demanded A BRANCH STORE EXPERIMENT 85 values, and the increasing cost of living had made them more critical than ever before. Many of them were buying staples, package goods, and other branded specialties at the city department stores and were giving me only the tag ends of their orders. To recover this part of my trade, it was plain that I would have to meet the department store inducements, and besides better serious local com- petition. How to do this was the problem. Like the residents of most high class subur- ban towns, my customers and prospec- tives were receiving everything in the way of service and accommodation which they chose to ask. On request, a clerk called each morning to take their orders. Special deliveries of trifling purchases were common. Charge accounts were the rule — with payments at the conveni- ence of the customer and an occasional loss as the result of this loose credit and collection system. To please their "regulars", salesmen frequently erred on the side of generosity in weighing or measuring goods. Baskets, boxes and containers of all kinds were given away. And so on. My store was no worse in these re- spects than the average grocery in a keenly competitive neighborhood. But all this service ran costs up to a level which made consumers restive and en- Hoiv he began to test, to find and correct his store faults ■without waiting for his custom- ers to do it for him at the ex- p en s e of his profits, is a day- by-day key to the problems of the retail mer- chant. Climb out of the rut. Get new ideas. Don't be preju- dic e d. In an hour this gro- c e r got new ideas wh ic h brought him success after failure. 86 FACTS— NOT GUESS WORK Study your cus- tomers. See if they can get what they n'ant at your store, both in prices and goods. Enterprise will often re- gain trade which big de- partment stores take away from the smaller re- tailer. Give a customer all possible ser- vice, but not at the cost of right selling prices. couragcd department store buying. At the same time, it was a question whether any reduction of service could be effected without an immediate loss of trade. I determined to find out. Expenses had been pared to the point where further savings looked impossible in any other direction. Price, service and volume of sales, then, were the factors in my problem and I began to study their effect on one another. In the first place, what service was absolutely necessajy to hold my cus- tomers, and what features would they dispense with in exchange for lower prices? Could I eliminate these "ex- tras" and stimulate buying by paying consumers to get along without them or perform them for themselves? In buy- ing from city stores, cash markets and peddlers, they showed such a tendency. Could this tendency be developed, through education and cash savings, into a fixed habit? The margin between profit and loss in my main store was too narrow to risk disturbing conditions through radical experiments. I decided, therefore, to open up a small store in a neighboring locality and try out a number of new ideas. This new store was started on the basis of offering the highest class of goods at A BRANCH STORE EXPERIMENT 87 the lowest possible margin of profit. There was to be no delivery and all sales were to be for cash only. This branch was stocked from the main store and stock was checked in detail every week. Expenses were small and easily ascer- tained, while the outlay for fixtures and equipment was kept as low as possible. The features of cash sales and no de- liveries were advertised as giving a great leverage in reducing the prevailing high prices. I made the most of the un- doubted advantages to the customer in- herent to cash buying and backed my arguments with concrete bargains. From the first, the branch store was a success. Certain other economies which I had in mind for the big store were tried out during this same period. One was a careful check on stock. I explained to my clerk how ''good measure" wiped out honest profits. Then I started a sys- tem of charging every item received and made weekly inventories to check the stock on hand against stock received and sold. This process gave no infallible check, of course — more dependable meth- ods were to be worked out later — but it helped to bring home to my two sales- men their responsibility in weighing and mea.suring. A monthly discrepancy was bound to occur, but the los.ses were kept down and the efficiency of the clerks in- creased because of their watchfulness. Loss of trade usually follows service reduc- tion. Study your trade carefully before making changes which will affect serv- ice. Learn how much your pa- trons unll do for lower prices. Learn your cus- tomers' reasons for going to a c am p e t iter's store. See if they can be ad- V an t a geously turned to win trade with you. Find the weak points in your "policy." Elimi- nating excess service will en- able you to re- duce selling costs. 88 FACTS— NOT GUESS WORK Ovcriveights sap profits as jtirely as uudcr- weights do trade. Train your clerks in their respon- sibili t y for weights and measures. To fix prices judiciously you must know the cost of goods and the cost of selling the m. Profit requires a fair mark-up. Think yourself bigger than any problem. The most complex problem taken to pieces and analysed in de- tail is then no longer form i- dable. It would be useless to analyze all the problems I tried to solve in that branch store during the next six months. The two examples just quoted will indicate my general direction. I was grouping towards certain vital facts. I wanted to Imow what lines were paying a profit ; what that profit was ; and what it cost to sell each line. My average mark-up had been about thirty-five per cent. On many branded articles the margin al- lowed me was less and it was important for me to know whether selling expenses on these specialties was greater or less than the discount. For the same rea- son, I needed information about my clerks; how much each man sold; what kind of goods he sold; and how much profit each man made for the store. The basic lesson, of course, was that of selling for cash. Next in importance was the division of stock into lines or de- partments and the computing of selling cost and net profit on each line. Of methods of securing efficiency in clerks, of turning stock rapidly, of buying, store arrangement and the like, my ex- periments had taught me little directly applicable to the main store. But I sensed the importance of each of these matters; I had learned that the most complex problem could be solved if you simply took it to pieces and settled the details one by one. CHAPTER X Bringing a Store System up to Date WITHIN a few months, I was ready to put the main store on a cash basis. Rather, I was so convinced of the advantages of selling for cash that I could not wait to try out any more detail methods at the branch. Be- sddes, the big store needed a tonic to help it through the dull period then pre- vailing and selling for cash was the most surprising change in policy it was pos- sible to adopt. I aLso decided to take all order clerks off their routes and to depend solely on the telephone and ad- vertising cards for our business. At the last minute, however, my courage failed me as regards strictly cash sales. I decided that it was better not to burn all my bridges behind me and decided to keep a select list of customers (about one hundred and twenty-five) on a credit basis, with the distinct understand- Success in in- creasing the sales of any re- tail business de- pends on keep- i n g customers in touch with the store. Use all the modern me t h- ods at your command. The telephone is an excellent sales- man. 90 FACTS— NOT GUESS WORK Have a definite plan in viexif re- gar din g a c- counts and en- force it. Custom and precedent keep many in the old rut. ing in each case, however, that the amount should be paid on or before the fifth of each month. Should any ac- count be not paid at that time, the credit was to be discontinued without further notice. When I announced this new plan, two weeks before it went into effect, there were many who prophesied disaster. Women would not be bothered paying cash for every purchase, my friends warned me. They were accustomed to write checks in settlement of their monthly bills and the keeping of ready money in the house constantly to meet grocery bills would strike them as ab- surd. And so on, at length. But I was satisfied that the high cost of living was working on my side and that the prices I offered would bring even women around to the cash-economy view. All my advertising insisted on the savings cash sales made for the con- sumer. Here, for example, is one of the little economy talks I put out at the head of an early advertising card: Tell customers in your adver- tising the rea- sons back of your prices and store policies. YOU, THE CONSUMER, ARE THE ONE WHO PAYS The cost of doing business is borne by you. Mistakes in trading are charged up to the cost of doing biisiness. Who pays it? YOU! The merchant who uses old- fashioned methods, who keeps an unneces- sary number of expensive delivery teams BRINGING A STORE UP TO DATE 91 loafing at the back door half the time, who is continually standing petty losses from his credit accounts, whose slip-shod system allows some goods to go out without being charged, while other goods spoil or get shop worn in the stock room — that mer- chant means to give you service. But is it service? ISN'T IT JUST UN- NECESSARY EXPENSE WHICH HE PUTS ON YOUR BILL? Our modern methods — no, our common sense methods — eliminate this useless expense. It puts NEW FRESH MERCHANDISE in your house at the lowest possible cost, and you save the difference. Telephone 700 Newton West and let us prove to you that our groceries are abso- lutely standard qualities, our meats, butter, eggs, and so on, the best the market pro- duces, and our cash prices so much lower that you can figure many dollars in savings each week and month you buy from us. That selling talk I backed up with price quotations which every intelligent woman knew were lower than she had been paying. As explained before, it was a season of lower wholesale prices on meats, fish and provisions, and my daily "leaders" gave consumers the full benefit of the market. From the first day, the cash payment plan was successful. Sales increased tre- mendously. Likewise our troubles. In five weeks the system which sufficed at the branch store was completely de- moralized. Six more clerks were en- Put it up to the consumer. Show buyers truthful and sensible reasons for something new and they are quick to help out. This retailer's experience em- phasizes the ne- cessity of exact knowledge i n dete rminin g cash prices. 92 FACTS— NOT GUESS WORK Correct retail prices depend on actual costs to the c on- sumer. To fix them, figures on each line are needed. The system of dete r minin g business facts is best laid out by a specialist in retail ac- counting. gaged and we had no great difficulty in handling orders and delivering pur- chases. But the methods of checking sales' and cash against stock, on which I was depending for lowered costs even more than on cash selling, broke down completely. A cashier handled all the money; there was no dishonesty or willful error ; but I couldn't get trustworthy informa- tion on what we were doing each day. And my cash prices, my whole scheme of business, were built on the command of facts and the checking of mistakes. My margin of profit was in danger. And every day I kept on guessing and sales continued to mount, the danger of final failure increased. Quick action was imperative. I couldn't wait to figure out my own sys- tem for handling, checking and record- ing sales, and for keeping track of stock, C. O. D. deliveries and the individual efficiency on my clerks. Delay might wreck the business. It was up to me to buy a store system ready-made. So I called in a specialist in retail accounting, told him what I needed to know and gave him a free hand. He was compe- tent, and in less than a month I was getting daily reports which kept me in touch with the important details of my business. Here was safety, all right. But I had BRINGING A STORE UP TO DATE 93 begun to see the possibilities of a busi- ness built and managed on a basis of exact knowledge. I wanted more in- formation. Instead of two or three broad divisions of sales in the meat mar- ket, for example, I determined to find out what profit was being made on each of the chief items — beef, lamb, poultry, smoked and dried meats, fish, butter, eggs, and milk and cream. My idea was to know what profit each of these paid every week; and whether any one of them made a loss. I conceived it pos- sible to divert selling effect from these unprofitable lines to others, which, for the time, were money makers. Next, I departmentized the store, and because I was aware that the human equation was standing between me and certain profits which were going astray, I soon came to see automatic scales, cash registers and an adding machine as money-saving investments. Four late- type scales were installed, therefore, to regulate overweights and prevent mis- takes in charging. Two cash registers gave us an iron-clad check on all trans- actions with customers. The adding machine was a price I paid cheerfully for the division of my daily sales by departments an hour after the last customer had been served. It also gave me a check on the totals shown by each cash register. Human mis- takes and weak- n e s s e s were eliminated by adopting the modern b usi- ness tools. Know wka t each line is ad- ding to your profits. Then try to divert the selling to the more Prof- itable Hne^. Not to remove t e m p t a t io ns from employes is to be as guilty as they. 94 FACTSr— NOT GUESS WORK A daily detailed report giz'es a check on sys- tems and plans enabling their continuation or cessation with the knowledge that you are right. Correct s o lu- tions for -new problems form the spotlight of business. They show up your ability and judgment. This daily detailed report, in fact, was the pulse of the business, and was care- fully studied. Any unusual increase or falling off in a department was shown up the day it happened. Usually the change could be traced to some specific cause. If favorable, this meant the con- finnation of some buying, selling or ad- vertising policy or device, the discovery of a new slant in public taste or a new means of interesting buyers. When a decrease occurred, the information was quite as valuable, since it showed up some inefficiency and marked stotk which should be moved at once. Cash sales were the foundation of my new plan and my new prosperity. But cash sales had their drawbacks. It was inconvenient for women whose house- holds were organized on a basis of monthly bills, to keep cash for daily grocery bills. I had waived our cash rule for more than a hundred of our regular customers. To keep from adding to this credit list, some plan had to be devised for removing that daily worry about money for the grocer. For those who found cash purchases difficult, therefore, I adopted a credit de- posit plan. At intervals they would send me a check and draw against this deposit with each order. Before it was exhausted we notified them and they renewed it. CHAPTER XI Fitting Sales Methods to the Customer To modify my program of cash sales and hold two classes of customers, the first group was made up of the cream of my charge accounts. The sec- ond group was allowed to make a de- posit, once a month or oftener, and order groceries against this deposit. This made the store a sort of grocery bank; each order was in effect a check which was honored in foodstuffs. When a business man learns, by con- crete experience, that one or two of his main policies have been out of step with facts, he is apt to question every detail, plan and method he has been using. That at least was the way with me. I had disregarded eleven years' experi- ence and much disinterested advice when I pitched credit selling overboard. Yet my customers were paying cash for pur- chases and, instead of losing volume, Customers can be divided into several classes. Are you sure your policies are paying? Question every detail until you have exact knowledge. Finding and c r r e c tin g zvaste and lost motion may re- veal many mis- takes you did not know ex- isted. 95 96 FACTS— NOT GUESS WORK Delivery prob- lems here were largely a matter f following precedence. Motor trucks seemed to offer a solution, and were adopted. The extent to which custom- ers would deny themselves now became the question in re- ducing delivery costs. sales were increasing day by day. To the introduction of automatic scales and cash registers, ray clerks had been hostile and my trade indifferent. Both, however, had swiing round to apprecia- tion of the savings made and the insur- ance against mistakes. My new adver- tising plan had proved both cheap and efficient. Every change had been for the better ; it was natural, perhaps, that in some of my subsequent experiments, I should move too fast. Service was the store bug-bear. Net profits had not kept pace with volume : chiefly because cut prices (the key of the whole program) had eaten up the savings made, and expenses had main- tained a certain proportion to sales. To take care of the new business, six clerks had been added and our delivery wagons were hard pushed to handle orders on time. I was certain that there was a tremendous amount of lost motion and waste effort in this end of the business, and I decided to find and correct the causes. After many months I was still finding and correcting them. What fol- lows here is a summary of the changes in methods, arrangement and equipment (some of them were not final), rather than a narrative of how the betterments were made. My first big operating change, for in- stance, might have been avoided and an REACHING YOUR TRADE 97 investment of nearly $3,500 cut out, had I known six months earlier, real facts about deliveries and the education of customers. The delivery department was the first investigated simply because it was so costly and yet hardly able to meet service demands. Nine-tenths of the work had to be done in about five hours, and my five wagons and nine horses were all hard driven. When Mrs. Scott Blank, four- teen blocks from the store, forgot her luncheon order until eleven-thirty, noth- ing but an emergency delivery would satisfy her and temper the family's hunger. These rush trips were numer- ous and speed was the first requisite. So essential in fact that I began to study motor trucks, and after several demon- strations decided to replace my wagons with gasoline delivery cars. I bought two high-grade, used touring cars, fitted them with 1,000 pound bodies, and, after training two drivers, gave up wagon deliveries altogether. Each motor would do the work of three wagons and in emergencies quite out- class horses. Later I added another and a slower truck of 1,500 pounds capacity for hauling butter, eggs and produce from our Boston markets and picking up "wanted" orders at the wholesale houses. This car was also available during the rush hours. This retailer would have saved $3,500 on one investment, if he had only secured sales facts earlier. What you thought was right yesterday, may be eating up your profits today. 98 FACTS— NOT GUESS WORK Motor trucks cut deliz'ery costs and adver- tised the store, yet were dis- pensed with la- ter on account of expense. Innovations can only gradually he introduced, and diplomacy must be used. Our motors saved money from the first. They displaced four drivers, who made from $13 to $15 a week, and their maintenance cost never equalled that of the nine horses and five w^agons I had been using. They had distinct advertis- ing value and helped, I think, to estab- lish the standing of the store with many of the new customers we gained during the autumn and winter. Yet they, too, were discarded in their turn, and gave way to the wagons which had formerly been used. Wty? Simply because I took another step forward in the standardizing of de- liveries. After noting the daily mileage of our motors for a couple of months, it struck me that the distances traveled were absurdly high for the small area covered. Five-sixths of our customers lived within a mile of the store, yet the records showed that the cars frequently made fifty to fifty-five miles each day. How much of this was service that could be dispensed Avith ? At the branch store, I had added a delivery on three half days per week for orders of $2.00 or over. Customers w^ere getting along with this restricted service without any apparent difficulty. Could we adapt this idea of scheduled deliveries to the more exacting patrons of the main store ? I determined to try. And as "usual, I employed our weekly advertising card to EEACHING YOUR TRADE 99 "sell" the new plan to customers. Few of these cards had gone out during the year without a little "selling talk" of some sort at the head of one page and people had grown accustomed to reading and sometimes acting on them. Four routes were described and a time sched- ule for each given. A week before the change, with the regular weekly sales card, each customer and prospect received a "Route Sched- ule" card to hang up near her tele- phone. It bore our telephone number, of course, but the important feature was the list of our closing hours for each route. The personal application was brought home by writing her name in the blank space opposite her route, which was further distinguished by a heavy cross. To induce customers to co-operate in cutting down service is not an easy task. We had many "regulars" whom we couldn 't afford to offend : these we had to "break in" gradually to the new order of things and we continued to make special deliveries whenever such were necessary. The emergency speed of the motor cars took care of this phase of delivery, but I was after the savings of a standardized service and we kept up the work of educating customers to the habit of ordering on time. From many of our patrons we had Customers'^ names on each route card — a strong personal appeal — aided in getting the plan thoroughly understood. Once fixed, the change was readily adopted. Aiding those habitually late to order on time eliminated hard feelings and insured the orders. 100 FACTS— NOT GUESS WORK Still enabled to deal with her favorite clerk by telephone, the women ac- cepted the new idea and really got better serv- ice. By holding nothing too cer- tain to admit of doubt, this retailer found motor delivery too expensive. been taking telephone orders for some time, calling them at a fixed hour and so saving them telephone tolls. It was a natural step now to add to this calling list the women who could not be de- pended upon to get their lists in promptly. To expedite the taking of orders, I put in the simplest form of private telephone exchange, one that the cashier could operate without interference with her regular duties, and" persuaded my three former ''route" men to sell "personal service" over the 'phorc to their clients. The advantages were real: the customer would continue to deal with her favorite clerk; she could trust him as much one way as the other, while by taking and filling her order early in the morning before fruits, vegetables, and so on were "picked over" by cross-counter buyers, he could give her much better values than were available later. These argu- ments carried weight. We lost only a few patrons by the change while the re- duction in expense was radical. By the time my scheduled delivery plan was working satisfactorily, I had made another discovery. It was that there was too little work to keep my motor cars busy. The cost of up-keep and maintenance had been reduced, but I had progressed to the stage where no method was too sacred to be investigated. REACHING YOUR TRADE 101 One of our new motor drivers was in- efficient. While his car went into the shop for repairs, I tried making deliver- ies on his routes by wagon. Under the fixed schedules, I found that a horse and wagon could do all that was demanded. My cost sheet showed that each motor was much more expensive to maintain than a horse and wagon. Before changing back, however, I made a full month's test, running a motor on one pair of routes, a wagon on the other. I also tried to make all de- liveries with one motor. But because of the relatively short hauls and the hun- dreds of stops the horses did the work more cheaply. The figures were conclu- sive: though it involved what some ad- visers looked on as a backward step, I re- turned to wagon deliveries. The consol- ing fact to me was that, through my ex- perimenting, I had discovered a way to make my deliveries with two wagons and three horses where before five wagons and nine horses had been necessary. Once a man lays hold of the fact that yesterday's right way may be losing some of to-day's profits, he is likely to carry his weighing and testing into every department of his business. Each bet- terment also provides a sort of foot- rule to measure up the deficient methods with which it is surrounded. Our auto- matic scales, for instance, our cash regis- Fifty miles a day and five- sixths of the customers with- in a mile of the store. T ha t's ■why motors were taken off. Three horses and two wagons supplanted the motors, where- as nine horses and five wag- ons were used at first. This shows the re- sult of actual investigation. 102 FACTS— NOT GUESS WORK The solution of one {Problem iin- coz'crcd anoth- er. One defect often covers several, zvhile only the visible one is known. Carrying stocks in the most con- venient place for filling de- liveries allowed attractive dis- plays. ters and adding machines, by their swift, error-proof operations made the awk- ward, round-about routine of fillinij and handling orders in the store stand out ' ' like a sore thumb, ' ' Our sales had doubled at the end of the ninth month, but with six extra clerks we were hindering one another at every turn. Either we had to secure more room or make better use of what we had. But the two storerooms could not be enlarged without costly structural changes. Therefore, the second expedi- ent was our choice. Re-arrangement of departments and careful selection of display stocks was the first step taken. Practically the gro- cery store w^as turned into a big sample room; we sold the samples and replen- ished the stock on shelves and in cases after the day's selling was done. This allowed us to display stock attractively, wdthout crowding, and insured a con- stant display of fresh goods. I do not mean that we showed only two or three bottles of this, half a dozen cans of that, but simply that we struck a bal- ance between space, stock accessibility and effective display and restored this balance daily. Our stock of staples, for example, was carried almost entirely in the shipping room. We displayed a sample lot of stock of everything we sold where the REACHING YOUR TRADE 103 customer could see and handle it. When we ran anything as a "leader" for the day, we usually piled up an impressive quantity in the place reserved for display of leaders. But when a woman ordered five ipounds of sugar or a quarter's worth of beans, either in the store or by telephone, the stuff was weighed out on the spot only when she wanted to take it away with her. When the order was to be delivered, the clerk simply put down all the items, with the prices and totals and gave her a cash register cheek show- ing the amount and character of the sale. ' If it was a cash transaction, she paid at the desk as she went out. In filling the order, this plan in- creased the efSciency of the most valu- able space and time by unloading work on space and time worth less than one- third as much. The clerk, for instance, in mailing up an order ran through it to see how many items could be filled from the ready-wrapped packages in stock in the shipping room. Orders for staples, in the mam, ran to standard quantities — five or ten pounds of sugar, a quarter's worth of rice, one or two pounds of coffee or a quarter- pound of tea. Weighing and wrapping these quantities during the early morn- ing or the afternoon before, they can be piled up on shelves in the shipping room for instant use during the rush Having various quantifies o f package goods wrapped and ready for use saves time and finds work for idle hands in slack hours. Steps saved on orders cut the expense and swelled the profits. You ozv c as much to your clerks as to your customers. Without judi- cious arrange- ment of goods and modern equipment, they can't he efficient. 104 FACTS— NOT GUESS WORK Ten per cent chopped off prices for the benefit of cus- tomers. Yet the store made greater profits and gained a stability u n- known before. The right mer- chandise, at the right time and in the right quantity, is a good rule for the retailer. hours when every minute is needed for serving: customers. Knowing what is in this package stock, the clerk who fills an order simply selects or measures the ar- ticles not on the shipping room shelves, assembles them, checks these items on the order, puts the carbon duplicate with the goods and sends the first copy to the shipping room to be completed from the package stock kept there for just this purpose. Twenty steps, on the average, were saved on each order. Allowing for the time previously lost by clerks waiting their turn at scales, sugar barrels, and so on, at least two minutes were saved on every sale. The steps and the min- utes saved made for space efficiency and allowed us to handle, without any great difficulty, a doubled, and a trebled busi- ness in the original store space. The largest saving on the cost sheet, however, came through the in- creased efficiency of clerks. Before re-organization, the store was selling about $37,000 annually with nine em- ployees. At the height of our conges- tion in all departments, with sales about double, the pay roll carried tw^enty-four. For the greater part of last year, when total sales amounted to $127,000 the work was done by eleven men in the store and on delivery wagons and two girls. CHAPTER XII Buying to Suit the Trade WHEN a retail grocer "turns" his stock twenty times a year, it means simply that he has been buying what his customers want, in the quantities they need, and at prices they are willing to pay. To strike this balance between stock and the consuming needs of his trade, he must know three things: (1) Wliat will appeal to the appetite and satisfy the quality and value stand- ards of his customers. (2) What offerings in the current wholesale markets — meats, staple grocer- ies, produce, fruits, fish, delicacies — will match up with these consumer require- ments. (3) iWhat quantities of seasoned foodstuffs his trade can and will make immediate use of at attractive prices. In some degree every grocer gathers and makes use of this kind of informa- 'Buy judiciously, study your pa- trons and antic- ipate their de- sires. Many "turns" a year depend entirely upon this. It is no more than good busi- ness to repre- sent your cus- tomers in the wholesale stores and to buy in market as they prob- ably would in- dividually. 105 106 FACTS—NOT GUESS WORK Did you ever have stock on hand zvhich you couldn't get rid off Here's a retailer's prac- t i c a I sugges- tions for sell- ing slow stock. Unless you look ahead of your competitors,you will always be a laggard. Be the purchas- ing agent for your c mm u- nity. Catching the "snaps" of the wholesale houses is easy. Don't guess on the market, or you'll lose. tiou in his purchasing. He need not be a wizard to install a stockkeeping sys- tem that brings to his attention any item which is wearing out its welcome on his shelves, will warn him against re- ordering it and will suggest a cut price or some other means of selling it. With a little patience and industry, he can keep weekly records of sales in the prin- cipal lines he handles, and so have trust- worthy figures on which to base his quantity estimates for the next week and for corresponding weeks in succeeding years. If he is civil to the jobber's salesmen who call on him and fairly sound in judgment, he can stock his goods at the average market prices, and thus be prepared to do business on the average margin and take an average profit. All this, however, is only the defensive side of buying. If he is going to sell every week half as much as his store eon- tains (and it is bound to contain a great bulk of staple foodstuffs which he must buy in large quantities in order to secure a price) he must do more than trail his customers likes and dislikes. He must anticipate both and frame his orders accordingly. When he buys, he must size up the market from the customer's viewpoint. For the time, if he is going to make the most of his business, he must forget that WATCHING YOUR MARKET 107 he is a grocer and become a sort of pur- chasing agent for his community. Hardly a day passes that the grocer in touch with a big wholesale market is not offered a real buying opportunity, if he has the wit and knowledge to recognize it. It may be a "snap" — a carload of standard canned goods, or potatoes, ap- ples, flour, on which some jobber is willing to sacrifice his profit. Or it may be a distinct lowering of prices in certain classes of foods as compared with other staple lines. Decision is easy in the case of the "snap." But when it comes to sizing up a sagging market on a staple and deciding how many extra bushels or hundred-weight your customers will ab- sorb at the lower price, the man who merely guesses will go wrong often enough to cancel the profit netted when his guesses prove up right. In other words, the business men — grocer, dry goods man, hardware dealer or druggist — must be able to create his "oMTi" snaps, instead of depending on the emergencies of the wholesale or com- mission house to provide them for him. Flour, for example, is not the sort of staple that suburban housewives buy often in the wood. They order bakery goods, bread, cakes, rolls and the like, and their purchases of flour, in the main, are of small quantities and of special Create your own "snaps" if none are of- fered by the market. But it is unsafe to guess. You should study the wholesale market for sags. Here's how a retailer placed thirty -five ex- tra barrels of flour among his trade during a dull period. Try it out. The plan entails the use of clerks dur- ing a slack pe- riod. 108 FACTS— NOT GUESS WORK A quick "turn," a substantial profit and a low price that ad- V e r t is e s the store are the entire profits of the deal. Knowing his customer's consuming ca- pacity for three, six or twelve months, by the sales record, made this" turn'' possible on busi- ness principles. kinds — cake flour for instance. Yet in twenty-four hours last spring, I placed no less than thirty-five barrels of flour in the district covered by my main and branch stores. It was a standard Min- nesota brand, the kind and quality I sell and advertise to my regular trade. It was very cheap, however, by comparison with what my customers had been pay- ing for their flour in twenty-five and fifty-pound sacks. We were having a dull week, the after- math of a holiday rush, and I could re- lease three or four of my clerks for so- liciting without sacrificing store service. My men couldn't see why any of our regular customers would want so large a quantity as a barrel of flour. It was my task, therefore, to tell them the price advantages of such a large purchase before they started out. I did it by com- paring the package price with that they would be able to offer our customers for flour in the wood. From my records, I showed them that any number of families in town were buying the equiv- alent of a barrel of flour every three or four or six months. I explained to them the low ebb in the store's sales and put it up to them to bring in the orders. I had bought only twenty barrels of flour. In a little less than one full work- ing day, between four o'clock one after- noon and three the next, they disposed WATCHING YOUR IMARKET 109 of thirty-five barrels. The business was, you might say, "pure velvet." The flour never entered our stock room, but was delivered direct from the ear in which it came out. The combination of a low wholesale price, minimum hand- ling charges and no overhead whatever, allowed me to quote an attractive low price and yet make a very substantial profit on the ' ' turn, ' ' This special sale illustrates what I mean by buying on the strejigth of ac- curate knowledge of my territory's con- suming capacity. I could figure out the total of my flour sales in quantities for three, six or twelve months of the pre- ceding year. I knew the temper of the housewives I aimed at, their fixed de- termination to reduce the cost of living and their natural eagerness to secure a bargain in a staple like flour. Simple mathematics did the rest. I played safe by buying only twenty barrels. The price that I could quote was so attractive that nearly twice as many women saw my of- fer in the same light as I saw it myself. Keeping in daily touch with the whole- sale markets helps me to keep my retail prices right as well as to buy when wholesale prices are low. On beef, for instance, there was an exceptionally high range of prices for 'a year. In the old days it was my method — and I expect it is the method of a good many The stock com- bination m u - tually attractive to dealer and customer is a low wholesale price, minimum handling charges and no overhead what- ever. Do you fix your price on stock entirely from cost? Then you're losing money. This re- tailer found it consistent t o follow the zvholesalc mar- ket. 11» FACTS— NOT GUESS WORK Accept ab I e qualities and the best values vAn trade. Buying governs them. By purchasing as if especially for individuals of his trade, this merchant won patronage. Unless you are able to follow them closely, downward shifts in whole- sale price lev- els may catch you unawares and force you to move stock at a loss. grocers and market men — to raise retail prices wheu the cheaper stock in the ice box began to be exhausted and the higher-priced quarters were brought out on the cutting blocks. Those intervals might be a week or even longer. The consumer, of course, profited by the delay but usually took no notice of his sav- ings. When, however, beef sought a lower price level, my customers were never willing to let me clear my high- priced meat out of the "cooler" before they demanded a reduction. Like many other dealers, I was trailing the market and losing on every price advance be- cause I didn't raise and lower prices with the wholesale market. By keeping in touch with the market, however, any rise or reduction in price comes to my attention at once, and ex- cept where I have advertised a "special" for which the stock is bought, the prop- er advance or reduction is made. I can also compare the value level of all the competing foods on the market, and so shape my buying and selling program for the next day in order to take ad- vantage of every change in the whole- sale prices and buy with the purpose of supplying just those meats or eggs or fish which my customers, if they knew the wholesale market, would buy them- selves. This, of course, is merely good business ; the retailer who offers accept- WATCHING YOUR MARKET 111 able qualities and the best values is bound to get the bulk of the business. ,The daily report on which I rely for the sales of my business was the result of a visit to a hospital. "While I was waiting in an ante-room, I noticed one of the doctors studying every detail of a chart handed to liim by a nurse. A few questions brought out the fact that its use enabled him to prescribe intelli- gently, since he had a picture of the ac- tual conditions and tendencies before him on the chart. Thereafter, that chart bothered me for several days. Why not adopt the idea my- self, treating my business as a patient and prescribing from day to day on a basis of real information and detail fig- ures ? The outcome was the daily report sheet, which certainly gives me the vital statistics and symptoms of each depart- ment. Comparison with previous years enables me to make a pretty close esti- mate of what my purchases should be in each department, of the price I can pay, and the quantities my customers are likely to absorb at prices based on these delivered costs. Soon after I started the branch store I began to take a weekly inventory in order to check the stock on hand against that received and sold. For the branch this was not difficult, but when I at- tempted to apply the same method to A doctor, a hos- pital and a chart gave this retail- er a valuable idea. Treat your pa- tient, ivhich is business, a c - cording to the chart of your sales, zv h i c h should give complete" symp- toms" and sta- tistics. I nv e nt o ries check careless measuring b y clerks. A suit- ab I e interval betzveen inven- tories is usual- h a month. 112 FACTS— NOT GUESS WORK "A monthly in- ventory gave an exact check on stock. The dis- crepancies were small because every clerk had been trained in giving full, but not extra, meas- ure. Special sales cut profits, but if investigated give valuable in- formatioti about slow moving stock. They check against blunders in the future. the main store I soon found that the re- sult did not repay the extra effort. By convincing my clerks that I was in earnest in my demand for accurate meas- ure and no more, however, this weekly check on stock had been so successful that I disliked to give it up. The re- sult was a compromise ; a monthly in- ventory was begun. Compared with the old method of tak- ing inventory at the end of the year, this seemed like a big doubling up of work. But I had set out to know what my business was doing, and to know it accurately and intimately. So while the expense of taking the inventory was an addition to my running costs, yet I felt that the information was worth the extra effort and outlay. Experience soon showed that the variations on the month's business were very little greater than the average of the discrepancies in stock bought and sold at the branch store, as shown by the weekly inventory there. By this time, too — it was now nearly three years since I stopped guess- ing — my clerks had become trained to the tale of full weight but no extra meas- ure. Accuracy has become almost sec- ond nature. The inventory is simply in- surance against lapsing back into the old habits with their attendant losses and leaks. When I find from the inventory that WATCHING YOUR MARKET 113 an article is not moving as it should, it is an easy matter to run a ' ' special sale ' ' on it and to profit by the knowledge that it is a "sticker," after the stock has been reduced to the proper figure. Thus the inventory acts both as a safety sig- nal against over-stocking, and an ac- curate guide in buying. It measures qualities, quantities and the salability of every item in stock. In all cases the records show what lines to push, and what is more vital, what lines to drop or carry in minimum quantities. "Whether an order is received over the 'phone or given in person by the cus- tomer, it is filled out on the same blank. This is similar to the duplicate sale slips in use in most groceries, except for the fact that it has a space at the top for the number of the person taking the order, and at the bottom for the number of the driver delivering it. This is simply another check to secure personal responsibility. In the filling of the orders, too, the same principle is followed. If clerk No. 4 fills out part of an order, he places his number in the first column opposite these items. Besides making possible a direct check-back in case of error, this permits more than one clerk to work on rush orders, yet prevents both working on the same items. When delivery is made across counter to a customer, a A duplicate sales slip which also gives a check on the receiving clerk and the clerks who fill the or- der was used by this retailer with success. Cash selling and economical, ef- ficient store ser- vice brought success to Dar- rell after he "found out." He got out of the rut by studying the details of his business. 114 FACTS— NOT GUESS WORK Not being afraid to know your failures, that you may remedy them, is good retailing. Constantivatch- ing prevents re- turning to old ruts, the most dangerous thing to the security of successful business. check mark indicates the number of the clerk who handled the sale. It took practically three years to cast aside my old " rule-of- thumb " methods and begin doing business on a basis of accurate knowledge. My general policy and many of my experiences and experiments have been outlined here at greater length, perhaps, than they de- serve. The big lessons of these experi- ences have been the importance of sell- ing for cash and the advantage of pro- viding as economical yet intelligent a store service as the demands of my cus- tomers would allow. Both have meant the development of better and more sys- tematic business methods. The process of evolution from the old to the new still continues. I never let myself be absolutely satisfied with any method until I have assured myself that it is sound by careful tests. There is too much danger of falling back into the old rut of guessing, for me not to beware of the easy way. But the fact that time has proved the wisdom of my original changes, adds a feeling of confidence in my efforts at analysis and the decisions based upon them. Having met similar problems in the past, I can go at the new ones with more assurance and with a better idea of how to get the informa- tion I need and how to analyze the facts when I do secure them. Part IV MANAGING STOCKS AND EMPLOYES Advertise to Your Men T ESS than three per cent of all retail sales- *-^ men are skilled at this trade. The other ninety-seven per cent are working along in the dark — faithfully perhaps, but ignorantly, thoughtlessly, blindly. They may see their wage and your clock; but their work, their chance, your need, are beyond their view. Only when you supervise your salespeople as you are supervising your stocks — with tact, with resource, with judgment — will you have an eflScient selling force, working open-eyed towards the success of your business. Efficiency can be made; skill can be instilled; loyalty and interest can be aroused. You can train and fit your men to their places — but you must share with them your enthusiasm, your knowledge, your loyalty. Responsibility sobers men. Opportunity stirs ambition. Demand for men shapes supply. Get your men to thinking. Advertise your business to them. Tell them your needs and their chances. Make them look ahead. Build your men and they will build your business. 1^ a ■ II ;ii TESTING FOR ERRORS IN STORE MANAGEMENT Vital Points of Good Storekeeping In Rjgfat Quantities At Right Prices CHART XVI: Your success as a retailer depends on carefully analyzing these factors that determine good retail management. Analysis is foresight, and foresight gets ahead of difficulties. Check up your business against this analysis of right merchandising policies :iii CHAPTER XIII Storekeeping Blunders to Avoid TAKE a $200 mark-dawn on that gold bag; reduce this bracelet $20." In the half darkness which follows the closing hour on short winter days, the head of one of the largest specialty stores in this country walked by the counters of his jewelry department and directed new price levels that fell below cost. A knot of assistant merchandise managers and buyers, following him by a few steps, noted with consternation the very radical reductions ordered by the head of the house. "This jewelry department is thousands of dollars over-bought," the merchant continued at the last counter. "It is a small retail store which has been mis- managed. The crudest of store-keeping blunders have been made. Only the fact that it happens to be under our roof keeps it solvent. Around the comer Jeweler Smith would miserably fail with it. "On looking at things closely, I find that the initial mark-up is small for jewelry. Since the stock-turn is low with jewelry, we must cover some of the interest on the capital tied up here through an initial mark-up which is more liberal than usual. Some novelty lines we can mark up one hundred per cent or more. The 117 118 STORE MANAGEMENT general nm should not fall below fifty per cent. "The sales force is taking nearly twenty per cent of the sales, which is far too high. We must locate the best salespeople and speed them up until their wages are under seven per cent of their individual sales. Then the slower sellers should be weeded out until the direct department monthly pay roll for salespeople is seven or eight per cent of the jewelry sales for an average month. ' * The turnover will not be over one or two — far below what we must have. Jewelry turns slowly, and a good deal of staple stock must be carried the year round. But here in the store we should carry only enough staple stock to give 'tone,' and must feature instead popular priced, quick turning, specials. In this way, we can drive the turnover up to five or six times a year. * ' I shall also stop all orders — no more stock is to come into the department until it is in a normal condition. Above all, in the future estimates of jewelry sales are to be carefully analyzed. By this analysis you will find that a fairly constant percentage of the year's jewelry sales fall in each month. For instance, June with its weddings will carry a high percentage of the annual sales. So will December, the gift month. Once you have these averages, fix on a conservative volume for a year ahead and take out the percentages of the months that face you. Subtract these estimated sales from your stock on hand. Then buy according to the result. * * Now I 've read you fellows quite a lecture, ' ' laughed the merchant. "What I have said are merely the ele- ments of good retailing. This store is just a collection of small stores under one roof and you must take into ac- count all the points which the small-town jeweler would have to manage for himself. ' ' This retailer has four thousand people on his pay roll. BLUNDERS TO AVOID 119 He has gathered over a hundred little stores into his big corporation. Still he says his problems and blunders are those of the smaller retailer. Furthermore, he adds that his experience in selling not far from a million — "■ ■~" - H_ Incompetent Help | -r Uncharged Sales ( H Errors in Addition | -r Wasted Time | . r\ •""" " -r Extravagant Use o| Supplies | | < Lost Containers | Lf Uninterested Sales People | — H Bad Accounts { Customers H Dissatisfied Customers | - r^. Careless Packing and Breakage | -L Unsystematic Delivery | RetaU Storekeeping Blunders - < Wrong Deliveries | Service < Poor Store Arrangement | -c Overmeasure | Lf Wrong Buying | H Unsystematic Bookkeeping | -c Wrongly Figured Profits | ^ Office -r Failure to Take Discounts | Lf Disregard of Losses from Mark Downs — H Failure to Charge all Expenses -r Extravagant Lighting | Overhead -f Disregard of Depreciation on Merchandise H" Disregard of Depreciation on Equipment | CHART XVTT: The storekeeping blunders shown here can be Riven a definite value. if you will analyze your practice under these headings. A properly classified expense sheet will warn you of many of these errors dollars of his stock a month shows that these blunders can be avoided, and tells you how. The buyer for this jewelry department, it later de- 120 STORE MANAGEMENT vcloped, was in a situation exactly like that of the country merchant who finally woke up and found that he had been too busy to make money — three-fourths of his work could be done by a five-doUar-a-week boy. The buyer had spent his days working out price ciphers and persuading manufacturers to create branded lines for his department. Instead, he should have estimated with care his probable sales, made sure that his expenses were reasonable and planned for a profit-making stock-turn. Both the city buyer and the country retailer had been lashed to detail and had never really disentangled them- selves enough to lead their business. Quick and Profit-Bringing Stock Tur*ns Are Usually Impossible loithout Modern Stock Records Dead stock is a difficulty also not peculiar to city stores. A Southerner had a few thousand dollars he wished to keep busy. He started a retail store and put a man in charge to "keep shop." A year or so later a chance to sell out came, even though the store had not been making a great deal. The purchasers wanted an inventory taken. The man who had been ''keeping shop" for the Southerner "guessed there was some ten thousand dollars' worth of stock on hand." The actual inventory, the first in the history of the store, showed a stock on hand worth over seventeen thou- sand dollars. Seven thousand dollars had been buried on the shelves — just as thoroughly as if at the bottom of a well. Modem stock methods would have made the neglect of these goods impossible for more than a few months. Quick turnovers are only possible to retailers who know by stockkeeping methods accurately the amount of goods normally demanded by their trade. BLUNDERS TO AVOID 121 Analytic stock records not only automatically check stock and watch the mark-up, but usually also uncover valuable information regarding the best selling full lines. If cards are ruled for each line of goods and every price within the full lines, a girl can keep on them stock records which analyze the best selling lines. The cards should separate the lines into departments and show daily receipts and sales of stock. The retailer who by this economical system can place his finger on his best selling line knows how to display and renew stock to the best advantage. The credit man for a wholesale house stepped into the shop of a small Western retailer, under orders to in- vestigate the little store 's stock. He found goods on the shelves which his house no longer handled. The mer- chant was evidently at sea regarding his best selling lines. "I'll bet you half your store that fifty per cent of your sales and seventy-five per cent of your profits are on items marked at fifty cents or under, ' ' the credit man finally said. He spoke from experience with hundreds of small re- tail stocks. "You're wrong," replied the merchant, "fifty cent lines can't give half my volume. My big trade is in suits. ' ' The wholesale man took three days to investigate. He sorted the sales for a month by prices and in the end convinced the retailer that about forty per cent of them were around half a dollar each. He next showed that with proper buying these sales alone could yield more than three-fourths of the store's profit. The merchant took the information to heart. He in- stalled duplicate sales slips as a check on the lines which 122 STORE MANAGEMENT gave quick stock turns. He remodeled his store on a basis of small departments and specialized on these low priced lines with rapid profits. Working out the profits on individual lines enabled him to shift the departments which were losing money to more favorable locations in the store, or discontinue them if necessary. He could also advertise departments with direct consideration of the possible profit in mind. At last he knew his business. Today he reckons a month 's gross profit in figures which formerly would have seemed a satisfactory yearly record. Yo^lr Net Profit and Expenses Are Percentages of the Selling Price and Not of the Cost An investigator with a liking for statistics has stated that seventy-five per cent of the retailers in America figure their profits inaccurately. Many of them mark up by taking a percentage of their cost equal to the desired gross profit, instead of working back from a selling price. A young accountant ran into this snag. He bought a half interest in a Pennsylvania retail store which showed, satisfactory profits on paper. But when he went over costs and mark-ups with his partner, he discovered that most of the profits were imaginary. His training enabled him to trace down the difficulty. He found that the dangerous trouble lay in his partner's sj'stem of estimating the cost of doing business as a cer- tain percentage of the gross and then adding this per- 'jentage to the cost price when figuring for the selling basis on individual lines. The minute the new member of the firm used the desired selling figures as a starting point in marking, the business showed healthy profits. The young man accountant correctly secured his gross profit (expenses were twenty per cent and the net ten per cent) on an item costing ten dollars, including BLUNDERS TO AVOID 123 freight and cartage, Dy assuming the selling price to be one hundred per cent and working it out as follows : Selling price, always taken as 100% Cost to do business 20% Net profit desired 10% 307o Cost, $10 70% Cost in percentage 70 Dividing cost in money, $10, by its percentage, .70, gave him the correct selling price : $14.28. The partner would have incorrectly marked the same article at $13.00, or $1.28 below the gross profit he de- sired, after making this calculation: 20% of |10 for cost to do business $ 2.00 10% of $10 for net 1.00 Gross profit $ 3.00 Cost 10.00 Selling price $13.00 He figured his thirty per cent gross profit on the cost price, instead of on his desired selling price. But the cost was only seventy per cent of the selling price, which must always be taken as one hundred per cent. Thirty per cent of seventy per cent gives twenty-one per cent, which is therefore the gross profit he actually secured. But he thought he was getting thirty per cent. Seventy per cent, his cost, plus twenty-one per cent, his actual gross profit, is ninety-one per cent, which is the percent- age of the desired selling he marked his goods by. lie therefore lost nine per cent on every dollar's worth he sold. CHAPTER XIV Winning Over Your Sales Force ONE winter morning, eight hundred telegrams were dispatched to as many store managers throughout the country. They read: "Did you say thank-you to every man who bought a cigar today?" and they were signed by the president of the long chain of cigar stores with which these managers were connected — a two hundred dollar illustration of the importance one king of the retail world attaches to courtesy in business. Business men who have the right to speak with author- ity estimate that rare element — courtesy — at a very high value. It is a main spring in business life; of business building value because it is so rarely found, perhaps. Courtesy does not mean the ingratiating bow and scrape of untutored origin, but the little every-day attentions that cost only thoughtfulness, yet go far in securing good will. His supply of collars having run low, a New York broker stepped into a haberdasher's shop on the A cheerful smile and a hearty "thank you" from a clerk enthusi- astic for the store are worth many mahogany fixtures. Enthu- siasm usually has to begin with the proprietor. 124 YOUR SALES FORCE 125 Broadway comer nearest his residence. This haber- dasher had paid a big premium for his location. Here was his best chance to get some of his money back by converting this broker into a regular customer. An over-dressed clerk, jerking a box of collars of the desired size and brand from a shelf, slapped the box down on the counter under the customer's nose. "Half dozen, did you say ? " he asked the already irritated pur- chaser. The broker nodded. "We've only got five left," said the salesman. He grinned. To be caught out of stock was evidently a joke on the customer. |The broker, eager to escape a clerk with such mis- guided instincts, took the lot. But he was not to escape ao easily. He had yet to deal with the man who hired that clerk. Half way to the cashier, he noticed that the sales slip given him called for the payment of sixty-five cents. ' ' See here, ' ' he protested, ' ' you have made a mis- take, haven't you? You are charging me fifteen cents for that fifth collar." "Single collars sell for fifteen cents," said the clerk. He said it as one conscious of having every one behind him from boy to boss. ' ' So you 're going to make me pay two cents extra just because you are out of stock," expostulated the broker. "I'll speak to the manager — " ' ' My time 's worth more than two cents, ' ' retorted the customer. He paid the charge and left the store in a huff. This store made an enemy instead of a regular A bundle re-vorapped; a bit of information cheerfully given; a rip scum up. Interested salespeople win customers by suck courtesies and attention. 126 STORE MANAGEMENT customer because it was run on a system of blind clerks and raised letter rules. "Dont't ever allow a customer to leave the store carry- ing a lot of small bundles," said a wise merchant to his clerks. "Even if she made most of her purchases else- where, offer to wrap them in one bundle, or to deliver them along with the rest of her order. And don't let any customer enter the store, no matter how busy you are, without in some way — ^by a pleasant ' good morning, * or a smile, or at least some little word or action — letting him realize you know he is there and that you will wait on him just as soon as possible. All these little atten- tions make friends and the more friends we have, the more sales we are going ,to make. ' ' How a Grocer Secured That Vahcahle ''At Home*' Feeling among His Customers A metropolitan grocery proprietor awoke to the fact that his business lacked the personal element. His clerks were courteous and efficient but somehow he knew that customers failed to "feel at home" and all because a necessarily large sales force made it quite impossible for customers to know the different clerks personally. To overcome this, he devised a means of acquainting his patrons with the name of the salesman who had taken their order, or who had waited upon them. He provided each of his clerks with neat business cards bearing the individual salesman's name in the lower left-hand cor- ner. One of the clerks hit upon a plan of presenting these cards that was adopted by the entire sales force. Success isn't made up of orders. It is made of re-orders. And a good customer, wrongly treated, is soon off your books. Explain this to every salesman. YOUR SALES FORCE 127 After selling his customer a bill of goods, the clerk presented his card and told her that if she desired per- sonal attention given any orders she might care to tele- phone in, and would mention his name to the telephone clerk, he himself would be glad to see that her orders were promptly and carefully filled. Thus, this pro- prietor's personal attention problem was solved — and his telephone orders were increased. A telephone customer dropped into a store in the rice belt. She had read of the extra food value and better flavor of the unpolished grain and decided to try it. The man at the counter failed to recognize her and smiled at her request. "You can't buy it, and if you could, you wouldn't put it on your table," he told her. "It's too dark." He failed to understand that she rated utility above mere appearance. Another dealer, at her request, made it a point to secure a sack of the unpolished grain direct from a rice grower. On an investment of only five dol- lars, plus the trouble of writing, he was able to satisfy her curiosity, make her a steady patron and incidentally stimulate a regular demand for the unpolished grain. Training in Personal Service Helps Both Your Salespeople and Your Profits Every store needs its formal training school — and every first-rank store maintains one — where the sales- people are impressed with the fact that patience, tact and a common-sense view of the customers' wants dis- tinguish a big and growing business man just as surely Show your employes that you arc altray-i ready to help out and work vrith them. Make them feel you are shoulder to slwidder vnth them. 128 STORE MANAGEMENT as does his pay envelope. Personal adaptability must, therefore, be considered an essential of store efficiency. The final word in retailing, however, is real customer service — putting all ot your storekeeping ability at the call of the people in your trade territory. A customer had asked at a market for a certain brand of chipped beef and found that it came in larger quantities than he wished to buy. He inquired for a smaller package. "Yes, we have the other brand at thirty -seven cents," was the reply, "but we don't urge it on our customers. Deducting the weight of the package, you get only about ten ounces, and that, as you can see for yourself, is hardly value. In place of it, I would suggest one of the bargains we are featuring today," and the market man went on to display what he conceived to be best fitted to his customer's wishes. One strong reason for the high value of courtesy may be its scarcity. But whatever the reason, it does pay. If You Were An Employee— What could the firm do for you that would make you do more for them? A Customer— Which of your methods would you first criticise.'* The mental habit of occasionally look- ing at yourself from the viewpoint of other people is extremely profitable. SOUT UNiVERS .,ALirORNIA 7 . mlmmm^^ UC SOUTHERN REGIONAL LIBRARY FACILITY AA 001 147 970 6