are invariably sate in commitments necessary
to take care of the enormous volume which
we handle.”
THE MAIL ORDER HOUSES
Neep For More Accurate CoNTROL
The comments of the executives of the
large mail order houses are very interesting.
Mr. Taropore F. MerseLes, president of
Montgomery Ward & Company, comments
on the problem as follows:
“The deflation of 1920-1921 was the starting
point of the present national policy of buying in the
so-called ‘hand-to-mouth’ method. Retailers are un-
questionably carrying smaller inventories and order-
ing from the manufacturer more frequently. This
results in manufacturers being compelled to carry
smaller stocks in order to avoid piling up inventory
losses. The situation has brought into play the
necessity for employing much more mathematical
control in the conduct of both manufacturing and
retailing businesses, in which the budget plays an
important part. We must not overlook the fact that
the greater efficiency of our railroads and automobile
truck deliveries are definite factors in enabling
manufacturers and retailers to turn their inventories
more rapidly than formerly. There always has been
and, no doubt, always will be a wide divergence in
production plans for staples and fashions, the de-
mand for which affects not only the cost of produc-
ing but that of distribution and ultimate consump-
tion as well. It is axiomatic that a satisfactory profit
in merchandising must be accompanied by a satisfac-
tory rate of turnover, and we would drift towards
the danger of another merchandising collapse if any
serious departure were made from present methods.”
Cuances IN FunpaMeENTAL CONDITIONS
RESPONSIBLE
Mr. Frank S. CunniNGHAM, president of
Butler Brothers, believes that the practice of
“hand-to-mouth” buying is the result of
changes in fundamental conditions, that it is
economically right, and that it has come to
stay. He points out that buying from hand
to mouth can be carried to an unwise ex
treme, but that the merchant who permits
that fault once will be punished by loss of
sales and is not apt to repeat it. He believes,
however, that merchandising aiming for a
fairly high turnover has been established as a
sound principle in modern retailing, and that
the manufacturers will be forced to do most
of the readjusting required. Commenting on
the general situation in his annual report
dated January 28, 1926, to the shareholders
of Butler Brothers, Mr. Cunningham has this
to say:
“More significant to the jobber than all other
changes added together is the fact that since the war
practically all retail merchants, big and little, are in
the habit of buying goods in smaller quantities and
placing more frequent orders. Up to six years ago
the chief emphasis in retailing went on buying. It
was easy to persuade the average merchant to buy
several months’ supply of an article, and to buy even
more if ever so small a concession in price could be
secured. Today the emphasis goes on selling. No
good merchant, large or small, is disposed to buy
more of an article than he thinks he can sell in about
six to eight weeks. Before he is willing to hurt his
turn he must see a very large saving in price. This
‘undamental change in retail methods is bringing to
‘he jobber a large amount of business which, in pre-
war days, was in process of going around him direct
0 the factory. Large metropolitan retail stores
which formerly did most of their buying from first
1ands are now glad to be able to buy many goods
from wholesale open stocks in order to help their
urn. Now that merchants wish to buy in small
juantities and reorder frequently, the advantage is
on the side of the system which makes it easy for
merchants to place orders daily by mail.
“This tendency to buy in smaller lots and more
often, we are convinced, has come to stay. It is not
a temporary phenomenon, but represents a lasting
change in methods of distribution. To compete suc-
cessfully with department and chain stores, the inde-
pendent retailer must apply the merchandising prin
ciples which their experience has shown to be sound.
He must buy a small lot of an item and when that is
sold, buy more. He must use his available capital
to stock the largest possible number of articles, rather
‘han invest more dollars in each of fewer items,
thereby ‘freezing’ a large share of his capital in re-
serve stocks. In particular, he must leave a margin
both of capital and of counter space for the bargain
specials and new goods which he must have coming
in every two or three days if his store is to rival its
larger neighbors in attractiveness.”
MANUFACTURERS AND
DISTRIBUTORS OF FOOD PRODUCTS
Current Buying Not InmMicaL To
Mass Probuction
Mr. Lours F. Swirt, the president of
Swift and Company, premises his remarks by
