BASEMENT STORES FOR THRIFTY CUSTOMERS g¢3
The great danger is that buyers are often tempted by
immediate profits to depart from the sound basic principles
of the automatic plan. One of the commonest happenings
in business is to see men do things for immediate profits
that interfere with the basic organization and principle
that would in the long run make ten times as much profit
and directly increase the goodwill of the business still more.
The automatic bargain basement plan is good only if it is
carried out scientifically to allow the automatic adjustment
of the buying to the most profitable times to buy. This
means that there should be no reserve stocks at all, no hold-
ing stocks back to avoid proper mark-down losses. Holding
stocks back is a natural tendency induced by the desire to
make greater immediate profits by putting only a small
part of a purchase on sale at one time and thus avoiding
the automatic mark-downs that might be necessary. Actu-
ally, this does not lead to the greatest total profits because
failure to take the losses prevents the automatic adjustment
of stocks. And this automatic adjustment of stocks is what
leaves the store open to buy at the most advantageous time
for buying.
Always there is this danger that some buyer eager for
immediate profits will want to hold large reserve stocks
simply to permit purchasing large stocks without incurring
the possible large mark-downs which under the full function-
ing of the plan might—and should, for greatest total profits—
be incurred. If such procedure is permitted, the buyers will
put into forward stock only the amounts that they can be
almost sure of selling out inside two weeks; thus they take
no mark-downs. And the rest of their merchandise is left
in reserve stock.
When abused in this way, the automatic plan loses its
greatest value because this practice slows down the basement
store’s rate of turnover, decreases sales volume, and often
ties the store up with such large reserve stocks that the buyers
cannot be open to buy even extraordinary lots.
There is great profit-making value to a store in being
known as always open to buy any extraordinary value.
