ing. The number of brands is constantly multiplied. 
Producers are engaged in an advertising competition. 
The distributor finds that to satisfy consumer de- 
mand so created he must stock thousands of branded 
articles, many of which are substantially identical 
in chemical content and physical structure. Not con- 
ent merely with the advertising of his brands, the 
producer is perennially seeking legislation which 
would give him the power to compel all retailers to 
sell his product at a fixed price to consumers, regard- 
‘ess of great differences in selling costs of distributors. 
THE DISTRIBUTOR'S PROBLEM 
“Distribution is the last great stronghold of com- 
vetition. It is a highly competitive business un 
bolstered by a high protective tariff. Faced with 
sreat social and economic changes, the distributor 
nust, in self-preservation, take the attitude ‘sauve 
qui peut.” He is close to the consumer. He has 
found that to meet consumer whims and caprices 
he must carry in stock a vastly greater variety and 
1ssortment of goods than ever before. His old staple 
tems have, for the most part, been supplanted by 
fashion goods. Competition in branded merchan- 
lise, competition in production refinements, and a 
sew consumer buying attitude are continually mul 
plying the items of his stock. 
“The producer has only his own lines to worry 
sbout; the distributor must take his chances on 
‘housands of producers’ lines. He has pondered this 
problem in all its infinite complexity. He has called 
to his aid the best possible talent for its solution. 
He has demanded that our educational system sup- 
oly him with its best recruits to learn, develop and 
mprove the new science of retailing. He has found 
‘hat one of the cardinal principles in preserving a 
reasonable profit and affording the service demanded 
»f him by the public is conservative buying—incor- 
rectly dubbed ‘hand-to-mouth’ buying. There is no 
doubt that this policy is sometimes carried to excess, 
sut the efficient distributor cannot starve his stocks 
and at the same time perform his service function to 
the public. Were he a commercial altruist, in the 
nterest of the producer, he might order far in ad- 
sance of consumer demand, but, as you yourself say 
‘n your letter to me, ‘it would be the height of 
‘olly.” Barring unforeseen changes in the character 
of consumer demand and producers’ competition, I 
selieve this policy represents a permanent change 
“As a fundamental business policy, rapid turn- 
sver is just as important to the manufacturer as to 
the distributor. Smaller stocks require less capital 
nvestment. Smaller stocks reduce insurance costs. 
Smaller stocks minimize losses due to price changes. 
Smaller stocks economize the use of bank credit. 
Smaller stocks tend to reduce the number and se- 
verity of business failures. Accelerated turnover 
:ontributes greater regularity to production and dis- 
ribution. Speculative excesses in both production 
ind distribution are minimized. During the past 
‘ew years conservative purchasing has tended to 
joften the severity of business depression. It has 
sontributed in no small measure to our national 
prosperity. I have no doubt that the social savings 
occasioned by this policy far outweigh whatever 
added social costs may be involved. Both producer 
ind distributor must face the consumer buying 
nabits as they now exist. 
FINDING A SOLUTION 
“As a distributor without manufacturing expe- 
dence, I hesitate even to suggest a remedy for the 
>xisting situation, which is felt so keenly by many 
sroducers. Many manufacturers can reduce the 
qumber of their lines without any material loss of 
yood will, a policy which a distributor can less 
:asily follow. The Hoover simplification program 
s an example of the large savings which can be ac- 
:omplished. The manufacturers raw material is for 
‘he most part staple. He can, in many cases, de 
nand orders in sufficient time to permit fabrication 
from raw material. All too often he takes specula- 
tive chances on raw materials. If the raw material 
yoes up in price he generally demands not only his 
onversion profit but also any profit which may 
save accrued on the raw material. If the raw ma- 
:erial markets turn against him he demands and fre- 
juently gets a price which represents both conver- 
sion and original raw material cost. There is not 
:nough business transacted on a straight conversion 
sasis. But more important than these policies is a 
leep study of the nature and character of consumer 
jemand. There is too much production without 
;areful study of the probable demand. 
‘In our business we endeavor to anticipate as far 
1s possible all important changes in consumer de- 
nand by careful study—in the case of style goods, 
oy the employment of style advisors of a character 
Jifferent from our department managers, who are 
nanipulators and not the choosers of merchandise. 
The silk industry has, I believe, for some years past 
shown a keen appreciation of the value of deep 
tudy leading to anticipation of demand, and some 
producers in that industry have provided accord- 
ingly. The announced intention of the cotton mills 
«0 study their problem through a Cotton Institute is 
orobably a step in the right direction. I cannot re 
sard the program of the woolen industry to scrap 
machinery and advertise the merits of wool as any 
sontribution to the solution of the problems of that 
ndustry