58 THE MODEL STOCK PLAN
Of course, if a buyer gets too large a proportion of merchan-
dise that has to be marked down, he is unprofitable to the
store—which supplies an incentive to good buying. The
automatic reduction plan makes him continually conscious
that he has to sell the merchandise as well as buy it.
A buyer might, to avoid losses, be tempted to mark some
of his merchandise higher than he should, but he defeats him-
self if he tries it. The greatest losses he can have are those
that result from the automatic mark-downs. People will
not buy anything but bargains in the basement. An article
priced too high is not a bargain. It may not become a
bargain until 25 or even 50 per cent is taken off the original
price. So the buyer who overprices at the start fools nobody
but himself. The first price simply must be extraordinary
enough to sell the bulk of the merchandise in the first 12
days. Otherwise the lot does not prove profitable. Even
if a policy of overpricing is temporarily successful it is harmful
in the long run because it hurts the goodwill, the drawing
power which is the chief asset of the store.
A fast rate of turnover, speedy selling—that is the big
thing. It is a definite outcome of the automatic plan. The
basement has sold as many as 30,000 pairs of shoes in 8
hours, which was a whole lot faster than the factory could
turn them out.
Small merchants have bought thousands of dollars’ worth
of merchandise in the basement at the retail prices. The
basement can often buy, take a fair profit, and yet sell for
less than the jobber’s price on small lots.
One of the original problems arose in connection with
giving away merchandise unsold after 30 days. It was
found that giving goods to customers resulted in some mis-
understandings, charges of discrimination, and loss of good-
will. So it was decided to give the merchandise entirely to
organized charities. Of course the amounts are small,
averaging perhaps $600 to $700 a month; that is, on a monthly
business of more than $800,000.
The figures on the percentages of goods that have to take
either the first, second, or third mark-down vary so greatly
on different lots as to make averages untrustworthy. For
