THE WAY TO GREATER TOTAL PROFITS Iz 
agencies of distribution’ —unless these other agencies adopt 
the Model Stock Plan. 
If the chains take away a large percentage of business, the 
overhead of the remaining departments, larger already than 
that of the chains, becomes still larger. Lines of goods not 
especially attractive before to the chains now become attrac- 
tive, therefore, as they are brought into the range where the 
chain stores can undersell the independent store. Unless 
independent stores adopt methods to meet and beat this com- 
petition, by far the greatest part of the independent mer- 
chants must succumb to chain stores operating in their own 
fields. Plainly, independent retailers are taking a dangerous 
chance by merely waiting, doing nothing effective about it. 
If this is continued the chains will eventually sell all lines of 
goods that independent stores are carrying. 
The Model Stock Plan enables us, through added efs- 
ciencies in retailing, to beat chain and other competition and 
make a profit, even though the competition may be an organ- 
ization of greater buying power. Hard as this is to accom- 
plish in the face of some competition today, it is nevertheless 
perfectly possible, as we shall see. 
Distribution charges, in general, double the cost of goods 
from producer to consumer. Sometimes the price triples or 
quadruples. This does not mean retailers are profiteers, 
for their net profits average less than 5 per cent. But it 
does mean that an indefensible increase occurs between 
production cost and what the consumer pays, due to prevent- 
able waste. Distributors must bear in mind that unless 
they conquer this waste they will be replaced: 
1. By others who can conquer it, or 
2. By direct distribution of mass producers whose success 
has come by conquering the wastes in production and who, 
therefore, cannot let these gains be canceled out by wastes 
in distribution. 
There is no excuse for excessive distribution charges 
amounting to colossal wastes. Distribution adds not one 
"In 1978, for the first time, the total sales of chain stores exceeded the total 
sales of department stores in the United States