Retailing

RETAILING Types of Retailing.—Goods reach consumers by retail in the following ways : by canvassing, that is, by sale from house to house; from samples; by peddling, that is, by sale from stock carried by wagon or truck or even from a pack carried on the back of the salesman; by sales made through circular or catalogue by mail; by retail stores owned by independent merchants, chain store operators, department stores, company or commissary stores and consumers' co-operatives. During the early 193os there was a rapid extension of house to house selling on such lines as groceries, meats, fruits, vegetables, dry goods, apparel, hosiery, home furnishings, soaps, spices, and patent medicines. In many cases specially constructed trucks or vans were used, veritable stores or shops on wheels. House to house selling by the canvass ing method grew enormously during the years from 1921 to 1925 in the United States. There were similar periods of high activity in canvassing following 1893 and 1907, suggesting that this meth od of selling seems to thrive best in a time immediately following a business depression. The mail-order method of selling to con sumers suffered severe declines following the business depression of 1920 and 1921, but has since regained its former position in the system of retail distribution. However, this method of retail selling has apparently reached its maturity in relation to other types of retailing. The leading mail-order concerns are now rap idly expanding into chain-store organizations. Department stores are, in general, showing slight gains in the communities in which they are situated. Individual department stores, here and there, however, continue to show remarkable growth. Chains have en joyed the most rapid development since 192o, but in recent years even they show indications of having reached their maturity of relative growth. The single, independently owned stores, while hardest hit by competition of the newer types of retailing, are now apparently holding their own. There are now more of such retail stores than ever before. Table I gives the statistics of retailing for the U.S.A. as shown by the censuses of 1929, 1933, and 1935.

Concentrated Buying.

A part of the competitive battle for trade among the various types of institutions consists in the utili zation of large buying power. Large chain-store systems, mail order houses, and large department stores frequently purchase their goods direct from producers and secure the prices usually given wholesale purchasers. But concerns that buy direct from producers, and thereby eliminate the wholesalers, as a rule incur most of the usual expenses of wholesaling, such as interest on the investment in the larger stock of goods, storage risks, buying ex pense in dealing with numerous producers instead of a few whole salers, extra record-keeping and, with chain-stores, reshipments to their various stores throughout the country. Since 1920 there

has been a rapid development in group, co-operative, and central buying by independent retailers of all kinds. Such organizations are variously known as retailers' co-operatives, retailer owned wholesalers, and voluntary chains.

Comparative Costs of Marketing. — Much interest has centred on the possibility of determining relative eco nomic efficiencies of the vari ous types of marketing institu tions by comparison of their respective costs of doing busi ness. Table II shows average costs of operation, not only for wholesale but also for retail institutions.

Comparing the various meth ods of retailing, as exemplified in the ordinary independent stores, the department stores and the mail-order house, from such facts as are available, it does not seem possible to as sert positively that any one method presents decided gen eral economic advantages over the rest. Each presents certain advantages. Where there are differences in service these dif ferences seem to be fully compensated in expense—that is, the public pays for what it gets and in proportion to what it gets.

Costs of selling through mail-order houses are not officially known. They are supposed to range from 18 to 3o% of sales. But the knowledge of a general figure of this kind for a large mail order house with many departments would be of little value for purposes of comparison with other kinds of businesses. Costs of selling in mail-order houses vary from department to department just as in department stores. All things considered, the general costs of running a large mail-order house are probably somewhat lower than those for a large department store handling similar classes of goods. The lower costs of selling, so far as consumers are concerned, are offset in part at least by the costs of transporta tion and other expenses incidental to ordering by mail.

The figures presented in Table II clearly show a wide range in costs from line to line, but they do not point conclusively to any important differences in costs of operation from one type of distribution to another. Differences in services rendered, not shown at all in the table, account for differences in costs. There are also wide differences in costs from concern to concern due to differences in management efficiency.