Merchandising

Front matter

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Preface

In the Text on Marketing Methods there is a general survey of the different steps in marketing from the producer to the consumer as well as a discussion of the function and present status of manufacturer, jobber and retailer. The latter chapters of Marketing Methods outline in detail the operating methods of the manufacturer in marketing his goods. The corresponding operating methods of the wholesaler ' or jobber and of the retailer remain to be discussed

' and this is the purpose of the present volume on

!J Merchandising. The reader is assumed to be well

grounded in the principles of marketing as discussed I in Marketing Methods, as well as in those of organ-

ization and management, advertising, salesmanship, accounting, credits and the other subjects preceding this in the Course.

Methods of doing business are changing daily, especially in trading concerns; therefore it has been necessary to make a special investigation of the field for the purpose of this text. In this work a nrmiber of experienced investigators have assisted me in collecting the necessary information. The work has been done largely by interview, and visits to various business centers of the country were made for the purpose. This was supplepciented by a large amount

V

308777 vi PREFACE

of correspondence together with questionnaires. Finally each chapter as prepared, has been read byseveral authorities on each topic. Some were university teachers ; some editors of trade papers ; some secretaries of trade associations; but most were oflScers in or proprietors of wholesale and retail concerns.

To give individual credit to each one who has assisted would be out of question, for the number would be several hundred ; and in addition many good suggestions and much valuable material has been obtained by checking over the files of correspondences with Institute subscribers. So the limitations of space in the preface require the author, much to his regret, to content himself with one general acknowledgment of his indebtedness.

It is possible, however, to give personal credit to my assistants. First I must mention Mr. W. L. Durant, who has worked with me on the whole volume and to whom much credit is due. Next I want to record my indebtedness to Messrs. D. H. Eastmead, George F. Hamilton, Max V. MacKinnon, R. B. Shumway and Harold B. Kreider, each of whom assisted in the work of investigation. In addition various members of the Institute Staff, collaborated frequently, while others, especially Messrs. Cuthbert Hague, Ernest E. Jenks and the late Allan C. Carroll, cooperated heartily in my regular work so that I could get time to give to the preparation of this volume.

John B. Swinney.

Chapter I 8xgti0n Paqb

1. Status of Wholesale Merchandising .... 3

5. Point of Attack 4

8. Radius Within Which Jobber Can Compete Successfully 4

4. Radius Within Which Jobber Can Work Intensively 6

6. Radius Within Which Jobber Can Render Efficient

6. Study of Business Cycles 7

7. Effect of Crop Conditions 8

8. Other Guides to Business Conditions .... 9

9. Total Consumption Capacity 10

10. Condition in the Jobber's Own Lines . . . .11

11. Study of the Consumer 11

12. Study of the Retailer 18

18. Classification of Retailers 14

14. Source of Information on Retailers .... 16

16. Reports from Salesmen 17

16. Analysis of Competition 17

17. Business Policies of Competitors 20

Chapter II

1. Two Kinds of Business Policies 22

2. Main Sales Appeal . 22

• • Vll

Tiii RETAIL MERCHANDISING

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S. Marketing Policy 23

4. Price Policy 24

5. Locality Price • . . ^ 24

6. Competitive Prices 26

7. Loss Leaders 25

8. Different Prices for Different Classes of Customers 26

9. Discount Policy 26

10. Three Kinds of Discounts 27

11. Cash Discount • • . .... 28

12. Extra or Special Discount 28

13. Extra Discounts on Large Quantity Purchases . 29

14. Extra Discounts on Drop Shipments .... 29 16. Credit Policy 30

16. Dating of Invoices 31

17. Trade Acceptances 32

18. Credit for Goods Returned 33

19. Other Business Policies 34

Chapter III Organizing And Financing The Business

1. Early Forms of Organizatidn 36

2. Military Type of Organization 36

3. Functional Type of Organization ..... 37

4. Variation in Detail 38

5. Financial Division . 39

6. Budget 89

7. Checking the Budget 41

8. Auditing the Various Reports 42

9. Credit Department 45

10. Collecting Past Due Accounts . . . . . .46

CONTENTS ix CHAPTER IV

8SCTI0N PAGB

1. Function of a Merchandising Division . . . . 4&t

8. Merchandise Office 48

4. Indicating Slow Selling Lines 6S

5. Selection of Buyers 5S

6. Essential Qualifications of the Buyer .... 63

7* The Buying Market 64

8. Buying Methods : ... 64

9- Authority of the Buyer 66

10. Discounts 66

11. Pricing 67

15. Branch Buying Office 68

13. Supervision of Stockkeeping 69

14. Necessity for Careful Stockkeeping . . . .60

16. Stock Rooms 60

16- Stockkeeping Methods ........ 61

17. Perpetual Inventories 61

18. Physical Inventories 63

Chapter V Selling And Sales Supervision

1. Function of the Sales Division 66

8. Application of Intensive Salesmanship to a Jobbing Business 66

3. Sales Department Office 66

4. The Sales Plan 67

6. Dividing the Territory 68

6. Sort of Salesmen to Employ 70

7. Expense of Employment and Training ... 72

8. Organizing the Sales Force .72

9. Price Book 78 at RETAIL MERCHANDISING

MCTIOK PAGS

10. Determining Compensation 74

11. Organization of Recording and Statistical Depart-

IS. Keeping in Touch with the Men •. . • . .78

Chapter VI

1. Necessity for Jobber Advertising 80

2. Present Status of Jobber Advertising .... 81

8. Function of Jobber Advertising 81

4. Advertising for Manufacturing and Semi-Jobbers 83

6. Organization of Advertising Department ... 84

6. The Appeal . 86

7. Advertising Appropriation 87

8. Selection of Medium 87

9. Miscellaneous Types of Advertising .... 88

10. Direct Advertising for the Jobber 88

11. Jobber's Catalog .88

Chapter VII Cooperating With The Retailer

!• Jobber's Obligation to Cooperation .... 90

2. Two Kinds of Dealer Cooperation 91

8. Helping in the Solution of Individual Problems . 91

4. The Credit Man as a Service Man 92

6. Dealer Aids 92

6. Accounting and Store Systems 94

7. Advertising Helps 95

8. Dealer Service Thru the House Organ ... 96

9. Retail Salesmanship 96

10. Correspondence Courses in Retail Selling ... 97

11. Demonstrations of Salesmanship 97

12. Sales Contests 98

CONTENTS xi

8XCTI0N PAGE

15. House Organs and Miscellaneous Dealer Litera-

ture 98

14. Selling Points of Merchandise 99

16. Trade Extension Trips 99

16. Merchants' Weeks or Seasons 99

17. Methods of Checking up the Results from Dealer

Service 100

Chapter VIII Operating The Business

1. Function of the Operating Division .... 103

a. The House Manager 103

8. House Policies 104

4. Methods of Emplojrment 105

5. Standards for Clerical Work and Wage Systems . 105

6. Instruction and Welfare Work 107

7. General Office 107

8. Order and Registry Departments 108

9. Timing the Order 110

10. Order Department Reports Ill

11. Order and Registry for Mail Orders .111

1ft. Traffic Department 113

18. Contract Department 114

14. Billing Department * . . 115

15. Claim Department 116

16. Profit and Cost Department 116

17. Bookkeeping Department 118

18. Cashier, Stenographers and Miscellaneous General

Office Employes 119

19. Warehouse Department 119

20. Receiving Department 119

81. Packing Department ' . ISO

2S. Shipping Department 121 xii RETAIL MERCHANDISING

Chapter IX Manufacturing Jobber And Semi-jobber

SSCTIOIf PAGK

1. Definition of a Manufacturing Jobber .... 122

2. Why Jobbers Manufacture 122

3. Methods of Organization . ^ 124

4. Relative Advantage of the Two Types of Organ-

ization 126

6. Production Methods . • . 126

7. Advertising and Selling 126

8. Special Terms 127

9. Accounting and Costkeeping 127

10. Pricing Goods to Jobbing Departments . . . 128

11. Definition of Semi- Jobber 129

12. Reasons for Development of Semi-Jobbing Busi-

ness 129

13. Organization 129

16. Accounting 132

16. Pricing Goods to Retail Store . . . . , 132

Chapter X

1. Basic Reasons for the Cooperative Jobbing Idea . 134

2. Behind Cooperative Jobbing . . . . . .136

3. Buying Syndicates 136

4. Cooperative Manufacturing . . .* . . .136 6. True Cooperative Jobbing 136

6. General Plan of Organization 137

7. Method of Stock Subscription 137

8. Voting Power 139

9. Dividends 139

10. Manager and Directors 140

CONTENTS xiii

8SCTIOK PAOl

11. Buying Advantage . 140

IS. Buying Arrangements 141

IS. Selection of Merchandise 141

15. SeUing 142

16. Returned Goods and Exchanges 143

17. Prices 148

18. Credits 144

19. Deliveries 144

Chapter XI

1. Necessity for Many Distributive Agents . . .146

2. Manufacturer's Selling Agent 147

S. Compensation of Selling Agents 148

4. Pricing 148

5. Delivery and Other Expenses 148

6. Sales Agent's Contract and Authority . .149

7. Two Classes of Selling Agents 149

8. Services Rendered by Selling Agent . . . .150

9. The Selling Agent's Organization 151

10. Mill Agent 152

11. Factor and His Function 153

12. Form of Agreement 154

IS. Method of Operation 154

14. Compensation of Factor 155

15. The Factor's Organization 156

Chapter XII The Commission Merchant And The Broker

1. Necessity for the Commission Merchant . . 158

2. Activities and Compensation of Commission Mer-

chants 159 xiv RETAIL MERCHANDISING

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3. Commission Merchants and Manufacturers' Agent 159

4. Commission Merchants and Factors .... 160

5. Rates of Commission • • 160

6. Commission Contracts 161

7. Organization 164*

8. Operating a Commission House 165

9. Export Commission Houses 167

10. Necessity for the Merchandise Broker .... 168

11. Function of the Broker 168

IS. Commission Merchants and Brokers .... 169

13. Extent of Merchandise Brokerage 169

14. Broker's Contract 169

15. Broker's Commission 170

16. Broker's Organization and Operating Method .. 170

Chapter I

1. Old Merchandising Methods ...... 175

2. Retailer Must Analyze Territory and Competition 176 8. General Store as a Type 176

4. Reason for Opening the Store 177

5. Analysis of Population 177

6. Division of Population into Classes .... 179

7. Other Sources of Trade 181

8. Studying Competitors 181

9. Large Department Store as a Competitor . . . 183

10. Chain Store as a Competitor 184

11. Competition with Mail-Order Houses .... 185

12. Learning from Competitors 186

CONTENTS XV CHAPTER II

SBOTIOK PAGB

1. Necessity for Statement of Business Policies . . 187

2. Two Kinds of Policies .187

8. Class of Trade 188

4, The Big Appeal . . 189

6. Buying Policies 190

6. Maintenance of Prices 191

7. Slow Selling Systems 192

8. Returned Goods and Refunds 193

9. Credit Policy . 196

10. Adjustments 196

11. Deliveries 197

12. Store Creed 197

I

Chapter III Organizing And Financing The Store

1. Meaning of Efficient Organization 200

2. Functionalizing the Business 201

3. Departmentizing the Business 202

4. Organization Chart 203

5. General Manager 203

6. Financing a Store 204*

7. Financial Budget 206

8. Counting Room 207

Chapter IV ^ Operating And Recording The Business

1. Necessity for Operating Function 209

2. The Superintendent . . 209

3. Choosing the Store Site 210

4. Store Building 210

5. Store Front 211 xvi RETAIL MERCHANDISING

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6. Heat, Light and Ventilation Sll

7. Store Equipment 212

8. Standards in Equipment 213

9. Organization of the Personnel . . . • . .214

10. Employing New Clerks 215

11. Training and Welfare Work 215

12. Wage Systems 216

13. Floor and Aisle Managers 218

14. Inspectors and Wrappers 219

15. Delivery Service 219

16. Records Manager 220

17. Retail Accounting 221

Chapter V Training The Selling Force

1. "The Salesman Is the Store" 223

2. Explaining the Store Policy 224

8. Teaching the Store System 226

4. Beginning Actual Selling . . . . . . 226

5. Special and General Bulletins 227

6. Studying Merchandise . 227

7. Libraries and Rest Rooms 228

8. Junior Courses 228

9. Cooperating with the Public Schools .... 229

10. Training the Non-Selling Employes .... 229

11. Results of the Educational Work 230

Chapter VI

1. Necessity for Good Buying 281

2. Organization for Buying 231

8. Basic Facts for Merchandising . . .' , . 232

4. Determination of Lines to Be Carried .... 233

CONTENTS xvii

SSCTION PA€n

5. Apportionment of Investment 234

6. Merchandise Plan 236

7. Fixing the Standard Turnover 238

8. Determining the Gross Profit Desired .... 239

9. Turnover as a Merchandise Factor .... 240

10. Controlling the Buying 243

11. Concentration of Purchases ...... 245

12. Buying Interview 246

13. Selection of Merchandise for Quality .... 246

14. Element of Price 247

15. Attitude Toward Discounts 247

16. Accrediting the Discounts 248

17. Element of Style, Novelty and Exclusiveness . . 249

18. Stocking New Lines 249

19. Pricing the Goods 250

20. Profits 250

21. Buyer as a Merchant 251

Chapter VII

1. Necessity for Good Stockkeeping 253

2. Receipt of Merchandise 255

3. Reserve Stocks 258

4. Arrangement of Reserve Stocks 260

6. Active or "Forward" Stock 261

6. Importance of Keeping Track of the Stock . . 262

7. Preparing for Physical Inventory ..'... 265

8. Preliminary Work 265

9. Inspecting Stock 266

10. Numbering 266

11. Changes After First Count 267

12. Taking Stock While Business Goes On . . . 267

13. Plan of Inventory 267

14. Subdividing the Inventory 268

XIX— 2 xviii RETAIL MERCHANDISING

Chapter VIII 8e0ti0n Paob

1. What Is Retail Advertising? 269

2. Starting Right 270

8. Advertising and Store Service 270

4. Value of the Newspaper 271

5. Intermittent and Continual Advertising . . . 271

6. What to Advertise 272

7. Must Each Advertisement Pay for Itself? . . 273

8. Store News 273

9. Change Copy Often 274

10. Put Interest into Copy 274

11. Individuality in Copy and Display .... 275

12. Letters and Circulars 276

18. Store Papers i., 277

14. Other Mediums 277

16. Use of Dealer Helps 278

16. Display Advertising 278

17. Guiding Principles That Govern Interior Displays 279

18. Aids to Interior Displays 280

19. Window Displays 281

Chapter IX Department Store And Specialty Shop

1. Point of View 283

2. Development of the Department Store . . . 283

3. Selling Field and Policies 284

4. Organization and Financing of Department Stores 284 6. Operating the Department Store 285

6. Delivery System . 286

7. Mail-Order Departments 287

8. Merchandise Office 287

9. Advertising Practice 288

Contents

SXCnON PAGS

10. One-Line or Specialty Stores 289

11. Analysis of Territory and Competition . . . 289

CHAPTER X 1* Analysis of the Selling Field 298

8. Partnership Type of Organization .... 301

4. Getting the Partners ^. . . 801

5. Organization and Operation 302

6. Advantages of the Type 308

7. Corporation Type of Chain Store 304

8. General Plan of Organization 305

9. Real Estate Department 305

10. Merchandising 306

11. Supply Department 307

12. Central Warehouse 307

13. Control of Warehouses 308

14. Planning Special Sales 309

15. Employment and Training 309

16. Keeping in Touch with Employes 811

17. District Manager 811

18. Department Managers 812

SECTION PAOI

80. Mail-Orders and Local Agencies 313

21. Store Manager 314f

S2. Stockkeeping System 314

28. Control of Stock Turnover . 316

24. Accounting System for Store 316

25. Accounting System for Central Organization . . 317

Chapter XI

1. Analysis of the Selling Field 319

2. Marketing Policies 320

3. Location 321

4. Organization 323

5. Financing a Mail-Order House 323

7. Pricing . 326

9. Sales Promotion 328

11. The Catalog 329

12. Operating the Business 330

Chapter XII

n

1. Reason for the Cooperative Movement .... 334

2. Starting a Cooperative Store 335

3. Organizing the Store 337

4. Store Manager . 338

6. The Budget 338

6. Business Policies 339

7. Buying and Stockkeeping 339

8. Sales Policies 341

9. Deliveries 341

CONTENTS

SBCnoir PAGs

10. Credit PoKcy 842

12. Salesmen and Salaries 844

13. Accounting System 846

14. Keeping Track of Members' Purchases . . . 846 16. Distribution of Profits 847

PART I