| - ' ^ v ' ' " * **^^^~ni HOD 9008 B 897,161.:900b e.N5 FOOD COSTS AND CIT /:'79 CONSUIRERS -//? Significant Factors in Metropolitan // Distribution of Perishables \qoo BY CHXIhJLES ENOS ARTMAN, M. A. Formerly Research Agent in Marketing 17. S. Department af Agriculture SUBMITTED IN PARTIAL FULFILLMENT OF TIIE REQUIREMENTS FOR THE DF.(REE OF DOCTOR OF PHILOSOPHY IN THE FACULTY OF POLITICAL SCIENCE COLUMBIA UNIVERSITY NEW YORK 1926.... _ -?~~~.........., Or -A-, A ---, 47^ ^^S^^^^l^~ ^"s0 -Fom~llriiiflmmmllllllllllHlu MC IIInl llo IIcI l I J.....................'ul............................""'..... IRECEIVED IN EXCIANGE FCo/ b/i nlv b. calu.-nioa UnIv Ll-bh^. I — -- g5 IlawWI'. 7~~~~~~~~~~~~~~~~~~ 1/7 FOOD COSTS AND CITY CONSUMERS Significant Factors in Metropolitan Distribution of Perishables BY CHARLES ENOS ARTMAN, M. A. Formerly Research Agent in Marketing U. S. Department af Agriculture SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY IN THE FACULTY OF POLITICAL SCIENCE COLUMBIA UNIVERSITY NEW YORK 1926 H4r) COPYRIGHT, 192-6 BY CHARLES ENOS ARTMAN PRINTED IN THE UNITED STATES OF AMERICA .r- 2" In.. Uf /ctn^-^ -'^ t~i PREFACE ECONOMICAL distribution of the food supply is a subject of vital concern alike to consumers dwelling in great population centers, and to the body of producers throughout the nation. The Joint Commission of Agricultural Inquiry reported in I92I its conviction that distribution is one of the most important economic problems before the American people, and that only through its solution can adequate adjustments be made among agriculture, industry, transportation, labor, finance and commerce. The machinery of distribution requires adjustment in order that the outlay of the final consumer may be related more closely to what the producer receives for his products. The wide gap between producers' receipts and consumers' outlays results in large measure from intermediate handling costs arising after goods arrive in the city wholesale markets. Yet comparatively little detailed or systematic study has been given to these factors of city distribution. In the present work detailed consideration is given to some factors in the expense of distribution under conditions typical of the New York metropolitan area. Fresh fruits and vegetables are particularly appropriate for this study because of the prominent place which they generally hold in family expenditures, because the problem of distribution is intensified by their perishable nature, and because efficient methods of handling such goods are more essential than with less perishable commodities. This study was undertaken early in I123 under the joint auspices of the United States Bureau of Agricultural EcoS,, 1 6 PREFACE nomics and the Port of New York Authority, as one of a series of inquiries into terminal handling costs. The work of collecting and analyzing the data was undertaken and executed by the author under the general supervision of Walter P. Hedden, of the joint research staff of the two agencies. The statistical tabulations were made by the machine tabulating section of the Bureau of Agricultural Economics in Washington. The illustrations are reproduced from United States Department of Agriculture Bulletin 1411, through the courtesy of Mr. J. Clyde Marquis, Director of Economic Information. For valuable assistance in the large amount of careful statistical analysis involved in this work, special acknowledgment is given to H. D. Comer, former Research Agent in Marketing and now with the Bureau of Business Research of Ohio State University. For aid in obtaining the information here presented, acknowledgment is due to numerous persons and agencies in the metropolitan area. Proprietors of individual retail stores, officials of chain-store systems, and dealers in the wholesale and jobbing markets of New York, Brooklyn and Newark gave invaluable assistance by supplying regular price quotations and market information for an extended period. Particular credit is given to the public-spirited women who submitted regular reports of prices in their neighborhood stores from week to week. The following civic and educational agencies gave active assistance in enlisting reporters for this work: Women's City Club of New York, New York League of Women Voters, Teachers College of Columbia University, Henry Street Settlement, Pratt Institute of Brooklyn, Civitas Club of Brooklyn, Brooklyn Society of Ethical Culture, Contemporary Club of Newark, Women's Club of Elizabeth, Housewives' Economic League of Passaic. PREFACE 7 The author acknowledges his indebtedness also to Professor E. R. A. Seligman, Wesley C. Mitchell, Paul H. Nystrom, 0. S. Morgan, and Frederick C. Mills, of Columbia University, each of whom examined the manuscript and contributed constructive suggestions. While this work is restricted to a few specific factors of metropolitan distribution, it shows quite positively the influence of consumers' buying habits on distribution expenses. This demonstration is significant not alone in the marketing of perishable foodstuffs, but in the distribution of all commodities that are sold in variable small-quantity units. CHARLES E. ARTMAN. COLUMBIA UNIVERSITY, MAY 21, 1926. CONTENTS PAGC PREFACE...................................... 5 CHAPTER I IMPORTANCE OF METROPOLITAN FOOD DISTRIBUTION Significance to Consumers...................... 12 Significance to Food Producers................ 15 CHAPTER II METROPOLITAN DISTRIBUTION AGENCIES Wholesale Market....................... 18 Jobbing Markets........................ I9 Retailers............................ 21 Different Types of Stores................... 24 Store Management...................... 25 Specialization..................... 26 Classes of Retail Trade.................... 27 Size and Equipment of Stores.................. 29 Evolution of Distribution System................ 30 Retailers' General Functions.................. 34 Physical Losses in Retailing................... 42 Retail Price Policies................... 44 General Expense of Distribution................. 45 Relation of Size of Business to Operating Expense........ 48 Distribution Expense Shown in Other Studies.......... 50 CHAPTER III SCOPE AND METHOD OF ANALYSIS Nature and Extent of Data used................ 53 Method of Collection...................... 54 Selection of Representative Stores.............. 55 Choice and Subdivisions of Commodities............ 56 Marketing Characteristics................... 57 Representativeness of Price Quotations............ 62 Possible Sources of Error.................... 63 Tabulation of results..................... 65 Choice of Averages................... 66 9 IO CONTENTS PAGE Adjustments for Shrinkage................... 68 Representative Prices and Margins............... 69 Interpretation of Price Spreads and Margins........... 70 Additional Working Data.................... 71 Distribution Factors Considered............... 73 CHAPTER IV COMMODITY CONTRASTS Possible Factors Affecting Distribution Expense......... 75 Differences in Service Requirements............... 76 Size of Retail Sale as a Measure of Service Requirements.... 77 Adequacy of Size of Sale to Explain Margin Differences.... 8I Deductions from Size of Sale Analysis............ 82 Apportionment of Price Spread to Jobber and Retailer..... 84 Variability of Jobbers' Portion of Standard Retail Sale...... 86 Relation of Jobbers' Spreads to Wholesale Price Changes..... 89 CHAPTER V STORE OPERATION CONTRASTS Classification of Store Types.................. 93 Extent and Adjustment of Data............. 95 Manner of Making Comparisons............ 97 Differentials in Distribution Expense.............. 98 Differences in Prices to Consumers................ o6 Summary of Store Operation Contrasts............. III CHAPTER VI IMPLICATIONS OF COMMODITY CONTRASTS Influence of Usual Units of Quantity.............. II2 Influence of the New Unit of Distribution......... 118 How Retail Prices are Set.................... 119 Summary of Application of Size-of-Sale Theory......... 121 Limitations of Percentage Differentials in Price Comparisons... 123 CHAPTER VII GENERAL CONCLUSIONS.................... I25 STATISTICAL APPENDIX.......................... 35 INDEX............................. I67 CHAPTER I IMPORTANCE OF METROPOLITAN SYSTEM OF FOOD DISTRIBUTION NEARLY one-twelfth of the total population of the United States lives and works in the New York metropolitan area, in the territory included roughly within a radius of thirty miles from the New York primary food market. This metropolitan area supported about nine million people in I919,1 and its numbers have grown rapidly since then. The wide geographical range in the producing sections which supply the food for this metropolitan population gives national importance to the New York market; while consumers in all large urban communities have a like common interest in the economical distribution of their food supply. Producers and consumers are thus equally interested in reducing as far as possible the gap between producers' and consumers' prices. Food producers are immediately interested in the prices received for their products at the farm, for the grower's money income depends upon prices at the point of origin. But it is the repeated purchases of many individual city consumers which are the ultimate source of farmers' incomes. Consumers therefore have an immediate interest in keeping city retail prices as close as possible to the prices received by producers; for it is the portion of the family income expended for food which determines the kind and quantity of 1 Report of Federal Trade Commission on Wholesale Marketing of Food, June 30, 1919, p. I97. II 12 FOOD COSTS AND CITY CONSUMERS nourishment secured. "Food absorbs 38.2 of the average American household's income. It therefore constitutes no inconsiderable part of the wage and salary cost in all production. Of two communities whose products enter the same market otherwise equally, that one which supplies its working people with food at a lower community cost either will pay its workers a higher real wage or will have a marked advantage in underselling the other through lower production costs. Both results may in some measure follow." 1 Careful consideration should therefore be given to factors in the methods of food handling which may influence the size of this price gap. SIGNIFICANCE TO CONSUMERS Authorities on diet hold that a substantial quantity of fresh fruits and vegetables in the daily menu is necessary to maintain health and efficiency. These articles are particularly rich in mineral salts and vitamines, and they supply the human system with important elements that are lacking in other foods. An adequate and well-distributed supply of fruits and vegetables is thus essential to the general wellbeing of the population. Studies made by the United States Bureau of Labor Statistics 2 show that, while the average total quantity of food consumed per man per day in I919 was slightly greater in New York City than in five other large urban areas in different sections of the United States, the daily consumption of fresh fruits and vegetables in the average dietary was materially lower in New York City, both in proportion to the total food purchased and in actual quantity. While in the St. Louis and Minneapolis areas these articles comprised 'Ibid., p. 13. 2 Monthly Labor Review, vol. ix, no. 2 (August, 19I9), "A Study of Food Costs in Various Cities," by Prof. William F. Ogburn, pp. 1-25. IMPORT.4ANCE OF FOOD DISTRIBUTION I3 about 40 per cent, and in Boston 31 per cent, of all foods consumed, they were only 25 per cent of the total daily food consumption in New York. The individual consumption of perishables in other cities exceeded that in New York by from 21 per cent in Boston to 49 per cent in Minneapolis and St. Paul. The total quantity of food consumed per man per day in each of the six cities, the amount of fruits and vegetables, and the ratios of the latter to the total consumption in each respective city and to the fruit and vegetable consumption in New York, are shown in Table I. TABLE I 1 DAILY FOOD CONSUMPTION PER PERSON 2 IN SIX LARGE CITIES Fruits and vegetables Locality Total food Percentage Percentage Amount of total of New York consumed food total Pounds Pounds Per cent Per cent New York............ 4.411 I.I125 26. IOO Boston............... 4345 362 31. 121 San Francisco........ 4.352 1.492 34 133 Chicago.............. 4.345 1.526 35. 136 St. Louis & E. St. Louis. 3.908 1.559 40. 138 Minneapolis & St. Paul.. 4.287 1.676 39. 149 The studies referred to show also that the average cost of a standard dietary was considerably greater in New York than in any of the other cities. The annual cost of food for a standard working-class family in New York City was $50 Monthly Labor Review, U. S. Bureau of Labor Statistics, August, I919. 2 Actual consumption of food yielding approximately 3500 calories per man per day, in standard working-class families consisting of husband, wife and 3 children, aged 2, 5 and II years, with total annual expenditure of $I300. 14 FOOD COSTS AND CITY CONSUMIERS greater than in Boston, $65 more than in Chicago, $73 greater than in San Francisco, over $Ioo above that in St. Louis, and nearly $200 in excess of the annual family cost of food in the Twin Cities. The outlay in these other cities was from 7 per cent to 30 per cent below the average for families in New York. Table 2 gives the cost of adequate standard dietaries in each city, and the percentage reduction of each below the New York expenditures. TABLE 2 COST OF ADEQUATE DIETARIES 1 IN Six LARGE CITIES Per man Per family Below New Locality per day per year York outlay Cents Dollars Per cent New York.................... 57.6 678.73 Boston.......................I 53.4 628.92 7 Chicago.....................I. 51,2 613.10 o San Francisco................ 51.1 605.40 II St. Louis & E. St. Louis........ 49.3 567.37 16 Minneapolis & St. Paul......... 42.6 485.29 29 From the data in these two tables, the consumption of fruits and vegetables appears to be closely related to the total monetary expenditure for food. As the outlay for food increases in the different cities the consumption of perishables diminishes. Since the expense of city distribution of fruits and vegetables is considerably greater than that for the more staple foods,2 the higher cost of food to New York consumers indicates that they pay an even greater excess for these perishable articles, and in consequence of the high cost the quantity of them consumed is materially 1 Actual consumption of food yielding approximately 3500 calories per man per day, in standard working-class families consisting of husband, wife and 3 children aged 2, 5 and II years, with total annual expenditure of $I300. 2 See figures from various studies on pp. 50-52. IMPORTANCE OF FOOD DISTRIBUTION 15 diminished. Reduction in the expense of distribution should therefore be a stimulus to increased consumption. To the nine million consumers whose food supply depends upon the metropolitan distribution system, this study of factors affecting the expense of city distribution is therefore of particular significance. " The whole industrial efficiency of the city is involved in this question of cheap food; and because New York is the great Atlantic gateway of the country, the problem of the efficient feeding of New York City widens to a national problem." 1 SIGNIFICANCE TO FOOD PRODUCERS The fresh fruits and vegetables which are consumed annually in the New York area are estimated to have a value at wholesale exceeding two hundred million dollars. In I923 over I8o,ooo carloads of these products were shipped or trucked into the metropolitan area for local consumption. An average of five hundred carloads, worth from a half million to a million dollars, passes into and is sold in the New York market each day of the year. Not more than ten per cent of this merchandise is locally grown, and only a scant five per cent is sold directly from farmer to retailer.2 Ninety per cent of the total is shipped from producing areas that are from 30 miles to over 3,000 miles distant. Over one-half of the rail and water arrivals are transported five hundred miles or more. The bordering and nearby states of New York, New Jersey, Pennsylvania, Delaware, Maryland and the New England States produce only about 30 per cent of the total. Over one-fourth comes from the Pacific Coast, California alone supplying upwards of 20 per cent. One-sixth of the total is provided by up1 Report of Federal Trade Commission on Wholesale Maketing of Food, p. 233. 2 Ibid., p. 218. i6 FOOD COSTS AND CITY CONSUMERS state New York, and Florida supplies one-seventh of the annual volume. Other important supply states are Virginia, North and South Carolina, Georgia and Texas. From various foreign countries come special articles,-early TABLE 3 PRINCIPAL SOURCES OF FRESH FRUITS AND VEGETABLES, NEW YORK WHOLESALE MARKET, CALENDAR YEAR 1923 Source.. California................................. New York............................... Florida................................... Virginia.................................. New Jersey............................... Maine.................................... South Carolina........................... W ashington............................... North Carolina........................... Georgia................................ Oregon................................... M aryland................................. Texas.................................... All other domestic........................ Foreign.................................. Small commodities not reported above........ Total rail and water receipts............... Local truck-hauled produce (estimated)....... Bananas imported from Central and South America................................ Total fresh fruits and vegetables from all sources........................... Quantity Carloads 30,665 23,557 20,034 9,425 8,517 6,541 5,756 5,394 3,967 2,965 2,703 2,628 1,320 9,674 9,204 7,662 150,0121 19,000 I3,500 182,512 Percentage of total rail and water receipts (excluding bananas) Per cent 2I.5 I6.5 I4.1 6.6 6.o 4.6 4.0 3.8 2.8 2.1 1.9 1.8.9 1.8 6.5 5.100.0 tomatoes and melons from northern Mexico, fruits from Argentina, Chile, Italy and South Africa, cabbage from Germany and Holland, onions from Spain and Egypt, 1 From Market News Circular, issued by U. S. Dept. of Agr. for New York Wholesale Market, February 15, I924. IMPORTANCE OF FOOD DISTRIBUTION I7 bananas from Central and South America. Because of the diversity and distance of sources, the average length of haul for all perishables consumed in the New York market in I923 was upwards of 1,500 miles. The principal sources which supply the New York market, and the quantity and proportion contributed by each state are given in Table 3. This metropolitan consuming area is of as vital concern to truckfarmers and fruit-growers on the Pacific Coast and in the southern states as it is to nearby sections in the east. Efficient distribution in this area is thus a subject of national importance to food producers. CHAPTER II METROPOLITAN DISTRIBUTION AGENCIES WHOLESALE MARKET Most of the fresh fruits and vegetables for the entire metropolitan area are distributed from a limited and highly centralized wholesale district which occupies about a halfmile of waterfront and adjacent streets along the lower west side of Manhattan Island. The perishable food for nine million consumers passes chiefly through this primary wholesale market. A small portion of the rail receipts is shipped over the New York Central Railroad directly to its Thirtythird Street yard. Minor portions are received also at the New Haven yards bordering the Harlem River in the Bronx, at the Pennsylvania yard in Newark, and at the Long Island Railroad terminals in Brooklyn. Very little local produce comes into the wholesale market from farms within trucking distance of New York, as this is hauled directly to the regional jobbing markets. With the minor exceptions stated, the whole supply of fresh fruits and vegetables passes through the wholesale market. " Through this market must be distributed in the course of nine hours of each day some 40 or 50 commodities representing in their grades upwards of a hundred items of traffic. Few of them are constant for long periods, so that in the course of a season a great many more than a hundred items of traffic are handled. The volume of trade in (all) perishable produce on the New York market is enormous, said to be upwards of seven hundred million dollars a year. The i8 DISTRIBUTION AGENCIES I9 greater part of it falls within four months of the year. Through this market must be negotiated all the irregularities of growing conditions of highly perishable crops that must be rushed at express speed to reach the market under normal conditions, and must not be delayed in distribution when they reach the market itself." 1 From the central wholesale market the supply for the different sections of the metropolitan area has to be hauled to the points of secondary distribution by motor-truck or team. There are no railroad facilities whereby any portion of it may be transported to local distribution points. In consequence of the congestion and heavy hauling charges which attend this addition to street traffic, the expense of distributing goods from the primary market is materially increased. Jobbing Markets There are five jobbing markets through which food supplies pass on their way to different parts of the metropolitan area. These are the secondary channels through which the carlot receipts of the wholesale market are distributed by jobbers to retailers after being split up into smaller sized lots convenient for retail trade. The largest of these jobbing markets is in downtown New York, adjacent to the wholesale section. It extends for several blocks along Washington Street and intersecting streets. This is the principal source of supply for most retailers of Manhattan Island south of Fifty-ninth Street. Stores in Jersey City and other municipalities near the western waterfront in New Jersey also are supplied chiefly from this downtown jobbing market. Most retailers in the borough of Queens, and some in Brooklyn, as well as scattered dealers in upper New York and the 1 Report of Federal Trade Commission on Wholesale Marketing of Food, p. 217. 20 FOOD COSTS AND CITY CONSUMERS Bronx, come here for perishable goods, being attracted to the downtown market by the more extensive supplies available because of its proximity to the primary market. There are two other jobbing markets on Manhattan Island which supply retailers in their respective vicinities. West of Tenth Avenue and below Fourteenth Street is the Gansevoort Market, which is the principal source for the large hotels and restaurants. On the northeast corner of tle Island is the Harlem Market extending from ooth Street to Io6th Street along the East River. From this center are supplied most of the retail trade north of Fifty-ninth Street and that of the Bronx. The Borough of Brooklyn, and a part of Queens is supplied from the Wallabout jobbing market, which is adjacent to the Brooklyn Navy Yard on the East River. The remaining secondary market of the metropolitan area is in the heart of Newark, New Jersey. Most of the retailers of that city and surrounding communities secure provisions there. In each of the jobbing markets, excepting that in downtown New York, there is a farmer's market, with a reserved open plaza, where locally-grown produce is hauled and sold directly to retailers and jobbers by growers and local merchants. The number and location of primary and secondary dealers in the wholesale and jobbing markets are given in Table 4. As frequent changes take place, with the establishment of new firms and the disappearance of old ones, these figures are only approximately accurate. With changing seasons the number fluctuates, increasing in the fall of the year and diminishing in winter and spring. There is also a considerable overlapping of wholesalers' and jobbers' functions, which makes exact classification difficult. Some wholesale receivers do a brokerage business, while some dealers have jobbing branches in the secondary markets in addition to their DISTRIBUTION AGENCIES 21 I TABLE 4 PRIMARY AND SECONDARY MARKETS, NEW YORK METROPOLITAN AREA, I923 Wholesale Firms Wholesalers and large handlers.......... 115 Auction brokers and growers' agents..... 135 Primary dealers........................ Jobbing Downtown N. Y. Market............... W allabout "............... Harlem "............... Gansevoort "............... Newark "............... Other miscellaneous..................... Out-of-town jobbers.................... Secondary dealers...................... Total wholesalers and jobbers............... 250 150 II5 100 IOO 80 50 45 90 630 880 wholesale business. Many jobbers do a semi-retail business also. The total number of individuals and firms carrying on wholesale or jobbing business in fresh fruits and vegetables is estimated to vary roughly from 8oo to I,ooo. From onefourth to one-third of these are wholesale dealers in the primary market. The manner in which goods are received and passed on through the wholesale and jobbing markets for distribution by retailers to metropolitan consumers, is illustrated graphically in Figure I. Retailers A full account of the retailing agencies that serve consumers in the metropolitan area would include not only the local community stores, but also several other types of retail distribution which serve special classes of consumers. In volume of perishable goods sold, and in number of establishments, the grocery stores and specialized fruit and vegetable stores are most important. In the poorer sections of Greater New York there are over fifty retail pushcart markets, in HOW THE NEW YORK DISTRICT RECEIVES AND DISTRIBUTES ITS FRESH FRUIT AND VEGETABLE SUPPLY IOLESALERS 600 JOBBERS RETAILERS 10,000 DOWN-TOWN N.Y. GROCERY STORES It' — " 15 0ISO FIRMS / /l ( Greater N.: ) q~ cl > CZ FIGURE I DISTRIBUTION AGENCIES 23 which seven thousand street vendors sell fresh fruits and vegetables to the extent of about 35 million dollars a year.' Some four thousand itinerant hucksters' wagons also circulate periodically within the metropolitan area. These two types are the most elastic part of the retailing system, providing an outlet for great quantities of low-priced perishables. The large transient and suburban population served by the many hotels and restaurants of New York gives importance to these agencies as outlets for a considerable volume of perishables. To them should be added also the hundreds of railway trains and steamships which are provisioned daily in New York for their outbound trips. Among minor distribution agencies should be considered the roadside market-stands along the rural highways leading out from the metropolitan centers. While these are outlets mainly for seasonal locally-grown farm produce, some of them maintain a continuous trade through summer and fall, with the addition of shipped-in produce from the city. These roadside markets have assumed considerable mercantile importance in recent years since automobile travel has become so general. Receipts from them in several agricultural districts of New Jersey in 1924 were more than double those of the preceding year.2 Recognition of their growing importance is evidenced in recent proposals to standardize them and place them under the supervision of the State Bureau of Markets.3 The miscellaneous retailing agencies just mentioned, including push carts, hucksters, hotels and restaurants, railway trains, steamships and farmers' roadside markets, are estimated to distribute from 20 per cent to 25 per cent of all 1U. S. Dept. of Agr. Preliminary Report, "Push Cart Markets in New York City," by Earl R. French, April, 1925, p. 2. 2 Press Circular of N. J. Dept. of Agr., Bureau of Markets, Oct. 26, 1924. 3 Circular of U. S. Dept. of Agr., " Marketing Activities," Apr. 15, 1925. 24 FOOD COSTS AND CITY CONSUMERS fresh fruits and vegetables consumed in the metropolitan area. The remaining amount, which comprises from 75 to 80 per cent of all receipts, is distributed through local community stores. Because the greater portion of metropolitan consumers make their individual purchases through these neighborhood retail stores, the present study is particularly concerned with their activities. DIFFERENT TYPES OF STORES Within the five boroughs of Greater New York there are upwards of I3,500 stores which retail fresh fruits and vegetables. Over one-half of these are independent grocery stores which carry perishables as an adjunct to their grocery business. Slightly over one-fourth of the total number are specialized retailers handling fruits and vegetables only. Chain grocery stores are one-fifth of the total. The number of each of these three types of retailers in each borough, and the totals for the whole city, are given in Table 5. TABLE 5 RETAIL STORES IN BOROUGHS OF GREATER NEW YORK,1 1924 Manhattan Brooklyn Bronx Queens Richmond Total Unit grocery.... 3215 3016 647 379 36 7293 Fruit-vegetable. 1159 1662 415 261 26 3523 Chain grocery.. 862 1952 392 380 69 2755 Total number... 5236 5730 I454 1020 131 1357I These three types of retail stores vary materially in their importance as outlets for perishables because of wide variations both in volume of total business, and in the proportion of this which represents sales of fruits and vegetables. From inquiries among representative grocers, both independent and chain, the proportion of these articles sold by grocery 1 Data furnished by New York University Bureau of Business Research. DISTRIBUTION AGENCIES 25 stores is estimated to average about 20 per cent of their total trade. The business of fruit-vegetable stores, on the other hand, consists almost wholly of perishables. The apparently smaller size places of business of some fruit-vegetable dealers is considered to be offset by a more rapid stock-turn than that of grocery stores. Giving due consideration to the numerical importance of each store type, and to differences in the proportions of perishables which they handle, their relative importance as outlets for fruit and vegetables in greater New York is: Fruit-vegetable stores, 64 per cent, unit grocery stores, 26 per cent, chain grocery stores, 10 per cent. The specialized retailers are thus of primary importance in city distribution, accounting for nearly two-thirds of all fruits and vegetables sold through neighborhood stores. Independent unit grocery stores dispose of but one-fourth of the total, and chain grocery stores sell only one-tenth. These proportions are regarded as holding true throughout the metropolitan area. Store Management The prevailing form of management in the metropolitan area is that of the single retail unit, operated as an independent neighborhood store. Eighty per cent of the retailers who sell fruits and vegetables operate such independent units. Each unit is conducted by its own local proprietor, who determines its policy and fixes its selling prices according to his own judgment. Of retail shops that sell fruits and vegetables, one-fifth are chain stores. These differ from the independent units in that each one is operated as a part of a unified system controlled by a central organization. Uniform policies and prices are thus established for all stores of a given chain system. There is a local manager for each store, in place of the independent proprietor. The manager conducts the business 26 FOOD COSTS AND CITY CONSUMERS according to standardized methods of procedure, with limited local autonomy, according to a fixed plan of operation and a uniform scale of selling prices. Only such standard commodities are offered for sale as are in general community demand. Specialities that are sought only by a limited number of consumers are not usually carried. By thus limiting varieties and brands, chain stores carry a smaller supply of goods in stock, whose turnover is more rapid than that when a wider variety is maintained. The centralized operation of chain stores gives them distinct advantages in purchasing supplies. Staple articles such as potatoes and apples are purchased in the wholesale market or at shipping points, by expert buyers who can take advantage of favorable conditions in the market. Supplies for the individual stores are loaded at the city receiving point or at the central warehouse into trucks for direct distribution to each store according to the requisition of its manager. In addition to the price advantages from large purchases, the chain system of direct distribution eliminates the expense of trucking to and from the jobbing market, as well as the loss of time required in selecting small individual lots for each store in the jobbing market. The chain store system can thus eliminate certain distribution expenses by large quantity buying and direct delivery of supplies from the primary market, and by its standardized procedure with the variety of goods restricted to articles of general community demand. Specialization Among retailers of perishable produce there are all degrees of specialization, from that of the general grocery store which adds potatoes and oranges to its main line of groceries, to the shops which sell nothing but fruits and vegetables. The line of specialization is therefore not clearly marked. Nearly all grocery stores carry the less perishable staples, DISTRIBUTION AGENCIES 27 such as potatoes, oranges and onions. Many of them carry also seasonal articles that are in regular demand, such as lettuce, spinach, and apples. The larger higher-class grocery stores sell a fuller line of perishables, including the principal specialty articles. Some stores carry a full line of fruits and vegetables and only a limited line of groceries, such as canned goods or coffee and dairy products. The widest variety of perishables is carried by the larger specialized fruit and vegetable stores. Some of these sell only fruits, and others sell only vegetables, but most of them handle both. Preferences of consumers to do all of the daily shopping for family provisions in one store seems to have been the basic inducement for the addition by chain stores of fruits and vegetables to their original lines of general groceries. It is stated that the original purpose in adding perishables was to attract and hold grocery customers, rather than to make a direct profit from the added articles. These were employed to draw trade to the more profitable highly-priced groceries. Some of the chain systems use potatoes in this way frankly as a leader, selling them at prices that yield little or no profit. While the majority of chain stores sell only the more staple fruits and vegetables, the tendency in many of them is to increase the variety of perishables so as to include all seasonal articles whose demand is general enough to assure a profit. Classes of Retail Trade There is marked divergence in the classes of retail trade in different parts of the Metropolitan Area. Gradation from an exclusive high-class residence section with luxurious apartments to one occupied by the poorer working classes is often found within a range of but two or three city blocks. The intermingling of such diverse areas is attended by wide 28 FOOD COSTS AND CITY CONSUMERS diversity in the class of trade. Variability in tastes and in purchasing power increases the diversity of food articles that are required by different consumers. Shops carrying only the highest qualities of goods for an exclusive trade are often located in close proximity to those carrying the cheaper goods for a more modest trade. Stores which attempt to serve both classes must carry a variety of extraquality goods for wealthy residents and the standard brands for the others. Retailers catering to the higher-class trade sell the widest variety of high-quality goods, and render the maximum of service. Their stores have wide frontage with spacious interiors, requiring high rentals. In the poorer neighborhoods where lower rents prevail the low-price stores predominate. They carry a restricted variety of staples and the cheaper grades of seasonal commodities. The stores are usually small, with narrow frontage, oftentimes occupying but one-half the space and frontage of a standard sized store. These low-price retailers render the minimum of service, grant little or no credit and make few or no deliveries. The most numerous retailers are those operating stores whose trade is with the great body of middle-class families of moderate incomes. The characteristics of this trade are standard qualities and a considerable variety of staple and seasonable commodities, with moderate prices. Limited credit is granted to regular customers, with limited delivery service. There are also numerous large general stores whose business is extensive enough to include both a high-class clientele and the medium and low-price trade. These maintain the most extensive stocks of goods, and the largest personel. For the exacting high-class clientele they carry fancy specialty goods, while they keep also an extensive stock of standard articles to supply the low-price trade. Large-scale operation enables these general stores to sell the DISTRIBUTION AGENCIES 29 widest range of commodities and to keep the fullest supply of fresh goods. Size and Equipment of Stores The size of business is, of course, highly variable, ranging all the way from that of a small fruit store whose proprietor is the sole attendant, to the large establishment with as many as eight to ten employees. The most numerous type of retail store, both grocery and fruit-vegetable, has a staff of two persons, a store frontage of 12 to 18 feet, and a depth of 20 to 30 feet. The staff consists of the proprietor and an employed helper, husband and wife, or a dual working partnership. Many stores are operated as family enterprises, in which the parents or father and son or daughter provide the attention and labor. The proportion of larger stores with eight to ten employees is not great, but the total volume of their business is much greater than their proportionate number. In these larger stores there is usually one person who keeps accounts, and another to make deliveries. The smaller stores which deliver often hire a boy or a man on a part-time basis for this purpose. Store frontages vary from narrow shops that are little more than stalls, not exceeding 6 or 8 feet in width, to double fronts of 24 to 30 feet. The most common size of frontage is I2 to 15 feet. It tends to be narrower in the higher rent districts. Where a grocery store handles fruits and vegetables, the full frontage is generally used for displaying perishables. The depth varies all the way from io feet to 40 feet. The rear part of the store is generally used as a temporary storage for supplies. A few stores have cellars which are used for this purpose, but their number is limited. Most retailers have a desk or an office in the rear end of the store for the keeping of business records; but many of the smaller ones use only the drawer of a cash register for this 30 FOOD COSTS AND CITY CONSUMERS purpose. Chain stores frequently occupy but one-half of the frontage and space of a divided store, thereby cutting down the item of rent. Fruit and vegetable retailers often use half of a store in a similar way. The equipment outside the store is that required for bringing in supplies from the jobbing market, and for delivery to customers where this service is rendered. The smaller stores have no inward delivery facilities, finding it cheaper to hire delivery or to buy from small jobbers who deliver to their store without charge. Many of the larger stores maintain a horse and wagon or a medium-size auto truck for bringing their supplies from market, using the same vehicle for delivering sales to customers. Most retailers prefer the automobile to the horse and wagon. Some of them, however, hold that the horse and wagon is more economical, because it requires less high-priced labor to operate. The trading area of the retail store varies according to location and size of business. The radius of stores in the congested residence sections often does not extend more than two or three blocks distant, and in many cases it is less than that. EVOLUTION OF PRESENT DISTRIBUTION SYSTEM In the days when New York was a thriving small city, its supplies of fresh produce were grown on nearby farms and were sold in the local market by the growers directly to the householders. The family market-basket and the regular trip to the city-owned farmers' market were then established institutions. "Relative to their actual needs and standards of life, the early New Yorkers and their markets were more ' modern' than they have been since. New York City was well served when all its perishable food came from the neighboring farms. Much of it was brought by barge, and the early market places were at the water side. In Revo DISTRIBUTION AGENCIES 31 lutionary days there were four such markets along the shore line, with one interior market on Broadway. The markets that followed were mostly at interior points, but they remained distinctly market-basket markets, supplied from the farms of the country-side. By I838 there were 13 such city markets. The farm-wagon markets which attach to the Wallabout, the West Washington and Harlem Markets, are relics of the early marketing system when the country-side from a radius of 30 miles supplied the city entirely." With the growth of population and the need for production from distant points to meet the city's increased food requirements, changes came about in the whole scheme of distribution. Rapid long-distance shipment of perishables, made possible by the extension of railroad transportation and the use of refrigerator cars, rendered the earlier system of local markets entirely inadequate. A complete change thus took place in the distribution of farm produce, in which commission merchants and jobbers gradually came into the market as intermediaries. With the introduction of the wholesaling principle, the function of provisioning the family, which was performed earlier through the local farmers' markets, was taken over by neighborhood retail stores. " The corner grocery and produce stores have now superseded the housewives' market-basket of the early day in the habits of New Yorkers. So it has come about that the public market-places originally designed for other purposes have gradually integrated with a scheme for distribution based upon deliveries at the rail and water terminals of the public carriers, with a distribution effected through an elaborate machinery of wholesalers, jobbers and retailers." 1 The geographic location of present wholesale and jobbing markets and the channels of distribution to retail 1Report of Federal Trade Commission, p. 204. 1Ibid., p. 205. 32 FOOD COSTS AND CITY CONSUMERS \ ISLAND C~) Pr/m ary Wholesale Mfarket ('\ dbbine Markets: (W, Wallabout, Brookilyn; G, Gans7evoort, Manhattan; 0 ~~~~~H. Harlem, M-anh a f/tan, N. Newark, Nd.) I* Retail stores included in this study FIGURE 2 DISTRIBUTION AGENCIES 33 stores in various parts of the metropolitan area, are indicated in Figure 2. The advent of modern apartment houses and large tenements with their restricted space and lack of facilities for keeping provisions, have forced radical changes in the foodpurchasing habits of consumers. The household now seldom carries any stock of family provisions, but makes food purchases from day to day at the nearby retail store, with no need to look forward and plan its requirements in advance. The neighborhood store has replaced the pantry and provision cellar of earlier days. The retailer keeps a small stock of provisions on hand, and replenishes his supply from the current market arrivals, which provide a fresh and continuous stream of goods assembled from near and far. These changes in supply and in the methods of distribution bring conveniences and services to the consumer that were undreamed of by the housewife of former periods. " There has grown up the neighborhood grocery store to do for the housewife what she has gradually ceased to do for herself, namely, to buy and bring into the neighborhood, to select and assort, and invitingly exhibit the receipts of the general market in such a way as to suggest and facilitate the daily home menu. The delicatessen store carries the process yet a stage further and serves partially prepared food; while the wagon and pushcart peddler wheels his assorted supply under the flat dweller's window. Along with the goods which he delivers, the neighborhood grocery man or delicatessen man has come to perform a very large personal service in this way; and he furthermore holds himself ready to perform this personal service during any hour of the day or night that his store is open, and to deliver in any irregular quantity that the passing whim of the housekeeper who has not planned ahead may impose upon him." Any fair 1 Ibid., p. 217. 34 FOOD COSTS AND CITY CONSUMERS evaluation of the present methods of food distribution must take account of the important place of personal service in consumers' purchases. " This sale of personal service along with the commodity is the striking phase of the New York produce distribution. It is a large item in the high cost of the produce sold. It is true the vagaries of the ultimate consumer are not directly handled by the wholesaler and jobber, but they are among the ultimate factors with which they must reckon, and for which they must provide by assorting and packing and searching out the markets for their particular goods." RETAILERS' GENERAL FUNCTIONS The retailer's important place in the distribution system is due to several essential functions which he performs for the community. The title of "consumer's purchasing agent" aptly characterises his role as an agency for meeting the individual requirements of the consuming public. In filling this role, he performs various services that are an inseparable part of the system of distribution as constituted at present. These services take form in a variety of distinct activities that may be grouped in the following manner: Assembling in one conveniently accessible place a variety of different commodities required by his trade. Maintaining at all times a fresh daily supply of the articles available in the market. Breaking up the shipping package or jobbers' unit into small-quantity units convenient for consumers' individual requirements. Selecting, grading and arranging his goods for retail sale. Displaying his stock for inspection and selection by customers. Measuring, weighing or counting each sale, putting it up in a convenient package for delivery, computing its value, and securing payment from the customer. DISTRIBUTION AGENCIES 35 Assembling a Convenliently Accessible Variety of Goods The diverse preferences of consumers for variety in their food require retailers to maintain a wide range of articles to satisfy various classes of trade. The demands of customers has much to do in determining the extent of the line of goods offered for sale. Frequent experimentation shows the extent of the demand for particular products. Competition may lead dealers to carry articles that bring little or no profit, in order to hold trade which might otherwise drift away to other dealers. Addition of new articles to a line of goods tends to reduce the volume of sale of the others; and each increase in the number of individual items carried in stock increases the risk of loss through incorrect estimate of the quantity of each which can be disposed of promptly. In consequence of the wide variety maintained, purchases in the jobbing market must be made in numerous small quantities extending over a wide range of articles. The extent to which retailers render service by bringing together in their community a variety of products from widely separated regions, is well illustrated in Table 6. This list contains 32 varieties of fruits and 40 kinds of vegetables, assembled in one grocery store for a single day's business. They are products of widely divergent sources, some of them as distant as California, Central American and Spain. Each variety was purchased in the jobbing market in a separate package or in bulk, in quantity sufficient to satisfy a number of individual customers' wants. Although the range of commodities and varieties in the example given is greater than that maintained by the majority of retailers, it would probably be exceeded in numerous stores at the height of the season. 36 FOOD COSTS AND CITY CONSUMERS TABLE 6 VARIETIES DISPLAYED FOR SALE BY A MANHATTAN GROCERY STORE, WEDNESDAY, OCTOBER 22, 1924 Fruits Variety Banana apples................... Delicious apples.................. Jonathan apples (2 sizes)......... Greening apples.................. Twenty-ounce apples............. Red bananas..................... Yellow bananas.................. Crabapples....................... Cranberries...................... Concord grapes................... Delaware grapes................. Niagara grapes................... Camille grapes................... Malaga grapes................... Seedless grapes................... Grapefruit (3 sizes)............. Huckleberries.................... Lem ons.......................... Casaba melons.................... Honey Dew melons............... Oranges (2 brands).............. Peaches (2 grades)............... Raspberries...................... Alligator pears................... Bartlett pears.................... Bartlett pears.................... Bosc pears....................... Cornice pears..................... Seckel pears...................... Seckel pears...................... Persimmons..................... Blue plums....................... Yellow plums.................... Quinces.......................... Source Pacific Coast Pacific Coast Pacific Coast New York State New York State Central America Central America New York State Massachusetts New York State New York State New York State California California California Florida New York State California California California California New Jersey New York California California New York State California California California New York State Southern States New York State New York State California DISTRIBUTION AGENCIES 37 Vegetables Artichokes....................... Beets............................ Brussels sprouts.................. White cabbage................... Red cabbage...................... Savoy cabbage................... Cantaloupes...................... Carrots.......................... Cauliflower...................... Celery........................... Celeriac.......................... Chickory........................ Sweet corn....................... Cucumbers....................... Egg plant........................ Kohl rabi........................ Boston lettuce.................... Lima beans....................... Green onions..................... Silver skin onions................ Spanish onions................... Yellow onions.................... White potatoes................... Parsley.......................... Green peas....................... Red radishes..................... White radishes................... Rutabagas....................... Salsify.......................... Spinach.......................... Green string beans................ Yellow string beans............... Sweet potatoes................... Tomatoes........................ White turnips.................... Water cress..................... California Local Local New York State New York State New York State Colorado New York State New York State New York State New York State Long Island New Jersey New York State New York State New York State New York State New York State Local New York State Spain New York State Long Island Local Local Local Local Local Local Local Local Local New Jersey New Jersey Local Local Maintenance of Continuous Supplies To maintain a stock of perishable goods in attractive salable condition, the retailer has to replenish it frequently with repeated small additions. He must therefore buy goods 38 FOOD COSTS AND CITY CONSUMERS daily in summer, and at least two or three times a week in cool weather. He cannot take advantage of heavy market receipts to stock up against price advances, but must estimate carefully the requirements of his trade from day to day. The demand for a wide range of articles, the diverse qualities and grades of goods available in the market, and the necessity of keeping his stock in fresh condition, thus combine to force the retailer to make frequent purchases in the jobbing market, in relatively small quantities. Breaking up Shipping Package into Consumers' Sale Units Fresh fruits and vegetables are bought and sold in the New York wholesale and jobbing markets mainly in the original shipping packages,-in crates, boxes, barrels, baskets, sacks, or in bulk by the hundred-weight or hundred-count. Retail sales are made in small quantities, in terms of a few pounds or quarts, by the dozen, or by single count. To dispose of a single retailer's package or a hundred-weight in this way requires from fifteen to fifty separate transactions. Although a limited number of consumers buy their supplies in considerably larger quantities, this small size retailing is the prevailing practice throughout Greater New York. In the surrounding smaller cities and suburban centers the proportion of larger size sales is somewhat greater. The extent of breaking up involved in retail distribution may be illustrated by the manner in which a carload of lettuce is subdivided. There are approximately 320 crates in a carload of New York State lettuce, and each crate contains two dozen heads. The ordinary sale to a jobber is twenty crates; thus sixteen sales are made in the wholesale market to dispose of a carload to the jobbers. The prevailing sale to retailers is a single crate. To distribute the carload into the hands of retailers thus requires 320 transactions by jobbers. When the housewife buys a single head of lettuce she pur DISTRIBUTION AGENCIES 39 chases one twenty-fourth of a crate. If each retail sale consisted of a single head, the retailer would thus have to make twenty-four transactions to dispose of a single crate of lettuce. To distribute a whole carload to consumers in single-head sales would thus require 7,680 retail transactions. In the break-up of a package into small units of sale, some loss in volume is almost inevitable. With many commodities exactness in weighing or measuring is difficult to attain, and any slight error is expected to be in the customer's favor. There is thus a considerable element of shrinkage in retailing, due to the division of a package or gross quantity into numerous small units. There is another source of loss, arising from portions of packages remaining unsold. Frequently a retailer has an insistent but limited demand for a particular article, so that he finds it difficult to dispose of an entire package. To carry it on hand at all he must ordinarily buy an unbroken package from the jobber, with the prospect of having part of it unsold on his hands. In one such instance a grocer sold five quinces to a valued regular customer, charging ten cents apiece for them. To the customer's protest against what was considered an exorbitant charge, the retailer explained that he had had to buy a whole bushel of quinces in the market to fill the one order, and that there was so slight a call for them from his regular trade that it was doubtful if he could sell the rest of the bushel at all. Assorting and Arranging Goods for Sale In retailing perishables, a considerable amount of time and labor is required to prepare goods for sale and to keep them in salable condition after they arrive at the retail store. Carefully packed and graded articles such as oranges and boxed apples may require simply the removal of their paper wrappings. But even the most rigidly packed goods de 40 FOOD COSTS AND CITY CONSUMERS teriorate to some degree in storage or in shipping, so that when opened for sale the package may contain defective specimens. With careless grading and packing inferior articles may be included, which make it necessary to re-sort the package into proper grades or sizes for retail sale. The work of putting goods into salable condition is generally done after they are received at the store, although a small proportion of jobbers recondition and repack their merchandise and guarantee its quality. Leafy vegetables such as lettuce, cabbage and celery become soiled or withered through handling or exposure in shipment, so that the outer leaves must be removed. Root vegetables are often dirty, so that they require cleaning at the store. Some articles require a moist atmosphere to maintain crispness, and these must be kept sprinkled with cold water or enclosed in a cool chamber. The insistence of consumers upon the privilege of sorting over a retailer's stock to select their purchases is an important item in increasing distribution expense. In making their selections, prospective customers frequently handle goods and leave the rejected articles soiled or disarranged. After a display has been handled by several customers, its attractive appearance is lost and its salability is thus impaired. Illustrative of this, a critical consumer of a high-class store selected three ears of sweet corn out of a dozen and discarded the other nine after opening their husks, because the kernels were not filled out to the extreme tip of the cob. With this mark of handling, the rejected ears could be sold to other customers only at a reduction in price, although they were sound and of good quality. The first customer's objection to the high charge for three ears of corn sorted out of an entire dozen, in comparison with the per-dozen quotation for standard goods in the wholesale market, overlooked entirely the loss which the retailer must bear on rejected goods because he grants the privilege of selection. DISTRIBUTION AGENCIES 4I Display for Inspection Display of the retailers' wares for the observation and inspection of customers is so general a practice that it is hardly thought of as a distinct function of distribution. Yet this is a real service which requires much effort on the part of the retailer. Consumers insist upon seeing the goods offered for sale, so that they may inspect them before purchasing. In recognition of this preference, retailers generally display IGURE 3 their stocks as freely and as attractively as possible. A large proportion of the goods they sell are first transferred from containers and arranged upon benches or racks or counters, where they will be easily accessible to customers. This arrangement of goods requires quite an outlay of time and labor, in addition to the store space which they occupy. A typical display of fruits and vegetables in front of a Manhattan store is shown in Figure 3. 42 FOOD COSTS AND CITY CONSUMERS MAKING THE SALE The services heretofore described are all performed in anticipation of consumers' requirements, and in advance of sale. They are preliminary to the retailer's immediate purpose, which is to make individual sales of his goods in the kind and quantity desired by his customers. Filling a customer's order involves a number of separate acts, viz: (a) taking from the display space or from the reserve stock the goods desired by the customer, (b) weighing or measuring or counting the desired quantity, (c) putting this up in a satisfactory package for delivery to customer, (d) computing the amount of the sale, (e) making a record of the transaction, and (f) obtaining payment. These final acts in completing a retail transaction are preceded by a number of preparatory steps on the part of the retailer. Each sale is a matter of individual personal attention. Each of these separate acts has to be repeated to fill each customer's order. They are performed millions of times a year by the retailers who supply metropolitan consumers with their daily food. PHYSICAL LOSSES IN RETAIL SELLING Losses in physical volume occur in the handling of perishables to a much greater extent than with more highly standardized non-perishable goods. The wide variability in qualities produced in different seasons and different shipping areas, and variation in grading and packing for market, make it difficult to avoid a considerable loss from these causes. Despite the improvement that has been made in market standardization, the diversity of conditions of production and shipping prevents the general application of rigid standards such as are possible with non-perishables. A favorable season with abundant high-quality goods may be followed by one of limited supplies and inferior qualities. Weather conditions in the period between packing of goods and de DISTRIBUTION AGENCIES 43 livery to consumers, also, have much to do with the condition of fruits and vegetables when finally offered for consumption. Physical losses in retailing arise from several sources. One of these is the shrinkage in volume accompanying the regrading and reconditioning of articles when removed from the original package for sale. For example, in hampers of lettuce and in barrels of apples inferior specimens are often found, which can be sold only at reduced prices, or may have to be discarded entirely. Specimens of cantaloupes are frequently bruised in shipment so that decay sets in. Reselection for retail sale thus entails considerable loss in volume. Loss in volume also takes place from shrinkage in actual contents of the original shipping package. Goods which evaporate quickly lose considerable weight between the time of packing and the time of retailing. A barrel of spinach, for example, whose contents normally weigh about 35 pounds, may vary in weight o or 15 pounds. With highly perishable commodities, too, occasional losses are hard to avoid from non-sale of sound goods, because of the retailer's inability to gauge accurately the consumer demand at a particular time. Even with drastic reductions in price, goods frequently remain unsold until so deteriorated that they have to be thrown away, thus entailing a total loss to the community. Skill of the retailer in making his purchases is necessary to prevent considerable loss from this source, especially in warm weather. In the absence of quantitative studies of the physical losses incurred by American retailers from these sources, one can only hazard a rough guess as to their average amount. An extensive inquiry in I923 by the British Ministry of Agriculture,1 into the expense of distributing fresh fruits and 1 Interim Report on Fruits and Vegetables, by Departmental Committee on Distribution and Prices of Agricultural Produce, I923, p. 63. 44 FOOD COSTS AND CITY CONSUMERS vegetables in English towns and cities, indicated that the average losses in volume in retailing had a range from 8X2 per cent to I9 per cent, classified under the following four headings: Loss in volume Reselection: sorting, grading and marking down for deterioration.................. 2 per cent to 5 per cent Losses in retail weighing and measuring... 2~ " to 44 Short weight or count in original packages.. 2 " to 5 " Unsold goods............................. 22 " to 4 Total physical losses................. 82 per cent to I9 per cent The lower figures are for cooperative stores, while the higher ones are for private retailers. Assuming similar conditions to exist in American retailing, it seems probable that the physical loss in selling perishables through retail stores is generally in excess of ten per cent of their original volumes. RETAIL PRICE POLICIES A canvass of typical metropolitan stores indicated that among independent retailers no uniform or systematic plan is adhered to in fixing their selling prices. Past experience and the practices of competitors appear to be the principal guides. Some high-class retailers, however, whose stores are conducted on strict business principles, have a consistent policy of adding to the cost of their goods a definite percentage which is considered necessary to cover retailing expenses. A number of retailers who were personally interviewed stated that changes in their selling prices were made according to changes in the actual cost of their new supplies, and not in conformity with general changes in market quotations. This indicates that some retailers advance their selling prices to coincide with the actual increase in outlay, rather than simply to parallel current market variations. Consequently DISTRIBUTION AGENCIES 45 a lag exists between wholesale and retail prices, whose interval represents the time required to dispose of the retailer's usual stock on hand. Price reductions appear to operate in a similar way, although competition tends to force retailers to bring their prices into line with those of other stores which have purchased new supplies at lower cost. Competition is thus a dominant influence in bringing about price uniformity, tending to hold the prices of competing retailers in a locality close together. The higher-class merchants feel competition less keenly than do the middle-class and low-price stores, because the former have a greater measure of local monopoly in the sale of guaranteed high-quality goods. Not only is it true that the usual supply of such goods is so limited that they do not come into competition with the general market supply, but the customers of high-class stores are probably less sensitive to price changes. Sharp price changes have disadvantages to consumers as well as to retailers. The public becomes accustomed to an established price, and is disturbed by sudden changes. Consumers seem to buy according to habit rather than from conscious motives of economy. Retail prices are therefore relatively much more stable from week to week than are wholesale prices. Rather than to attempt adjustment of prices to accord with slight market changes, retailers find it more satisfactory to maintain fairly steady prices at levels which will cover the ups and downs of the market. Retail price variations for different qualities and varieties, are much less marked, also, than are these variations in the wholesale market. GENERAL EXPENSE OF DISTRIBUTION The incompleteness of retailers' sale records, and the lack of detailed statistical studies in this field, make it difficult to obtain anything more than general statements of approxi 46 FOOD COSTS AND CITY CONSUMERS mate retailing expense. Such studies as have been made have dealt for the most part with general groceries, or with particular single commodities such as bread, meat, and milk. The Joint Commission of Agricultural Inquiry, appointed by the 67th Congress of the United States, conducted extensive studies in I92I into the marketing and distribution of foods and other articles. Surveys of the distribution of perishable farm products in Metropolitan Boston have also been made by the Massachusetts Department of Agriculture, in cooperation with the United States Department of Agriculture. A survey of the sale of perishable goods in the Center Market of Washington, D. C., was conducted in 1923 under the direct supervision of the United States Department of Agriculture. A number of other studies into the retailing of particular articles have been made in the last few years by the same agency. In England, also, an extensive survey of the marketing of fruits and vegetables was conducted in I9123 by the British Ministry of Agriculture. Analysis of the operating expenses of grocery stores have been made by several agencies. The Federal Food Board and the New York State Food Commission in I917 made a wartime study of prices in representative grocery stores and meat stores in Greater New York. The most comprehensive and detailed studies in this field are those by the Harvard Bureau of Business Research, which are based upon financial statements from a large number of retailers in different towns and cities of the United States and Canada. The University of Wisconsin, the University of Nebraska, and the University of Oregon have conducted more limited similar studies. Although the studies by various agencies are too greatly diversified in scope, duration, and method of analysis to justify detailed comparisons, it is instructive to observe their general results. A summary of these studies and of such DISTRIBUTION AGENCIES 47 others as have come to the writer's attention, is therefore presented in Table 7. This gives the agency making each of the respective studies, the scope of the inquiry, and the approximate average retailing expense, expressed as a percentage of total receipts from sales. This percentage margin thus indicates the portion of the consumers' outlays which was required to cover the retailing services. The footnotes indicate the publications or manuscripts in which details of the respective studies are set forth more fully. The various studies show a range in the proportion of retailers' receipts absorbed in the distribution process from a minimum of I4 per cent to a maximum of 61 per cent. The margin for fruits and vegetables is seen generally to be noticeably higher than that for other food articles. These perishables have a range in eleven independent studies from 20 per cent to 6I per cent, while the range in nine studies of other foods ranges only from 15 per cent to 23 per cent. It is interesting to note that the expense of retailing perishables in English towns and cities was found to be considerably less than that shown by the studies of American retailers. The generally higher margin on perishable articles, in comparison with the more staple foods, accords with what would be expected in consequence of the losses in physical volume incurred in retailing fruits and vegetables. In the Harvard analysis of statements of 471 retail grocery stores in the United States and Canada for I923, the principal items in store operation expense were found to be salaries and wages, rent, delivery, interest and losses from bad accounts, and miscellaneous expense for advertising, wrapping and sundry items. Salaries and wages were I0.5 per cent of the entire expense. The average expense for rent was 1.3 per cent of the net sales; for stores in large cities of 400,000 population or over, the rent item was slightly greater, being 1.7 per cent of net sales. The allow 48 FOOD COSTS AND CITY CONSUMERS ance for interest and losses from bad accounts together comprised 1.4 per cent, while delivery expense was I.3 per cent. Advertising, wrapping and miscellaneous outlays absorbed 2.5 per cent. The total expense for the 471 stores was I7.3 per cent of net sales, and the net profit averaged 1.8 per cent, making the total margin to cover all expenses and profits I9.I per cent. The overshadowing item of expense was that for salaries and wages. Rent and delivery expense, with interest charges and losses from bad accounts, were of minor importance in comparison with that of personnel. Salaries and wages, rent, and delivery expense, together accounted for about three-fourths of the total operating margin. Relation of Size of Business to Operating Expense In size of annual business transacted, there was a variation in the 471 stores of the Harvard Study from less than $30,000 to over $I50,000. The stores were divided into five groups according to size of business. The stores having the lowest proportionate operating expense were those whose annual volume of business was between $50,ooo and $ioo,ooo. The highest proportionate operating expense was in the smallest stores, those doing less than $30,000 of annual business. This group of small stores paid out 13 per cent of their gross receipts for wages, salaries and rent, whereas the larger-store group paid only I 11.5 per cent for these items With the latter group there was an average net profit of 2.3 per cent, while the small-store group showed a slight net loss of 0.3 per cent. An analysis of the retail meat trade in New York City showed similarly a decline in gross margin with increased size of business. While stores doing $25,000 or less annual 1 Data collected for 1917 by Federal Food Board; reported in U. S. Dept. Agr. Bulletin 1317, Jurte, 1925, page 65. DISTRIBUTION AGENCIES 49 business operated with an average gross margin of 18.4 per cent of sales, those with $5o,ooo to $Ioo,ooo had a gross margin of only I6 per cent. In the latter study, as in the Harvard Study, the rate of stock-turn, computed as the quotient of the year's total cost of goods and the inventory at the beginning of the year, increased regularly with the increase in total volume of sales. In the smallest stores of the Harvard Study the average stock-turn was only 8.2 times a year, while in the $50,00ooo$oo00,000 group it was Io.6 times, and in the $I50,000 group it was II.0 times. The larger the annual volume of business the more rapid was the movement of goods, and hence the smaller was the proportion of goods carried on hand. Moreover, the stores with the highest stock-turn were the ones with the lowest total expense, and the highest net profit. From these studies it appears that small retail units moved their goods more slowly than the larger stores, and that they generally required a larger proportion of income for operation of the business. An undue proportion of the receipts of the small business units was absorbed by salaries, wages and rent. As the general movement of fruits and vegetables is necessarily much more rapid than that of staple groceries, the rate of stock-turn on perishable articles would seem to be even more closely associated with retailing expense. If this expense for perishables varies with the size of annual business as it does for groceries, then the small store seems to be at a particular disadvantage in distributing fruits and vegetables. 50 FOOD COSTS AND CITY CONSUMERS TABLE 7 DISTRIBUTION EXPENSE SHOWN IN SOME OTHER STUDIES Agency making Study '4 V P,.^ tionship between total distribution _z / expense and total retail value, with o0k a5~ / { ~the curve bending toward the totalretail-value axis. TOTAL RETAIL VALUE c. Analysis of the relationship bec tween total distribution expense and @,, total retail value reveals a direct oZ ~ curvilinear association between ~S ~o /^~ ~spread per pound and retail price cn 0 —! 4-j I, 0 P4 W p.4 vo NW Column No...... Formula....... Symbol....... '7 NRa Vra VWa Commodity: Northern potatoes Southern potatoes Calif ornia oranges. Peaches....... Sweet potatoes.... Cantaloupes..... Boxed apples..... Southern cabbage.. Barreled app~les.... Eastern lettuce.... Western lettuce.... Yellow onions.... Northern cabbage White onions..... 1,550 2,2301 3,465 1,985 i,Soo ",555 3,265 1,770 1,885 1,770 2,255 1,675 1,405 2,150 C" 970 1,38o1 2,015 1,100 1,000 835 1,750 930 970 865 i,o8o, 745 590 8o5 Cd 2,230 3,475 1,985 1,900 1,54-5 3,355 1,935 1,820 2,285 1,700 1,455 2,220 Cd 0 99C 1,38c 2,01C 1,090 1,02C 1,780 950 975 88o 1,075 795 605 Sic C" 0 1,090 1,560 2,250 1,280 1,155 950 2,1i60 1,140 1,120 1,1 10 1,250 920 745 1,070 En U 4.1 7.41 1I1.0 I11.9 8.9 7.6 10.9 9.4 8.o 13.0 '4 7 7.' 5.2 9.0 7.7c 0 U 2.4 4.21 6.3 4.4 4.1 4.4 3.7 6.4 7.0 3.2 2.0 3.2 4.1Ic U U 2.7 4.7 7.2 7.3 5.' 4.7 7.2 5.4 4.3 8.2 8. i 3.7:2.5 4.3 4.7c. Weighted mean.... 1$2,065 1$1,145 $2,I5 $ I501$1,330 1 Based on 12 months' average prices. STATISTICAL APPENDIX ANALYSIS OF COMMODITY (ALL STOREi TYPEs)-Continued '4' Total Value of Commodity 1923 N 0.4 0 cis 0 a) 0 — a)1 Column No...... Formula....... Symbol....... Commodity: Northerui potatoes Southern potatoes Calif ornia oranges Peaches....... Sweet potatoes.... Cantaloupes..... Boxed apples..... Southern cabbage Barreled apples. Eastern lettuce.... Western lettuce.... Yellow onions.... Northern cabbage White onions..... 25 VraE 0-Ic V00.0 0a 23,111 15,855 1 22,419 9,288 4,601 7,469 21,040 4,211 17,936 8,944 4,404 9,037 2,373 1,290 25a, V 10.4 14. 3.03 4.94 24.8 6. i8 5.9 2.9 53.9 i.6.8 0N a) 0c $-. CA 0 ~0 o 0 E-q 14,465 9,8101 13,265 5,145 2,555 4,011 11,277 2,210 9,230 4,370 2,110 4,290 995 485 CU a)U 0 C.) 26a, 17.2 ii6 15.7 6. i 3.0 4.8 13.4 2.6 11.0 5.2 2.5 1.2.6 100 0 C U c. 27 VjuE 0l-,n0 0.. I= 0 16,252 11,090 14,814 5,989 2,952 4,563 13,919 2,712 10,657 5,609 2,441 4,963 1,258 642 97,861 Total....... 151,978 100 j 84,218 1 Based on i12 months' average prices. I42 STATISTICAL APPENDIX ANALYSIS OF COMMODITY (ALL STORE TYPEs)-Continued Size of Standard Sale $_1W t U. -, Column No. 27 2829n 30 Symbo Qr Qj a c~~-( Cd 0. 0 C E Cd W a P c Column No........... 27 28 29 30 Formula...... Symbol.............j Qr Q. Q Commodity: 0 0 F F P.4 P- P-, P. Northern potatoes 5 to8 6.50 200-250 225 Southern potatoes 3 to 4.5 3.75 165-200 183 California oranges... 2 to 3 2.50 75-93 84 Peaches...5 to 3 2.25 60-70 65 Sweet potatoes.2.5 to 3 2.75 50-100 75 Cantaloupes.3 to 3.5 3.25 90-102 96 Boxed apples........ 1.5 to 3 2.25 40-120 8o Southern cabbage.... 2 to 3.5 2.75 90-100 95 Barreled apples 2.5 to 3.5 3.00 50-150 100 Eastern lettuce 1.5 to 2 1.75 48-60 54 Western lettuce I to 2 1.50 48-68 58 Yellow onions....... 2.5 to 4 3.25 100-120 110 Northern cabbage 3 to 5 4.00 120-130 125 White onions.. 15 to 3 2.25.. 100 Weighted mean.. 3.28 112 STATISTICAL APPENDIX I43 ANALYSIS OF COMMODITY (ALL STORES AND UNIT STORES) Mean Value of Standard Sale Ls Pra 0 4 _ Pr 31 RA LX Pra c 32 ra 32 QrPra Zra LI ap, aZ r C S cd0 Cd 33 34 Ru QrPru Pru Zru AY* Ydi ^^ ^rt I e13 -ecn -~ Pru Zru la "0 C Cn ~d 0 I II s.. 35 QjPju Zju Column No.......... Formula............ Symbol............. Commodity: W V Northern potatoes... Southern potatoes... California oranges... Peaches............. Sweet potatoes....... Cantaloupes......... Boxed apples........ Southern cabbage.... Barreled apples...... Eastern lettuce...... Western lettuce...... Yellow onions....... Northern cabbage.... White onions........ 4.I 7.41 11.0 Ir.9 8.9 7.6 10.9 9.4 8.0 I3.0 14.7 7.1 5.2 9.o U 26.7 27.8' 27.5 26.8 24.5 24.7 24.7 25.9 24.0 22.8 22.1 23.1 20.8 20.3 0u 4.2 4.2 7.4 11.2 12.0 9.4 7.6 11.2 96 8.2 13.4 14.9 7.2 5-4 9.3 7.9 V 27.3 27.8 28.0 27.0 25.9 24.7 25.2 26.4 24.6 23.5 22.4 23.4 21.6 20.9 25.9 V) 0 6.08 8.6o 6.05 4.75 3.83 4.5I 5.76 5.I3 4.30 4.43 4.70 4.07 3.I3 4.30 5.25 Weighted mean.... 7.7 25.3 1 Based on 12 months' data, 1923. '44 STATISTICAL APPENDIX ANALYSIS OF COMMODITY (ALL STORE TYPES) Number of Sales 0~, DP4 Z,n E36 VraZra Sr 0 cd 0$ c0 V 37C' 3j7 Qj.0 ZIn Wj 0l l 38~Sr $ cCd a)I 0 H4C E rn z CA o (A 164C39R -o 0.0 0) S a)4 - 4, 0 ESj H Io 0 40a Column No...... Formula....... Symbol....... Commodity: Northern potatoes.. Southern potatoes Calif ornia oranges. Peaches....... Sweet potatoes.... Cantaloupes..... Boxed apples..... Southern cabbage Barreled apples. Eastern lettuce.... Western lettuce.... Yellow onions.... Northern cabbage White onions..... Total....... Weighted mean on 5,805 8,020 12,380 7,405 7,345 6,295 13,220 6,835 7,85 5 i7,765 10,205 7,250 6,755 10,590 8,145 V I78 i8o 381 269 300 213 375 221 260 252 266 227 240 250 33 45 32 28 24 30 35 31 30 3' 38 32 28 43 -0-' 0 0.0 86,553 57,014 8i,5ic 34,640 18,774 30,235 85, I9c i 6,26c 73,739 39,237 19,930 39,114 11I,409 6,354 599,967 0 4) 14.4 9.5 13.6 3.1 5.0 14.2 2.7 12.3 6.6 3.3 1.9 I.1I 100 0-4.0 2,654 1,280 2,509 1,259 767 1,023 2,417 526 2,474 1,273 519 1,225 405 150 18,48i V I.U 4) 14.4 6.9 13.6 6.8 4.2 5.5 13.1 2.8 13.4 6.9 2.8 6.6 2.2.8 100 250 1 32.5 STATISTICAL APPENDIX ANALYSIS OF COMMODITY (ALL STORES AND UNIT STORES) '45 Spread Per Standard Retail Sale a-0 v0~j Cl) - 0 EH Cd0 v &, - 0 42 MtuZru Dtu a1cl Cd W a). v -0 43 MruZru Dru -0 - 44 MjWr Dju Column No...... Formula....... Symbol....... 41 MtaZra Dta Commodity: Northern potatoes Southern potatoes California oranges. Peaches........ Sweet potatoes.. Cantaloupes..... Boxed apples..... Southern cabbage.. Barreled apples.... Eastern lettuce.... Western lettuce.... Yellow onions.... Northern cabbage White onions..... 9.9 10.6 12.1 I 1.0 11-4 11.4 12.4 i i.8 11.5 iiz.6 12.2 12.1 12.8 I11.3 0 U 10.4 io.8 i i.8 12.2 1 1.9 11i.8 12.7 12.3 12.2 1 1.9 12.4 12.5 13.4 a) U 8.7 9.2 9.8 9.7 10.1 9.6 9. 1 9.8 10.3 9.2 10.1 io.8 io.6 10.9 9.7 0 a) U 1.7 r.6 2.0 2.5 2.0 2.7 2.9 2.0 3.0 1.9 2.5 2.1 Weighted mean.... 1 Based on 12 months' data, I923. I46 STATISTICAL APPENDIX ANALYSIS OF COMMODITY (ALL STORES AND UNIT STORES) Spread Per Car Total Distribution Expense of Commodity, 1923 a0 Cl) - 0! 45 Vra-Vwa Cta Ia Cl 0 - Ct 3-o 47W Vru-Vj Crun. can — 0 48. Vju-Vw Cj 0 49 ECta 0 ~0 ",.0 000 P49 Column No...... Formula....... Symbol....... Commodity: Northern potatoes Southern potatoes California oranges. Peaches....... Sweet potatoes. Cantaloupes..... Boxed apples..... Southern cabbage Barreled apples.... Eastern lettuce.... Western lettuce.... Yellow onions.... Northern cabbage White onions..... Total....... Weighted mean (n 0 585o 1,390 885 Soo 720 1,515 840 915 905 "'I75 88o 815 ",345 920 0 6I5 850 1,465 895 88o 730 "1575 865 960 940 1,210 905 85o 1,410 955 0 515 670 1,225 705 745 595 "'195 675 8I5 710 1,035 780 710 "'159 775 Ca -. 0~. 0 H 100 8,646 ISO 6,045 240 9,154 190 4,143 135 2,046 135 3,458 380 9,763 190 2,001 145 8,706 230 4,574 175 2,294 125 4,747 140 1,378 260 8o5 67,760 i8o 0 12.8 8.9 1 3.5 6. i 3.0 5.' 14.4 2.9 12.9 6.8 3.4 7.0 2.0 1. 2 100 1 Based on 12 months' data, I923. STATISTICAL APPENDIX '47 ANALYSIS OF COMMODITY (ALL STORES AND UNIT STORES) Percentage Margin (Cents of Consumer's Dollar) Percentage Mark-up from Wholesale cac0 co - Ra-Wa Ra Mta 0.U0 H.U51 Ru-WuI Ru-W Mtu UW 2 aj 2 ~0:2:0 z'- r " 52 53n t Ru-Ju. JuWu Ru-j RuMru Mju 1.a 0 H 50a Ra-Wa Wa 01. 0 53 a Ju-Wu Wu Column No...... Formula....... Symbol....... Commodity: Northern potatoes.. Southern potatoes California oranges Peaches....... Sweet potatoes.. Cantaloupes..... Boxed apples..... Southern cabbage.. Barreled apples.... Eastern lettuce.... Western lettuce.... Yellow onions.... Northern cabbage White onions..... 0 37 381 41 45 45 46 46 48 49 5' 52 53 63 391 42 45 46 47 47 48 50 52 53 53 64 a) 32 331 35 36 39 39 36 37 42 39 45 46 49 52 0 6 7 9 7 8 II II1 8 13 8 7 9 12 8.1I2 0 59 62 69 8o 8o 86 87 91 95 I05 109 III '39 i67 0 I0 '3 12 17 14 ' 7 22 20 '5 26 i6 23 Weighted mean.... 44.6 45.4 37. 3 1 Based on 12 months' data, 1923. 2 Excluding white onions. 148 STATISTICAL APPENDIX STORE TYPE COMPARISONS (GROCERY & FRUIT-VEGETABLE UNIT STORES) Price Per Unit.5 W3 0 c.; " v U ' Cn - U (D C); v bA;U,. ' 0 5j 56 Rf Column No.......... Formula............ Symbol............. 54 N N 55 Kg Commodity:._ SC 5 CU c4 Northern potatoes... Southern potatoes.... California oranges. Peaches............. Sweet potatoes....... Cantaloupes......... Boxed apples........ Southern cabbage.... Barreled apples...... Eastern lettuce...... Western lettuce...... Yellow onions....... Northern cabbage.... White onions........ 400 330 415 500 225 340 750 210 175 400 320 250 300 250 4.11 9.31 8.13 4. 18 8.69 5.19 4.64 8.68 11-59 4.84 7-35 7.23 4.94 9.60 oE Cd 3.97 8.85 8.23 3.9I 8.37 4.33 4.43 8.6i io.88 4.44 7.o8 6.64 4.8I 8.62 's^ C ) 0 - Pc c57 Wg U2 2.44 5.96 4.97 2.24 4.28 2.63 2.42 4.34 5.60 2.30 3.31 3.31 2.02 3.40 z. Wi 58 Wf v )C P- cn 0 0 o r - cdS 59 Jg S. 3 C 0_ q,, 0 r 60 Jf Ct - 2.49 5.95 4.8o 2.15 4.64 2.32 235 4.59 5 54 2.17 3.37 3.12 2.01 3.17 Cd CU 0 0 2.74 2.73 7.59 6.72 5.50 5 39 2.63 2.53 4.9I 5.23 3.19 2.66 2.90 2.87 5.54 5-39 6.57 6 35 2.93 2.72 3.85 3.91 3.82 3 6i 2.54 2.46 4.45 4.22 STATISTICAL APPENDIX 149 STORE TYPE COMPARISONS (GROCERY & FRUIT-VEGETABLE UNIT STORES) Value Per Car 4)U rO 4 ) co v t) o, -d.-d 4 4) 4) 4) co 00C > 3 cu0 c, oo edL( O O 0 > > > C~ ~] d -C = -, $p co Cd U. 4) ) o4 U40 0O 0~ Cd C el d PuCs U Q4 ~ Pcf W Column No.......... 6i 62 63 64 65 66 Formula............ NRg NRf NWg NWf NJg MJf Symbol............. Vrg Vrf Vwg Vwf Vjg Vjf Cd Cd Ca co Cu Cs Commodity: -o - -o - Northern potatoes I 645 1590 975 995 I095 1090 Southern potatoes 3070 2920 1965 1965 2505 2220 California oranges 3625 3415 2065 1990 2280 2235 Peaches.2090 1955 1120 1075 1315 1265 Sweet potatoes....... 1955 1885 965 1045 II05 1175 Cantaloupes......... 1765 1470 895 790 io85 905 Boxedapples........ 3480 3325 i8i5 1765 2175 2155 Southern cabbage.... i825 I8IO 910 965 1165 II30 Barreled apples...... 2030 1905 980 970 1150 1110 Eastern lettuce...... I935 1775 920 870 1170 1090 Western lettuce. 2350 2265 io6o io8o 1230 1250 Yellow onions.. 8io i66o 830 78o 955 905 Northern cabbage... 1480 1445 605 605 760 740 White onions.2400 2155 850 795 IllS 1055 Weighted mean.... 2275 2145 1220 1200 1445 1370 I50 STATISTICAL APPENDIX STORE TYPE COMPARISONS (GROCERY & FRUIT-VEGETABLE UNIT STORES) Spread Per Car c4 0 1 nC CaHC z._:: 0. C _ o Q! &~ -U) 0 l H 4) c(U 0 (U -.. Cn kCn t Wf W W 0,5 0 0 C _ 0 2. cn & V " 0> 72 Vjf-Vwf Cjf Column No.......... Formula............ Symbol............. 67 Vrg-Vwg Ctg 68 69 70 71 Vrf-Vwf Vrg-Vjg Vrf-Vjf Vfg-Vwg Ctf Crg Crf Cjg Commodity: ru I M ed C: Northern potatoes.... 6I Southern potatoes 0.... o5 California oranges... 1560 Peaches............. 970 Sweet potatoes....... 990 Cantaloupes....... 870 Boxed apples........ 665 Southern cabbage.... 915 Barreled apples...... 050 Eastern lettuce...... I1015 Western lettuce...... I290 Yellow onions....... o80 Northern cabbage.... 875 White onions........ 1550 Weighted mean.... 1055 0 0 595 550 955 565 1425 1340 880 775 840 850 680 680 1560 I305 845 660 935 88o 905 765 I 85 II20 880 855 840 720 1360 1285 945 830 5o Q 500 700 II80 690 710 565 1170 680 795 685 1015 755 705 I 00 120 540 220 I95 140 I90 360 255 170 250 170 125 I55 265 W Ct 95 255 245 I90 130 I 5 390 165 140 220 170 125 I35 260 775 225 170 STATISTICAL APPENDIX i5i STORE TYPE COMPARISONS (GROCERY & FRUIT-VEGETABLE STORES) Percentage Margin (Cents of Consumer's Dollar) C 0 _ o cr 10,f Wf Ctf Rf.Wf Rf Mtf 0 U 0 o (d C 75 Rg-Jg Rg Mrg 0 0. '5o 0 u - V c S u P4 76 Rf.Jf Rf Mrf o cn 0. _ 77 Jg-Wg Rg Mjg 0 0 r. U.0C o O 78 Jf-Wf Rf Mjf Column No......... Formula............ Symbol............. 73 Rg-Wg Rg Mtg Commodity: 0 4) 41) g o p^ 0 C. 4) Northern potatoes.... Southern potatoes.... California oranges. Peaches............. Sweet potatoes....... Cantaloupes......... Boxed apples........ Southern cabbage.... Barreled apples...... Eastern lettuce...... Western lettuce...... Yellow onions....... Northern cabbage.... White onions........ 41 36 43 46 51 49 48 50 52 53 55 54 59 65 37 33 42 45 45 46 47 47 49 51 53 53 58 63 0 a4 P4 33 19 37 37 44 39 38 36 43 40 48 47 49 54 36 31 24 35 35 38 39 35 37 42 39 45 46 49 51 36 c 4u p. 8 I7 6 9 7 10 10 14 9 '3 7 7 10 IO Ir 10 u Q) P4 6 9 7 IO 7 7 12 IO 7 12 8 7 9 12 8 Weighted mean... 46 44 152 STATISTICAL APPENDIX STORE TYPE COMPARISONS (CHAIN STORES) Price Value Spread Percentage Per Unit Per Car Per Car Margin En U)C In U)P.C ~ 0 CU-0> co Cd RUc~( U = C s. 0W C (U - C. U)Q P4 y D~0 P4, (/ I d ( r 0 U 0 U d -: (U cd U V, 0 0cn Column No.......... 79 8o 8i 82 83 84 Formula........... NRc NWc Vrc-Vwc Rc-Wc Rc Symbol............. Rc Wc Vrc VWc Ctc Mtc CU CU Cd U U c Commodity: - Northern potatoes * 2.89 2.36 II55 945 210 x8 Southern potatoes ' (4.79) (2150) I (158) (570) (27) California oranges 7.10 5.00 2945 2075 87o 30 Peaches.3.84 2.37 1920 1185 735 38 Sweet potatoes....... 5.38 3.90 1210 88o 330 28 Cantaloupes......... 4.80 2.97 1630 1010 620 38 Boxed apples......... 3.44 2.09 2580 1570 1010 39 Southern cabbage.... 6.94 3.69 1455 775 68o 47 Barreled apples.. 8.58 5.38 1500 930 570 37 Eastern lettuce 3.56 1.82 1425 730 695 49 Westernlettuce...... 6.ig 3.50 1980 1120 86o 44 Yellow onions....... 5.91 3.22 1480 8o5 675 46 Northern cabbage.. 3.56. 63 1070 490 580 54 Whitaonions........ 6.65 3. 14 I66o 785 875 53 Weighted mean.... 1735 1140 595 34 1 1 Twelve months' prices. STATISTICAL APPENDIX '53 ANALYSIS OF MANAGEMENT AND SERVICE POLICY (UNIT STORES AND CHAIN STORoaS) 0 101 Ara En 0 I02 Aru -o 4C), 103 Aru I >0 W~i Cs U 104 ArU'2 05 Aru3 En 0 Ca.0 U 106 Arc CA 107 Ar C2* 0 coCa U - o8 Arc3 Column No...... Formula....... Symbol....... Number of Retail Price Quotations Commodity: Northern potatoes.. California oranges... Sweet potatoes.... Boxed apples..... Barreled apples.... Eastern lettuce.... Yellow onions.... 1650 2064 1281 '453 1317 1331 x 8o6 '399 I1843 11I48 1285 1184 1219 1524 833 1109lo 698 706 775 903 457 631 387 367 389 39' 5I5 lo9 I03 63 107 891 53 io6 251 221 '33 x68 133 112 282 '74 86 '3' 88 65 184 878 11I05 77 7' 47 37 45 47 98 422 586 Total....... 14 commodity totals.... 10902 9602 5835 3137 63c I4806 13115 7935 4339 841 1300 i6gi '54 STATISTICAL APPENDIX ANALYSIS OF MANAGEMENT AND SERVICE POLICY (UNIT STORES AND CHAIN STORES) Mean Retail Price Per Unit.0 C) Ca >10 U 0 I110 Ru - 0 W En II Rui U C 112 Ru2,0) ~C/ U I 13 Ru3 En 0 Cn U 1 14 RC 00 WC~t Cd U 115 Rc2 0) 0 C0.0.0 COU ii6 Rc3 Column No...... Formula....... Symbol....... Commodity:- - CO 0 0 0 0 0 0 0 Northern potatoes * cwt. 4.01 4.09 3.98j 3.77 2.89 2.89 2.91 Californiaoranges * box 8.37 8.87 7.83 7.23 7.10 7.09 7.11 Sweet potatoes.... cwt. 8.44 9.03 7.77 5.96 5.38 5.75 4.70 Boxed apples..... box 4.47 4.66 4.28 4.04 3.44 3.41 3.48 Barreled apples bb... l. I i.o6 I11.58 10.62 9.90 8.58 8.8 I 8.I I Eastern lettuce....3.dz. hpr. 4.55 4.78 4.29 4.43 3.56 3.46 3.70 Yellow onions.... cwt. 6.8o 7.07 6.77i 6.i6 5.91 5.76 6.22 STATISTICAL APPENDIX '55 ANALYSIS OF MANAGEMENT AND SERVICE POLICY (UNIT STORES AND CHAIN STORES) Mean Wholesale Price Per Unit U) 0 Cl) U Pii8 Will U ( U 11 120SWu2 Wu3% En 0 ~0 U 121 WC UJO0 0. CU) UC) C a CU U U 122 123 Wc2 Wc3 Column No. Formula....... Symbol....... "I7 Wu CU Cd CU CU CU CU CUs Commodity: 0 o 0 0 I:: Q) Q: ~ 1: Northern potatoes 2.48 2.47 2.52 2.27 2.36 2.38 2.31 California oranges * 4.84 4.93 4.79 4.86 5.00 5.02 4.96 Sweet potatoes.. 4.54 4.63 4.16 3.86 3.90 4.26 3.24 Boxed apples.....2.37 2.41 2.35 2.25 2.09 2.09 2.11 Barreled apples....5.56 5.59 5.61 5.16 5.38 5.35 5.46 Eastern lettuce....2.20 2.30 2.18 2.21 1.82 1.83 i.8i Yellow onions.....3.17 3.19 3.29 3.17 3.22 3.10 3.44 156 STATISTICAL APPENDIX ANALYSIS OF MANAGEMENT AND SERVICE POLICY (UNIT STORES AND CHAIN STORES) Mean Retail Value Per Car U, (A~~~~~~~ Z >v Qu v- 4 ~_ > -. j0 u40' "0n, U co.5~~~~ u 4 U ~ ( 4 - 4 ( U U U < 12,4 1 25 I126 127 I128 129 130 13I NRu NRui NRu2 NRu3 NRc NRc2 NRc3 N Vru Vrui VrU2 Vru3 Vrc VrC2 VrU3 Column No...... Formula....... Symbol....... Commodity: ~0 z Northern potatoes.... Calif ornia, oranges... Sweet potatoes.. Boxed apples..... Barreled apples.... Eastern lettuce.... Yellow onions.... 400 415 225 750 '75 400 250 (-4 0 3475 1900 3355 '935 1820 1700 0 1 635 2680 2030 3495 2025 1910 1770 (.4 0 15~90 3250 1750 3210 i 86o 1715 1 695 (4 150 3000 1340 3030 '735 1770 1540 1960 (.4 0 "155 2945 1210 2580 1500 1425 1480 1700 '735 (4 0 "155 294Q 1295 256c 1540 1385 1440 1700 0 11i65 2950 1o0o 2610 1420 1480 '555 1700 Weighted means (7 commodities).... Weighted means (14 commodities)... 2180 2I05 2275 2095 STATISTICAL APPENDIX '57 ANALYSIS OF MANAGEMENT AND SERVICE POLICY (UNIT STORES AND CHAIN STORES) Mean Wholesale Value Per Car 0 C/) r. 132 NWu vWU ~-0 Cla U '33 NWui VWuI fr, cn U. '3s4 NWU20 Vwu24 U.4. *0.0 C6 U '35 NWuq Vwu3 0 3.5.0 IU 136 NW~c Vwc v 0 p. &A U 137 NWC2 VWC2.0 U Cd t U 413 NWc3 Vwc3 Column No...... Formula....... Symbol....... Commodity: Northern potatoes.... California oranges... Sweet potatoes.. Boxed apples..... Barreled apples.... Eastern lettuce.... Yeffow onions.... 0 990 201IC 102C 1 780 975 88c 795 fA 0 990 2045 1040 isio, 980, 930 8oo, CS 0 1010 1990 935 1765 980 870 825 Cd 0 910 2015 870 1690 905 885 795 1135 CS0 945 2075 88o 1570 930 730 805 11130 1140 0 950 2085 960 1570 935 730 775 "135 CS 925 730 1585 955 725 860, 1125 Weighted means (7 commodities)... Weighted means (14 commodities). 1185 1150 120C I1190 158 STATISTICAL APPENDIX ANALYSIS OF MANAGEMENT AND SERVICE POLICY (UNIT STORES AND CHAIN STORES) Spread Per Car v, 0 Cl) W oD.-. P l _o. ' I C) Cn. _ v _ v. D cn ce v s. t^o co U vE 0 '43 Ct 143 Vrc-Vwc Ctc Column No......... Formula........... Symbol............. 139 140 Vru-Vwu Vrui-Vwui Ctu CtuI 141 142 Vru2-Vwu2 Vru3-Vwu3 Ctu2 Ctu3 Commodity: Northern potatoes.... California oranges... Sweet potatoes....... Boxed apples........ Barreled apples...... Eastern lettuce...... Yellow onions....... CI 0 6I5 1465 88o 1575 960 940 905 _ Cs 645 I635 990 1685 1045 990 970 Cn 0 580 1260 815 1445 88o 845 870 Cs 600 985 470 1340 830 885 745 o 210 870 330 I010 570 695 675 Weighted means (7 commodities).... Weighted means (I4 commodities)... 995 1070 955 905 825 570.... 595 STATISTICAL APPENDIX I59 ANALYSIS OF MANAGEMENT AND SERVICE POLICY (UNIT STORES AND CHAIN STORES) Total Percentage Margin Q) C/) Q 4 0 147 Ctu2 MtU2 Mtu2 W!C U 148 Ctu3 Vru3 Mtu3 0.0 Ctc Vrc Mtc Q V) ~Icn U U I50 I51 Ctc2 Ctc3 Vrc2 Vrc3 Mtc2 Mtc3 Column No.......... Formula............ Symbol............ Commodity: Northern potatoes.... California oranges... Sweet potatoes....... Boxed apples........ Barreled apples...... Eastern lettuce...... Yellow onions....... 37 41 45 46 49 51 53 38 42 46 47 50 52 53 39 44 49 48 52 52 55 4. 36 36 39 47 45 47 49 51 4..) 4o 0 33 35 44 48 50 48 I8 30;0 49 46 33 34 44 48 I8 29 26 39 39 47 46 33 2I 3o p4 21 30 31 39 33 51 45 33 Weighted means (7 commodities).... Weighted means (14 commodities)... 44 45 45 45 47 43 42 46 43 41 i6o STATISTICAL APPENDIX ANALYSIS OF MANAGEMENT AND SERVICE POLICY (UNIT STORES AND CHAIN STORES) Mean Retail Value Per Standard Retail Sale 0 $-U4 15 Sr 0 W '53 '54 Vu Vrui -g6- Q C Zru IZru $)-. Sr Zru20 U 0 $V C >15 15 Vru3 Vrc. Sr cis ru3 Zrci Column No...... Formula....... Symbol....... Commodity: Northern potatoes.... California oranges... Sweet potatoes.... Boxed apples..... Barreled apples.... Eastern lettuce.... Yellow onions.... Cl) 5805 1 2380 7345 13220 7855 7765 7250 0 U 27.7 28.1i 25.9 25.4 24.6 23.4 23.5 25.9 25.9 0 U 28.2 29.7 27.6 26-4 25.8 24.6 24.4 U 2-4 26.3 23.8 24.3 23.7 22.1 23.4 U 26.0 24.2 18.2 22.9 22.1 22.8 2I.2 0 U 19.9 23.8 16.5 19.5 19.1 i8.4 20.4 Weighted means (7 commodities).. Weighted means (14 commodities). 8405 27.0 24.9 23.3 20.2 STATISTICAL APPENDIX I4 ANALYSIS OF MANAGEMENT AND SERVICE POLICY (UNIT STORES AND CHAIN STORES) Spread Per Standard Retail Sale 0 158 Ctu Dtu U4 '59 >tuI Dtui U i6o Ctu2 Dtu2 Ca U, CtU3 Dtu3 0 Cn ~0 U 162 Ctc Sr Dtc Column No...... Formula....... Symbol....... Commodity: a) U Northern potatoes. California oranges. Sweet potatoes.... ]Boxed apples..... B3arreled apples.... Eastern lettuce.... Yellow onions.... io.6 i i.8 12.0 1 1.9 12.2 12.1 12.5 U U 11.1 10.0 13.2 10.2 13.5 11.1 12.7 10.9 13.3 11.2 12.7 10.9 13.4 12.0 U 10.3 8.o 6.4 10.1 io.6 11.4 10.3 U 3.6 7.0 4.4 7.6 7.3 9.0 9.3 Weighted mean1 I....I (ii.8)I (12.8) I (10.8) (9.8) 1 (6.8) -1 The parentheses on pp. 161 and 163 indicate that the weighted figures were derived by dividing the respective mean spreads per car and differentials per car by the weighted mean number of retail sales per car-8405: 162 STATISTICAL APPENDIX ANALYSIS OF MANAGEMENT AND SERVICE POLICY (UNIT STORES AND CHAIN STORES) Differential in Spread Per Car 0 Cl.0,0.0 U_ 164 165h Ctu3- CtuiCtc Ctu3 Hu3c HwUu3.0 U i66 Ctui - CtU2 HuIu2 CU U 167 CtU2 -CtU3 Hu2u3 Column No...... Formula....... Symbol....... 163 CtuCtc Huc Commodity: Northern potatoes.. California oranges... Sweet potatoes.... Boxed apples..... Barreled apples. Eastern lettuce.... Yellow onions.... Weighted mean.... Weighted average deviation...... Weighted average deviation as percentage of weighted mean. CU 03 405 595 550 565 390 245 230 425 100 C's 0 390 "15 140 330 260 190 70 255 100 CU 0 45 65o 520 345 215 I05 225 250 x6o CU 0 65 375 '75 240 i65 '45 100 1 70 8o CU 0 -20 275 345 105 50 -40 125 So 95 (24%'0) (39%o) 1(64%) (47%"") (119%) STATISTICAL APPENDIX 163 ANALYSIS OF MANAGEMENT AND SERVICE POLICY (UNIT STORES AND CHAIN STORES) Differential in Value of Standard Retail Sale (Adjusted) 0 0 - i68 169 170 171 172 Huc Hu3c Huiu3 Hulu2 Hu2u3 Sr Sr Sr Sr Sr Kuc Ku3c Kuiu3 KuiU2 Ku2u3 Column No...... Formula....... Symbol....... Commodity: Northern potatoes. Calif ornia oranges.. Sweet potatoes.... Boxed apples..... Barreled apples... Eastern lettuce.... Yellow onions.... Weighted mean'I — 0 U 7.0 4.8 7.5 4.3 5.0 3.2 3.2 (5.0) 0 U 6.7.9 1.9 2.5 3.3 2.4 1.0 (3.0) 0 U.8 5.2 7.1 2.6 2.7 1.4 3.1 (3.0) 0 U 1.1 3.0 2.4 2.1 1.9 1.4 (2.0) W U -.3 2.2 4.7.8.6 -.5 1.7 (i.o) 1 See footnote, page 161. 164 STATISTICAL APPENDIX TESTS OF VALIDITY OF JOBBERS' AND WHOLESALERS' QUOTATIONS AS REPRESENTATIVE OF ACTUAL SALES (I) A check of the validity of dealers' quotations as representative of actual sales was afforded by comparing sales records of individual jobbers in two markets on a given date with their price quotations, for four seasonal commodities. The differences between quotations and sales figures, and the variance as a percentage of the latter, were as follows: NEWARK JOBBER-MAY 18, 1923 New Potatoes Onions Lettuce Apples (bbl.) (cwt.) (hamper) (bbl.) Quotation..................... 8.50 $2.88 $5.25 $8.50 Typical Sale Price.............. 9.00 3.00 4.50 9.00 Difference............... -.52 +75 — 50 Percentage Variance........ -.5.6% o -4.% +I6.7% -5.6 WALLABOUT JOBBER-JUNE I5, I923 New Potatoes Onions Lettuce Apples (bbl.) (cwt.) (hamper) (bbl.) Quotation..................... $6.50 $3.25 $2.00 $12.50 Typical Sale Price.............. 6.50 3.25 I.88 12.75 Difference................ o +.12 -.25 Percentage Variance........ o o + 6 -2 (2) A test of the validity of figures used in the study to represent quotations from individual jobbers in Gansevoort, Harlem, Wallabout and Newark Markets on a typical market day, for each of four commodities, showed an average deviation of quotations around the figure used ranging from 27 cents a hundredweight for onions to 46 cents a hamper for lettuce. As percentages of the typical figure, the average deviations around it were: potatoes 3.3%, apples 6.7%, onions 8.3%, lettuce I3.1%. Following are the data: STATISTICAL APPENDIX i65 Yellow Florida Baldwin New Potatoes Onions Lettuce Apples Date.............. Apr. 27, I923 Mar. 2, 1923 Mar. 2, 1923 Mar. 2,1923 Number of Qnotations 8 I6 I3 13 Price Range........ $9.50 to $ I $2.50 to $3.75 $2.00 to $4,50~$4.0o to $7.00 per bbl per cwt. per hamper I per bbl. Mean Price......... 10.22 3.15 3.38 5.97 Modal Price...1.... I.. 6.oo Figure Used........ 10.00 3.25 3.50 6.00 Average Deviation..34.27.46.40 Around Figure Used (3.3%) (8.3%) (3.1 ) (6.7%) (3) To illustrate the accuracy of the official figures of the U. S. Department of Agriculture as representative of transactions in the wholesale market, data of purchases by a Newark jobber in the New York wholesale market on four Fridays in May, I923, were checked against the official figures for the same dates. The differences found between the jobber's typical purchase price and the official quotation on each date were: New Baldwin Potatoes Onions Lettuce Apples (bbl.) (cwt.) (hamper) (bbl.) May 4......................25 o May I................... 05.8.. May I8....................7~...13 May 25...................42 Average Percentage difference 4-5% 3% 5 35~ 5~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ I INDEX Acts of retailer in making a sale, 42 Additional data, 71, 72 Adequacy of size-of-sale analysis, 8i Adequate dietaries, cost of, 14 Adjustment of data, 68, 95 Adjustment of prices for shrinkage, 68 Advantages of neighborhood store, I26 Analysis of commodities, 75-92; I37-I47 Analysis of store types, 93-III, I48-I63 Apartment houses, 33 Appendix, 135-165 Application of present study, 133 Application of size-of-sale theory, 121 Apportionment of price spread, 84 Assembling variety, 35, 36 Assisting agencies, 6 Assisting organizations, 6 Assorting for sale, 39 Averages, choice of, 66 Breaking-up packages, 34, 38 Bureau of Labor Statistics, 12 Cash-and-carry factor, 127 Centralization of purchases, 35, 127 Chain stores, 24, 25, 93ff., 98, 126 Changes in dealers, 20 Changes in distribution system, 31 Choice of averages, 66 Choice of commodities, 56 Classes of retail trade, 27 Commodities, distinctions in, 56 Commodities selected, 57 Commodity analysis, 75-92, 137-147 Commodity contrasts, 112 Community stores, 24 Competition, 45 Computation of margin, 71 Conclusions, 125 Consumers' influence, 131 Consumers' outlay in various store types, I I I Consumers' purchasing habits, I25 Consumers, significance of subject to, I2ff Cost of adequate dietaries, 14 Cost-plus-service policy, 128 Credit, 28, Io5ff Credit and delivery factors, I27 Data adjustment, 68, 96 Data collected, 53, 66, 95 Data, nature of, 53 Data, working, 7I, 72 Deductions from size-of-sale analysis, 82 Delicatessen store, 33 Deliveries by stores, 28 Delivery equipment, 30 Description of stores, 55 Determination of retail prices, 119 Differences in management, 99 Differences in service requirements, 76 Different types of stores, 24, Io6 Differentials in distribution expense, 98, I05 Direct delivery, 26 Display, 29, 34, 41 Distribution expense in different store types, 98, 99, I05 Distribution factors considered, 73 Diverse preferences of consumers, 35 Early city markets, 31 Elimination of uneconomical stores, I30 Equipment of stores, 29 Error, possible sources of, 63 Expense items in store operation, 47 Explanation of margin differences, 8I Extent of data, 66 167 i68 INDEX Evolution of distribution system, 30 Factors considered, 73 Farmers market, 20 Federal Food Board, 46 Federal Trade Commission, II Food consumption per person, 13 Food cost, effect on consumers, I2-15 Food cost in different large cities, 14 Forms of store operation, 93 French, Earl R., 23n Frequent purchases by retailers, 37 Fresh condition, maintenance of, 38 Fresh supplies, 34, 37 Gap between producers' and consumers' prices, 5, 132 General conclusions, 125 General stores, 28 Harvard Bureau of Business Research, 46, 50 Hotels, 23 Hucksters, 23 Implications of commodity contrasts, 112 Influence of form of store operation, 93ff Influence of new distribution unit, 118 Influence of usual units of quantity, 112 Inspection by consumers, 34 Interpretation of store contrasts, Ioo Jobbers, number of, 21 Jobbers' portion of price spread, 84, 86 Jobbers' sales, size of, 87 Jobbers' spread, 85, 89 Jobbing markets, I9 Jobbing price sources, 54 Joint Commission of Agricultural Inquiry, 5, 46, 50 Large-scale buying of chain stores, I00, IOI Large-scale operation, 28 Larger size purchases by consumers, 128 Leaders, 27, Io2 Limitations of percentage differentials, 123 Locally grown produce, I5, 20 Long distance shipments, 31 Losses in volume, 39, 43, 44 Making the sale, 42 Management differences, 99 Management factor, 126 Margin defined, 69 Margin computation, 7In Margin computed from mean prices, 67 Mark-up, 70 Mark-up defined, 7I1n Market standardization, 42 Marketing ccharacteristics of commodities, 57-62 Massachusetts Department of Agriculture, 46, 5I, 52 Mean margin defined, 67 Measure of service requirements, 76 Median margin defined, 66 Method of analysis, 53 Method of city distribution, 22 Method of collecting data, 54 Metropolitan distribution agencies, I8 Metropolitan distribution system, IIff Miscellaneous retailing agencies, 23ff Motor-truck hauling, 19 Nature of data, 53 Neighborhood store, advantages of, 126 New England Research Council, 52 New unit of distribution, II8 New York State Food Commission, 46 Number of dealers in markets, 21 Number of quotations, 66, 153 Number of retail stores, 24 Oft-repeated small sales, 132 Operating expenses of grocery stores, 46 Other studies of distribution expense, 45 Overcrowding by small stores, 130 Percentage differentials, limitations of, 123 INDEX I69 Percentage margin derived, 7In Percentage margins shown by other studies, 47 Perishability of commodities, 91 Personal services of retailer, 34 Physical losses in retailing, 42 Port of New York Authority, 6 Potatoes as leaders, o02 Price advantages from large purchases, 26 Price changes, 45 Price per pound, 79, 80 Price quotations, 62 Price spreads, 53, 70, 99 Price reductions, 43 Prices to consumers in different store types, Io6 Primary and secondary markets, 21 Producers, significance of subject to, II, I5ff Purchasing habits of consumers, 125 Pushcart markets, 21, 33 Railway trains, 23 Range in size of sale, 78, 79 Range in selection, 29, 35 Relation between "margin" and " mark-up ", 72 Relation of jobbers' sale to retail sale, 87 Relation of jobbers' spread to wholesale price changes, 89 Relation of size of sale to price per pound, 8o Representative price quotations, 62, 69 Representative stores selected, 55 Reservations in interpreting store contrasts, Ioo Restaurants, 23 Retail price policies, 44 Retailers' functions, 34 Retailers of metropolitan area, 21, 22 Retailers' portion of price spread, 84 Retailers' spread in retail sale, 85 Roadside markets, 23 Scope of study, 53 Selection of goods, 34, 40 Selection of stores, 55 Service differences in price spreads, I04 Service requirements, 76, 77 Shipping packages, 38 Shrinkage, 43, 68 Significance of subject to consumers, 12 Significance of subject to producers, I5 Size of jobbers' sales, 87 Size of retail sale, range in, 78, 79 Size of sale as explanation of margin differences, 8I Size of sale as measure of service requirements, 77 Size of stores, 29, 48, 49 Small purchases by retailers, 35 Small size retail sales, 38 Sources of error, 63 Sources of food supply, 15, i6 Special services, influence of, 127 Specialization of retailers, 25 Specimen entry of data, 65 Split-up of consumers outlay, 86, I I Standard retail sale, 77, 79 Standardization, 42 Statistical appendix, I35-165 Steamships, 23 Stimulation of larger-size sales, i28 Stock-turn in grocery stores, 49 Store management, 25 Store operation forms, 93 Store-types analyzed, 93-III, 148 -163 Summary of size-of-sale theory, 121 Symbols used in appendix, 136 Tabulation of data, 65 Tenements, 33 Terminals, rail and water, 31 Terminology, 135 Tests of price quotations, I64, I65 Trading area, 30 Trucking from jobbing market, 26 Types of stores, 24 Typical unit store, 95n Uniformity of retailers' spread per sale, 85 Unit of distribution, new, II8 Unit of service, 77 University of Nebraska, 50 University of Wisconsin, 50 Unsold portions, 39 Use of leaders, I02 Usual units of quantity, 77, 112 U. S. Bureau of Labor Statistics, 12 U. S. Dept. of Agriculture, 23n, 30, 46, 51 I70 INDEX Validity of quotations, 164 Value of standard retail sale, 79, Io6 Variability of jobbers' portion, 86 Variability of wholesale prices, 90 Variations in distribution expense, 53 Variations in size of sale, 79 Varieties displayed by store, 36 Variety in different stores, 28 Wholesale market, I8 Wholesale price sources, 55 Wholesale prices, variability of,go Wholesalers, number of, 21 VITA THE author of this dissertation, son of Almira Huggins and Arthur Melvin Artman, was born on a farm near Dansville, New York, on August 18, I888. He attended the public schools in LeRoy, New York, and in I9IO was graduated from Syracuse University with the Bachelor of Arts degree. After several years of social and educational work in Pennsylvania and Ohio he entered the Graduate School of Columbia University, receiving the Master of Arts degree in the Faculty of Political Science in June, I918. He enlisted in the Tank Corps of the United States Army on June 4, 1918, and served with the A. E. F. in France, becoming a member of the Sorbonne Student Detachment after the Armistice. From September, I919, to the end of 1922 he was engaged in banking and credit work in New York City. From the beginning of 1923 until July, I925, he was engaged in marketing research for the United States Bureau of Agricultural economics in cooperation with the Port of New York Authority. Since then he has been Special Agent in the Domestic Commerce Division of the United States Department of Commerce. During the academic years 1922-23, 1923-24, and 1924-2 5, he conducted courses in Foreign Exchange and in Economics, in the Extension Faculty of Columbia University. He also prepared and directed a Foreign Exchange course in the Home Study Department of the University. Publications: "Camp Liberty-A Study of Social Adjustments in a Boys' Farm Labor Camp "-Survey Magazine, May I, I918; "Expense Factors in City Distribution of Perishables," Department Bulletin I4zr, United States Department of Agriculture, July, I926; "Foreign Exchange and Foreign Finance ", to be published, fall of I926, by McGraw-Hill Book Company. I71 ij i 7...3. ' -'..f - *; i ^ *^ " ' _ _J: ';v,.:, ^ '., " - D 1 i i h, A ": ~i He An ' ^..??:;:'-.; UNIVERSITY OF MICHIGAN '~~~~~~~~~~~~~~~~~~~~~~l I'l \ '., ' / -! 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