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The Columbia University Libraries reserve the right to refuse to accept a copying order If, In Its judgement, fulfillment of the order would Involve violation of the copyright law. Author: Chamber of Commerce of the United States of... Title: The reduction of merchandising expense Place: Washington, C. Date: [1921] %-ei^n-l MASTER NEGATIVE « COLUMBIA UNIVERSITY LIBRARIES PRESERVATION DIVISION BIBLIOGRAPHIC MICROFORM TARGET ORIGINAL MATERIAL AS FILMED • EXISTING BIBLIOGRAPHIC RECORD 60 35 Chanber of conneroe of the United States of Amer-* ica« Domestic distribution department. The reduction of merchandising expense • Me- thods which distributors throughout the United States are applying to ease the process of re- adjustment and the results of the methods, April, 1921. Washington, Domestic distribution department. 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'^. ■-v. ^^>A € 4^ »- IV> 3 3 • e-i IS 1° s •5-2 Is si II 4i c A LIBRARY School of Business / 1 V*" '% i THE REDUCTION OF MERCHANDISING EXPENSE Methods whichi^Distributors Throughout the United States are Applying to Ease the Process of Readjustment and the Results of these Methods April, 1921 11 i r^ DOMESTIC DISTRIBUTION DEPARTMENT CHAMBER OF COMMERCE OP THE UMTED STATES WASHINGTON < FOREWORD A copy of the Questionnaire on the re- duction of merchandising expense was sent to every member of the Chamber of Commerce of the United States. The replies represent the experience of all classes of Business Men in every kind of business from the largest cor- porations down through the whole list of Wholesalers and Jobbers to the small Retailer of a county town — from ,the Canadian line to the Gulf of Mexico and from the Atlantic to the Pacific Ocean. ID 1-^0 C3? ..I hi. '1 Merchandising Expense Reduction SUMMARY Under the date of February 14th, 1921, the Do- mestic Distribution Department addressed a Ques- tionnaire to the members of the Chamber, which was accompanied by the following letter : "With the pressure from the public for lower prices and with the widespread re- duction that has resulted, the merchant, to make a living profit must also reduce his expense of doing business. "We are anxious to know what you arc doing to reduce your cost so that we may be able as quickly as possible to give you the actual methods and facts which others have found beneficial. "Many of our members would prefer that the identity of our informants shall not be made known. This rule will be observed in your case." Of the 1652 replies, a great number, instead of re- lating to one organization only, are compilations pre- pared by the President or Secretary of various groups, so that the actual number of firms represented in the replies amounts to many thousands. In considering the tabulations which follow, it should be remembered that the percentages of reduc- tions and increases are not based upon all of the re- \ II sponses to the Questionnaire, but upon those who answered that they have accomplished some reduc- tion; that their expense in that particular item has increased ; or that it remains unchanged. PERSONNEL '*What are you doing to reduce your Personnel Cost?" As might have been expected, matters relating to "Personnel" exhibit the greatest changes. Wages show some falling off, a net average decrease of 4.52^% ; but the Savings in Commissions and Bonuses, 11.54%, and in the Number of Employes, 12.43%, are very marked. The most frequently repeated comment on this question is to the effect that short- age of work has produced a great improvement in the attitude of employes toward their jobs, and the feeling appears to be that the results will be of as much value to the employes as to their employers. Perhaps the most significant type of response to this question is contained in the numerous answers showing that employers are opposed to lowering wages except as a- last resort. Others, of the same general character, tell of calling their employes to- gether, taking counsel with them and securing their approval of some plan to reduce expenses. In brief, there is a better spirit of co-operation abroad in the land. PUBLICITY **What have you done to reduce your Publicity Costs to a normal basis ?" There has been a net average increase in only one item of all questions, namely in "Publicity," wherein Circularizing shows a net average increase of 5.48%. ♦ \ Although Advertising Space shows a net decrease of 9.67%, and by use of Cheaper Mediums 2.53%, there is a strong sentiment displayed in many answers favor- ing increased expenditures in publicity during per- iods of slow sales. SERVICE "Please state separately the approximate percentage of your reduction in Service." Comparatively few concerns had any Service to re- port upon and the net average decreases are only .98% in Deliveries and .27% in Rest Rooms. That is, roughly, a little less than 1% and a little more than one-quarter of 1%. CREDITS "Please state saving, if any, accomplished by restrict- ing Credits." "Credits" indicate very little change. There have been some reductions both in the Volume, 6.13%, and in the Saving by Shortening the Time, 1.23%, but there are many replies which argue that, like Adver- tising, Credits should be extended rather than re- stricted as a basis of doing business. The general tendency may be expressed as a definite purpose to drop all doubtful accounts and to speed up collec- tions wherever possible. OTHER COSTS "Please state, approximately, the percentages by which other costs have been reduced." "Other Costs," according to the replies, have been reduced principally by closer buying and quicker turnovers. They present an encouraging average, . i! 7.12%, which is apt to increase measurably from month to month. A resulting advantage from this effort will show itself in fresher and more timely stocks. GENERAL **To which of the above five items of cost (one or more than one) do you now give the most at- tention?" Items Per cent 1. Personnel 58.4 2. Publicity 7.1 3. Service 3.0 4. Credits 10.0 5. Other Costs 21.5 Total 100.00 In summarizing the whole matter, the answers to this general question furnish valuable testimony to the importance which is attached to Personnel as the item of expense most in need of attention. ADDITIONAL FACTS Of equal value with the tabulated percentages are the explanations of methods applied to the lowering of costs which follow under the general heading, "Additional Facts," classified under the sub-heading to which they refer. It is impracticable and unneces- sary to repeat all of these explanations since many hundreds of them have a very limited application and, naturally, repetitions are frequent. Therefore only those which have a wide significance or present some important difference from the others are re- corded. « There are many contradictions among these meth- ods of decreasing expense, particularly in Publicity, Service and Credits, but in a lesser degree the other questions also. This is to be expected. In Publicity, many concerns, after a careful study of their markets, believe that the need for immediate sales supplants temporarily the deferred benefits of national or "good will" advertising; therefore their accounts are con- centrated upon local mediums and circularizing. In Service and Credits the character and customs of the trade determine what can be done. CLASSIFICATION Since every manufacturer is a merchant with more or less selling expense in disposing of his product it was necessary to include this class of distributors. But to reach the percentages named herein no an- swers were used relating to other than distribution ex- penses whether from manufacturers, lawyers, bankers or insurance firms. In presenting the Questionnaire it was necessary to assure the members that their answers would be held as confidential. This resulted in receiving a large number which could not be classified definitely as between manufacturers, wholesalers and retailers. The main fact to be gathered from these various methods is the careful study which is being conducted by business men of every class; and among these methods some will be found which apply to every kind of business. A 8 V Tabulation of Percentages Method of Reduction Reducing Cost Increasing Cost Net Proportion reporting Average decrease Proportion reporting Average decrease " Unchanged 1 average decrease Personnel Per Cent Per Cent Per Cent Per Cent Per Cent Per Cent By reducing wages 27.29 16.65 .98 2.00 71.73 4.52 By reducing bonuses or commissions 20.04 57.59 • • • • • • • 79.95 11.54 By reducing number of employees 5S.45 21.35 .98 5.00 40.57 12.43 By reducing hours (part time work) .. 11.60 22.72 • • • • • • • 88.40 2.63 By increasing work- ing hours 7.00 11.06 • • • • • • • 93.00 .77 Publicity • In advertising space . . 28.10 50.48 9.90 45.56 62.00 9.67 In cheaper mediums.. 4.38 64.18 .98 29.00 94.64 2.33 In circularizing 7.21 45.30 11.53 75.88 81.26 •5.48 In other publicity ... 4.83 42.93 3.35 33.37 91.82 .96 Service In deliveries 6.39 29.06 2.02 43.33 91.59 .98 In rest room .89 75.00 .53 75.00 98.58 .27 Credit In volume of credit business 20.81 29.91 1.80 5.00 77.39 6.13 By shortening time on charge accounts . . 14.94 ^2.64 4.62 46.66 80.44 1.23 Other Costs * Incrf^asA 38.C6 18.61 .30 25.00 61.04 7.12 — A Additional Facts PERSONNEL "We are now compiling statistics on selling expenses which wc will use in 'weeding out' inefficient salespeople." "We adopted the plan of morning meetings of fifteen minutes and have men qualified on subjects discussed to talk. The results have been marvelous." "Installation of devices for comfort of employes." "Considerable further reduction in cost can be effected if the merchants will adopt the cooperating plan which, so far, is hardly in evidence in this section, as cost of living is practically identical with eight months ago." "We believe in giving our help more than a living wage and bonus in proportion to our earnings." "It is a mistake to begin to cut the cost of doing business by cutting wages. A well paid working class with reasonable working hours, with opportunities for the right living, comfort and recrea- tion, will produce right thinking." "Our belief is that it is perfectly logical to reduce wages a little less than the dollar increases in purchasing power, until a normal basis is reached. We do not believe it fair to use the present condi- tions as an excuse to arbitrarily reduce labor." "We h«ve arranged a part time schedule by which our men in the operating department are off each fifth day, or twenty per cent of time. To any who prefer we are allowing a ten per cent reduction in pay with full time work. About sixteen per cent of our force have preferred the ten per cent reduction." "The salary of the president, secretary-treasurer, as well as all the directors has been materially reduced, while we have not reduced tik wages of any of the employes. Improved methods and systems that could not be installed during the 'rush' in the past two years are now being tried out with excellent results for economizing costs." "Encouraging thnft and desire to remain with our firm by the employe voluntarily saving and depositing in a designated sav- ings bank an amount each month equal to 10% of their monthly salary, in which event we as a firm deposit a like amount (both deposits are held by bank in a joint account, drawing interest at \f~ " »t^ 10 4% per annum.) If employe remains with us for three years, the Ml amount of savings then belongs to employe. If employe leaves our employ for any reason voluntarily or by request, then the total savings and interest is divided equally between employe and firm. "Making them more familiar with the goods they sell. Havmg factory representatives demonstrate to the sales force best features and talking points." "The writer (supt. since Jan. 1) spent almost his entire time in personal and group interviews which have been absolutely pro- ductive. Out of 400 people we have found it necessary to adjust only one salary downward." "By having salesladies suggest items, save on bags, paper, twine, etc. Showing stock clerks easiest way of doing work in efficient manner, saving light, fuel, etc." "We have a school of instruction in salesmanship and as an inducement offer extra commission on special sales over the quota." "Reducing salaries in such departments as were out of line, stenographers principally. Salesmen's salaries reduced on average of $50.00 monthly, and bonus or commission offered that would replace this amount, if sales on certain higher profit bearing com- modities reached stated amount. Object, increased sale on better profit bearing merchandise." "In paying our employes we pay a bonus for sales above a fixed amount. We put it squarely up to our salesmen that they must sell at least one-fourth more goods than formerly in order to have the same value in dollars and receive the bonus." "Put forth every effort to please and never miss a sale. Always suggest something besides what the customer buys. Each clerk must call three customers and try to ^ell them something, such as washing machine, incubator, cream separator, etc." "By giving a money prize to each employee in the department that makes the largest increase in sales each month over the average of the past five years." "We not only manage business but lay off our coat and take a hand ourselves." "By practicing the golden rule in all our dealings with the em- ployes." "We have offered a 2j4% bonus on all increased business over last year." 11 c "Our principal method of increasing the efficiency of our em- ployes is to take them into the firm as members as soon as they have demonstrated their right to such confidence as must neces- sarily be placed in them. This has never failed to get results." "Now employing engineers of N. Y. to suggest efficiency methods." "Think we should use great care not to reduce wages and salaries as fast as commodities decline. We did not raise them as fast as prices advanced." "We now have back all our former help, experienced and reliable and increased their pay 10% over 1920 salary. This affects five men only. The above increase conditioned on a more vigilant and careful interest in everything we do — for economy, efficiency and profit." "By weekly letters in pay envelope encouraging them to feel they must do more." "We have recently supplied our sales force with a Sales Build- ing Bulletin Service and the entire personnel with group life in- surance. )> "Endeavor to have employes feel that they are working with us rather than for us." "Some employes taking night course in accounting and sales- manship." "Have introduced new bookkeeping system that increases effi- ciency without increasing cost." "By giving each dealer and salesman a mark to shoot at and rewarding the successful." PUBLICITY "With business hard to get we believe this is the time to ad- vertise." "We have rather added to advertising as this has always been our custom — advertise heavily when business is hard and *go easy' when it is coming anyway." "Are trying to make what advertising we do more effective. Have simplified the new catalog we are getting out by eliminating all goods for which there is not an active demand." "We are striving for greater effectiveness in publicity by more \ 12 csreful selection of items advertised, requiring more careful mer- chandising preparation." "There has been a material reduction in 'Dealers Helps* which are furnished to our customers in proportion to amount of orders placed." "Analysis of results obtained to make every inch of space pro- ductive." "Am using liberal space in my competitors' magazines and circu- larizing fifty per cent more than last year. When the other fel- low quits I like to begin." "Letters have been directed to the various publications stating that all prices are in process of liquidation from fuel to finished product, and that consequently some reduction will be expected in the near future for advertising space." "About the middle of January, after taking inventory and hav- ing heard from enough of the manufacturers to know about where they stood as an average, we decided that it was up to us to move as much of our stock as possible, at a profit if possible, but figuring on a basis of replacement cost. With the public little inclined to buy, lower prices plus an extra effort would be necessary, and we believe this will hold good for some time to come and that the days of 'long profits' are past. Accordingly we put on an extra man to work almost altogether on direct advertising, a field hitherto almost totally neglected. This man uses letters, per- sonal calls and the telephone. Our newspaper advertising in February was also increased. The total sales for February show an increase (in dollars and cents) of a little over 5% over 1920; the increase in expense is about the same. The gross profit, of course, shows a decrease of 16%, in fact, we just barely covered cost of operating in February, but we are moving the high priced goods and that was. our real object. In view of price lists that are now beginning to reach us, we believe we have done wisely." "Owing to the recent high costs of newspaper and magazine space per thousand of circulation, we have found it not very profit- able and are spending our money more and more on the distribu- tion of samples." "We have taken no steps to reduce our advertising space, as it is our feeling that it is false economy to cut down advertising at a time when business is in need of a stimulant to keep it alive." «) 1^ 13 "Endeavored to cut down our commissions and agents by gene- rous advertising by circularizing, thereby developing the direct mail order business." "We are economizing in space and size of issues but not prun- ing as to number of or kind of channels. Our newspaper adver- tisement rates have very materially increased, however." "There is no reduction in 'cheaper mediimis' because, as wc understand it, such are not used. Our plans call for a 9% increase in mail order circularization. Interior displays and decorations have been cut down to a minimum. The outstanding feature of our reduction of publicity costs is that of cutting down space used in newspapers, which we believe ought to be carried out to a larger degree by stores all over the U. S." "We are dropping a few newspapers whose rates have been raised to a level that makes the further use of such papers im- possible in our case." "Have practically discontinued envelope stuffers and pamphlets." "We are discontinuing a house organ and all newspaper adver- tising and are increasing our efforts in circularizing the trade." "Are making special efforts in special direct advertising, by per- sonal sales letters, and enclosures." "We did not circularize before, but now issue a monthly house organ with good results." "Reduction by purchasing duplicating machine with which all advertising is done." "We regard our advertising rather as an investment and as business insurance than as expense. Our effort, therefore, has been to maintain an adequate all-around campaign at a minimum total cost. it "Use more mediums but small space with equal resuults. Space does not count ; pounding away all the time is what tells." "We do not feel that we should decrease publicity ; if any change, it should be increased." "Concentrating more than ever on the consumer, by circular letters, house-to-house work and dealer demonstration." "We have found circularizing to be the most effective means of advertising and have increased rather than decreased our appropria- tion for this work." \\ 14 "Have increased our advertising expenditures to increase our business." "We have increased our direct circularizing." "No reduction in amount expended, but dropping out of territory in poorer section and increasing efforts where results may be ex- pected." "It is our idea that cutting the advertising would only increase the cost of selling merchandise and we believe we are right." "We have concentrated on advertising and eliminated general publicity." "Cut down size of our general catalog about 18%." "We are decreasing the amount spent in magazines of national circulation and increasing appropriation for direct advertising, using actual typewritten letters." "Increased publicity by hangers, posters and calh'ng attention to the dechne in prices from the peak with quality equal or superior to that at the higher price." "Have stopped entirely the advertising in so-called 'charity publications.' " "We have reduced the newspaper space, letters, etc., and in the place of this we have given more attention to extra values in our windows, and in our localities it shows good results, because we feel that price is the thing that is most interesting to the trade instead of reading matter." "We are not trying to curtail our publicity but are increasing it, c'iS we need it much more now than we have for the past three or four years." "We have recently started a weekly circular letter to our out- of-town trade which will substantially offset the service of one of our traveling salesmen, who left us February 1st." "We kept our appropriation down to bed rock during the days when there was practically no sales resistance, conserving our funds for a time when they would stand us in good stead. We feel we now owe it to our distributors and dealers and to ourselves to help keep things moving as satisfactorily as possible by securing the healthy flow of distribution, produced through consistent, well directed and forceful publicity." "Elimination of advertising automobile." "We are running the biggest advertising campaign in our history 15 in order to cooperate with our connections in bringing back normal business conditions." "Changing from magazines to newspapers." "We feel there is greater sales resistance, particularly on our products, at this time than before, and in consequence we are tak- ing aggressive action in the matter of space and direct-by-mail eftorts." ^^ "Using cheaper paper stock for circulars wherever possible. "We reduced our advertising appropriation by 50% but the signer is not sure that it was a wise move." "Have increased our advertising 300 or 400%. General pub- licity and circularizing have been increased." "Less white space in advertising." "We have begun the use of an industrial film and will make this one of our major publicity agents." SERVICE "By combining day and night delivery so as to do most of delivery work before 10 a. m. to avoid congested traffic— thus reducing delays, accidents, etc." "Discontinuing helpers on motor trucks." "4% reduction by using one truck instead of two on the road, 5% by putting one man where two traveled." "We have reduced deliveries expense by loading trucks to full capacity and not sending them out except with full loads." "We have not attempted to reduce our service in deliveries as we believe that service today more than ever before is going to be one of the strong factors in business reconstruction." "In the matter of deliveries, however, we do not urge the use of this service by the customer, but rather adopt a neutral attitude, delivering with pleasure any merchandise which the customer wishes. Our sales people merely hand the package to the customer with the statement, "Thank you." They do not as was once the practice when handling the package, say, 'Do you wish this de- livered?'" "We have just recently completed a survey of the delivery system." "Since the war have had one delivery per day, when before we had two. This saves in many men and trucks." Ii I 16 "It costs us today 20c each to deliver packages, while before the war it cost us Sj^c each." "We are enlarging our area of delivery with motor truck ser- vice." "We have reduced our truck expense 25% and cut down the expense of our transportation costs by making deliveries at certain times only, whereas last year we were forced by circumstances to deliver without any regard to route or time." "Consider our service department adjunct of sales and are in- creasing it We are looking after our trucks to greater degree than ever before." "We are endeavoring to maintain our service at higher than its usual standard. We are anxious to secure orders and these orders in our business result more directly from good service than any other single reason." "Increasing list prices in delivered territory over non-delivery territory." "Have put on our own trucks, instead of employing trucks or drayage companies, eliminating their profit." "We have made no reduction in service. I cannot see that our public IS any less entitled to good service during a period of slack business than during a period of good business. As a matter of fact the present opportunity should afford right thinking concerns an opportunity to re-establish the service that suffered so much through the inefficiency and lack of interest of employees during the war." ^ CREDITS "We are more lenient on credits based on moral standards than on nnancial. "More liberal on small credits and small accounts than ever. To increase our sales and build up GOOD WILL." "Close attention and sharper action taken with credit business. Cash business being promoted by quoting liberal discounts and boosting 'cash and carry' method through circulars and salesmen." Use trade acceptances." "We have not changed our limits or time of credits, but don't call on those customers who have been slow, working on those who are prompt. \ ) \ r 17 "We have within one year reduced our regular credit terms from net sixty days to net thirty days. This has resulted very satisfactorily. It means just about a 50% saving in our average current accounts, outstanding." "We are wherever possible selling on 30 days Federal trade acceptances." "By selling for cash only it is possible to save on bookkeeping, collections and worthless accounts." "We are charging interest on all accounts which run longer than the fifteenth of the month following date of purchase. This has reduced the monthly balances on our accounts approximately 25%." "No change in terms of payment of domestic accounts, but mak- ing more liberal terms of payment on export business to meet competition." "All sales made that settlement is to be made immediately by trade acceptance or cash." "We are watching our collections carefully but have put in no program of restricted credits. As a matter of fact we have ex- tended help to a good many of our customers who need it worse than we need the money." "No credit to those who steal time or who refuse proper state- ments or refuse to give notes or acceptances." "Over two years ago we shortened our credit terms from 60 to 30 days and are very glad we did so." OTHER COSTS "Another place, of course, where reduction can be created is greater turnover, to employ less capital tied up in merchandise, thereby saving from several angles expense in the way of interest, insurance and taxes." "Have carefully curtailed traveling expenses of men on the road by letting them work territories more closely, thereby avoid- ing expenses of long trips. Are carefully avoiding expense of long distance telephone and telegraphing by employing mail in all cases where possible." "We are now doing all of our housekeeping work in the day- time and are accomplishing this with a smaller force of men to the extent of 80i% saving in the number of cleaners and porters 18 19 employed than when we were operating both day and night." "We are watching every detail of our business and especially those departments showing loss in volume of sales, also depart- ments not making profit ; and purchasing minimum supplies, etc." "Cutting down all improvements until we can pay for them with PROFITS." "Reduction of stocks, thus saving interest, taxes and insurance charges." "More care is exercised now than for the past three or four years in every item such as saving packing cases, paper, twines, etc." "Close analysis of expenditures, and percentage should not be allowed to exceed the same percentages of sales in past years." "Every one of them. We watch them like a 'hawk watches for a chicken.' " "We worked out a budget for expenses for each department and then took each item in detail, notified the manager of that de- partment that he must come within his budget." "Can maintain present salaries at least during the year of 1921." "The matter of figuring out ahead what funds we will have available and planning our expenses accordingly." "Interest charges lessened by reducing stock of merchandise and reducing investment accordingly. Also less insurance and taxes." "We are making forecast lists of monthly expense items such as salaries, general, incidentals." "We are closing up various branch offices that were not operat- ing at a profit." "We are increasing our business by taking smaller profits and thereby receiving greatly increased volume." "We have adopted the method of thinking TWICE before mak- ing an expenditure, and have figured out what each store can spend each month and no more." "Improved systems of handling merchandise and office routine and a more economical distribution of space play into our plan of reducing. Cannot estimate percentage." "Cutting out entertainment, traveling and other incidental expenses, scrutinizing telegrams, long distance messages, postages and creating short cut methods where possible." "Cut in employe magazine from fortnightly to monthly." "Eliminating some of the extravagant habits contracted during the period of hysteria." i • t^fn "Increasing volume of sales and decreasing stock have in- creased turnover 4 to 8 times a year. Interest now a credit in- stead of a debit." "This firm is putting in a complete cost accounting system and finding it a great factor in reducing costs." "We have reduced the market price of our goods. Noting the disastrous effects caused to retailers with full shelves by the re- ducing of price on the part of the manufacturers, we are pro- tecting our retailers by maintaining our prices at source of supply until they can reduce their stocks without loss." "Our costs are being reduced by forced liquidation of merchan- dise based on replacement values." "Have reduced amounts borrowed and cut interest cost consider- ably." "We are jobbers and have made many reductions regardless of the replacement value, and reductions in price have been for the purpose of reducing our stock, as we anticipate a further decline and we are doing everything in our power to dispose of such items on which we have an abnormal stock." "Better merchandising and more turnovers will in our opinion enable us to stand legitimate expense." "Am doing as much business as last season by running special sales on any long item, in stock." "We have instituted a better stock keeping system which will give us a better turnover. We hope thereby to reduce our ware- housing cost; we also hope to reduce our interest, insurance and taxes charges by a reduced stock of merchandise." "Expenses being reduced by: Unification of files and mail; unified reading of mail, eliminating duplications; elimination of individual stenographers and establishment of unit; use of inter- office memo, eliminating typed memo; close supervision over office supplies, stationery, laundry, electric lights, etc.; insisting upon punctuality; survey made of all office equipment to eliminate purchases." "We are promoting sales through our local organization by buying home-made goods sufficient to keep our home people em- ployed." "10^ is saved by eliminating errors and duplicate work, better ^ai I' I «<1 "1 20 service and care in handling stock, accounts, sales, wear and tear on equipment, trucks, wagons, etc." "Overhead cut by reduction of administration such as items covering borrowed money, insurance, legal expense." "Have material arrive so there will be no demurrage; no over- time in unloading." "We have reduced our merchandise stock and are saving storage 25^. Also reduced our loans to almost NIL and have cut down our interest expenses 80%." 'Reduction in overhead by change in accounting system." 'Biggest immediate saving possible in reduced interest account resulting from decreased inventory." "We have an item of general expense including telegrams, cables, stationery, telephone, entertainments, periodicals, etc., of about $350,000.00. This has been reduced to $227,000.00 an- nually and will go under $100,000.00 this year." As a conclusion, there is appended through the courtesy of the National Wholesale Grocers' Association a description of the methods adopted by a Middle Western wholesale grocer. These are just as applicable to any other business, and to a retail as well as to a wholesale house. 1.— THIS FIRM WILL SAVE ABOUT $16,500 on interest charges. Average borrowed capital has been reduced from $300,000 in 1920 to $95,000 in 1921. How it was done is self-explanatory. "Dead horses" have been moved; outstandings held firm; inventories cut sharply but intelligently; insurance and storage charges reduced, etc. 2.— THIS FIRM, WITHOUT CUTTING SAL- ARIES or wages will save, at least, $10,500 on its 1921 payroll as against 1920. It has been brought about by reduction of persons em- ployed; in one warehouse a floor force of 12 men are do- ing the same work that 17 men did a year ago. (This grocer believes that, not including salesmen, 10 to 20% too many people are employed by the average grocer.) Where there is a resignation, death or removal the work is either divided among other employees or a new em- ^ I C 21 ployee starts at a figure 20% to 30% under the amount the position paid previously. 3.— THIS FIRM HAS REDUCED ITS AVERAGE inventory by $172,000 as compared with last year- slashing interest, storage and insurance costs, etc. Which means that this firm is following the market closely but not ultra-conservatively. 4.— THIS FIRM HAS MELTED $100,000 into cash that was frozen in slow-moving stocks that required special attention. They got it. Here is found leadership at its best. The head of the firm has adopted the policy of "walking the stock rooms," personally, each week and sometimes daily. He takes an assistant with him and stocks that look too large or a little "slow" are marked for special attention. They are moved by intensive salesmanship. 5.— THIS FIRM HAS HELD "OUTSTAND- INGS" at around 1920 figures with just a slight increase. In this method, account is taken of present conditions and the figures of 1920 were favorable. 6.— THIS FIRM IS BRINGING INTO ITS STOCKS a number of items that have been eliminated in the past eight or ten years. By going over its old stock records the firm added profitable items that were dropped during the past eight or ten years. 7.— THIS FIRM HAS DETERMINED TO PARE THE entire payroll, probably excepting salesmen, from 20% to 30%, in the event that the methods outlined above do not bring the desired results. Here is the last step in the policy of this firm. The hope, if not the opinion, at present, is that it will not be necessary. Date Due %7:r-5 '.d j'^ 1 _ . «• JAH25 J922 COLUMBIA UNIVERSITY UBRARIES 0044243375 C35 JhLber of comerce of the United • _ '^6o expense . ^^\ (lf«H ^S"53^ NEH ^H I tt99S END OF TITLE