The talking machine world (July-Dec 1927)

July, 1927 THE TALKING MACHINE WORLD 11 Plan of Home Demonstration of Records Doubles Sales Volume of Seattle Store H. M. Hassellj of Seattle, Wash., Describes the Method of Interesting Customers in New Records That Has Been Instrumental in Building Profits in This Department The sale of records is a cash business. Perhaps it is the only business in which the customer is persuaded to buy more than he originally intended, and like it. The music store with which the writer is connected has for the past two months used a method of record merchandising that has produced such startling results that it is thought well to pass the idea on for the benefit of the industry. We have almost doubled record sales in this time, and, incidentally, by virtue of the plan, increased machine sales to a marked degree. First, we keep our customers well supplied with record catalogs. With each occasion for sending out mail we enclose a list of the latest releases and popular "hits," offering to bring any number of records, selected by the customer, to his home, and there demonstrate them. In this way we find that people buy twice as many records as they do when we wait for them to come into the store to select them. We use a form which reads: "The Academy Music Co. You may bring the records marked to my house for demonstrating. It is understood that this does not obligate me to buy. Name Address " .We find that the general public does not fully realize the great improvement made in records in the last year or two. This plan offers an opportunity of explaining the numbers, and revealing their beauty, and any interesting history attached to the composition. Thus enthusiasm is aroused, and we are able to leave our customers in a pleasantly expectant frame of mind for future releases. Last, but very important, indeed, is the fact that in demonstrating the records we are enabled to gather a valuable list of prospects for new machines. Taken at its height, the enthusiasm over good records forms an exceedingly good opportunity to arrange for the demonstration of the latest phonograph model. The sale of a machine is then two-thirds accomplished. So vastly improved is the reproduction of a given record on a new type machine over the older models that to close the sale under these conditions we find is a matter of mere mechanics. So by pursuing these methods assiduously, going to our customers, we have doubled our record sales in a very short time. By using records as our "broadcasters," and by employing the marvelous reproducing capabilities of the new instruments (especially the electric pick-up models) as the vehicle for the hidden beauties in the new process records, we have placed our business on a thriving and moneymaking basis. Survey of Overhead and Profits in Retail Talking Machine Establishments (Continued from ['age 3) ness, or how that cost was divided. In a large measure, the completeness of the dealer's answers was in almost direct ratio to his success as a merchant. The dealers approached by The World were asked to give the percentage of overhead for their entire businesses, and the overhead and percentages as divided among the talking machine, record, radio and musical merchandise departments. They were also questioned regarding the manner in which overhead costs were divided as between rent, salaries, advertising, etc., and then to set forth the net profit that remained to the credit of the various departments after the cost of doing business had been taken care of. Errors That Cause Loss Replies indicated an all too frequent tendency to confuse gross profit with discount and mark-up, and there were a surprising number who gave the percentage of discount as the percentage of profit and let overhead take care of itself. It indicated once again that the term "gross profit" is a misnomer, and might well be eliminated from the business vocabulary for the protection of those who seem inclined to accept it as a final measure of what they have learned through a combination of capital and effort. It is a serious matter, as more than one dealer has come a cropper because he regarded his discount as profit of sufficiently impressive size to permit of careless handling, and when he finally learned that the discount simply represented a margin to cover the cost of doing business it was too late. Another difficulty appears to be that a substantial proportion of dealers are content with overhead figures that cover the business as a whole and where several different departments are operated do not take the trouble to divide the overhead in accordance with those departments. The talking machine record department may be paying handsomely, the radio department breaking better than even, and the musical merchandise department operating at a loss, or change about, without the dealer being able to tell which is which and, as a result, being unable to correct situations that may develop into real business problems. When the overhead of each department is taken separately, then that department must stand on its own. When there is a let-down the dealer knows where it is and can get at the root of the situation quickly and effectively. It is simply justice to those in charge of different departments that they get full credit for the results of their efforts and are not saddled with carrying another losing department in general overhead figures. All this comes when the subject of overhead is properly understood, but this is a far advanced stage, apparently, for those dealers who have not yet learned to figure their businesses properly even in a general way. One dealer with a general discount on his several lines averaging between 35 per cent and 40 per cent reported an overhead of 34 per cent, yet calmly stated that he showed a net profit of IS per cent, thus making a neat 49 per cent out of a maximum 40 per cent gross. Another enjoying similar discounts reported an overhead of 25 per cent and a net profit of 40 per cent, the 40 per cent in this case undoubtedly referring to what he might have called gross profit or discount. Still another dealer reported a general overhead of 40 per cent, and a net profit of 42 per cent, which in itself proves that he had little knowledge of the vital subject. One retailer was able to give detailed percentages regarding various overhead items, but casually included 33 per cent of the total overhead under the heading miscellaneous. Probably included in that 33 per cent were many items that might well be dispensed with. It might be well for many members of the retail trade to read carefully, absorb and profit by the following declaration adopted at the recent annual convention of the National Association of Credit Men, which declaration emphasizes the need for closer attention to overhead control: "The difficult problem of our business to-day is making reasonable profits. Profits do not result alone from prices. Cost control is of ranking importance with prices in profit-making, and costs frequjfntly arise from unexpected but inevitable causes. In controlling shrinkage in gross margin of sales, no protection is of greater value than the conversion of merchandise into sound receivables. "This Convention points out the mistake so common these days of building volume production at the expense of safe credits. It urges in the very strongest terms upon the executives of our business enterprises closer attention to overhead control and to the preservation of margins in sales by avoiding merely gamblers' chances in credit transactions and by giving to the intelligent and progressive management of their credit departments the needed respect and control." National Record Albums Made oS the best materials and finished by experienced workmen PORTABLE ALBUMS ALBUMS FOR CABINETS ALBUMS BOUND IN CLOTH or ART MISSION Albums for Export Our Specialty Write Cor list ot 1927 styles and prices National Publishing Co., 239-245 South American St., Philadelphia, Pa.