The talking machine world (Jan-June 1927)

26 THE TALKING MACHINE WORLD February 15, 1927 Frequent Turnover Measures Profits in Record Department By C. H. Mansfield Manager. Phonograph and Radio Department, Fitzgerald Music Co. flllllll!llll!lllllllllllllllllllllll!lllllllllli:!l!nll]||||||!H||[||||||||||||l||| |||!||||||||||||| Illlllllllilllllll Illlllllllllg If you would make an outstanding success is a record department manager then try for frequent turnover. It is far better, and far safer, to order records every day than every week, or even twice a week. Turnover Measures Profits The biggest profits come in modern merchandising through turnover. To the young lady or young man in the record department, to whom this is merely a vague term, I wish to give an example of what turnover means. We will say that a certain record stock represents, at list price, $5,000. And, as an example, say that the record department does a business of $2,500 list price per month. Then it naturally turns its record stock over six times per year. Therefore, if the same record department, with one-half the stock does the same amount of business per month it will naturally turn over its stock twelve times per year. Therefore, much more money will be made on the same amount of business. Of course, if your jobber is several hundred miles away then there is more difficulty, but few stores in the United States are more than two days removed from the jobber at most, and in those cities where the jobber is removed this far I believe the customers will be more willing to excuse a store for being out of a record than customers in the city where a jobber is located, and where naturally they are accustomed to larger stocks. The Bugbear of Overstock I have been through all periods of the record business, and I know that the most dangerous habit) of all is the one so often employed of ordering records less frequently. Ordering only a day's supply at a time insures you against a big overstock on any numbers. Even with judicious daily ordering you are going to have to keep a clear head and a cautious eye to prevent that business bugbear of overstock from getting into your records. Daily Record Ordering Is Safest No matter how popular you think a record is going to be, be careful and stick to your rule of ordering one day's supply at a time. Remember dealer's record stocks every year are filled with numbers that looked like sure sellers when they were bought. A check up of stocks will undoubtedly show that almost invariably the numbers on which dealers are greatly overstocked are numbers that at one time were big sellers. Just think that over when you are tempted to order a week's or a month's supply at one time. If a new record sounds unusually good to you, and you feel sure you can sell an average of fifteen a day or one hundred during the next week, just control yourself and order the one day's supply and then reorder it every day. I have been told by many young ladies in record departments that it seems so silly to order the same records each day — records that they felt were going to be good sellers for weeks to come. It would be sill}' to do otherwise! Even though you have been selling fifteen or twenty of one particular number every day for days or weeks or months, and the demand seems to be growing rather than slackening, just you keep up the ordering of your day's supply each day and watching closely for the downward curve in that record's popularity, for it will come some day just as sure as you are alive. I have known of several cases where some FULL LINE of HARDWARE For Radios and Phonographs H. A. GUDEN CO., Inc. 87 WALKER STREET NEW YORK, N. Y. I C. H. Mansfield illlllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllU^ particular record sold steadily for over a year, and even more, and then in less than two weeks' time stopped selling because another record of the same selection, more beautifully rendered, was issued. The first record became dead stock immediately. How Profits Are Wiped Out In one case of this kind I know of a dealer who was selling some eighty-five or one hundred of a particular record every ten days or two weeks. Another record of the same selection was issued and it killed the first record and this dealer was caught with eighty of this record on hand. This particular case was over one year ago and in that year, with the efforts of everyone, he has been able to dispose of only ten of these old records. But he has only been able to dispose of those ten by deceiving those customers who did not know of the more beautiful rendition. This dealer now has seventy records, representing the net profit on some three hundred or more other records. It seems that the profit on hundreds of other records must go to make up the loss on this dead stock. It is true that the record exchange plans offered by some companies will eventually take care of some of these overstocks, but I can show you records in overstocks that have been there for two and three years awaiting the mercy of the exchange plan, and even though the record exchange plan eventually takes care of much of your overstock, if this stock remains long much of your profit is taken by lack of frequent turnover. Analysis of Profit Through Turnover A simple way of understanding why, or how. money is made on frequent turnover, can best be illustrated by the following: As an example, say that you have $100 to invest in a record stock. If you buy $100 worth of records and sell them all in a given period of time, say one week, then you have the $100, after deducting, say, an imaginary net profit, after paying expenses, of $10, to invest at once in another stock of records. You sell this second stock also in the same given length of time, just one week, and you have made another $10 and so on. But, just for example, say that through unwise buying you find $50 worth of these records move just twice as slowly, and it takes twice the given time, or two weeks, to move them. Then you turn over $50 only during the one week's time, making a profit of only $5, and it takes two weeks to make the other $5 froni the slower moving numbers. Thus, in two week-;, you have made only $15 net profit when you should have made $20 In a year with the 100 per cent weekly turnover (Continued on pacts 27)