Food - What The Retailer Does
( Originally Published 1917 )
The grocer's place in the town's business. Did you ever ask yourself what is the most important business carried on in your community?
This is really about as vital a question as you could raise, because the answer forces you to learn the truth about a situation that has become obscured by false notions and traditions. Perhaps the easiest and surest way to get at the right answer to this question is to imagine yourself in a community wholly cut off from all the rest of the world, at least for the time being, and then ask: "In such stress, what business could we least afford to spare? "
Only a little thought will be required to convince you that the grocer, or food merchant, would be the one man to whom all eyes would turn in such an emergency. Men and women can wait a long time, if obliged to, for most of the things they buy which are commonly called necessities, but they can wait only a little while for food. They must eat or they will perish.
Most of us are in the habit of thinking that the banker, for example, is an important man. So he is. But there are many small towns that get along very well without a bank, using little actual money. Put to the same test every other business and you will soon see that selling foods is the only business absolutely necessary to the community all the time. It cannot be spared, even for a short time, without serious harm.
Possibly you will say that clothes are quite as necessary as food. The answer is that you could wait much longer for a new stock of clothes than for a new supply of food.
The grocer's services varied. The notion is quite common that about all a retail grocer does is to deliver goods over his counter and take money in return for them. It is true that all his activities center around supplying the people of his locality with foods and that his motive for doing this is to make money. On the other hand, he does so much more than merely hand out goods and take in money that it would be a great injustice to him to look at his work in this way and fail to see the real importance of his service to the community.
The position of the wholesale grocer who distributes food supplies to the people of his territory may be compared to that of a big bank which supplies money, through many smaller banks, to the people of the district in which it operates. The retail grocer is the link in the chain which connects the food producer with the consumer. We may aptly call him the country banker of foodstuffs.
The grocer as a banker. But the retail grocer is far more than a banker in food supplies. In many instances he is also a money banker for his customers because he gives them credit; or, as the common phrase has it, he "carries them" on his financial shoulders. The length of time for which the grocer carries his customers depends largely upon local conditions, upon whether he is located in a city or a country town, and whether the customers get their money from mills and factories or from farms and ranches. The storekeeper in a manufacturing town, where the men are paid by the week or month, does not usually give his customers credit for longer than thirty days. But, of course, hi times of slack work or in hard times, he is often obliged to stretch his credit over several months.
In the country districts,,where the storekeeper's customers are mainly farmers, dependent upon their crops, the credits frequently run from harvest to harvest. In dairy districts where farmers get regular monthly milk checks, as in manufacturing towns, thirty-day credits are the general rule. Often this really means that the grocer or retailer actually furnishes a large part of the money on which his community does business. In thousands of cases, grocers are actually paying interest on the money their customers owe them. Suppose, for example, that a storekeeper started in business, as many do, with almost all his capital invested in fixtures and equipment. This would mean, of course, that he would have to buy his stock on credit. Then, if he had to carry his farmer customers from one crop to another, he would soon be forced to borrow money to meet his bills at the wholesale house and thus keep his credit good at the source of supply. In case of a crop failure it is often necessary for the storekeeper to shoulder a double burden of credit and wait until still another harvest for his money. Sometimes this means a year and a half or even two years that the storekeeper must stand behind his unfortunate' customers, furnishing them food until they succeed in raising a crop and marketing it.
Banking, or financing his customers, is not unusual on the part of the storekeeper but an ordinary happening of trade. The storekeeper does not intend to do a banking business when he starts out, but circumstances draw him into it. He must do it for his own protection, to hold his trade together, until his customers succeed and pay their bills.
Of course there are thousands of farmers and ranchmen who can and do pay their bills at the end of each month, as there are thousands of doctors, lawyers, laborers, and business men who settle their store accounts every thirty days; but almost every storekeeper must act as banker to a large part of his trade. If his customers all paid promptly, the storekeeper would not need to borrow money to carry them along, and would not only save the interest on this money but would be able to pay his own bills promptly enough to save the discount allowed for cash or prompt payment.
It is quite natural to ask why the retail store-keeper does not require his customers to pay interest on their overdue accounts, thus offsetting the interest he must pay on money borrowed to carry them along. In many cases this is done, but it is not easy to carry out this plan in all instances, because the average storekeeper hesitates to ask a customer to pay interest. And the customer who, under ordinary circumstances, is good pay resents such a request from a storekeeper to whom he gives a substantial trade from month to month.
The grocer as a warehouseman. The retail food merchant gives his community still another kind of service which is seldom recognized or appreciated by his customers. He acts as warehouseman, carrying reserve foodstuffs in a way that keeps them in good condition, ready to be dealt out in small quantities as they are needed by the consumers.
He does more than this-he takes the risk of loss by breakage, by shrinkage, by waste in handling, and by the general decay to which many food products are subject. Again, he is liable to loss by decrease in the market value of the goods themselves. This is the penalty he pays for being a food banker.
Suppose your mother, like her mother or her grandmother, perhaps, was obliged to buy her stock of groceries and prepared meats for practically a whole year in advance, and not only buy them but store them in the house. Before that year's stock of foodstuffs was used, would not your mother be more than willing to give up all the profit of the retail grocer on those goods if she could only be saved the loss and waste of every kind and the bother of caring for them? There is little doubt that the retailer's profit on those goods would seem a small reward for all that she had been obliged to endure to secure the benefits of buying in quantity. A household experiment of this kind would show clearly just how much service the retail storekeeper gives to his customers by acting as a warehouseman and delivering food supplies in small quantities and in fresh condition.
Those who are inclined to believe that the retailer takes a heavy toll for his services should bear in mind that the retail grocer's rent or cost of providing a place in which to do business, his payroll for help, his taxes, his insurance, and even the money he must pay out in order to give his customers the long credit they demand by no means make up the total sum of his expenses. He is called upon to contribute to every cause in the community for which popular support is sought —church enterprises, the Fourth of July and other town celebrations, the village band, the high-school baseball and football teams, and all forms of charity.
How the city retailer serves the public. Suppose we visit a high-class retail store and see just what the retailer is doing for his money. This is a fancy grocery in a large city—an aristocrat among retail stores. An obliging clerk will personally conduct us through the store.
Notice close to the door those crates of French endive. You will see by the label on the box that they were imported from Belgium. Those alligator pears or avocados were brought from the West Indies. Over there on that long porcelain counter are piles of cucumbers, crisp heads of lettuce.
Brussels sprouts, and many other varieties of garden products, all of the choicest. This is no special display prepared for an unusual occasion, but merely the ordinary stock handled each day in this store.
You ask where such wonderful vegetables were obtained.
"Throughout the country," replies the clerk. "We have a number of experts in garden truck who visit our gardeners and select the choicest of their stock. About twenty-five gardeners are raising vegetables especially for us and the best of their product is shipped here. In order that we may not be handicapped by unfavorable conditions in any one locality, we are in touch with gardeners in every section of the country, and have buying stations in Florida, in Michigan, in California, in Texas, in New York, and all through the Middle West. Our growers raise the vegetables according to our instructions. We furnish the seed and give explicit directions as to how each product is to be grown. This also applies to much of our fruit. We have a man raising peaches for us who is said to produce as fine a peach as any grown in America. In several states we have melon farmers who send us their finest fruit.
"Our store has a woman cook who makes fancy pastry especially for us. Even our crackers are of a special quality. The woman receives fancy prices for her pastry, and the cracker company charges a little more for the special crackers. We pay from 20 to 100 per cent extra for the special foods prepared for us and also a large sum above the regular market price for everything that is accepted from the gardens, orchards, and fields of our special growers. Even the printer gets a bonus for putting extra care into the printing of our bags, labels, and boxes."
The small-town grocery. Now let us go into a typical small-town grocery store and market and see the foods handled there every day'.
First of all, we see several boxes of oranges and a box of lemons: At home we usually order a dozen oranges and perhaps a half dozen lemons, as we need them. The grocer tells us that the wholesaler expects to sell at least a box of lemons at a time and more than one box of oranges. He also says that the shipper would not think of handling less than a carload of either of these fruits, while the grower expects to sell his entire crop to one buyer. Since few families would care to purchase several hundred lemons or a box or two of oranges at one time, we see plainly that the retailer is necessary in the handling of such fruits.
There hangs a bunch of bananas. The retailer cannot buy fewer than a bunch at a time, the wholesaler must buy them by the carload, and the importer by the shipload. Few private families could afford or would wish to buy bananas by the bunch. So again we see how real economy is impossible without the local retailer.
Notice the grocer's supply of nuts—walnuts, pea-nuts, pecans, almonds, and Brazil nuts. It would not be difficult to store a considerable quantity of nuts in one's home, but ,on account of their bulk it would hardly be advisable. A hundredweight of nuts is a very small order for the grocer to give a wholesaler, but a hundred pounds of nuts would be both an expensive and cumbersome item for the family larder.
We see on the counter a generous supply of vegetables—all brought in from the outlying truck farms early this morning. The grocer sent his delivery boy for them in an automobile. The boy called at several farms and truck gardens before he found just what he wanted. His speedometer showed that he traveled eighteen miles on that trip.. Suppose before we could have string beans, fresh tomatoes, potatoes, and peas, we had to get up early in the morning and travel eighteen miles for them. Surely the retail grocer is a convenience, at least.
On the next counter are a number of cantaloupes and osage melons from Michigan. They are especially early ones, too, obtained from the city produce merchant at a fancy price. Our retailer had to buy a crate holding twenty-five of them. One family could not afford to take more than three or four of such melons.
Balancing supply and demand. But, perhaps you think that if we were willing to wait a little, we could buy all these things much more cheaply in their natural season direct from the farmers who grow them. Perhaps we could, but it must be remembered that there are many parts of our country where such things cannot be raised. Again, an unfavorable season will cause a scarcity of them in a wide territory. In our home town, the farmers raise good fruits and vegetables. But one year, for some reason, we had few tomatoes and very little corn, and a blight seemed to have struck the cucumbers and melons. Yet a little later the grocers were selling these things at about the usual price and we really did not suffer from any scarcity of them. On the other hand, there were a hundred cabbages raised near here to every one that could be eaten. I t looked as if cabbages could be had for nothing, for the truck farmers would have to throw them away. But retailers in other parts of our country would not permit that. The great majority of the cabbages raised in this vicinity were shipped away by wholesalers and bought by the retailers in other states where cabbages were scarce. Other communities had a surplus of melons, cucumbers, and tomatoes. So, in effect, through the wholesaler and retailer, the extra cabbages were being traded for the surplus tomatoes, cucumbers, and melons produced by the growers in other localities.
Buying from the producer. Sometimes, especially when food prices are extremely high, consumers try to do without the retailer by buying as much as possible of their table supplies from the producer. Perhaps this has been successful in some cases, but on the whole these experiments seem to show that both the producer and the consumer can make profitable use of the retailer's services. Generally when the consumer attempts to buy directly from the producer, he finds it necessary to pay almost as much for the eggs, the potatoes, or the poultry straight from the farm as the local retailer demands. At the same time he fails to receive many desirable things which the local grocer must furnish in order to hold his trade. Among these things may be mentioned experienced grading, packing, and handling, also credit, and delivery in small quantities at the convenience of the consumer.
If there is one special line of food distribution in which the retailer is indispensable, it is that of selling meats and fish. Were it not for the retailer, the average family would be compelled to go without fresh meat entirely, and the people living inland would find it practically impossible to serve fish on their tables.
Buying in quantity. There are many purchases the housewife would find it wholly impossible to make if the retailer—and behind him the wholesaler —was not on hand to solve the troublesome problem of quantity buying. Many families, for example, like Swiss cheese. But a whole cheese of this kind weighs about 200 pounds. Only the largest retail grocery houses have enough trade to dispose of a whole Swiss cheese within a reasonable time. There-fore, the wholesaler cuts one of these big wheel-like cheeses into quarters or eighths for his various retail customers. In turn, the retailer cuts this section of a wheel into smaller pieces in order to meet the immediate needs of his Swiss cheese customers. For example, he sells Mrs. Smith, who has a large and growing family, two pounds of cheese at a time, and Mrs. Jones, who has no hungry boys and girls to demand Emmenthaler cheese sandwiches, a quarter of a pound.
If Mrs. Jones could not buy so small a quantity of this cheese she would no doubt be obliged to go without it altogether. And while Mrs. Smith is able to use about eight times as much as Mrs. Jones, she, too, would find it necessary. to deny herself this prized article of food if it were obtainable only in big sections, the size of the one bought by her retail grocer from the wholesaler. So the retailer—by providing for the combination of many small purchases —places within reach of his customers many kinds of food they otherwise could not have.
Even in so small an item as fowls the work of the retailer is important. Here is an example taken from personal experience. One day we bought a chicken from a dealer who made four cents on the transaction, but to earn that four cents he drove into the country for the chicken, paid cash for it, dressed it, and sold it on thirty days' credit. No doubt his margin of profit in this instance was a good deal below the average.
You have already learned that before a great many kinds of foods reach the consumer they must pass through many processes. Of course you also under-stand that it would be impossible for a family to buy its tea, coffee, spices, and similar foods direct from the producers, and that it would be equally impossible for the jobber or the wholesaler to sell direct to the consumer. The wholesaler must handle millions of pounds of food every year and to attempt to sell it in one-pound lots would be impractical and commercially impossible. Then, too, the instant the jobber began to sell direct to the consumer he him-self would become a retailer, and would have to carry the retailer's expenses in one form or another and charge the retailer's prices. At the same time, it would be impossible for him to give the retailer's service.
The grocer a local agent. When considering the service of the retailer, it is important to remember that he is really the local representative of the wholesaler, the manufacturer, the producer and is right on the ground where he can be reached at first hand by every customer to give protection and satisfaction.
The grocer's profit and loss. It is common to consider the difference between the buying price and the selling price of the foods handled by the grocer, or his gross profit, as a tax on his customers' for the service he renders them. After his expenses are deducted there will be a great difference between this so-called gross profit and his net or real profit—which represents his pay for his work; just as the street-car conductor's weekly wage is his pay. But the money or capital which the retailer has invested is really an assistant which demands its wage and gets it too. The retail food merchant must be repaid this outlay with a little extra for profit and for insurance against the risk that he takes. For the fact is, the retailer of foods of any kind is constantly losing money on account of various shrinkages.
For instance, it is not uncommon to see a half dozen crates of strawberries sold at less than one third their normal price because the grocer fears that unless he sells them at once they will "go bad" on his hands. Of course, he loses money on such sales, and he constantly faces such conditions.
Retailer and wholesaler partners. In a way, the retailer has the wholesaler back of him in the service he gives to his customers. How far the retailer can rely upon the wholesaler depends partly upon his character and standing, partly upon how far the wholesaler can afford to back him, and partly upon the local conditions of the trade. Looked at in one way the wholesaler and the retailer are partners. When the retailer finds that he must shoulder an unexpectedly heavy burden in carrying his farm customers over a crop failure, it naturally follows that he must lean still more heavily on the shoulders of the wholesaler. The wholesaler usually makes a reasonable response to this demand for additional credit because the retailer's business pays a profit to the wholesaler. He is therefore vitally interested in seeing the retailer retain his standing, his trade, and his customers. On the other hand, the retailer must bear his own burdens to a considerable extent and keep his standing good with the wholesalers from whom he buys his goods. This means that if he has not capital enough of his own to meet his needs, he must borrow it. Often the retailer is forced to borrow heavily as well as to ask credit of the wholesaler in order to carry his own customers over a period of hard times.