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Cash Or Credit - Arguments For A Credit Business

( Originally Published 1912 )

Now, what are the arguments in favor of a credit business?

Appeals to Best Classes

First: The best class of people in every community wish to buy on credit, whether they have a bank account and pay by check, or at regular periods of settlement pay cash. As a class, these are the people who make the largest purchases, who buy the best quality of goods. Therefore, they are the most desirable customers for any store which deals in the quality of goods which appeals to such people.

More Regular Customers

Second: If a family runs a charge account with a store, that family is apt to buy in that store with greater regularity. The dealer can count on a certain trade from that family which will not materially vary. When he has enough trade of that character he can figure quite accurately on the amount and the kind of trade which he will have.

Creates Friendly Feeling

Third: There is a friendly feeling between the dealer and good charge customers. He knows them by name, knows exactly where they live, knows how much of their trade he is getting, and knows whether it is worth while for him to be extra accommodating to them. On the other hand, the customer knows the dealer in a better way—particularly if he encloses an itemized bill with each purchase. Indeed the personal acquaintanceship between the small merchant and his customers, particularly charge customers, does more than any other thing to keep the big store from getting all of the retail trade. Human nature has not changed ; the big store may be interesting and dazzling, but most of us like to do at least some of our trading in a store where there is a friendly feeling and personal acquaintance between ourselves and the one with whom we are dealing.

Charge Customers Less Critical

Fourth : The charge customer is not so inclined to "shop around" and pick things to pieces and drive a hard bargain, and wrangle over prices, as is the cash customer. This is a more far reaching argument than may at first appear. There is some-thing subtle and psychologic about it. A woman with the money in her hand feels that she can be just as "saucy" and just as mean as she wants to be with the dealer ; she is independent, she has got the money, and she can trade anywhere. That makes her more critical and harder to deal with.

Cash May Induce "Pernicious Shopping"

For that reason she is more apt to trade this week in one store, next week in another, and where she pleases in the third. She becomes an inveterate shopper—she is not a good customer of any store, but scatters her trade here, there and everywhere, until it is not worth a great deal to any one store.

Less Chance of Dishonesty

Fifth: In a store where all of the business is cash, there is a greater opportunity for employees to make money by being dishonest. They get the actual money in their hands. The dealer is not so apt to make a written record of every transaction, since he gets the money right on the spot and thinks that he does not need to make a record of it. That is the chief reason why cash stores, as a rule, often have more trouble with dishonesty than do credit stores. The employee working in a credit store does not have the opportunity to get his hands on the money, nor to get the money in his pockets, as do employees working in a strictly cash store. No matter how small a store may be it must make a manifold sales-check record of every transaction if it expects to stop such losses.

$200,000.00 Stolen, One Store

Just think what it means when one of the acknowledged leaders in the cash retail business admits that his store loses by dishonesty two per cent of its gross sales annually. Since this store does an annual business of over $10,000,000.00, you can figure out what that two per cent amounts to.

Quality of Trade

Sixth : Very few dealers can handle the finest class of goods and run a strictly cash store. There may be exceptions to this rule, but it is so universal that the exceptions need hardly be considered. This is another way of saying that what are generally considered "the best customers" now buy, and al-ways will buy, on credit.

Telephone Orders

Seventh : The continually growing practice of shopping by telephone is giving the credit houses a great advantage. It is so easy to pick up the phone and tell the dealer what you want, that there are now stores of a certain kind that do more than half of their business in that way. This practice of buying by phone is growing so fast that many stores are putting in switchboards with competent order takers as operators. These order takers have special order forms, on which they write out the order and 'send it to the proper part of the store. Many merchants make a practice of calling up their customers regularly and soliciting orders by phone. Of course, cash stores can take phone orders, too, but the fact remains that they have not been able to get so much business in this way as have credit stores.

Usually More Accommodations

Eighth: A store doing a credit business can usually furnish its customers many accommodations which a cash store does not, or cannot give its customers. For example, if a woman of means wants to buy a coat for a little girl, she does not want to get into the crowd of a big busy store and try on several coats. She goes to the store herself, picks out several coats, has them sent to her home, and tries them on the little girl, and returns those which she does not need. She is perfectly willing to pay an extra price for the goods to save herself the annoyance and inconvenience of all this wearisome detail at the store.

Remember, there are so many well-to-do, aristocratic people in every locality, town, city and state of this whole country that their trade means for-tunes to the merchants who get it. This class is more and more willing to pay for extra attention and extra accommodations.

Few Strictly Cash Stores

Ninth: There are very few strictly "cash" stores, although many stores are widely advertised as such. Most "cash" stores do a more or less limited and conservative credit business.

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