Needs Of The Retail Meat Industry
( Originally Published Early 1900's )
Does the retail meat industry need improvements or remedies? Not everyone engaged in the retail meat business realizes that there is great room for improvement to better conditions in the industry. While the complaints and grievances of the individual retailer are usually directed towards his nearest competitor for selling at low prices, the industry as a whole suffers from a great many deficiencies. In addition, efforts should be directed towards lowering the cost of retailing meats and at the same time making the business so profitable that it will give the owner a fair return on his investment.
Actual investigations prove that a great percentage of meat retailers are not making the profits they are entitled to, there-fore, conditions as they exist at the present time in the majority of markets need considerable improvement.
The business ability of an industry as a whole may be judged by the number of failures in that particular line. Convincing evidence as to the need of improving conditions in the retail meat industry can be gained by studying the reports of business failures in the United States as shown by the leading credit agencies.
In the table presented herewith, groceries, meat markets and fish dealers lead in the number of business failures. While this list includes grocers, it is also well known that a large percentage of grocers handle meats, but as the majority of their business is done in the grocery line, they are classified commercially as straight grocery stores. These staggering figures of failures are not a compliment to the business ability of the retail meat industry.
During the year 1925, the losses due to failures in straight meat markets, as reported by one credit agency, were approximately $6,000,000.
What Is Needed In The Industry
The meat retailer is also generall looked upom as a very good buyer. He is fond of driving a hard bargain to the dismay of the cooler salesman or branch manager. It seems that from the standpoint of skill in meat cutting and buying, improvements are not needed. What then is needed in the industry the most? W. C. Davis, marketing specialist of the Bureau of Agricultural Economics, United States Department of Agriculture, has made investigations of the retail meat industry covering a period of several years. He has given an excellent outline in one of his reports of the handicaps and needs of the industry, as follows :
1. Organized effort on the part of the trade to prevent fraudulent and dishonest practices by unscrupulous retail meat dealers.
2. Misleading advertising is one of these evils which should be eliminated.
3. Too many shops make unnecessary and harmful competition.
4. More knowledge of costs and fundamental knowledge of business principles.
5. Comparison of business practices and exchange of information within the trade will contribute to more efficient retailing.
6. Retailers should co-operate more closely with the local health authorities to bring about more sanitary conditions.
7. Education of consumers to recognize cost and cuts of meat will improve trade conditions by eliminating unwarranted competition when dealers handle different cuts of meats.
The above is the opinion of an investigator who knows the business conditions in the industry intimately. Everyone in the trade will admit that such conditions exist and that remedies are needed to eliminate them.
In 1924 another investigation was made of retail meat markets of the United States by Horace Secrist, Ph. D., director of the Bureau of Business Research, Northwestern University School of Commerce, in conjunction with the Institute of American Meat Packers and the National Association of Retail Meat Dealers. Under the caption of: "What Needs to Be Done in the Trade," Dr. Secrist says:
1. Educate the merchant—training should extend to the fundamentals of:
Cost Keeping Merchandising General Business Methods.
It will be noted that both investigators point out that education is needed extensively in the retail meat industry, Is it education in meat cutting, in buying, or where is the need for education required most?
Business Education Needed
The observer in the industry realizes that there are today three principal requirements for the meat retailer. These are :
1. Education of business principles.
2. Retail Salesmanship.
3. Salesmanship for the industry and its products.
Education of Business Principles
The market owner who is familiar with and practices modern business methods, has a thorough knowledge of cost and selling prices, keeps proper records, and knows his business facts thoroughly, cannot help being a better retailer and a better competitor. A thorough education in business principles is there-fore the paramount need in the retail meat industry. A thorough. knowledge of business principles will bring about better business, better ethics and will help to eliminate many, if not practically all, of the evils which exist in the industry today.
This lack of knowledge of business facts leads to misrepresentation, to imaginary profits, to harmful price cutting. untruthful advertising, and is a cause of many of the failures in the industry. That meat retailers are not in possession of business facts is well known to investigators and students of the industry.
Few Retailers Keep Records
It is estimated that 75% of the market owners do not keep records of their business transactions. Many use the check book balance as an indication of their financial standing. In the report of Herbert C. Marshall, United States Department of Agriculture Bulletin No. 1317, the fact is disclosed that out of 3,641 market owners, 2,357 did not keep books at all but merely kept memoranda.
The meat retailer who realizes his true status knows that he is nothing but a distributor of meats. He is a seller of meats because his principal function is to sell a product he has bought at wholesale. While the skill formerly needed as a butcher has been eliminated, he does need an-other kind of skill to market his meats over the retail counter.
There are a great many markets today which may employ, for instance, ten men, of whom one or two are in the refrigerator or in a back room doing the meat cutting. They may be called meat cutters. In addition there are eight men who' are behind the counter serving the trade, doing nothing but selling. In a market of this type, the division of labor consists of 90% salesmen and 20% meat cutters or, in other words, the larger percentage of the employees are selling.
With the constant progress being made in the industry, skill in meat cutting is gradually being displaced by machines which cut meat five to ten times as fast as a meat cutter. For that reason less and less skill in meat cutting will be required. Instead, salesman-ship is taking its place.
In any business, merits of the product being equal, the firm having the best sales organization will usually lead. This same principle applies to the modern meat retailer, who practices retail salesmanship. A thorough knowledge of business principles coupled with salesmanship will naturally have a tendency to increase the business of the individual market. Such salesmanship and business knowledge are the best equipment with which to fight unfair competition, and they will surely and gradually force out of business the ignorant competition which is doing such harm to the industry in general.
Since the retail meat merchant is on the same footing as practically any other establishment where goods are sold at retail, thorough training in salesmanship is as essential for the meat retailer as it is for any business organization selling product or service. A thorough outline of retail salesmanship is found in another chapter.
Salesmanship of the Industry and Its Products
The man engaged in the retail meat business is the logical one to further the interests of the entire retail meat industry. The retail meat man does not realize the extent to which he is in competition with practically all other food products. The grocer, the fish dealer, the fruit man, the candy store owner have become direct competitors of the retail meat dealer. As the average individual retailer is interested in his own business, the time has come when as an individual he must face this problem which is affecting the entire industry.
Magazines, newspapers, billboards and other advertising media are making the retailer realize that he is actually in keen competition with other food producers. Unless he realizes this fact, the retail meat business as such will gradually diminish. While this competition may seem to have only a slight effect on the individual market, such competition is not to be ignored, as it can be felt extensively in the industry as a whole.
As the meat retailer is the final link in the distribution of meat products, and as he is the one having the final contact with the consumer, he has the greatest opportunity to further the interests of the meat industry. As such, the retailer should make the maximum use of it.
The importance of salesmanship for the industry and its products is realized when a study of the figures of the total meat and lard consumption in the United States is made. For the year 1924 the per capita consumption was 165 lbs. For the year 1926 it was 156.3 lbs. per capita, or a difference of 8.7 lbs. less meat consumed per capita. Good salesmanship would have helped withstand the inroads of competitive foods.
Food Competitors Take $254,475,000
While a figure of 8.7 lbs. per capita may not seem to indicate to the retailer a large loss, these figures become astoundingly large when multiplied by the total population of the United States. If the per capita consumption decreases 8.7 lbs., it means that there will be 1,017,900,000 lbs. less meat sold over the retail counter in one year.
At an estimated average retail selling price of 25 cents per pound, this means a loss of sales amounting to approximately $254,475,000. Does the individual retailer feel such a loss? According to the law of averages, the retailer loses his share too. Again, figuring the average retail selling price of meat at 25 cents per lb., a loss of meat business of $2.17 per capita yearly is shown on such a decrease in consumption.
Statistics prove that the average family consists of slightly over four people. Applying this example to a retail market having 200 customers, the market with 200 customers feeds 800 people. Multiplying the per capita loss of $2.17 by 800 consumers (200 customers), the market owner sustains a loss of $8.68 per customer or a total of $1,736.00 yearly, which is worth while trying to prevent.
Every Market Loses
Distributing this loss over 120,000 retail meat markets, it shows an average loss of $2,120.70 for each market. Assuming that the average market operates on a net profit basis of 5% on sales, it means a loss of net profit of $106.30 per market. This makes it very obvious to, every meat retailer that he should put forth every effort to sustain and increase the sale of meat and meat products.
Competition of Other Food Products
All food products have their advantages and their disadvantages. The producers and manufacturers of foods other than meat are naturally trying to further the sale of their products by acquainting the public with their merits. For that reason, publicity and advertising campaigns are conducted through the leading advertising media in an effort to induce the public to buy such advertised food products. Irrespective of the merits of the product, it becomes a competitor of the meat retailer's products.
Advertisements of various cereals are published, featuring the healthful qualities of these articles. Regardless of their merit, these advertised cereals have a good chance of displacing some bacon and eggs or ham and eggs from the breakfast table. There-fore they are in direct competition with the man who sells bacon and ham. Cheese advertisements call attention to the delicious lunches which can be prepared with the cheese recipes furnished. Such uses of cheese in sandwiches or otherwise may be considered substitutes for sliced ham, bologna, and other prepared meat products. Chocolate, candy and ice cream, which are extensively advertised as a substitute for a meal, may often serve as a lunch for the office worker or stenographer. On the other hand, these products are displacing some other food that in all probability would be boiled ham or bologna in a sandwich. Oranges, apples, bananas, oysters, fish, sauer kraut, and a great many other food products are directly in competition with the retail meat dealer's products.
It is for this reason that the meat retailer should be familiar with his products and have a thorough knowledge of the meat he handles, its merits and its relative value to health, and be able to advertise it in sales talks or in printed matter.
The buying public has a great habit of consulting the market owner or meat cutter before buying meats. The retailer, therefore, as the final contact between the producer and consumer, could do more to further the meat industry in this respect than most any other agency.