Classic Mode

Music Trade Review

Issue: 1924 Vol. 78 N. 14

Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
THE
APRIL 5, 1924
MUSIC TRADE
REVIEW
Why the 36 Per Gent. Overhead Cost?
Excessive Selling Costs Lower the Piano Merchants' Net Profit Below Its Proper Ratio to Sales—Overhead
Problem a Neglected Study in the Trade—Its Relation to Distribution Methods—The First
of a Series of Articles on Present-Day Piano Distribution
NE of the leading dealers in the Western
section of the retail piano trade recently
reported gross sales of a certain type of
inst.unient in the line he carries amounting to
over $1,000,000 with a net profit of less than $50,-
000, this before deductions had been made for
taxes, etc. Of three of the largest music dealers
in the country who recently made public their
annual statements, not one of them reported a
net profit of more than 7 per cent. An investi-
gation recently conducted by The Review, based
on figures furnished by approximately 100 deal-
ers, showed that average overhead costs in their
warerooins ranged slightly over 36 per cent, in
some cases going as high as 42 per cent. One
of the best-known dealers in the trade, shortly
after the results of this investigation were made
public, made the flat statement that the real
profit in the average instalment piano sale, in
many cases, represented no more than the inter-
est collected on the outstanding paper, which
the sale created.
A Fundamentally Wrong Condition
These facts show a condition in the retail
piano trade which is fundamentally wrong.
Representing one of the highest forms of
specialty selling, and moreover conducted on an
instalment basis io the extent of at least 85 per
cent of its sales, the average net realized does
not represent an adequate return on the invest-
ment when the risk is taken into consideration.
Vague charges of extravagance in selling costs
in the past have constituted the sole reasons
alleged for this condition, but unquestionably
the causes lie far deeper than this and are prob-
ably inherent in the conditions under which the
industry is conducted at the present time. They
have arisen out of the fact that the industry has
never studied its distribution problem as a
whole, has not directed it upon a reasonable and
logical plan, has lacked adequate knowledge of
its actual state, and has permitted it largely to
come into being as the result of disordered
growth rather than as the result of study, plan-
ning and preparation. For an industry of its
size there is probably less known about it to-day
than of any other similar industry in the
country.
These arc perhaps strong statements, yet
every piano man who has ever given compre-
hensive thought to his own industry knows they
are true. Despite the progress which has been
made in the last ten years in the betterment of
distribution methods, much more remains to be
done before the industry will have passed
through its present transitional stage and be
truly placed upon a modern basis. For the dis-
tribution of pianos is by no means a unique
problem; it has all those sides which have al-
ready been solved in other lines of industry,
which have either lacked the burden of tradition
that acts as a brake upon the adoption of new
methods, or else have studied and solved their
problems in common.
First Definite Figure
The Review has made the first comprehensive
study of retail overhead that has ever been
undertaken in the music trade. From this has
come probably the first definite figure telling
the average cost of making the average piano
sale. It is the basis from which the further
study of overhead problems must proceed. That
is the fundamental condition which confronts
both manufacturer and merchant at the present
O
0
N
day, one that is of mutual interest. F"or the
manufacturer bears an equal share of respon-
sibility with the merchant for conditions as they
exist, since with but a few prominent exceptions
it is only within a very short time that he has
devoted any attention to them. That this mutual
responsibility is to-day more widely recognized
than ever before is one of the most encouraging
signs that are present, and the one that is most
likely to bear fruit in the shape of increased ex-
pansion within the near future.
Hound up closely with the questions of dis-
tribution and overhead is that of increased turn-
over. Turnover in the retail piano trade is a
complicated proposition, primarily because of
the preponderant instalment element in the re-
tail sales. Stock turnover is likely to be far dif-
ferent with many dealers from capital turnover,
a condition which exists because of the widely
varying financing methods which are in use. Un-
questionably, however, turnover to-day does not
bear the proper relation that it should to tin-
percentage of net profit, else the average net
profit of a dealer over a year would be consider-
ably larger. This directly leads back to distribu-
tion methods, and shows once more conclusively
that what is wrong with piano selling to-day is
a question of distribution and nothing more.
In short, if one seeks the reason for the heavy
overhead cost in retail piano selling, one is in-
evitably led to the question of distribution.
There is no getting away from it, and many of
the leading figures in the trade, both manufac-
turing and retail, realize it and are using their
best efforts to reach efficient solutions. It is the
purpose of this series of articles to deal with
some of the high-lights of this progress and in
some detail to discuss what is being accom-
plished.
Lack of Knowledge
Retail distribution to-day suffers primarily be-
cause of the dealers' lack of knowledge regard-
ing the territories which they cover. They are
not selling a product of either universal or
staple demand. They are not selling a product
which has an uncompetitive field. On the con-
t.ary, the piano in its various forms has the
sharpest of competition, since it is usually paid
for from the surplus which the average family
has over and above the amount required for the
actual necessities of its existence. Yet the aver-
age dealer scatters his selling efforts over the
entire mass of the population and rarely con-
centrates upon those classes which are able to
buy what he sells. He sells pianos, or endeavors
to sell them, too much like groceries are sold.
As a result his sales cost is high through the
wastage involved in handling prospects that are
cither unable to buy at all or else if they do
buy are exceedingly poor credit risks.
As a matter of fact, all this is unnecessary,
provided he is willing to do a little preliminary
work. If a dealer will consider, according to
figures available and within his reach, taking the
families of lowest incomes only into considera-
tion, that the average home with an annual in-
come of between $2,000 to $4,000 has an aver-
,-ige surplus of between $500 and $1,000 over
that required for the actual necessities of life,
that the family w r ith an income of between $1,000
and $2,000 has the sum of between $200 and
$400 available, and will provide similar propor-
tions to families of greater incomes, he will be
in a much better position to direct his selling
efforts where they will count for a good deal
more than they do when scattered haphazardly
over his entire territory. If he will find the
number of families of these various incomes in
his territory, and he can easily do so by using
the income tax statistics published annually by
the United States Treasury Department, he is in
a much better position not only to sell more
economically, but to concentrate on those grades
of instruments for which his territory presents
the largest demand. Few dealers ever do this,
yet it is the simplest and most necessary of all
preliminary work in planning a retail selling
campaign and in buying the grades of instru-
ments which are to be so sold.
Rigidity of Sales Methods
This is but an example. Here is another.
How many dealers are there wjio know the pre-
vailing industrial conditions in their territories?
All know them generally, of course, but few in
sufficient detail to apply them to their Own
selling policies. Some two years ago there were
a number of dealers doing a good business in
low-priced players in a territory that drew most
of its local prosperity from coal mines. Strike
conditions killed this business completely. With
the exception of one dealer, all of them con-
tinued to work along the same old lines. This
one dealer switched his selling efforts to a better
grade of instruments and did business while all
his competitors were dead with the exception
of paying high overheads right along. It seems
paradoxical that where cheap instruments could
not be sold due to strike conditions, better grade
instruments could be moved, but the answer is
simple enough. The officials and permanent
forces of the mines were continued in employ-
ment and paid their full wages. They were a
market, in fact, the only existing market, and
the'"c was only one dealer going after them
strongly. H e had practically an unrestricted
field and he cashed in, his overhead keeping at
its proper relation to his volume. Yet this was
something that every other dealer could have
done just as well if he had thought the situa-
tion out from the facts at his command.
Improve Distribution
The comparatively high selling cost thus can
be traced back largely to inefficient selling
methods, or, in other words, poor distribution,
(ietting at the nub of the question, the trade has
got to have better distribution, both wholesale
and retail, ii it is going to have lower selling
costs. The manufacturer has to link his own
selling efforts more closely to those of his deal-
ers and come into closer relations with him;
the dealer in turn must take advantage of the
manufacturers' co-operation and must study his
own selling problem in relation to the territory
from which he draws his sales. The reasons for
a 36 per cent overhead are these, and upon their
solution depends whether or not it will be
bi ought to a lower figure. And also upon that
solution depends whether or not the industry
will once more expand in a proper ratio to the
growth and development of the wealth and
population of the country.
Further articles in this scries, which will
appear consecutively in The Review during the
next four weeks, will deal with a number of
different aspects of this very important question
and it is hoped will prove of great value to
those merchants who are endeavoring to im-
prove their methods.
B & E * N
H
Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
THE
MUSIC TRADE
REVIEW
APRIL 5, 1924
Out in the Field With the Dealers
A. Frederick Carter, Field Editor of The Review, Sums Up Conditions Existing in the Retail Music Trade
in Alabama—Demand for High-grade Instruments Predominating Among the Buyers in This
State—Musical and Civic Activities of the Retail Music Merchants
IRMINGHAM, ALA., April 1.—One cer-
tain way to gauge the progress of any
particular community is to interview music
dealers who are progressive and active in ac-
tivities of their city. The State of Alabama is
particularly fortunate in this respect as music
dealers are taking an active part in every move-
ment designed to help the State take its posi-
tion as one of the leading ones of the entire
South. This is no careless statement, for it is
based on observations, not only from the
musical standpoint, but from the reaction which
musical influence has had on city and State
chambers of commerce. Without exception
these business bodies have corroborated this
opinion. There is no question that the State of
Alabama is second to none in progressiveness
in the South, for it is rich in natural resources
and is a beehive of industry where manufactur-
ing plays an important part.
A very interesting point as regards music
business here is the large number of high
priced instruments that are sold. This is inter-
esting in view of the fact that in the largest
manufacturing city of the State, Birmingham,
merchants are getting this class of business
when it would be naturally supposed that the
majority of their sales would be of the lower
priced instruments.
People are purchasing
Steinway, Chickering and other well-known
grade A pianos. In the talking machines con-
soles of the very finest kind find a ready market.
Merchants are bending every effort to enlarge
this field and are cultivating every single chan-
nel offered to secure this class of business.
This does not mean, however, that the lower
grades of instruments are not sold, for I re-
member one merchant totals his business almost
two-thirds in the middle priced player-piano
class and the low price upright, and his volume
is indeed a large one. This proved that, no mat-
ter how poor or how wealthy a particular com-
munity may be, both grades of instruments have
a market, providing that the music merchant
makes a careful analysis of the possibilities and
lays his plans accordingly.
Montgomery, Ala.
It was a pleasure to meet L. S. Parsons,
general manager of the Jesse French retail
warerooms, who is, without doubt, one of the
best-posted men in that State I met. Mr. Par-
sons is the ideal type of modern merchant, as
he not only interests himself in the affairs of
his own business, but is continually active in
movements for the civic betterment. My visit
with him was on his return from a Rotary
Club luncheon at which he had given a short
talk on the musical possibilities in the city.
Mr. Parsons is very much interested in bring-
ing to Montgomery the leading artists of the
country through the medium of the Mont-
gomery Concert Course Association, which is
conducted by three leading musicians of the
town in the persons of the Misses Kate Booth,
B. Leigh Eilenberg and L. Bryan Gill, who
have their headquarters in the store of Mr.
Parsons. The series this Winter included
Mischa Levitzky, Segrid Onegin, Madame
Pavlowa and the Ukranian Chorus, and the St.
Louis Symphony Orchestra. Needless to say
Mr. Parsons, through these activities, has made
for himself an enviable reputation and a host
of friends, which have been responsible, in a
large measure, for the successful business of
which he is the head.
S. E. Pace, manager of the Starr Piano Co.,
is one of the oldest members that this organi-
zation has and is considered one of the ablest
B
managers in the entire chain. His store is one
of the best arranged 1 have yet seen, for he has
equipped it with every modern convenience de-
signed to properly serve all classes of clients in
talking machines, records and pianos.
Mr. Pace this week placed a new dealer for
the Starr Co. in Wallace, N. C, in the person
of E. L. Sandlin, who conducts the Wallace
Cycle Music Co. He has just acquired addi-
tional space which he is to devote exclusively
to the display of the complete line of Starr
phonographs and pianos. Mr. Pace is enthu-
siastk over this new account as it will give his
house a representation in a section of North
Carolina that is making rapid strides in its com-
mercial progress.
The definition of a live wire in musical mer-
chandising is certainly exemplified in the person
of C. A. Tyler, who manages the store of the
Cable-Shelby-Burton Co. on Dexter street. Mr.
Tyler has an organization that knows how to
sell goods, especially high-priced pianos and
talking machines. He has with him Mrs. A. E.
Gibson, who does nothing else but sell pros-
pects outside of the store and, according to Mr.
Tyler, has not a peer in the entire country in
this highly important phase of securing busi-
ness. Mr. Tyler reports a very healthy business
since the holidays and, from all indications,
1924 promises to be one of the best his store
has yet enjoyed.
Birmingham, Ala.
The city of Birmingham is so filled with civic
pride that the atmosphere generally is per-
meated with it, and welcome is the visitor once
he enters the city's gates. It is a beehive oi
industry, a steel mill, iron mill, coal and mining
center with a number of other varied industries,
which all tend to make it one of the busiest in
the entire South. It is no wonder that music
merchants carry a smile on their faces and go
about with a satisfied air which bespeaks general
prosperity. Every single one with whom I
talked reports an excellent business for the past
year and a very healthy demand for his goods
since the new year. The condition of their
stores is remarkable, in that they are well ar-
ranged, well kept and each vies with the other
in the decoration of their show windows. These
latter are a revelation in the art of window dis-
plays, for here I have seen some unique and
original ideas carried out that are without ques-
tion a reflection of the high-class character of
the local wareroom.
The Clark-Jones Piano Co. on Third avenue,
which features the Steinway piano and other
high-grade makes, has one of the finest ware-
rooms in the South. Both Mr. Jones and
Robert McDavid, general manager of the store,
have a keen conception of methods used by the
successful retail music dealer and they are con-
tinually formulating new plans and originating
unique ideas to foster their business. Mr. Mc-
David specializes in originating some of the
best window displays I have ever seen and so
good are they that the local newspapers have
become interested to the point of taking photo-
graphs of them and reproducing them. From all
reports, these windows have been responsible
for the largest business secured during the last
two years. Both of these gentlemen are promi-
nently connected with local civic bodies and are
taking their place in the advancement and prog-
ress, of the city of Birmingham. By the way,
it is a question as to whom of the two is to
attend the Allied Music Trades Convention to
be held in New York in June, but if I have been
a good salesman there is no question about it.
In addition to conducting one of the largest
piano businesses in Alabama, Steve Warrick, oi
the Seals Piano Co., finds time to play a good
game of golf, ride a thoroughbred horse and do
considerable hunting in the season. Mr. War-
rick, in partnership with Robert Seals, a brother
of Clude Seals, who began this piano company
in 1882, conducts the present business and,
from figures and statistics which he showed me,
it is one of the most prosperous music stores in
the State.
I met a very interesting gentleman and a
most accomplished musician in Oliver Chalifoux,
who conducts one of the busiest music stores
in the city. His store specializes in every con-
ceivable type of sheet music. In addition to
these strenuous activities, he finds time to teach
the violin to a large class of pupils, and has had
the distinction of turning out the winner of the
first prize in violin pupil competion in the city
of Birmingham for the last two years, which
speaks exceedingly well for his talent in this
instrument. Mr. Chalifoux has an able partner
in his accomplished wife, who is a harpist and
who also teaches. This combination is very
much in demand throughout the city for concert
work.
While visiting in the C. C. Holcombe store,
I was just too late to have tfre pleasure of
shaking hands with Jesse French, Sr., president
of this well-known piano company, who had
been visiting Mr. Holcombe, Sr., while on his
way North from a Winter sojourn in the South.
However, I met an old friend in the person of
Clyde Holcombe, who is assistant to his father
in conducting this business. Also I had a very
interesting discussion on music conditions
generally with Ira F. Randall, general manager
of the store, whom I found well posted on music
conditions and who is an experienced piano
man of many years' standing. He was for many
years connected with the W. F. Frederick Piano
Co. of Pittsburgh.
Mobile, Ala.
Mobile offers, to my mind, manifold possi-
bilities commercially and every other aspect of
general progress, for it is the gateway of ocean
travel for the entire State. A concentrated effort
of the- leading merchants has been able to im-
press the State authorities on the importance of
Mobile port with the most gratifying result.
In the Loper-Gresset Music House I ran into
more musicians than I have seen for many
months past. Mr. Loper is an accomplished
musician and so is his wife, and last, but not
least, they have with them a negro porter who
plays the piano such as I have never heard
anyone play in all my experience. The re-
markable thing about his playing is that he
knows nothing of music and all his playing is
extemporaneous with a left-hand melody all of
his own transposing. Last week Hart Gillen,
composer of "The Mean Blues," was here visit-
ing Mr. Loper, and after hearing this negro
play his number in his own peculiar way he
immediately adopted the left-hand transposing.
Through the courtesy of Walter D. Miller,
general manager of the W. H. Reynolds Co.,
Victor distributor, I was given some very in-
teresting information as regards Mobile and its
possibilities musically. Mr. Miller's particular
activity is in wholesaling Victor product, but he
is also interested in the affairs of the retail
store conducted by Mr. Reynolds on Dauphin
street. Unfortunately, Billy Reynolds, pro-
prietor of the store, was confined to his home
with a serious attack of pneumonia, but, from
latest reports he is recovering.

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