Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
THE
MUSIC TRADE
REVIEW
JUNE 21, 1924
THE POINT OF REVIEW
O
NE of the most interesting discussions at the recent convention
of the National Association of Music Merchants in New York
was that devoted to the topic of turnover. The principal speaker
and the man who led the discussion was Ernest Katz, controller of
R. H. Macy & Co., representing the National Drygoods Associa-
tion. As was to be expected, Mr. Katz treated his subject largely
from the viewpoint of a department store man. He pointed out
that increased turnover must be sought by the merchant in concen-
trating upon lines that are the most rapid sellers and which thus
are necessarily best suited to the demand of his clientele. This is
all very true so far as it goes, but the turnover problem which
confronts the retail music merchant, and especially the one who
sells pianos, is one that is much more complex in its scope and
which has a number of other factors that contribute largely to make
turnover notoriously slow in that field. These, in a majority of
cases, are beyond the ability of the retail music merchant to elimi-
nate, but perfectly within his ability to ameliorate.
ft
%
&
¥ T will be remembered that the policies which have succeeded so
-1 well with the house which Mr. Katz represents were a dismal
failure when they were applied to the retailing of pianos by this
very same firm some years ago. This observation is made in no
invidious sense, but simply to emphasize the wide degree of differ-
ence that exists between the field of retail selling from which came
the speaker and the field of retailing from whence came his listeners.
Ninety per cent of retail piano sales are made upon an instalment
basis and are not entirely complete until periods ranging from twelve
to thirty-six months are ended. In cases where the merchant is a
poor collector, and there are many of them in the retail music field,
the average length of these periods is considerably extended. It
thus can be seen how much more complex is the music merchant's
problem of turnover, for, after all, turnover in its true sense deals
not with the actual stock itself but with the capital investment
which it represents.
%
A
&
IX
NY consideration of the retail music merchant's problem of
turnover without a simultaneous consideration of his problems
of financing will not carry the seeker for better conditions very far
towards his ultimate aim. For when capital represented in sales is
tied up in comparatively long-term paper, it is essential that this
paper be liquidated and made an available asset before new stock
may be bought and moved. It makes no difference whether the
stock be bought by this lease paper itself, the manufacturer taking
it in lieu of cash, whether the merchant makes bank loans upon
this paper as collateral, whether he uses the discount company to
obtain free cash, or whether he has sufficient assets to carry this
paper himself—every one of these methods must be considered in
relation to his turnover and the sooner he realizes that these two
things constitute one and the same problem, the sooner is he on his
way toward an ultimate solution. There is no intention here to
stress any one of these particular methods save to point out that
the dealer should use the one which provides him with necessary
cash at the lowest possible expense to his business.
%
%
%
HE retail piano trade has never really suffered from a lack of
desire or inability to move the actual pianos themselves fast.
Where its real trouble has been is that it has sold in many cases
without taking into consideration whether or not the terms of the
sale were sufficiently safe to guarantee an ultimate net profit,
dazzled by the chimera of gross volume. There have been many
dealers, and are to-day many of them, whose apparent turnover,
taking all things into consideration, is extremely high. It is only
upon analysis of their sales in terms of collections and average
time of each lease that the turnover index falls off remarkably and
the true facts become apparent. It is notorious that the greatest
failures which have ever taken place in the retail music trade can
be traced directly and inevitably to this factor which, in simple
words, is a seeking for an apparent rapid turnover without taking
into consideration the worth of the paper created or the method of
T
financing and carrying it, once it is in the hands of the dealer. This
is what makes turnover, so far as tfte retail piano merchant is con-
cerned, such a delicate and difficult question to handle, and one
which should only be considered by a man who has a close and
exact knowledge of actual conditions as they exist.
V£
%
%
O ETAILING pianos can never be a business where the cash for
AV each day's sales is in the till at the close of each day's business.
Nor can it ever be a field of retail merchandising where all sales
are paid for within the duration of the average open account in the
usual department store. To endeavor to make it that would mean
such a heavy curtailment of its potential market that it could not
exist. Those who have ever tried to work along these lines, and
they have been very few in number, have scored failures. It is not
likely that they will have any followers in the future. So it can
easily be seen that here is one problem of merchandising which, so
far as the retail piano trade is concerned, differs even in its funda-
mentals from the same problem as it confronts merchants in other
retail fields. The sooner that this is realized, the better it will be.
«f
Mf
J¥
OUND financing at low cost means rapid turnover in retail
piano selling, provided all other things are equal in the actual
sales department itself. This is a statement that may be made with
no hesitancy, for the two are simply the aspects of the same ques-
tion. Sound financing, of course, is primary in its importance, and
must be the aspect that first finds its solution. After that the ques-
tion of turnover itself, as Mr. Katz outlined it, that of concentrating
on lines which are best suited to the trade the dealer caters to, may
be given consideration. But to treat the latter part of this without
first discussing the former is very much like putting the cart before
the horse and leads largely to the same results.
&
%
X
O M E W H E R E it has been said that a retail piano merchant
must be a sound banker before he can be a successful merchant.
There is a great deal of truth in this statement, and those who have
made the most striking successes in the retail trade have almost
invariably been found to have followed along these lines. For un-
questionably the financing end of the business is always paramount
and affects every other branch. This, some will say, is true of every
line of business, and there is no intention to dispute that here; but
financing in other fields today is largely a matter of cut-and-dried
routine and presents no unusual difficulties to the man of ordinary
business ability. His assets are such that if he has a prosperous
business he can go to the average bank and obtain whatever aid he
needs. Unfortunately, the piano merchant's affairs differ widely
from these and create conditions which almost invariably make it
difficult to deal with the average bank, as many a retail piano mer-
chant has found to his cost. This complexity has naturally created
ihe important place which financing holds in the minds of the entire
piano trade and its influence on all aspects of retail piano selling.
«f
ve
%
' T ' H E death of George R. Hughes, of the Wiley B. Allen Co., of
•» San Francisco, and the new president of the National Associa-
tion of Music Merchants, comes as an inexpressible shock to the
entire industry. Mr. Hughes, during his recent attendance at the
New York convention, where he received the greatest honor his
fellow merchants are able to confer, seemed to be in the best of
health, brimful of energy and with nothing in his aspect to lead
those who met him there to think that it was the last time they
would see him. The ardent work which he was doing for the
coming convention of the Pacific Coast trade in July, of which he
had the chief direction, made him more active than usual at the
New York gathering and has made the shock to his many friends
all the greater. The sincere sympathy of the entire industry goes
out to the house which Mr. Hughes directed so long and so effi-
ciently and to the entire Pacific Coast trade, of which he was such
a leading figure. The entire music industry suffers a loss that it
can ill bear.
S
S
T H E REVIEWER.