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REVIEW
THL
VOL. LXXIX. No. 20 Published Every Saturday. Edward Lyman Bill, Inc., 383 Madison Ave., New York, N.Y. Nov. 15, 1924
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Piano Terms, Credits and Collections
The Maximum Terms and the Average Terms on Outstanding Leases Which Prevail in the Retail Piano Trade
—The Percentage of Cash Sales Reported—What Type of Instrument Brings the Highest Per-
centage of Cash—Interest and Methods of Collecting—Methods of Pricing
T
HE question of terms and collections re-
mains the most important of all problems
which confront the piano merchant in suc-
cessfully merchandising that instrument. For,
and here is where the piano trade differs con-
siderably from the ordinary line of retailing,
selling, terms and collections are essentially a
merchandising problem and can not be rele-
gated to the financial management of the busi-
ness as is usually the case. Nor will it ever be
possible for a change to be brought about in
this condition, since the high average unit value
of the piano and its various types makes it im-
perative that instalment sales heavily predomi-
nate in the gross sales of the trade. Thus arises
the complexity of the piano merchant's problem,
for the two separate branches of the business
are so closely interrelated that it is impossible
to separate them. A heavy volume of sales is by
no means a criterion by which to judge the
average piano merchant's worth, for there have
been instances and striking ones in the trade
where this achievement, accomplished regardless
of proper terms and
E-AST
proper collection meth-
ods, has led to failure or
else to profit quite out
of proportion to the
capital investment repre-
sented in the business.
Although this is a con-
dition which is generally
recognized in the trade
there has existed no
authoritative information
regarding the terms up-
on which the great num-
ber of retail piano sales
are made, nor are there
available
any
definite
facts which would pres-
ent the condition of any
great proportion of out-
standing retail paper in
relation to its duration,
its condition as regards
collections, the number
of sales which fail to pay
out and other allied fac-
tors. The retail piano
merchant thus has had
no standard by which to
judge general conditions
33
32
31
30
29
28
2T
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25
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22
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20
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'
TN this series of articles the first of which
appears on this page, The Review pre-
sents the results of a national survey to
which approximately 400 retail piano mer-
chants have contributed. It is believed that
this is the first similar survey ever con-
ducted in the trade, and that it presents a
valuable contribution to the vital subjects
of terms, credits and collections.—Editor.
problem has been limited by this fact for of
necessity it has been based either upon figures
furnished by an individual merchant and thus
presenting only conditions in that particular
store or else it has wandered largely in the
realm of theory, conclusions being deduced
from advertised terms or else from similarly
vague information which has made them of but
little value.
It was with these facts in mind that The Re-
view recently completed a survey, national in its
SOUTH
MIDDLE WEST
outstanding paper, the percentage of past due
on outstanding leases, the percentage of re-pos-
sessions and other information of a similar na-
ture. The compilation of these facts has shown
a remarkable trend towards betterment in retail
piano selling so far as terms and collections are
concerned, and, judging from these reports,
effectually dispels the charge that the trade
failed to profit by the war period during
which terms were radically reduced, owing
to the prosperity of the country at that time
and to the comparatively large cash payments
which were made.
Maximum Terms
Over 350 merchants reported to The Review
the maximum terms at which they sold their
instruments. The following table gives the re-
sults of these reports:
MAXIMUM TERMS
East
South
Middle West
Far West
National Average
FAR WEST
AV&RAGE'
„
• * -
^ - ^
X
X
in relation to the specific figures of his own
business. He has not known, save by hearsay,
whether his terms were above or below the
average. Intelligent discussion of this vital
V
X
V
X
X
MAXIMUM TERM5
,
AVERAGE T&RM5
scope, in which approximately 400 retail piano
merchants co-operated by furnishing detailed
information relative to the maximum terms on
which they sell, the average duration on their
33.5 months
32. months
31. months
30.75 months
31.81 months
When it is considered
that it is g e n e r a l l y
thought in the retail pi-
ano trade that thirty-six
months represents a safe
maximum, the showing
made in the above re-
ports is distinctly favor-
able. It shows that a
great many retail mer-
chants throughout the
country
are
working
hard to reduce terms and
that since they have been
able to reduce their
maximum they have met
with no little measure of
success. That adoption
of a safe maximum, wide
enough to permit sales
to be made, and the
strict adherence thereto,
once it has been adopted,
is the basis of successful
selling on instalments.
Of all the houses report-
ing the highest maxi-
mum stated was forty
months and the lowest
eighteen. As can be seen
by the average figures, the generally accepted
figure of thirty-six months has been cut down
by a great number of firms. Details given by
{Continued on page 5)