Music Trade Review

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The
Music Merchant's
Place in
RADIO
By ERNEST INGOLD
President, Ernest Ingold, Inc., San Francisco, Cat.: President,
Music and Radio Trades Association
Ernest Ingold
OING back to 1923 and 1924, the advent
of radio was probably a good deal like
that of the baby which was found on
the doorstep of the bachelor when he went out
to get his morning paper. It was not expected,
not wanted and left at a home not ready to
take care of it. Radio early involved peculiar
mechanical conditions which naturally the
music merchant was not as able to take care
of as promptly as was the electrical store, the
battery station or even a garage for example;
so the very early selling of radio was largely
passed up by the music store or if it was sold,
but a half-hearted effort was given it. The ven-
tures then made by music men in radio were
largely unsatisfactory and unsuccessful. It is
fair to say that many of the radios manufac-
tured were unsatisfactory on the one hand, and
that errors in their selection by the retailer
occurred on the other. Now, however, we find
radio quite generally sold by the music trade,
the major item as far as turnover is concerned
either in stock or capital or both, and that
radio as a single item standing alone accounts
for from 40 to 70 per cent of a music store's
volume of business. Whether we as music men
want it or not, whether we like it or not, radio
is here and someone is going to sell it.
In a talk made a year ago by a very good
friend of mine, a phrase was used "We are in
a new business—a business of shorter discounts
and bigger turnover, and we have to learn this
new business." Let's see what this new busi-
ness involves.
The Question of Turnover
Its turnover is different. For example, the
average rate of turnover on radio stock should
be at least ten to twelve times. Less than this
shows inefficient handling or wrong lines and
means lower profits. There are abundant rec-
ords showing a turnover of as high as twenty-
three times and an average in a great host of
stores of from ten to fifteen times. In fact,
one of the stores represented here had a turn-
over on a single make of radio of twenty-three
times last year and an average turnover of
better than twelve times on all of his lines
of radio. Eighty-two per cent of his sales in
dollars were made on one line, the one which
he turned twenty-three times, and his profits
G
were in keeping. Radio was highly profitable
at this store. But lines of fast turnover can
support only to a definite limit lines of radio
which do not turn.
From the best figures I have been able to
secure, the approximate turnover in the various
divisions of the music merchant's store run
about like this: Pianos, two to three times,
although many of you are turning your stock-
less than this; musical instruments, by which 1
mean band and orchestra instruments with
the small goods incidental to them, two times;
phonographs, two times (this figure, how-
ever, varies widely due to the inclusion or
exclusion of combination machines and due
to what are apparently unnatural sales
O
NE of the most frank and compre-
hensive talks on the music mer-
chant in his handling of radio and in
the conduct of his business generally,
was that given by Ernest Ingold, of San
Francisco, a leading distributor of
radio, receivers and accessories in that
territory at the Western Music and
Radio Trade Convention in Salt Lake
City on June 12. Mr. Ingold's com-
ments on turnover, overhead and per-
sonnel are worthy of the earnest con-
sideration of every member of the
music trade, regardless of how success-
ful he may be, and are reprinted here
for that reason.
urges, following model changes); sheet music,
two times if a complete stock is carried and
somewhat more often if only popular hits are
featured; records six to eight times, a turnover
which could be increased were it possible to
liquidate promptly records not now moving and
constituting an overstock.
I do not quote these as necessarily exactly
accurate, but they are the best I have been able
to find. However, the figures given are suffi-
cient to indicate that radio is something radi-
cally different as far as turnover is concerned
10
Western
from the merchandise heretofore sold by the
dealer in music.
Regarding Consignment
Music men have in many cases had consigned
music goods stocks. Radio has not been con-
signed except by a weak manufacturer. A con-
signed stock because of rapid progress of radio
is dangerous alike to the factory and retailer.
You have not found and probably will not in
the near future find worthwhile radio available
on consigned basis. Nor will a good line in-
volving rapid turnover be available on a long
discount basis. Speaking of developments and
progress in design one of the problems of the
music merchant has been the obsolescence of
his radio stock. Fluctuations are active in radio
resale prices and are often caused by bad mer-
chandise. I would say that the first premise
in handling a line of radio would be to ask your
bank to get a financial statement on the factory
whose line you propose selling. The second
would be the determination of purchase based
solely on turnover so that obsolescence may be
nil or negligible and the determination of a
clear understandable policy covering any
change in list price. A manufacturer seriously
engaged in the business of commanding your
confidence can give you all of these, but so
much radio has been purchased on the basis of
cabinet designs, price, terms or discount or
because somebody else said it was all right or
even on the glamour of imaginary or new tech-
nical features that I believe the music merchant
has taken far more than his share of the losses
arising from the causes just given.
The discount on radio merchandise is less
than that on a piano, for example. It should
be—the turnover is different. The turnover
of radio dealers is better; their sales, as com-
pared with invested capital are vastly better,
and the percentage of net profit on net invest-
ment is better. I firmly believe they are much-
to-be respected competition just now for the
music industry because they are devoting their
major effort to the sale of radio, their major
volume producer, are operating on a profitable
basis, building a good clientele, and now we
find them taking on heretofore strictly music
lines, phonographs, portable phonographs, rec-
ords and other items. In many cases, they are
becoming music stores of a new sort, stores of
fast turnover and low overhead.
Keeping Overhead Within Bounds
The principal reason for their competitive
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