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THE MUSIC TRADE REVIEW, MARCH, 19 Ul
S
O what does it cost a factory to
wholesale? In radio the whole-
sale gross is about 18%; in re-
frigerators it is about 15%, but
in each case due to the big buyers —
called "key accounts" insisting on all
the discount possible, sales to these is
done at 5%, so overall the big city
jobbers gross about 12%. A factory
making 1,000 pianos, selling them to
dealers at $150, for a volume of $150,-
000, on a 10% sales cost basis, would
then have but $15,000 for a sales
agency to do this work. Or in other
words, the sales agency would factor
the pianos at $135, selling either for
the $150, or more in order to make any
money. This could be accomplished by
adding 100 dealers to take 10 a year,
on a financing deal and thus get better
grosses and better nets. It is doubtful
if the key-dealers would buy from a
sales agency unless at key-dealer
prices, and then the margin of profit
would suffer because these boys are
smart buyers.
P
RIMARY move of the sales
agencies will be to put several
hundred new dealers into
pianos; ones who know nothing
about what can't be sold "because
there is no demand for that name" and
thus will cause a development in the
numbers of dealers. As the wholesale
costs of each factory is different, and
there being no general piano whole-
saling costs for industry use, the en-
trance of these sales agencies is bound
to reveal what should be—or shouldn't
be — the proper cost of wholesaling
pianos. It will bring this problem in
the open; it will start to aid all fac-
tories to get higher prices; but no one
yet, not even the agencies, can make
any predictions on the future of the
wholesale merchandising of pianos.
Even though The Review sticks its neck
out frequently on guesses, this par-
ticular problem has us in the corner
with no articulation. Perhaps you, or
you, could drop us an opinion on the
basis that "now is the time to come to
the aid of the editor."
A
WORD of old-time character-
istics has been developing
into much greater use during
I the past few months, and this
is "bottle neck." It developed from
reports of authorities in the defense
program, but it could be used in the
piano business. In the piano business
there are half a dozen bottle necks, one
of the major ones being source of
supplies.
For example, consider sounding
boards: with one concern making
approximately 80,000 and another
manufacturer 40,000 — anything that
might happen to one of these rwo
outfits would put a serious crimp into
piano production. In the urge to cut
expenses of manufacturing, the sound
board men have been very competitive
in meeting the prices wanted by piano
makers, so that it is difficult to even
maintain a rational profit in the pro-
duction of sounding boards. So with
these two houses doing 85 percent of
the business, the situation could be
considered a bottle neck.
The other bottle necks are in the
supply of keys, actions and hammers
and certain types of hardware, as well
as in piano cases, and with so much
surveillance necessary for insuring
piano production in 1941, plus the urge
to make more pianos, it is inevitable
that production costs will be up and the
dangers of non-delivery greater than
at any time in the past 20 years of piano
business.
Piano manufacturers are taking
great care to anticipate requirements
so dealers should do likewise. From
recent reports we believe most of them
are.
W
H I L E The Review has
always advocated the pol-
icy of dealer turnover of
stock, it is probable that in
1941, orders must be larger in order to
offset what appears now to be slow
deliveries if dealers try to order for
quick shipments as they did in the past
several years.
Another bottle neck is the hiring and
training of young men for piano sell-
ing. It is probable that the average age