PRODUCE & MARKET REPORTS FROM DAY TO DAY.

Evening Post, Volume CVII, Issue 10, 12 January 1929, Page 12

PRODUCE & MARKET REPORTS FROM DAY TO DAY.

CHAIN STORES

GROCERY PROBLEMS

1 CASH, CARRY, AND CREDJT

'•Evening Post," 32th January. Chain stores or multiple shops have long been a feature of the British grocery and .provision trade, and companies conducting them, are heavy purchasers of. New Zealand Butter and cheese. Up. to now they, have not operated on any very extensive scale in ' New Zealand, although there-is a trend-in- that direction! The multiple shop" will'no doubt be a more pronounced feature, of the'New-Zealand grocery trade with the expansion of population. In the

.United States within the past seven years 27 000 chain grocery stores have multiplied'to .over 68,000, and one-sixth oi the retail grocery trade- of the country is done by the multiple shop companies, lhe v individual storekeeper with his personal contact with".customers, is gradually being ■ effaced. A great authority on wholesale and retail trade in America, the National Bdrnk of Commerce in New 10r1t,.. has noticed.that multiplication of stores in the most favourable centres has ushered in the second stage of chain-grocery development —that of interchain competition. -Lnis new stage bids fair to provide a more sey- - ere test of chain merchandising than did ■the earlier one of conquest ot the oft-times ■ inefficient independent rctaier. Ihe tools of the new-competition will of necessity be'different. ■ , . ■ ■ . .' ■ . CUT PRICES. "Gut-prices, the great bulwark of the chain in -contending,: with .the. small re- ■ .lileiv cease, to be readily eftective . when used against competitors with practically the same facilities for meeting them In 'part, also, the shift away from emphasis on low prices is 'undoubtedly due to the 'different-.clientele being sought by clam stores. As they have multiplied to take care of a larger and larger proportion ot the grocery trade, they have outgrown the part of consumer demand to which price is the most potent appeal, and which responds to the cash-and-carry method ot economy and have been forced to seek different'bases upon which to bid for patronagOne of the first recourses has been ex-•tensiori-of service-telephone orders delivery; and even credit at the discretion oi the sJtore meager, .These are inking developments in recent chain-stores piactict. ■ 'Another' development growing directly out of such competition, and one of especial significance to manufacturers and to mtei'mediafe agencies is the more genera reliance -by chain stores upon standard nationally advertised ...products that are already largely sold to the consummer. It is reported that in a survey of chains m the New York district, those with the greatest profits were found to be the ones carrying over 80 .per cent., .'advertised brands/ A complete store turnover at least fourteen times a year is said to be the average for the most successful chains, and it has reached' as high.as 20 to 2u, compared with 12 for groceries in general. The handling of a large proportion of wellknown goods.-is. a factor in. this difference „.,. .-'• .-■ i ...••■-..

QUICK TURNOVER. Quick turnover and limited stock go hand in hand. The average number ot items carried sby'successful chain stores is reported as 900 to 1000, although one chain does well.with 1300. Narrowing the stock as much as possible to only quick-moving items holds down capital investment need; ed for a given volume ok' business^ am], ol bour'sej reduces .the margin of profit on each turn. This, policy, too, is ot great significance to .manufacturers.- Unless their products-can be-counted among'the limited number, -which promise the chain a rapid- turnover, their- chances of selling- to it are small. These changes, remarks the bank, have contributed to significant alterations in relationship between chains and manufacturers, and in wholesalers and jobbers. The hold of the manufacturer, upon consumer : demand, ■'> is - becoming more and more essential in iiis:relation to-chain stores.' Mass.production:,of' standardised, nationally, advertised ..products .is being matched by standardised mass, distribution. Direct contact between the two offers hope of a relatively limited "field,-for the services of intermediate -agencies except as they find a place, in distribution of specialties.'.. '■ ,■-.'■-'■'■■'■":.■..;•■'"'£: . -.'■"•'.'-..■'■,'■'

• BUYING POWER; \ ,; ' "There can be 'little doiibt," the'bank concludes,- "that, aggregations of buying power :in the'hands o£ chain-store• organisations have been a potent factor in encouraging large scale consolidations among food-product manufacturers, who' .thereby seek to fortify.themselves with.a bargains ing power commensurate with that of the larger ch'ainaj. Reciprocally,, the, growing size of, manufacturers' organisations has. undoubtedly served as. one stimulus to chain consolidation. In . this contest for position, the consumer id recognised as ultimate arbiter, and both bid for his favour, the chain by. ■ emphasising its service as a selective agency- fitted to choose from ■among all manufacturers' offerings the products best suited to its clientele the manufacturer by so advertising his products that the consumer will know and choose them without the selective service of the: retailer." ;