LIKE PROVERBIAL SNOWBALL

NZ Truth, Issue 1305, 18 December 1930, Page 6

LIKE PROVERBIAL SNOWBALL

Expert Declares Price -cutter Takes Goodwill of Manufacturer and Barters It Over Counter

NOT DUE TO ALTRUISTIC MOTIVES

(By Mr. A. L. Cropp, manager T. J. Edmonds, Ltd., Christchurch, m a special interview with "N.Z. Truth.") In. asking me to furnish you with my opinions of the price-cutting epidemic \tfhich o has now got such a strong hold throughout the Dominion, it' will only "he possible to touch the fringes of the case, and incidentally cover the ground as it affects our own particular industry. . ■ . ■ I am personally convinced that the actual price-cutter, and I mean this m the strictest sense of the word, is not actuated by any desire to grant any particular favor to the general public, but rather that his action may bring further business.

A T the outset, it muat ■be borne m ■*"*■ mind that .the trader who sets out on a price-cutting campaign concentrates his attention only on lines which are enjoying a large sale. In other words, he takes the goodwill of the manufacturer, and barters it over his counter. Once price-cutting is started, it becomes the proverbial snowball until the stage is reached such as exists at present m New Zealand, where retail grocers are selling numerous lines over their counter at cost price, and m some instances even below. On the face of it, the average consumer might not realize the fact that such conditions may have a disastrous effect upon established businesses. By that 1 mean manufactures. Directly the selling price of an article gets at such a' level that it shows no profit to the distributor or retailer, it is only J natural that their efforts are concert-, trated on. the sale of some other line on which they can get that necessary margin. The present extraordinary position m retail trade has been somewhat accentuated by the introduction of cash and carry stores, the advent of -which has meant lower - prices being charged by such stores. It is only reasonable to suppose that purchasers who pay cash oyer the. counter for their goods and carry them home are entitled to a consideration over the purchaser at a credit store who gets the" goods delivered and pays for them a 'month or so later. In my consideration, cash and carry stores are as necessary as the credit stores. One is just as important to the requirements of the public as the other. 1 am strongly of the opinion, judging from the results of our own scheme,

that a fixation of prices (cash and carry and credit) would be welcomed by the whole of the grocery trade m New Zealand. As the law stands at present, the Trust Act forbids . the .fixation of a

minimum selling price except under certain conditions, which many manufacturers find it possible to employ. In our own particular instance, the scheme was evolved with the assistance of able counsel, whereby the difficulty of the Trust Act was overcome, but only after considerable reorganization of the business with its attendant expense.

As conditions stand at present, 'it is within the bounds of possibility that an industry which has taken a life's effort to build can be destroyed by the price-cutter, and the unfortunate manufacturer is denied the right to take any measures to protect, his business. I make that statement generally, because it is more or less qualified m a. previous paragraph, and which would take too much of your space to go into m detail. A remedy is undoubtedly required to correct present unfortunate conditions that permeate through the whole of the Dominion. I feel that the Government could scrap the 1910 Trust Act completely without impairing the hold they have on the operations of businesses. All the power required to combat any advantages taken by the trade of exploiting the position would be amply covered by the powers 1 invested m the Government by the 1916 Cost of Living Act and the Board of Trade Act. The position calls for a remedy, and I am strongly convinced that the Government which will face the position and take its courage m both hands to remedy the present deplorable conditions will gain the respect and support of a large and important section of the community. In conclusion, I would like to state without' fear of contradiction that the Price Maintenance Scheme put into operation by my own firm some two years ago. has not only proved a success m protecting our own interests, but has also secured the comniendation and co-operation of the whole of the retail trade of the Dominion. These remarks only cover the fringes of the situation, but I think will give food for thought. .