THE WHOLESALE CLUB.

Stratford Evening Post, Volume XXIX, Issue 84, 29 May 1911, Page 5

THE WHOLESALE CLUB.

ITS HISTORY. The rise and fall of the New Zealand Wholesale Club forms the subject of a most interesting article in the “Mercantile Gazette.” Our contemporary states that some twelve months ago, three or four private individuals in Christchurch conceived the possibility of starting a business upon now lines, their intention as announced in copiousadvcrtisinp being to sell retail at wholesale prices. A fairly well-stocked store was opened, and any person who forwarded the proprietors an annual subscription of ton shillings was allowed the privh lego of purchasing for cash whatever he required at a price no greater, so it was said, than was charged by the wholesale bouses. In other words, a customer was able to buy a single article for which he would pay no more than a storekeeper would be charged if he purchased one hundred dozen of. the same thing. Trade developed along these lines very rapidly; the club’s premises were crowded with purchasers, hundreds, wo think the numbers ran into thousands, paid in half Sovereigns, and in a very short time the promoters found the business running rapidly ahead of their capital. To all appearances the prices charged by the club were satisfactory to their clients, the amount taken every week substantially increased, but whether profits were made no one appears even now to be in a position, to say. !n NoveiiiLer of last year the promoters fuiumri the concern into a company. The future piospecis were nept .vfil bcfoie the ouolic in a continual s* rs of skilfully famed advertisements, each one of which continually hammered home the absurdity of paying fifteen shillings for tobacco which could be bought from the club for ten, the changes being rung every day down the whole list of everything required in a house and family. The first thing people looked for every morning in the newspapers was the club’s Erice of dressing gowns, ladies’ oots or children’s perambulators and Epps’ cocoa. Again, and after a very, short time, the business overran the capital, pnd in the early months of this year the Wholesale Club, Limited, decided to reconstruct, and upon a grand scale. It invitetd applications from the public for no less a sum than £BO,OOO. The nominal capital was to be £IOO,OOO, of which one-fifth was to be donated to the promoters for the goodwill, and thiis led practically to the more speedy that the shareholders of the Wholesale Club wore to receive' 1 twenty thousand pounds’ worth of shares fully paid, brought upon the prospectus a flood of criticism. Those who were directly interested in checkinig the further progress of the movement joined with those who felt assured that the amount to be paid for the goodwill was. about £20,000 in excess of its value, and the effect of this criticism was to immediately damp the ardour of the subscribing public .and arrest the .flow of capital into the, business; Notwithstanding tliis the promoters determined to continue, although only a very small amount of . additional money was placed in their hands by the public. The company ,was registered. It was unable to purchase in the local nUi ket as the .wholesale houses declined to do business for fear cf cffifiding their other cusWimys, vhV club had therefore to purchase whoever it could and upon whatever tprms were offered,' Credit was. restricted, with an ever-increasing business, without, a fifth part of .the capital required, the portion soon became critical and then .acute. issues ’followed oa,ch other succession, the promoters fought to the last in an attempt to carry on an impossible position, until one day a week ago the debenture-holders walked in and closed the business. This is the ‘history of the origin and development of the Wholesale Club, which has , formed for many months the most interesting subject for town and tea-room conversation which Christchurch has had since the days of Sullivan. Whether the club ever had any chance of success'had it beep properly equipped with capital we should not like to, 1 say. Personally we conceive it to bo an impossibility for any retailer to sell at wholesale prices and avoid losing his own or his creditors’ money. That, however was the leading principle which the company advertised, and it had in consequence, either to sell at. wholesale prices or to charge some additional profit. If it did the latter then the selling price must show the ordinary addition upon cost to cover the expenses and leave a profit. It is possible with an immense turn-oyer the company might by directly importing everything have been able to reduce the pricej out we do not know that establishments in London, such as Harrod’s or Whiteley’s, are able to undersell to any extent other but smaller rivals. In New Zealand most of the larger establishments purchase direct, and we are certain that no huge fortimos have been made as a result of buying in the best market and selling bore retail. We think the club’s experiment was a doubtful one, however, it has been attempted unsuccessfully. The promoters will no doubt dissent from this criticism and say that the cause of their failure was not due to the principle they advocated, but to causes which ’ a supply of capital would have converted. They point to the fact that their cash takings ran up to nearly three thousand pounds per month, and this in a business hampered by the proprietors’ inability to keep full stocks, hut customers are easily obtained if sufficient is offered,. because nothing appeals to the ordinary retail customer so much as the belief that at any particular shop his sovereign has a purchasing value of twenty-five shillings. Turnover is nothing unless it is yielding profit, and whether the chib was or was not making money by the volume 'of trade it was putting through is a matter upon which the proprietors them Selves cannot perhaps give a definite answer. One thing is satisfactory from the commercial point of view—no one accuses the promoters of any moral turpitude in connection with the business, for tliis time last year they were all men fairly well off. They have each backed their opinion to the full extent of their private estates, and for at least three or four of them the present position spells ruin. However unsatisfactory the loss of their estates must be 'to themselves, the promoters have at least the knowledge that no one can point to any action which suggests moral turpitude on their part. They have induced people to come in with their money, but they have at least risked their’own, and' to that extent they show that their belief in the future of the club was honest and real.