manufacturers of patented articles, who for a time had sustained in the
lower courts their claim to a fixed retail price standard, sought
definitely to control Macy retail prices upon their products. Macy's,
however, defied them, and the Victor Talking Machine Company, one of the
leading adherents of price maintenance, brought an action in the United
States courts to compel Macy's adherence to the rules for resale at a
certain price. Again there was a royal battle and again Macy's triumphed
signally, for on final appeal, the United States Supreme Court again
decided in favor of the store in Herald Square, on every one of its
contentions. Macy's then retaliated and brought suit against the Victor
Company, under the Sherman Law. In a bitterly contested action, which
culminated in one of the longest trials before a jury on
record--consuming more than ten weeks--Macy's recovered a judgment of
$150,000, and a counsel fee of $35,000; after which no paths apparently
were left open to the manufacturers who sought to maintain the retail
prices that suited them best. Court decisions seemingly blocked all
possible pathways.
One path did remain, however--legislation. Effort was made to pass a
measure down at Washington to permit and sustain retail price
maintenance, which in reality meant the emasculation of the Supreme
Court's decisions. When that measure came to a hearing before the
Interstate Commerce Committee of the House one of the Macy partners,
accompanied by Mr. Wise, the store's counsel, and Mr. E. A. Filene, the
well-known Boston merchant, came before it in opposition. Up almost to
that hour, Macy's had gone it alone. Now the attention of the country
was focussed upon its fight and the National Retail Dry Goods
Association came in with both its sympathy and its active
co-operation--hence the appearance of Mr. Filene, who made a most
excellent argument in support of the Macy contention.
It was shown definitely to the members of this House committee that
many, if not all, branded and patented articles took a retail profit of
from fifty to seventy-five per cent. The member of the Macy firm took a
watch nationally advertised at $2.50 and duplicated it with a watch
which his store sold at sixty-five cents, going so far as to take the
two watches apart so as to show conclusively that the one was quite as
good as the other. Certain other commodities went under similarly
critical analyses. When the hearing was completed, the committee laughed
the bill out of court. Since then the question of price maintenance by
the original producer has been permitted to drop. Macy's had won its
hard-fought fight; won it cleanly and honestly. By performance it had
made good its statements that it proposed wherever it was humanly
possible to undersell its competitors. That was no idle phrase.
It is indeed one thing to make a statement--whether in print or by word
of mouth--and another and ofttimes a far more difficult thing to make
good that statement by performance. No one knows this better than
Macy's. Having set down such a definite and distinct statement it must
be prepared to make good. It must be so covered and protected at every
possible point that if challenged it can give a good account of itself.
In fact, challenges come in every day--they have been coming in every
day for a good many years now--and the house continues to make good its
statement willingly--even joyfully. Here it is, then, that the
comparison department functions; here it is that the original
fundamental policy of Rowland H. Macy--to buy and sell only for
cash--strictly adhered to during the sixty-four years' life of the
business--makes it possible for the house to make good.
How, then, is it done?
The answer is easy.
Suppose, if you will, that Smith, Brown & Jones are having a special
sale of Mother Hubbard wrappers. There are advertised as their regular
$4.97 stock, marked down (at a heartbreaking sacrifice) to $3.79.
Manifestly, it is up to R. H. Macy & Company to sell the same quality of
Mother Hubbard for less than $3.79, if they are to live up to their
oft-stated policy. It is quite as patent that Macy's must know just
what kind of wrappers Smith, Brown & Jones are selling, if it is to
compete on an exact basis. Nothing simpler. One of the Macy staff of
shoppers is hurried forthwith to the scene of the bargain and,
purchasing one of the garments, brings it back post-haste to the Macy
comparison department. Furthermore, it is in this department by ten
o'clock of the morning of the sale. It is then matched as closely as
possible with a Mother Hubbard from the Macy stock, and the two garments
compared, point by point. If, after careful examination, it is found
that Macy's is charging more, or even the same price, for equal quality,
then its prices are immediately marked down to a figure at least six per
cent. lower than that advertised by the other store. And this, mind you,
is not an exceptional performance but a daily procedure in the carrying
out of which an exceptionally alert woman manager and twenty expert
shoppers are constantly kept busy.
If you make inquiry regarding the ins and outs of this remarkable policy
you will find that it is far broader than you may have imagined. Here,
again, is proof of the pudding. It is a typical letter, received from a
customer and copied verbatim, with only the name left out:
November 12, 1920.
R. H. Macy & Co.,
New York City.
Dear Sirs:
I purchased a banjo clock at $13.89 from you on Tuesday. Yesterday
I saw the same clock, with same works, etc., identical in every
way, at ----'s, for $11.25. Now, inasmuch as you claim that you
sell goods at the very lowest figure, I think that is too much
difference in price to overlook. I trust that I shall receive your
check for the difference in the amount, otherwise please call for
the clock at once. I purchased clock in the basement.
Yours very truly,
----------------
This letter was received by the store and acknowledged that very day. It
then was turned over to the comparison department, from which a shopper
was despatched to the store at which the customer claimed to have seen
the clock for less money. The shopper reported that the claim was
correct, and a check was immediately forwarded to the customer for the
difference between the price which she paid for the clock and six per
cent. less than the other store's price for it. Nor did the matter end
there. All this kind of clocks in the basement were at once repriced to
conform to the adjustment made with the customer.
There are, too, the occasional tests made by customers who, while they
are not dissatisfied, cannot believe that the low-price policy can be
consistently carried out. As an example, this half-jocular letter:
November 15, 1920.
R. H. Macy & Company,
Broadway & 34th Street,
New York.
Gentlemen:
Lest you regard this as a complaint from an ordinary .22 calibre
chronic kicker let me say in the first place that I merely want to
see to what extent you will make good on your brazen claim to sell
goods at a lower price than other stores. Now then:
On November 10th, I purchased a toy "cash register" bank in your
toy department for $1.98. (I want the kid to learn frugality better
than I did.) On November 14th my wife saw the same toy at Hahne's
in Newark, N. J., for exactly the same price. So far, so good. It
was worth it. But, Mr. Macy, you said your prices were _less_.
Besides, I have an account at Hahne's. By the time I would have
needed to pay for that bank there would have been enough in it to
settle the bill.
Here is your chance, but I'm from Missouri.
Yours,
------------
The answer to this complaint was prompt and to the point. It reads:
R. H. MACY & CO.
HERALD SQUARE, NEW YORK
December 4, 1920.
Mr. ------
------
------
Dear Sir:
We acknowledge your letter of November 24th, with regard to a
toy-bank, which you purchased from us for $1.98. We have
investigated your complaint and find, as you state, Hahne & Co. in
Newark are selling this article at the same price at which you
purchased it from us. Our price on these banks is now $1.89, in
keeping with our claim that we sell dependable merchandise for
"lowest-in-the-city" prices.
We appreciate your courtesy in calling this matter to our attention
and also for the opportunity to demonstrate the upholding of our
policy. A refund of nine cents in stamps is enclosed.
Yours very truly,
(Signed) R. H. MACY & CO.
------ Mgr.
Bureau of Mail Order and Adjustment.
Of course this complaint was trivial, the sum involved small, and Macy's
must quickly have realized that the man who wrote the letter was not
particularly serious. Yet that made no difference. The matter was
adjusted; even though the process of adjustment involved a shopper's
trip to Newark and considerable clerical work--in all several times the
cost of the tiny bank. Yet the matter _was_ adjusted and all the
toy-banks of that kind were at once reduced in price, to say nothing of
a satisfied patron made for the store.
There is another sort of complaint that, at times, keeps the comparison
department pretty busy. Women frequently will stop at a counter in the
store, examine an article and then exclaim:
"Hm-m--$6.74 for that! Why, I saw the same thing today at Jinx, Bobb &
Company's for $5.90."
A mere passing comment which, in the old days of merchandising, might
easily have been ignored. In Macy's it is not ignored. The clerk who
hears this remark makes a note of it and sends through to the comparison
department what is technically known as a customer's complaint.
Immediate investigation is made, the prices checked up, and, if the
casual shopper is right, Macy's prices are at once readjusted to the six
per cent. below the competitor's charges. It has been found, however,
that nearly ninety per cent. of this sort of complaints are incorrect.
Two articles, in separate stores, may look so nearly alike that a casual
inspection will not reveal any difference, and, therefore, competing
goods must often be subjected to expert examination and even to
analysis. A magnifying glass is used to count the threads in a fabric;
woolens are boiled in chemical solutions to determine whether there is
any adulteration; and cotton goods, such as sheets and pillow cases, are
weighed, washed and weighed again to ascertain to what extent they are
loaded. For Macy's is just to itself, as well as to the public.
As has been indicated already, there are some things that the store as a
matter of policy does not sell--pianos, chief of all. But that does not
mean that there is, in the minds of its managers, the slightest excuse
for its shelves not holding the things that it ought to sell. A large
difference, this, and one which is constantly being checked by members
of the shopping staff of the comparison department--going through its
floors and inquiring in the various departments for goods for which
there is little ordinary demand, and so a considerable likelihood of
their not being found in stock. If an article requested is not found in
stock, the shopper immediately buys something else--so as to get the
number of the salesclerk. Then a report is made to the department buyer
in order that he may see whether or not the clerk has followed up the
inquiry.
Incidentally, the shopper's report upon this entire transaction takes
into account all the details regarding the manner in which the sales are
handled and even notes the speed with which the parcel is wrapped and
the change returned. It is not a spying system, but part of the store's
honest effort to keep its efficiency at the highest notch. Naturally the
shoppers of its comparison department are not known as such to its
salesforce--for this reason the personnel of the corps must be under
constant change--and it is equally evident that their anonymity is
carefully preserved in their dealings with other stores. They are all
well-bred young women, ranging in type from the flapper to the matron,
and each is so carefully trained to act her part that it is quite
impossible to distinguish them from the store's bona fide shoppers.
Another of their duties is to report upon the speed of Macy deliveries.
Once a month, at a certain prearranged time of day, a similar purchase
is made at each of the largest stores in the city, including Macy's.
These are all ordered sent to the same address and a record is made of
the length of time it takes each to arrive. In the report that is
finally made of the test details are included showing the manner in
which all the packages are wrapped in order that Macy service may at all
times be held up at least to the standard of its competitors.
In the highly scientific machine of modern business, the test is as
valuable as in other machines. I have stood in a great sugar refinery
and watched the workmen from time to time draw off tiny phials of the
sweetish fluid in order that they might show under laboratory
examination that the machine was functioning at its highest point. And
so are the tiny phials of Macy service drawn from the machine. If they
show that, even in the slightest degree, the great machine of retail
merchandising is functioning below its highest efficiency, it becomes
the immediate business of the management to correct the loss.
"I tell my people not to come to me with reports that everything is
going well," says its general manager, "I only want to know when things
begin to slip. Then it is my job to set them straight once again."
One thing more, before we are quite done with this sketch of the
organization of a great merchandising institution. It is, in this case,
a most important thing:
With the credit system in force in nearly, if not quite, every other
large store in the New York metropolitan district, Macy's for years has
had to encounter a considerable sentiment against its policy of doing a
cash business only. For there always has been a desirable class of trade
represented by customers who, for one reason or another, find it most
inconvenient to pay their bills monthly--people whose means and credit
are unimpeachable. At one time it looked as if R. H. Macy & Company
would either have to forego their custom or else make exceptions to
their long established rule. The former they could do; the latter they
would not. But--
Out of this very need for furnishing customers with the convenience of
some sort of a charge account grew a great Macy specialty--the
depositors' account department which, while making no concessions to the
store's rock-ribbed principle of selling for cash, solved a very great
problem in its touch with its public. It turned the costly credit
privilege into an asset both for the customer and for the store. The
very thought was revolutionary! What, ask a customer to pay in advance;
to have money on deposit with R. H. Macy & Company, private bankers, to
pay for normal purchases for a whole thirty days to come! It couldn't be
done. New York would never, never stand for it. Every one outside of the
store was sure that it never could be done. And a good many inside, as
well. Yet the thing deemed impossible has come to pass. The idea was
sound. The plan today is successful, even beyond the dreams of its
promoters. With fifteen thousand depositors, its total deposits--money
placed into the store to be drawn against solely for merchandise
purchases--have reached as high as $2,750,000 at a single time.
Interest at four per cent. annually is paid upon these deposits, so that
the customer's money does not lie idle in the Macy till. Moreover, the
money may be withdrawn at any time, and without previous notice being
given. Further than this, it has been a custom--not, however, to be
considered invariable--to pay a bonus of two per cent. on net sales
charged to the depositors' account department throughout the year.
Compare the thrill of receiving a bonus check from your
department-store, instead of a bill for dead horses!
It has been estimated that in some of New York's most representative and
most elegant department-stores something like eighty-five per cent. of
all retail transactions are upon the credit accounts. Assuming even that
all of these accounts are promptly collectible--or collectible at
all--the expense of the machinery of their collection becomes no small
item in store management cost. This item Macy's saves--entirely and
completely. And so, to no small extent, the store justifies itself in
that other rigid rule--the pricing of its merchandise at a uniform
rating of six per cent. less than that of its competitors. Upon this
thought, alone, a whole book might be written.
III. Buying to Sell
Up the broad valley of the Euphrates a caravan comes toiling upon its
way. It is fearfully hot; frightfully dusty. For it has come to
mid-September; the rains are long weeks gone; and with the crops
harvested, even the sails of the great mills that pump the irrigation
canals full are stilled. The time of great heat and of little work. But
still the caravan--the long, attenuated file of horses and camels must
press on.
Ahead is Bagdad, that self-same ancient Bagdad which three thousand
years ago was the commercial capital of the world. Through the heat
waves and the blinding dust, the trained eyes of the Moslem can see the
sun touching the gilded minarets and towers of her great mosques. Bagdad
ahead. And at Bagdad the market-places which have stood unchanged for
tens of centuries. Save that in recent years there have come to them
these Americans--these shrewd agents of a little known folk, these
rug-buyers of a far-away land of which they spin such fascinating tales.
Tales far too fascinating ever to be believable. Yet Allah keeps his own
accounting.
In the foyer of a lovely new home in newest New York a Persian rug is
being spread for the first time. Its owner dilates with pride upon his
purchase; shows those roundabout him the symbolism of its rarely
delicate design; even to the tiny fault purposely woven into the
creation by its maker to show in his humble fashion that only Allah may
be faultless.
A great French city; this Lyons, by the bank of the lovely Rhone. For
two centuries or even more its tireless looms have spun the rarest silk
fabrics of the world. Nearby there is a little French village. Were I to
put its name upon these pages, it would mean nothing to you. Yet out
from it there comes a lace, so rare, so delicate, that one well may
marvel at the human patience and the human ingenuity that conceived it.
The silk comes to America, straight to the chief city of the Americas;
so do the laces; and so in a short time will come once again the
wondrous cotton weaves of Lille and of Cambrai--and will come as a
tragic reminder of the five fearful years that were.
In the hot depths of a South African mine, negroes, stripped to their
very waists, are toiling to bring forth the rarest precious stones that
the world has ever known. In the fearfully cold blasts of the far North,
facing monotonous glaring miles of lonely ice and snow, trappers are
after the seal and the mink. Why? In order that milady, of New York, may
sweep into her red-lined box at the Opera, a queen in dress, as well as
in looks and in poise.
From the mine and from the ice-floes to her neck and back a mighty
process has been undergone. The great multiplex machine of
merchandising has accomplished the process. A thousand other ones as
well. Herald Square sits not alone between the East River and the North,
between the Battery and the Harlem, between five populous boroughs of
the great New York, not alone between the four million other folk who
dwell within fifty miles of her ancient City Hall, but between the shoe
factories of Lynn, the cotton mills of Lowell and of the Carolinas, the
woolen factories of the Scots and the nearer ones of Lawrence, the paper
mills of the Berkshires, the porcelain kilns of Pennsylvania, between a
thousand other manufacturing industries, both very great and very small,
as well. Into Herald Square--into the red-brick edifice upon the
westerly side of Herald Square and reaching all the way on Broadway from
Thirty-fourth to Thirty-fifth Streets--all of these pour a goodly
portion of their products. In turn, these are poured by the big
red-brick store into the pockets and the homes of its tens of thousands
of patrons.
A mighty business this; and, as we shall presently see, a business made
up of many little businesses. Merchandising, financing, transportation;
each has played its own great part in the bringing of that silk sock
upon your foot or the felt that you wear upon your head. Each has
co-operated; each has correlated its effort. There are few accidents in
modern business. Rule-o'-thumb has stepped out of its back-door. In its
place have come cool calculation, steady planning, scientific
investigation. If modern merchandising has tricks, these are they. And
they are the tricks that win.
In our last chapter we pictured R. H. Macy & Company as a machine of
salesmanship. Now I should like to change the film upon the screen. I
should like to show you Macy's as a machine of buying. Obviously one
cannot sell, without first buying. Buying must at all times precede
selling, while to meet competition and still sell goods at a profit, the
keenest sort of shrewd merchandising must be used in purchasing. Your
buyer must be no less a salesman than he who stands behind the retail
counters and, what is more to the point, he must constantly keep his
finger upon the pulse of the market. Which means, in turn, that he must
not for a day or an hour lose his touch with manufacturing and financial
conditions--to say nothing of the changeable public taste.
For the one hundred and eighteen different departments of the Macy's of
today there are now sixty-nine buyers; the majority of them women. This
last is not surprising when one comes to consider that by far the larger
percentage of the department-store's customers are of the gentler sex.
Women know how to buy for women--or should know. How foolish indeed
would be the merchant prince of the New York of this day who would not
instantly say "yes" to the assertion that feminine taste in buying is
the one thing with which his store absolutely could not dispense. So the
woman buyer in our city stores is so much an accepted fact as to call
today for little special comment, save possibly to add that in no store
outside of Macy's has she come more completely into her own. The buyer's
job covets her. And she covets the buyer's job. Well she may. For it is
a job well worth coveting--in independence, in opportunity and in
salary.
In almost every case a buyer comes to the job from retail
experience--although occasionally a knowledge of wholesale selling
develops the required skill. In nine cases out of ten, however, he or
she rises to the important little office on the seventh floor from the
salesforce upon the retail floors beneath. From salesclerk he--or as we
have just learned, usually she--is promoted to "head of stock," which is
the title of the head clerk in a department having three or four or more
clerks. This promotion comes from a superior knowledge of the stock, yet
not from that alone: the clerk must have executive ability. An agreeable
temperament is also a necessary ingredient to the potion of promotion.
To the position of assistant buyer is the next and logical promotion for
the ambitious and successful "head of stock." After this should come the
step to the big job--which steadily grows bigger--of buyer, or as the
Macy store prefers to call it, department manager.
Department managers do no actual selling. They now have graduated from
that. Yet none the less are they salesmen--in more than a little truth,
super-salesmen. For not only must they know what to buy--and how to buy
it at the most favorable price--but they are equally responsible for
knowing what to do with their purchases, once made. They are the
merchants of the departments; accountable for the saleability of their
stock. It is very much their concern whether those departments show a
profit or a loss. Little stores within a big store. A big store made up
of more than a hundred little stores.