A NEW COMPETITOR
The New England Hardware Company were to open their store on Macey
Street on January one. I knew because I had received the following
letter from them, which evidently they had sent to every house in town:
Dear Sir:
The New England Hardware Company open their Farmdale
Store January 1, at 62 Macey Street. This store will be
in charge of Mr. Roger Burns, who for many years was in
charge of the kitchen goods department at the Bon
Marche.
We earnestly solicit your patronage at our new
store--not because by so doing you will help Mr. Burns
(who has an interest in the profits of the company) but
because you will get the best in kitchen hardware at
cut-rate prices.
You will readily appreciate that an organization like
ours can give you greater value than the usual hardware
store, where the goods are bought in small lots by the
proprietor or manager, who has many other duties to
attend to. Our buyers are experts, who devote all their
time to the study and search of markets; buying in
tremendous quantities (for twenty-seven stores), and
paying spot cash. We are thus able to sell merchandise
for less than usual prices.
Mr. Burns hopes to meet all his friends on the opening
day, January one. He has a surprise gift for every
visitor to the store on that day.
Respectfully yours,
NEW ENGLAND HARDWARE COMPANY.
That had struck me as being a pretty good letter. It certainly was a
clever idea to get Burns as their manager because he was very popular in
the town. When the Bon Marche failed he had come to me, but, of course,
I couldn't use him. Then he had told me that the chain-store people had
made him an offer, and he went to work in their Hartford store. At that
time he didn't say anything about the possibility of coming back to
Farmdale as manager of a store for them. I don't think, as a matter of
fact, that he had any idea that they were going to open a new store.
Burns was a bully good fellow, and I honestly hoped he'd be successful,
although I hoped the new store would not hurt us much. . . .
The day after I received the circular letter I had a telephone call from
Burns. He had come into town to take charge of getting the new store
ready. We made an appointment to have Christmas dinner together and he
promised to tell me how his firm had gone about opening the new store in
Farmdale.
I had been doing a little figuring, and I didn't know whether we'd do
our $30,000 in the fiscal year or not. Up to the end of November--that
is for six months--our business had amounted to $13,872.00, $1,128.00
below our quota. However, in the last two days we had taken in $345.00
and I had been able to pay off the last few of our monthly accounts.
Barrington, too, had told me he'd wait until the first of the year; but
insisted that I tell him then what I could do.
I wished I could increase the business a little bit more, for my
expenses were still high, and we were all of us feeling fagged through
being under-staffed. We could well have done with another clerk; but we
just couldn't afford it. However, while Betty was away I could work day
and night, if necessary, and then, perhaps, by the time she got back,
we'd have things in such shape that I could afford another clerk.
As arranged, I had Christmas dinner with Roger Burns at his
boarding-house.
After dinner Roger told me some of the methods that the New England
Hardware Company used in locating stores and carrying on their business.
"You know, Jackdaw," said Roger (when I was at school the boys all
called me Jackdaw; one reason I suppose was that I was so dark and my
first name was Dawson), "it is some months since the New England
Hardware people hired me and sent me to Hartford as assistant in their
store there. After I had been with them for a month, they shifted me to
their Providence store for a month as assistant manager. From there I
was sent out as traveling inspector, and spent two months in visiting
each of the stores and spending a day or two at each one. Then I was
called to New York--as you know, they have their head office there--and
was coached in methods of handling the records which they required store
managers to send in to the office.
"Not only did they tell me what records had to be made out, and how they
had to be made out, but they showed me what happened to them when they
reached the New York office, and also explained very clearly the need
for all those records.
"I learned more about business, Jackdaw, in those six months than I ever
knew before. They didn't just tell me what to do, but they told me why
it had to be done. Every question that I asked them about running a
store they answered for me. No trouble seemed too great for them to
take, if it was going to help me to understand how they did business. I
thought they were telling me altogether too much; they were telling the
secrets of the conduct of the business; but Mr. Marcosson (he's a weird
combination--a Scotchman with a sense of humor)--Mr. Marcosson is the
general sales manager--he said that I couldn't be any use to them,
unless I knew all about the business; what the goods would cost me in
the store, how much profit I ought to make, how much turn-over I ought
to get, and Oh! it would take me a month to tell you all the facts they
gave me.
"One thing has stuck out clearly in my mind from this training, and that
is, that I can do my work for them much better than would have been
possible if I had been working under an ordinary store proprietor. I
know _why_ things should be done. There's real horse sense at the back
of every move they take. They don't guess at things. They find out. If
you were to ask me what accounts for the big success of chain-store
organizations I should say that it is that the chain-store organization
_knows_ what it is doing, while the ordinary retailer _guesses_ at what
he is doing. For instance, they are looking for towns for two men who
are going through the same training that I went through--"
"Do you mean to tell me, Roger," I broke in, "that they spent six
months' time in training you, when you might leave them at any minute?"
"H'm, h'm," said Roger, "that's a fact. Marcosson said that, as soon as
any one could do better for me than they could, they expected me to
leave. And it is a fact that, out of all the managers they have had,
only three of them have left. Of course, it's a fairly young
organization--been in existence only about five or six years; but the
employees are treated so well that they rarely want to leave.
"You know I get an interest in the profits the store makes--"
And that reminded me, I hadn't yet worked out that profit-sharing plan
for my people! It had been no easy job.
"Another thing," continued Roger, "Marcosson said that impressed me very
much. 'We are going to give you a share in the profits, Mr. Burns,' he
said, 'because we believe it is due you.' You know, Jackdaw, Marcosson
is the kind of man you can speak right out to--not the kind of man you
get scared of at all; so I said to him: 'I've heard many people say that
profit-sharing isn't a success.' 'So far as we are concerned, it is,' he
said. 'Most retailers who go into profit-sharing plans go into them with
but a very slight study of the problem. They don't think the thing
through to a logical conclusion, and they put into operation some
half-baked plan which, of course, does not work out right, and then,
instead of blaming the plan they damn the policy as a whole!
Profit-sharing is necessary in modern retail business; but its operation
must be planned in a common-sense way to be successful. One might just
as well complain of the principles of arithmetic because one cannot do a
sum correctly!'
"But let me get back to my story of how we came here," said Roger,
lighting a fresh cigar. . . .
While he was talking, I had been looking at Roger, and comparing him to
the old Roger Burns I had known a year or so ago. He had grown
bigger--not in size, you understand, but he was a bigger man--he had a
personality which he never had had before. He had more confidence in
himself, and I attributed this to the fact that he was sure of what he
was about. He knew exactly what was expected of him--he had been trained
thoroughly to do it, and that had given him a confidence which I was
sure will make for his success in Farmdale. Frankly, I felt that, as a
competitor, he was going to be a much keener one than Stigler ever had
been.
"The New England Hardware Company," continued Roger, "has money enough
to open as many stores as it wishes; but it can open stores only as
quickly as it can get men. So the first thing it seeks is a man who is
likely to make a good manager, then it looks for a location in which to
place him."
"Is that how all chain-store organizations do?" I asked.
"No," replied Roger. "Some of them look around for towns where the
merchants are not on to their jobs. That's the way some of the big drug
store chains in particular operate. They go around to the towns where
the existing drug-store proprietors are dead, and don't know it, and
where there is practically no competition for them, and that's where
they open the store.
"My people go at it a little differently. Where possible, however, they
try to open a store with a manager who is known in the location."
"Do they ever buy existing stores and make them part of the chain?"
"No, although some chain organizations do that."
"How do they pick out the towns to locate in?"
"When they look for a town in which to locate a store, they want to know
a lot of facts about it. They want to know, for example, whether the
town covers a large area or not. They find out if the houses are
scattered, or if the dwellings are concentrated in a small area. They
like a town that is a trading center for neighboring towns, because they
can draw from all these neighboring towns as well as from their own
local trade. If it's a manufacturing town, they want to know whether the
factories make such goods as will tend to make the labor problem steady.
For instance, they wouldn't want to locate in a town which was always
having labor troubles, or where there were periods where the factories
have to close down because they manufacture seasonal goods. In other
words, they want a town which has a regular, steady trade all the year.
"A good residential town, of course, is splendid for them. When they go
to a manufacturing town they pick out, wherever possible, a town which
has a diversified line of manufactories, instead of one which is devoted
to one line of industry. You see, that helps to avoid slack times,
because if one line is slack the other is inclined to be busy. See my
point?
"Then they find out how many stores in their line are in the town, and
if they look alive and up to date."
"Did you think we were a dead lot?" I asked.
"Sorry you asked me that," said Roger with a grin. "They did. Yes, they
think that old Barlow has the only real store in the town."
"And me and Stigler?" I said interestedly, even if ungrammatically.
"Well, they think Stigler is a joke, and that you are--" he hesitated
for a word--"inexperienced!"
"So they think that Barlow,--old-fashioned, plug-along Barlow--is the
only real competitor in the town?"
"Yes. You see, Barlow does twice as much trade as you and Stigler put
together, and then some."
I had never realized before that Barlow was so much a bigger man than I
was, but the more I thought of it the more I believed that the
chain-store people had sized up the situation correctly.
"Then," continued Roger, "they find out where the people live; if they
own their own houses, or if they rent them. Obviously, a town where
people own their own homes is going to offer a more regular and
permanent trade than one where every one lives in rented houses. Then
they want to find out how and when the great number of employees in the
manufacturing plants are paid. They want to know this so that they can
offer special sale goods and such-like on the day that the people get
the money."
That was a new one on me. I had never thought of that before.
"Everybody pays on Saturdays, don't they?" I asked.
"Everybody used to, but it is by no means uncommon, now, for factories
to pay the help on Thursday and Friday.
"When they've studied this question, they next study the business
streets to learn which are the most important.
"The most important to them does not necessarily mean the main street of
the town, but the one which offers the greatest number of passersby, who
are likely to be customers. For instance, they want to know where the
people congregate in the streets in the evening. Do they go past the
drug store and past the most popular movie theater? Do the men go
through the town on the way home, or can they get home without going
through the shopping section?
"Now, some concerns, such as the big chain cigar store people, plan to
get the corner which has the greatest number of people passing it. They
have tellers stand outside various corners and count the number of
people going each way during various hours of the day. But our people do
differently," said Roger, with a pride that made me realize that the
instruction they had given him had certainly developed in him absolute
confidence in his people. "We try to get stores with a reasonable rent
just off the main thoroughfares, but so located that we catch as many
passersby as possible.
"Now, we are opening in Macey Street, although High and Main are
unquestionably our two main thoroughfares here."
Macey Street is a narrow street running from the post-office, which is
on Main Street, facing Macey, and connecting with High. On High Street
is the theater and two of the moving-picture houses. The railroad
station, also, is on High, a little way from Macey.
"Now, on Main Street," said Roger, "are all our business and
professional men. Their best way to get home is down Macey into High,
either to the depot or to the trolley junction in front of the depot.
Thus you see we catch the bulk of the people coming from Main to High
and from High to Main. The rent is even less than you pay," he said with
a smile, "and yet we have a location which is several times better than
yours."
I felt as if I wanted to kick myself when he said that. If I had only
known that. I had bought the store, but I had never even thought that I
might have gotten a better location than I had.
"Then the next thing we have to consider," said Roger, "is whether or
not we are on the right side of the street. Now, you may or may not know
it, but the right side of the street is the one which has the greatest
amount of shade in the summer. You see, in the heat of the summer,
people prefer to walk in the shade, and consequently they take the shady
side of the street. In the winter, if there is any snow, it makes the
sunny side of the street sloppy, so that people still walk on the shady
side."
"H'm. Stigler's got one over me, then, because he's on the shady side of
the road."
"Yes, we reckoned that Stigler had a bit better location than you had.
But he evidently does not know it, else he wouldn't have wasted that
money opening the five-and-ten-cent store next door to you."
"He's doing a big business," I said ruefully.
"Wait till after Christmas. The Christmas season is a big time for
five-and-ten-cent stores such as his. But wait until February, and he'll
'find it's a rocky road to Dublin.'"
I certainly felt good to hear that. Roger grinned.
"Tell you, old man," he said, stretching over and putting his hand on
my knee, "I don't like Stigler, and I'd like to go for his scalp, only
my company insists that I'm here to sell goods to the people, and not to
compete with any one else. But, if the time ever comes that you can get
a bit better location than you have, do so. You see, old man, the bulk
of your people have to go to the store. You don't get a great amount of
people passing it naturally.
"Another reason we chose this location is that we are just between you
and Barlow."
"How is that any help?"
"Well, it helps in this way. Some one passing your store suddenly
remembers that she wants something--a saucepan, let us say. She has
already walked by your store and doesn't bother to turn back. A little
later on she comes to my store. I get the benefit of the suggestions
which occur to people as they pass your store."
I could hardly believe that. It sounded too much like--oh, quackery; and
I told Roger so.
"All right, old man," he said with a smile. "But have you ever noticed
when you go to a big city that you will find a man at one corner selling
apples and then there is a man on the next corner doing the same thing.
You will notice how people pass the first one, then take a few seconds
to think it over, or the suggestion is just a little one, and it is
strengthened when they come to the second stand. The same thing applies
to a group of stores. As an example of this: In Jacksonville, Fla.,
there are not less than six hardware stores located in one block. That
town of sixty thousand people has several good business streets, but
this group of stores has become known as 'The Hardware Center' and
people gravitate there for anything they want in the hardware line.
Those stores benefit by being together. The same thing applies in a
smaller way to a street of stores. One store by itself doesn't impel the
buying instinct, but a street of stores puts the thought of buying into
the minds of people passing them."
Well, that certainly was mighty interesting. Roger silently smoked for
some minutes. I thought he had finished his story, but there was more.
"Then, when we had got the store," he said, "we found there were two
little steps leading to it. We had these removed, and put in a slope
from the street to the floor. It is easier for people to walk up a slope
than up two steps. Then, if you notice, we have had the windows altered.
There were two panes in each window. We have had them taken out and one
big glass put in each one. Then we have had a new lighting system put
in. And then you notice that the outside of the store has been painted
an olive green. That is the distinctive color of our stores, and also is
a color which harmonizes with our goods.
"Now, we have given a lot of care to lighting and to the outside
appearance of the store. We have some good display counters inside the
store, but we have only cheap deal fixtures. We haven't spent much money
on fixtures, because they have not quick-asset value."
"What in the name of thunder is that?"
"Well, a quick-asset value is the value that an article will fetch at a
forced sale, and it is the policy of the company to invest in nothing
that will deteriorate as rapidly as expensive fixtures do."
"It certainly is wonderful," I said. "They seem to have thought of
everything, haven't they?"
"Yes, indeed; even to the point that we have a lease on the store with a
clause in it that, if we give it up, it is not to be rented for another
hardware business for at least twelve months after the expiration of our
lease."
"Did they stand for that?"
"You bet they did."
"What's the idea?"
"Well, we believe we have the best location, but we are not sure. Now,
if we find in two or three years' time that we haven't got the location,
we will get a better one. In that case, we are not going to make it
possible for some one to take that same location and scoop up our
business, because another hardware store, coming in there, would reap
the benefit of all the publicity we gave to the store. Do you see the
point?"
I saw the point all right. That conversation with Roger Burns was a
revelation to me. If only I had given the same thought and care to
getting a store how much better off I'd have been!
Another thing I realized from Roger's talk. They plugged ahead steadily.
They didn't leave anything undone. They didn't make any false moves;
while I--I was almost a joke!