SELLING COFFEE AT RETAIL
_How coffees are sold at retail—The place of
the grocer, the tea and coffee dealer, the chain
store, and the wagon-route distributer in the
scheme of distribution—Starting in the retail
coffee business—Coffee blends for retailers—Small
roasters for retail dealers—Model coffee
departments—Creating a coffee trade—Meeting
competition—Profits and costs—Splitting
nickels—Figures costs and profits—A credit policy
for retailers—Premiums for retailers—How to build
and hold a retail coffee business._
Seven different types of distributers figure in the retail
merchandising of coffee in the United States. These are the independent
retail grocer, chain store, mail-order house, house-to-house
wagon-route distributer, specialty tea and coffee store, department
store, and drug store.
Considering the methods of merchandising, the seven retail distributing
agencies may be grouped into three distinct classes. The first class
would comprise the independent grocer, the chain store, the department
store, the drug store, and the specialty store, all of which maintain
stores where the consumer comes to buy. The second class takes in the
mail-order house, which solicits orders and delivers its coffee by
mail, and sometimes by freight or express. The third class covers the
wagon-route dealer, who goes from house to house seeking trade, and
delivers his coffee on order at regular periods direct to the consumer
in the home. As an inducement to contracting for large quantities to
be delivered in weekly or biweekly periods, the house-to-house dealer
generally gives some household article, or the like, as a premium to
establish goodwill and to retain the trade of his customers.
The mail-order houses confine their sales efforts to agricultural
districts and small towns, soliciting trade by catalogs, by circular
letters, and by advertisements in local newspapers, and in magazines
which circulate chiefly among dwellers in rural districts.
The majority of wagon-route distributers depend upon the lure of their
premiums, and upon personal calls, to develop and hold their coffee
trade. The leading wagon-route companies, sometimes called “premium
houses,” maintain offices and plants in cities or towns adjacent to the
territories to which they confine their sales efforts. At strategic
points, they have district agents who engage the wagon men that do the
actual soliciting of orders and deliver the coffee. All wagon-route
companies handle other products besides coffee, specializing in tea,
spices, extracts, and such household goods as soap, perfumes, and other
toilet requisites that promise quick sale and frequent reorders.
Wagon-route coffee retailing began to make itself felt seriously about
the year 1900. At first, the premiums usually consisted of a cup
and saucer with the first order, the customer being led to continue
buying until at least a full set of dishes had been acquired. Later,
the range of premiums was expanded, until today the wagon man offers
several hundred different articles that can be used in the home or for
personal wear or adornment. Practically all the leading wagon-route
concerns favor the advance-premium method; that is, a special canvasser
induces a consumer to contract for a large quantity of coffee and
other products in return for receiving the premium at once, though the
coffee is delivered only as the customer wants it, generally two pounds
every two weeks. The wagon man delivers the coffee, and is usually
held responsible for the customer’s fulfilling the agreement, and is
expected to secure repeat orders with other premiums.
The importance of the wagon-route plan of coffee retailing is shown by
the fact that in 1924 there were 600 houses of this kind in the United
States; and it was estimated that they distributed 10 percent of the
total amount of the coffee consumed in the country. The biggest company
was capitalized at $16,000,000, and operated 1,100 wagons. Most of the
wagon-route concerns were operating in the central states, practically
one-third of them covering the states of Illinois, Wisconsin, Indiana,
and Iowa. Pennsylvania is also a wagon-route-dealer center.
The premium wagon-route distributers have an organization called the
National Retail Tea & Coffee Merchants Association. It is composed
of 200 members (all of whom use premiums), who operate 3,500 wagons.
The largest single wagon-route operator is the Jewel Tea Company, of
Chicago. The members of this organization claimed to have served more
than 3,000,000 families in 1923.
In the chain-store system of merchandising, we see the opposite extreme
of coffee retailing. The wagon-route man features his delivery service;
while, in the chain-store plan, all customers must pay cash and carry
home their parcels (some chain stores, however, maintain more or less
complete delivery service). Though the earliest established chain
stores gave premiums, the practice has now been generally abandoned.
Roasting, blending, and packing coffee in a large central plant, the
chain-store operator advertises that he can sell coffee at a price
lower than his competitors. As a rule, only one grade of coffee is
offered for sale. While it is generally good value, many consumers
prefer better quality and go to the independent grocer for it. Others
patronize the grocer because of his convenient delivery service, and
because he gives credit on purchases. Chain-store organizations seem
to be growing rapidly, however; the largest of the chains, the Great
Atlantic & Pacific Tea Company, reporting in 1924 that it had nearly
10,000 branches throughout the country, which sell 60,000,000 pounds
of coffee annually. This chain has a capitalization of $13,750,000,
and in 1923-24 sold $302,880,369 worth of groceries, as compared with
$246,940,873 in the preceding year. This company opens about 1,500 new
stores every year.
The chain-store men are organized in the National Chain Store Grocers
Association, having 75 members, representing 25,000 stores, operating
in 23 states. It is estimated that there are not to exceed 150
chain-store grocery organizations in the United States, representing
about 30,000 store units and having a minimum of 25 units each. The
chain-store grocer turns his stock over from 12 to 25 times a year,
sells for cash, makes no deliveries, and claims to save the consumer
an average of 15 percent in buying. These stores do business on a net
margin not exceeding three percent on sales, as against the average
retail grocer’s 30 percent, while their average gross cost of doing
business has been stated as between 13½ percent (lowest) and 18½
percent (highest).
It is estimated that these chain-store organizations distribute
270,000,000 pounds of coffee a year, or about 20 percent of the total
amount consumed in the United States.
_Starting in the Retail Coffee Business_
When taking up the retail merchandising of coffee, the practical grocer
learns all he can about the popular grades to be had in the principal
markets, and how the coffees are grown, roasted, blended, and ground.
He also ascertains the best methods of brewing, testing out each grade
and kind on his own table, if he does not have testing facilities in
his store. He studies the relative trade values of different varieties
of coffee and the requirements of his particular clientele.
An interesting analysis of some 250 grocery stores in the United
States[4] made in 1919, showed that 29 percent of the dealers bought
all their coffee from wholesale grocers, 48 percent exclusively from
roasters and specialty wholesalers, 10 percent got over half of their
coffee from wholesale grocers, and 13 percent bought less than half
from the wholesale grocery houses.
[4] Bureau of Business Research, Harvard University.
There are two fundamental plans on which a retailer builds a successful
coffee business,—by buying coffee already roasted, and by buying it
green and roasting it in the store. Each plan has its advantages; but
its practicability depends upon conditions in different localities.
Beyond acquiring a general talking knowledge about coffees, the
retailer buying his stocks roasted in bulk or package form does not
generally need the intimate knowledge of his goods required by the
grocer who roasts his own coffee. If he grinds the coffee for his
customers, he must know the type of grind best suited to the way the
coffee is to be brewed, and must be able to tell the best brewing
method.
The practical grocer who makes up his own blend is acquainted with
blending principles and methods. While he cannot expect to be so expert
as the large wholesale blender, he should know that green coffees are
generally classified by blenders into five great divisions; Brazils,
including Santos, Bourbon, and flat bean, Rios, Victorias, and Bahias;
Washed Milds, embracing, as of the most commercial value, Bogotas,
Bucaramangas, Guatemalas, Mexicans, Costa Ricans, Maracaibos, and
Meridas; Unwashed Milds, such as Maracaibos, Bucaramangas, La Guairas,
and Mexicans; Javas, Sumatras, and Padangs; and Mocha and Harari.
It has been found by experience that a good assortment for the average
retailer to carry consists of Santos, because of price; a natural
unwashed Maracaibo or Bucaramanga, because of full-body and general
blending values; and a washed coffee, preferably a Bogota, which gives
quality and character to a blend. In stocking up with these coffees,
the practical merchant avoids Santos with a strong or Rioy flavor,
bitter or “hidy” Maracaibos, and acidy or thin Bogotas.
A grocer equipped with these coffees has the Santos for his low-priced
seller. For his medium grade, he blends Santos and Maracaibo,
half-and-half. The next higher grade is made up of one-third each
of the three coffees; while the best blend consists either of
half-and-half Bogota and Maracaibo, or three-quarters Bogota and
one-quarter Maracaibo.
The chief advantage of these three coffees is that they blend well in
any way they are mixed; and the dealer with a little experience, and
working with the two necessary ideas in mind,—satisfactory coffee and
price,—can make up various combinations.
In view of the fact that the United States imports coffee from more
than a hundred different sections of the world, and that there are wide
variations in flavor among the coffees produced in each of the hundred,
it is easy to understand that the blender has an almost unlimited
supply from which to make up a blend with a distinctive individuality.
Practically all coffee importers, and most wholesalers, are thoroughly
acquainted with the relative trade values of the different coffees, and
help their customers make up desirable blends.
_Small Roasters for Retail Dealers_
While the wholesale coffee roaster is obliged to install a large and
somewhat complex equipment, the retailer must use a small, compact,
self-contained unit that does not take up much space in his store and
is easily operated. Retail roasting machines are constructed on the
same general principle as the wholesale roaster. The roasting cylinder
is generally revolved by electric power and the heat is derived from
gas or gasoline fuel. Cooling is by air suction in a box attached
to the roaster. The capacities of the machines range from 10 to 300
pounds, the operating cost running from approximately eight cents per
100 pounds for gas fuel and 10 cents for electric power. The roasters
cost from $300 for the smaller sizes to $1,500 for the one-bag type,
and to $2,000 or $3,000 for the two-bag type.
One coffee-roaster-machinery manufacturer has recently brought out a
gas-fired, electrically operated, 50-pound miniature coffee-roasting
plant designed for retail stores, which comprises a roaster, a rotary
cooler, and a stoning device, that sells for $650.
Retail coffee roasting is similar to the wholesale operation. When the
cylinder has become heated, the green coffee is run in and allowed to
roast in the revolving cylinder for about half an hour. If the coffee
is the average green kind, the full heat may be applied at once; but,
if old and dry, a lesser degree is used. When the roast begins to
snap, the flame is turned lower, to allow the beans to cook through
evenly, and, when nearly done, it is almost extinguished. During the
operation, the roaster man, who may be the proprietor or a clerk
delegated to the work, frequently “samples” the coffee by taking out a
small quantity with his “trier” and comparing the color of the roast
with a type sample. When the colors match exactly, the coffee is dumped
automatically into the cooler box just below the cylinder opening, and,
when sufficiently cooled, is ready for grinding to order.
A large number of retailers roast coffee in their stores; and the
most successful find that, besides being able to make a feature of
freshly roasted coffee, they can save money and increase their sales.
One progressive grocer found that he was able to get 88 pounds of
roasted coffee out of 100 pounds of green coffee, as compared with
the wholesaler’s 84 pounds; that he could buy green coffee at a
closer price than roasted; and that it cost him less for labor, fuel,
overhead, and similar items than it did the wholesale roaster to turn
out a roast.
A chain of coffee specialty stores in which the coffee is roasted fresh
every day was started in California about 1916, and met with almost
instant success. In this system, the proprietor buys the green coffee
in large quantities, and it is roasted in each of his specialty stores,
which are located in public markets, store windows, and alongside
heavily traveled highways. The roasting machinery is invariably set up
in front of the store where passersby can easily see it in operation
and also smell the coffee roasting. Four years after starting the first
store, there were 50 in operation along the Pacific Coast, doing an
annual business of $600,000, some units taking in more than $7,000 a
month.
_Model Coffee Departments_
Authorities generally agree that a well-laid-out coffee department not
only increases a grocer’s coffee business, but speeds up sales in other
departments as well. Coffee lovers are inclined to “shop around” for a
coffee that suits their taste, and, when they have found the store that
sells it, they buy their other groceries there also. Another argument
advanced in favor of a coffee department is that coffee pays more money
into the retailer’s cash drawer than any other grocery item.
Most successful retail coffee merchandisers establish the coffee
department near the entrance to the store, where it can be seen through
a window by passersby, especially if there is ornamental roasting and
grinding equipment. It has been found that a department at the left of
the entrance is almost certain to draw attention, because people are
inclined to glance in that direction first. Some merchants, having the
space, erect attractive booths, designed somewhat like the familiar
food-show booths, directly in front of the door, after the fashion of
department stores when holding a special sale on a certain article.
Such a booth is generally used for demonstration purposes, and is
decorated with signs and possibly with bunting. A permanent department
is usually less ornamental, but still attractive. In telling how he
made a success of his department, one American grocer said that he was
careful that his fixtures were not so ornamental as to draw attention
from the goods. While the decorations were always attractive, they were
subordinated sufficiently to form a background for his coffee display.
[Illustration: JOHNSON, OF RED OAK, IOWA, ROASTS BEFORE THE CUSTOMER]
The most popular layout is the conventional counter system, behind
which the clerk stands to serve the customer on the other side. There
are many advocates of the counter that is built into the shelving,
believing that, the closer the customers are brought to the coffee,
the more they will be inclined to buy. This system also makes for
cleanliness, doing away with the possibility of the runway behind the
counter becoming a catch-all for dirt, torn paper, bits of wood, and
the like.
The modern coffee department has counters divided into compartments
having glass fronts. This type serves both as a storage place for
coffee and for display purposes. The top of the counter is used for
wrapping up parcels, etc., and also for displaying bulk and package
coffees. In the well regulated store, the counter top is never used
for storage, all stock being kept on shelves or in the counter’s
compartments. Good merchants find that cleanliness pays; and that a
“littered up” store drives away desirable custom. The wise proprietor
never allows a clerk to weigh out coffee after handling cheese, onions,
and other odorous articles, without first thoroughly washing his hands.
He knows that few food products in his store will more quickly absorb
undesirable odors and flavors than coffee, and consequently is careful
to protect his coffee from contamination. In the better stores, the
proprietor will either take charge of the coffee department himself, or
will delegate a competent man who will do nothing else.
The wide-awake retail coffee roaster always features his roasting
machine, which is generally highly ornamental and draws attention even
when not in use. Some progressive merchants plan to roast coffee at
noontime and at night, when homeward-bound passersby are hungry and are
particularly susceptible to the pungent aroma of roasting coffee. It
is a quite common plan for the retail roaster to arrange the exhaust
of the machine so that the full strength of the odor is blown into the
street.
_Creating a Coffee Trade_
Because of steady sales and quick profits, there is keener competition
in retail coffee merchandising than in other food products; but, all
things being equal, any intelligent person can create and hold a
profitable trade if he follows approved business methods—and works. The
best practice among coffee merchants shows that the prime essential is
good coffee, freshly roasted and ground. After that comes intelligent
and unremitting sales-promotion work.
The many ingenious trade-building plans worked out successfully by
grocers in all parts of the country are too numerous to describe in a
book of this character, but the methods cited in the following, all
of which have been tested in actual working conditions, will serve to
indicate the fundamentals of good retail coffee-sales promotion.
Among the chief sales-winning methods are demonstrations in the
store, at local food shows, and at church socials, picnics, or
functions, judicious sampling either in person or by mail, personal
canvassing from house to house, circularizing by mail, linking up
window displays with current happenings, local newspaper and outdoor
poster advertising, and selling coffee by telephone. Most of the
foregoing plans are worked intermittently. The telephone, however, is
a most important sales factor, and should be employed constantly and
consistently. Many successful stores consider the telephone, properly
used, the greatest single sales help in retail coffee merchandising.
One grocer had such faith in this method that he paid half the annual
telephone rental for a large number of his best-paying customers.
Another large merchandiser put in an individual telephone for each
of his salesmen, who called up his regular customers each day to
suggest articles for that day’s order, always of course mentioning
their “superior brand of coffee.” Telephoning is the next step to
personal contact, and, if tactfully done, is considered to be even more
advantageous because of the time it saves both the customer and the
storekeeper.
Coffee demonstrations in stores are easily arranged, in most cases. The
main consideration is fresh coffee of good quality, served daintily
and hot. Lacking a coffee urn, some grocers make their brews in
large-size home-service coffee-making devices. Those most advanced in
the correct method of brewing use the drip process. It is generally
agreed that demonstrations should not be held too often. They not
only cut into profits, but lose much of their advertising value.
Food-show demonstrations require more elaborate equipment, consisting
of a decorated booth, educational booklets, posters, and exhibits of
different kinds of coffee, both green and roasted, whole bean and
ground. Generally, coffee packers cooperate with retail demonstrators
by suppling gratis the coffee to be brewed, if the names of their
brands are suitably displayed. They supply also posters, signs,
samples, and booklets for free distribution.
Window displays form one of the best means of advertising at the
command of the average grocer, and one of the least expensive. A
popular coffee display consists of a series of educational “windows,”
starting with green beans in the bags in which they are shipped from
the growing country. Generally the bags, mats, or bundles are obtained
from the wholesale house, and are filled almost to the top with some
inexpensive stuffing, the green coffee being spread over the top to
give the appearance of a full bag. Pictures showing how the coffee
is grown, harvested, prepared, and shipped are frequently used in
such a display. The next exhibit consists of whole roasted coffee
spread thickly over the window floor to create the impression of bulk,
accompanied by a few pans of green coffee by way of contrast, and
with pictures showing scenes in coffee-roasting plants. A barrel,
lined with blue paper, and lying on its side with roasted coffee beans
spilling out, serves as a centerpiece for such a display. Following
this, comes a coffee package window, accompanied by pictures showing
how coffee is roasted, ground, and packed. This completes the series;
but there are many variations that have proved successful as trade
builders.
_Meeting Competition_
Since the advent of the wagon-route distributer and the chain store,
the independent retail grocer has been faced with the problem of how
to regain at least a fair measure of the coffee trade he has lost. The
grocer is not only concerned about his profits on coffee sales, but on
other goods as well; for a trade investigation has shown that a large
percentage of the regular customers of the retailer are held to the
store by their purchases of coffee and tea. This means that if coffees
and teas are bought from the wagon-route distributer and the chain
store, the remainder of a family’s order is “shopped around.”
To meet this competition, the best authorities agree that the
independent grocer should feature coffee in every practical way, such
as soliciting coffee trade from each customer that enters the store;
give up offering coffee on a price basis, and make up his own blends
from good-quality growths; perhaps make up his own brand and push it at
every opportunity; display coffee artistically, with frequent changes
of layouts; and have occasional store demonstrations. He should see
that the coffee is roasted properly, and that it is always fresh; that
the selling effort is not expended on the lowest-priced blend, but on a
grade that can be recommended for cup merit. This should be a leader,
but a lower-price coffee could be carried to suit the trade that buys
on price. Persistent efforts should be made to persuade the last-named
class of customers to use the better grades, which in the end are
cheaper and give better satisfaction. In short, the grocer should work
consistently to establish a vogue for his leader blend on the basis of
merit.
_Profits and Costs_
Because of its influence on other grocery items, coffee can often be
sold at a close margin of profit, particularly if a competitor’s store
or wagons are cutting into a grocer’s neighborhood trade. Twenty-five
percent is recommended as a reasonable gross profit on coffee in most
cases, although some grocers make less, and not a few make more; the
range being usually from 20 to 39 percent. The independent dealer
should meet chain-store competition in coffee on a price basis, making
a special on a superior grade and figuring to get not more than three
cents profit a pound, like his competitor. A bag of roasted coffee will
bring back $3 gain, and the cash to pay for another—and the grocer has
kept his customers, 90 percent of whom, theoretically, will have bought
their other food supplies from him. As a matter of fact, in the last
year of the World War retailers showed a tendency to demand cash on
sales of all grocery items. This practice reduces the cost of operation
and allows the storekeeper to reduce his prices. A large number
of grocers charge a small percentage of the total sale for credit
privileges, and five or 10 cents for each delivery below a certain
total value of the purchase price of the articles to be delivered. As a
result, they have been able to meet chain-store competition. Collective
buying has also been a factor in offsetting the inroads of the “chains.”
_Splitting Nickels_
One of the reasons advanced for the loss of coffee trade by retail
grocers is that they price their blends in “round numbers,” that is,
20, 25, 30, or 40 cents, while their competitors “split nickels,”
selling their product at 18, 23, 28 or 38 cents.
Most of the retail enterprises in other lines of trade have built up
their business on the penny-change plan, and many coffee men believe
that this should become the universal merchandising method among retail
distributers of coffee. One of the leading advocates of “splitting
nickels” has worked out a chart to show how coffee should be priced to
make predetermined profits:
TABLE SHOWING PROFIT PERCENTAGE ON SALES
_Selling Price and % Profit_
_Cost of
Coffee_ 25c. 26c. 27c. 28c. 29c. 30c. 31c. 32c. 33c.
————————————————————————————————————————————————————————
20c. 20% 23% 26% 28% 31% 33% 35% 37% 39%
20½c. 18% 21% 24% 26% 29% 31% 33% 35% 37%
21c. 16% 19% 22% 25% 27% 30% 32% 34% 36%
21½c. 14% 17% 20% 23% 25% 28% 30% 32% 34%
22c. 12% 15% 18% 21% 24% 26% 29% 31% 33%
22½c. 10% 13% 16% 19% 22% 25% 27% 29% 31%
23c. 8% 11% 14% 17% 20% 23% 25% 28% 30%
23½c. 6% 9% 13% 16% 19% 21% 24% 26% 28%
24c. 4% 7% 11% 14% 17% 20% 22% 25% 27%
24½c. 2% 5% 9% 12% 15% 18% 21% 23% 25%
25c. 0% 3% 7% 10% 13% 16% 19% 21% 24%
25½c. 2% 5% 8% 12% 15% 17% 20% 22%
26c. 0% 3% 7% 10% 13% 16% 18% 21%
26½c. 1% 5% 8% 11% 14% 17% 19%
27c. 0% 3% 6% 10% 12% 15% 18%
27½c. 1% 5% 8% 11% 14% 16%
28c. 0% 3% 6% 9% 12% 15%
_Figuring Costs and Profits_
While the cost of conducting a retail grocery business naturally
varies according to local conditions and the size of the enterprise,
an investigation among some 250 stores in small and large cities made
in 1919 by the Bureau of Business Research, Harvard University, showed
that the average cost was 14 percent, that the net profit averaged 2.3
percent, and that stock was turned about seven times a year. Gross
profits ran from 10.5 to 26.04 percent of the net sales, the most
typical figure being 16.9 percent. Sales cost formed the largest single
item of expense, varying from 3.41 to 9.94 percent, with the bulk of
figures showing around 1.8.
According to advanced business practice, the cost of doing business
should be based on these 14 points:
1. Charge interest on the net amount of the total
investment at the beginning of the business year,
exclusive of real estate.
2. Charge rental on real estate or buildings at a rate
equal to that which would be received if renting or
leasing to others.
3. Charge, in addition to what is paid for hired help, an
amount equal to what the proprietor’s services would be
worth to others; also treat in like manner the services of
any member of the family employed in the business and not
on the regular payroll.
4. Charge depreciation on all goods carried over on which
a less price may have to be made because of damage or any
other cause.
5. Charge depreciation on buildings, tools, fixtures, or
anything else suffering from age or wear and tear.
6. Charge donations and subscriptions paid.
7. Charge all fixed expenses, such as taxes, insurance,
water, lights, fuel, etc.
8. Charge all incidental expenses, such as drayage,
postage, office supplies, livery expenses of horses and
wagons, telegrams and telephones, advertising, canvassing,
etc.
9. Charge losses of every character, including goods
stolen, or sent out and not charged, allowances made
customers, all debts, etc.
10. Charge collection expense.
11. Charge any other expense not enumerated here.
12. When it is ascertained what the sum of all the
foregoing items amounts to, prove it by the books, which
will give the total expense for the year; divide this
figure by the total of sales, and it will show the percent
which it has cost to do business.
13. Take this percent and deduct it from the price of any
article sold, then subtract from the remainder what it
cost (invoice price and freight), and the result will show
the net profit or loss on the article.
14. Go over the selling prices of the various articles,
and see what are profits; then get busy in putting your
selling figures on a profitable basis, and talk it over
with your competitor as well.
_A Credit Policy for Retailers_
While the minor factors governing a credit policy for retailers
vary with local conditions, the fundamental principles are alike
everywhere, and should have the thoughtful consideration of all retail
distributers of coffee. After a retail-grocery-store experience of 25
years, a past president of the National Association of Retail Grocers
of the United States found that a grocer should insist upon references
and a thorough investigation of every new applicant for credit,
refusing the privilege when the prospective customer hesitated to give
the needed information; that he should arrange a date for periodical
payments, explaining that this was necessary so that the storekeeper
could arrange to meet his own bills, which would enable him to discount
his invoices and to sell his goods cheaper; that statements of accounts
should be sent out promptly and never a few days late; that he should
insist upon payment in full when due, requesting the customer to
call if an extension of time was asked; that he should not let the
customers decide when they would pay bills, bearing in mind that the
possible loss of a few customers who did not pay promptly was offset
by the advantages of cash when promised; that he should never abandon
the hope of collecting an old account, but should try the method of
sending statements only to the surest customers, sending a clerk
for the collection of all other accounts; that he should personally
examine all uncollected accounts every month, insisting upon a reason
for failure to pay; that he should study his customers and not trust
those who gave a bad impression; that he should have the courage to
say “No” when necessary; not to be satisfied with merely a financial
rating on a credit applicant, but to ascertain his general reputation
and character; and to help to eliminate the deadbeats by giving careful
attention to all requests received from other retailers for credit
information.
_Premiums for Retailers_
House-to-house dealers are the largest users of premiums among
coffee distributers. Most of them operate under what is known as the
advance-premium method.
The plan followed by house-to-house dealers until about 1910 was
to issue checks redeemable in premiums after a certain amount of
tea, coffee, or other products had been purchased. This practice
has not been entirely abandoned; but in most instances the premium
is now handed to the consumer in advance of the initial purchase in
consideration of the buyer’s promise to use a stipulated quantity of
tea, coffee, or other merchandise. The driver of the wagon generally
carries a portfolio illustrating numerous premium items redeemable
through the purchase of varying amounts of merchandise.
Many retail coffee stores also employ premiums, using both the
old-style and the “advance” methods. This type of store, however, is
being supplanted by the chain grocery store.
Some independent retail grocers use premiums to a limited extent.
These usually carry a small line of premiums, featuring a piece of
kitchenware, or other inexpensive item, with bulk coffee.
It is significant that one of the largest chain-store organizations in
the United States, the Great Atlantic & Pacific Tea Company, uses few
premiums today, although its business was founded upon the premium idea.
Trading stamps, which are sold to grocers and other merchants by firms
making a specialty of this form of premium giving, are little used
nowadays. The average retail grocer is antagonistic to trading stamps,
as a result of the methods of certain unscrupulous stamp dealers.
Legislation against trading stamps is in effect in many states.
_How to Build and Hold a Retail Coffee Business_
Whether the retailer roasts his own coffee or features several reliable
blends of package coffees, there are certain things he should bear in
mind if he wishes to build and hold a substantial coffee trade.
First he needs to know all about coffee, in order not only to buy
intelligently, but also to discuss the subject entertainingly with his
customers. To this end he should put in all the available spare time in
reading up on the subject.
Every dealer should know that he is first of all a soldier in the army
for the common good, and that as such he has a duty to perform in
rendering a real social service; not to the manufacturer, not to the
jobber, but to the consumer.
Every dealer should know that “honesty is the best policy” because it
pays; and that is what the Latter Day Psalmist meant when he said, “The
crown of virtue is riches.”
Every dealer should know how to figure his cost of doing business,
remembering that this involves salary for himself, and a charge for
rent even if he owns the building.
He should know his net profit on every pound of coffee he sells.
He should know that he is not a merchant if he sells any product at
less than 20 percent on his selling price, because the approximate
cost of doing business in the grocery line is 17 percent, and at 20
percent he makes only three percent net; also that there are many safe
investments at six percent.
He should know that his most valuable advertising medium is his window;
and, because this is so, it should be dressed never less than once a
week, and it would be better if it were dressed every other day. If he
owns space in a newspaper, he should not repeat the same copy every day.
He should know that the one great trade winner that costs nothing is
politeness.
He should know that another, costing little, but worth all it costs, is
cleanliness.
He should know that the customer is always right; that he is “the
boss,” because he not only pays the clerks wages, but also the
proprietor’s salary.
He should know that advertised goods are sold for him.
He should know that anybody can give goods away, but it takes a
merchant to sell them, and this means, Do not be a price cutter.
He should know that, while good fixtures cost money, they soon save
what they cost. The initial expense is temporary; the saving, perpetual.
Every dealer should know that, if he subscribes for every newspaper,
magazine, or book published, he will not get so much information about
his business from all of them put together as he will from one issue
of a good trade paper; that the trade-paper editor is his best friend
in his fights for fair profits; that in the advertising columns of his
trade paper is to be found his best market place.
He should know that a chain store and the wagon-route man cannot take
business away from him if he is well posted, aggressive, and renders
the right kind of service; that the tea and coffee business of his
community belongs to him by right, and that it can slip away from him
only if he neglects this profit-making department of his business.
Then, too, the dealer should know that to get the trade of his
community he must go after it, not wait for it to come to him. To
be a go-getter, he should study first how to arrest the prospective
customer’s attention, how to arouse his interest, how to create in him
a desire to buy his favorite kind of coffee in the dealer’s store, and
how to hold his trade.
To arrest the customer’s attention, he must have a bright, shining
store, with “come-hither” windows (the windows are the eyes of the
store), and he may add to the attractiveness of the place by a window
coffee roaster, or by enticing window displays of coffee in bulk or in
packages.
If the dealer does his own roasting, the manufacturer of the roasting
machine may be depended upon to furnish him with all needful guidance
in green-coffee selection, blending, roasting, etc. If he buys in bulk,
he should seek only reliable sources of supply, and take advantage
of all the sales help his jobber has to offer. Above all, he should
resolve to carry only blends of quality,—not how many, but how good.
Let him be sure he is right in this, then go ahead.
Next, the proper grinding equipment is of prime importance. Get a good
grinder and instruct the housewife in the matter of the right grind
for her method of making the beverage. The National Coffee Roasters
Association will gladly cooperate with any dealer in this matter. The
live dealer knows that every family in his territory buys at least one
pound of coffee a week, and if the purchase is not made at his store
the fault is in himself, not in the customer. He should make up a list
of names, and keep after them regularly, systematically.
Any prospective customer’s interest may be aroused by personal
attention, practical demonstration, and thoughtful study of his coffee
requirements. Offer to make up a blend just for him. Have a card index
to this blend, so that any clerk may serve him. Send solicitors to
call upon him at his home. Demonstrate at church fairs and social
gatherings. Get a good coffee maker, and demonstrate the gospel of good
coffee making in all seasons. Give it away, or, better still, sell it
to him. Be an authority on the proper grinding and brewing of coffee.
Be a coffee enthusiast. Such enthusiasm is infectious. The coffee
custom of any community will soon wear a beaten path to such a dealer’s
store.
[Illustration]
[Illustration: IN ONE OF THE COFFEE KITCHENS OF THE WALDORF-ASTORIA
HOTEL, NEW YORK]