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11^906317 549 9 ' C^^^V.,Al>L
NATIONAL RECOVERY ADMINISTRATION
■ ■ ■ S 1936
DIVISION OF REVIEW
EVIDENCE STUDY
NO. 34
OF
RETAIL TRADE
Prepared by
DAVID M. POLAK
August, 1935
PRELIMINARY DRAFT
(NOT FOR RELEASE: FOR USE IN DIVISION ONLY)
THE EVIDENCE STUDY SERIES
The EVIDEl'ICE STUDIES viere originally planned as a means of gathering evidence
"bearing upon various legal issues which arose under the National Industrial Re-
covery Act.
These studies have value quite aside from the use for which they were originally
intended. Accordingly, they are now made availahle for confidential use within the
Division of Review, and for inclusion in Code Histories.
The full list of the Evidence Studies is as follows:
1. Automobile Manufactixring Ind. 23.
2. Boot and Shoe Mfg. Ind. 24.
3. Bottled soft Drink Ind. 25.
4. Builders' Supplies Ind. 26.
5. Chemical Mfg. Ind. 27.
6. Cigar Mfg. Industry 28.
7. Construction Industry 29.
8. Cotton Garment Industry 30.
9. Dress Mfg. Ind. 31.
10. Electrical Contracting Ind. 32.
11. Electrical Mfg. Ind. 33.
12. Fab. Metal Prod. Mfg., etc. 34.
13. Fishery Industry 35.
14. Furniture Mfg. Ind. 36,
15. General Contractors Ind. 37.
16. Graphic Arts Ind. 38.
17. Gray Iron Foundry Ind. 39.
18. Hosiery Ind. 40.
19. Infant's & Children's Wear Ind. 41.
20. Iron and Steel Ind. 42.
21. Leather 43.
22. Lumber & Timber prod. Ind.
Mason Contractors Industry
Men's Clothing Industry
Motion Picture Industry
Motor Bus Mfg. Industry (Dropped)
Needlework Ind. of Puerto Rico
painting & Paperhanging & Decorating
Photo Engraving Industry
Plumbing Contracting Industry
Retail Food (See No. 42)
Retail Lumber Industry
Retail Solid Fuel (Dropped)
Retail Trade Industry
Rubber Mfg. Ind.
Rubber Tire Mfg. Ind.
Silk Textile Ind.
Structural Clay Products Ind.
Throwing Industry
Trucking Industry
Waste Materials Ind.
Wholesale & Retail Food Ind. (See No. 31)
Wliolesale Fresh Fruit & Veg.
In addition to the studies brought to completion, certain materials have been
assembled for other industries. These MATERIALS are included in the series and are
also made available for confidential use within the Division of Review and for in-
clusion in Code Histories, as follows:
44. Wool Textile Industry
45. Automotive Parts & Equip.
46. Baking Industry
47. Canning Industry
48. Coat and Suit Ind.
49. Household Goods & Storage, etc, (Dropped)
Ind. 50. Motor Vehicle Retailing Trade Ind.
51. Retail Tire & Battery Trade Ind.
52. Ship & Boat Bldg. & Repairing Ind.
53. Wholesaling or Distributing Trade
L. C. Marshall
Director, Division of Review
(\-b\^
I A^^
CONTENTS Page
Foreword 1
CHAPTER I - NATURE OF THE RETAIL TRADE 2
Number of Retail Stores 3
Nimber of Proprietors 2
Number of Stores by States 2
Number of Proprietors by States 3
Number of Failures and Liabili ties Involved 5
Total Net Sales 5
Total Sales by Kind of Business 7
Principal Commodities Sold 8
Competitive Trends Within Retail Trade as
a Wliole 9
CHAPTER II - LABOR STATISTICS 11
Number of Fall-Time Employees 11
Seasonal Variation in Employment 11
Total Annual Payrolls of Pull and Part-Time
Employees 12
Monthly Indexes of Employm.ent and Payrolls 12
Average Hourly Earnings 12
Average Weekly Hours per Employee 13
Average Weekly Wages per Employee 13
Number of Employees, by States. 13
Total Annual Payrolls, by States 16
CHAPTER III - KINHS AND SOURCES OF I^EERCHANDISE SOLD 19
Kinds of Merchandise Sold by Members of the
Trade 19
Sources of Merchandise Sold 19
CHAPTER IV - SALES AND DISTRIBUTION. 20
Net Sales by States 20
Volume of Sales 20
Evidence of Interstate Character of Retail
Trade 21
Retail Sales in Selected Interstate Trading
Areas 21
Interstate Character of Mail-Order Trade 22
Interstate Character of Department Store
and Other Types of Retail Trade 23
Interstate Shipment of Stocks to Retailers 24
Nature of Advertising Media Used, 24
Interstate Character of Newspaper Advertising 25
CHAPTER V - TRADE PRACTICES 25
Unfair Trade Pra^ctices Prevalent Prior to
the Code 26
Trade Practices T/hich Became Detrimental
Because of Abusive Use 26
8489 -i-
CONTENTS (Cont'd^
Pace
Unfair Trade Practices Prevalent Under the
Code 26
Effect of Unfair Trade Practices on Retail
Trade and Sources of Supply 26
CHAPTER VI - GENERAL INEO.RivlATION 29
Retailing as a Part of the Distributive
Process 29
Trade Association Activity 29
National Retail Furniture Association 30
National Retail Hardware Association 30
Tlie Mpil-Order Association of America 30
Tlie National Association of Retail
Clothiers and Furnishers 30
The National Retail Dry Croods Association 31
The National Shoe Retailers Association 31
National Council of Shoe Retailers 31
The Limited Price Variety Stores
Association 32
Competitive Trade Associations 32
The Extent of Union Activity 32
Labor Conditions Within Various Trade Groups 33
In General 33
In Department Stores 33
Company Unions 33
Mutual Aid Associations 33
Old Age Pensions 34
Group Insurance 34
Financial Condition of Retail Trade 34
Effect of the Code on the Retail Trade 37
Prices and Stocks 37
Wage s 37
Hours 37
Operating:; Costs 38
Proportion of Trade-Marked Merchandise 38
Limited Price '"'ariety Stores 38
National Council of Shoe Retailers 38
National Retail Dry Goods Association 38
Effect of Imports of Foreign Merchandise... 39
In Goneral 39
Department Stores 39
Variety Stores 39
Shoe Stores 39
List of Q,ualified Uitnesses 39
8489
-11-
TABLES
Page
TABLE I - ITura'ber of Stores in the Trade as
Defined by the Code, by Principal
States ^
TABLE II - IvT-omber of Proprietors in Trades Covered
by the Code, by Principal. States 4
TABLE III - Niunber of Failures and Amount of
Liability Involved 5
TABLE IV - Total Sales in Trades Covered by the
Code, by Zinds of Business 8
TABLE V - Principal Commodities Sold by Variety
Stores, 1934 9
TABLE VI - Indexes of Employment, by Ilonths, 1933 11
TABLE VII - Avorr^.ge Hourly Wage Rate, Average TTeekly
Earnings, and Average Hours Per Week
in the General Merchandise Group 13
TABLE VIII - Average Number of Pull-Time Employees
in the Tra.de as Defined by the Code,
by Principal States 14
TABLE IX - Average Number of Full and Part-time
Employees Combined, and of Part-Time
Employees in Trades Covered by the
Code, by Principal States 15
TABLE X - Per Cent Change in Total Number of
Employees, in Pall and in Part-Time
Employees, in Trades Covered by the
Code, by Principal States, 1929-1933 15
TABLE XI - Total Annual Payrolls in Trades Covered
by the Code, by Principal States 18
TABLE XII - Net Sales in the Trade as Defined by
the Code, by Principal States 20
TABLE XIII - Net Sales of Selected Stores in Cities
and ToTTns Having an Interstate Trading
Area 22
TABLE XIV - Per Cent of Publicity Cost per Dollar
of Sales 25
TABLE XV - T^^Tiical Operating Results of Department
Stores 35
8489 -iii-
TABLES (Cont'd)
Page
TABLE XVI - Net Profit or Loss in Retail Stores,
Classified by Size of Annunl Salos,
1929-1933. . /. 35
TABLE XVII - Operating Results of Hardivare Stores,
' 1930-1933 37
CHART I - RETAIL TRADE 5
-oCo-
84-89 -iv-
- 1 -
EETAIL THADE
Porev;ord
Basic Retail Code Nizmber 60 "by definition excludes those retail stores
dealinj; in automobiles, food, dairy products, lumber, and tobacco, as v/ell
as trades governed by a separate code. Allowing for these deductions approxi-
mately one-third of all retail stores as listed by the Census of Retail Dis-
tribution fell witMn the scope of the Code. An executive order exempting
stores in all places having a population of 2,500 or less from jurisdiction
of the Code further limits its scope.
Tlie Census data used in this report cover all the Idnds of retail
business not exp^ressly excluded from the Code by its definition and not
covered by another code. The groups included are as follows: general stores;
general merchandise group; apparel group, except custom tailors; furniture
and household group; and "other retail stores" excepting farm implement
stores, cigar stores and stands, coal and wood yards, jewelry stores,
opticiriis and optometrists, and nonuinent and tombstone works.
Since the Census of Distribution contains a less detailed break-dov.-n
in 1935 than in 1929, Census data for two minor groups, opticians and
monument works, are not available for 1933. Estimates covering these groups,
which were made by the Retail Census, have been used, however, in order to
subtract the data for these groups from the published totals. These estL.iates
are as follows: number of establisliments, no change; employment and payroll,
the sai'-ie percentage decline as in retail trs-de; sales oy opticians, 45 per
cent decline; sales by iionument works, 65 per cent decline.
Deductions to allow for the exemption, by Executive Order, of stores in
places with population of less than 2,500 imve been based on Census data for
that group. Retail stores in these small places constitute approximately
one-third of the total number of stores, account for about one-fifth of a.11
retsdl sales, and employ one-eighth of all full-time employees engaged in
the Retail Trade. It has been assTomed that the per cent of retail stores
subject to the Code was the sai.ie in small places as in all places. A stuoy
of the groups excluded and inclixded shows this to be a reasonable assumption.
Inasmuch as classifications by size of city are not available for part-
time emloyces and part-time payrolls, nor in sufficient detail h^r kind of
business, a few te.bles have been included in this report in which no deduc-
tions he.ve been made for small places exempt from the Code. Wherever this is
the ca,se, it has been so noted on the tables.
8489
Ci-LAPTEE I
MTURE OF THE RETAIL TRADE
Iliuaber of Retail Stores
According to the Census of Aaerican Business, there were, in 1933,
1,526,119 stores in the Retail Trade. Of this nuraber only 297,100 eventually
■becnrnc stibject to the Code. The reiiiainder were either excluded by definition
or else v/ere excluded under an E:>:ecutive Order of the President which exeiapted
stores in towns having a popule.tion of less than 2,500 from code provisions.
d'le Census of Retail Distribution for 1929 indicates that there were in
that --ear approxiuately 359,000 stores in the Trade as later defined by the
Retail Code, as compared with the total of 297,100 reported in the Census of
American Business in 1933. (See Table l).
Fanber of Proprietors
Tlie nuuber of individual proprietors in the Trade as later defined by
the Code niuabered 289,100 in the year 1933, (See Table II). This represented
a IS per cent decline from the 1939 total of 343,000.
Huaber of Stores by States
Table I indica.tes that of the more tiaaii 297,000 stores in the Trade as
defined by the Code 61.2 per cent of the total were located in the 10 states
specified in 1933. Of these New York contained the lar^jest niimber, nesaelv-
43,500 stores, or 14.7 per cent of the total in the Trade, and Pennsylvania
follov/ed with 22,900 stores, or 7.7 per cent of the total number. The con-
centration of retail stores closely follows that of population, and each
sta,t8 has appro ::imately its proportionate share of retail oiitlets.
TABLE I
Iroxiber of Stores in the Trade as Defined by the Code,
by Principal States a/
19 29
-.
1933
State
ITurnb er
Per Cent
i\-u-nber
Per Cent
U. S. Total
369,000
100.0
297,100
100.0
Cali f 0 rni a
21,800
5.9
19,500
6.6
I llinois
25,900
7.3
21,200
7.1
Massachusetts
15,900
4.3
12,800
4.3
Michijaai
13,900
3.8
11,400
3.8
Mi s souTi
11,000
3.0
9,300
3.1
New Jersey
14, 900
4.0
13,200
4.5
Hew "fork
58,500
15.8
43,500
14.7
Ohio
20,200
5.5
17,000
5.7
Penns Ivenia
33,400
9.0
22,900
7.7
Texas
13,100
3.5
10,900
3.7
Total, 10 States
229,400
52.2
181,900
61.2
Other states
139,500
37.8
115,200
38.8
8489 (Continii.ed on following; pace)
- 3 -
TABLE I (Cont'd)
Source: Uvdted States Census of Pistrilpiition. Hetall 'Trade, 1950,
Taole I ; and Censiis of A-n.erican ^isiness. United States
giu.a.-.ary of Hetail Census, 1952, Table 3, s-id State Heoorts,
Table E.
a/ Data for place;3 with, po^^ula-tion of less than 2,500 and for
trades e.:cluc1ed from the Code were estimated "by NRA Research
and Planning Division aiid subtracted from the Census totals to
Cive code coverage.
JMuiiber C"'" Proprietors b" States
The distribution of proprietors in the 10 principal states in 1929 vias
appro::imatel7 the same, in proportion to the total number, as the distribution
of retaal stores (See Table II), Although data by states, on the number of
proprietors in the Trade as defined by the Code — which involves the ex-
cliision of those in places having a population of less thaii 2,500 — are not
available for 1933, any change in the relative importance of these 10
principal states betv/een 1929 and 1953 nay be inferred from the left-hand
side of Table II. These figures, representing all the proprietors in the
trades later covered by the Retail Code, ind.icate very little shift in the
relative im-oortance of these states during this neriod.
8489
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gU89
- 5
Humbei- of Failures and Lialjilities Involved
The National Betail Code Authoiuty has compiled failxxres data y/hich
cover most of the trades included imder the Code, These indicate that
failures declined in nui:iber from 4,882 in 1933, to 2,278 in 1934, and in the
amount of liabilities involved from $75,118,000 in 1935, to $27,148,000
in 1954* These reductions v;ere equivalent to 53.3 per cent in the number
of failures and 55.9 per cent in the amount of liabilities. (See Table III).
TABLE III
Number of Failures and Amount of Liability Involved-S^'
Year
Number of
Fai lures
Amount of Liability
Involved (OOO's)
1930
1931
1933
1934
7,793^
8,597^
4,882
2, 278
119,186^/
151,360^
75,118
27,148
Source: National Retail Code Authority, Inc., "Reply to Questionnaire
of Litigation Division - iIRA, on Code for Retail Trade,"
April 1, 1955.
a/ Includes failures of General Stores, Clothing and Furnishings,
Dry Goods and Department Stores, Leather and Shoes, Furniture
and Crockery, Hardware, Stoves and Tools, Paints, Kats, Gloves
aiid Furs.
b/ IVliolesale and retail combined in 1930 and 1931, but, according
to the Code Authority, by far the greater proportion was retail.
The foregoing figures differ from those published under the Traders'
Group in Dun and Bradstreet Monthly Review in that the latter figures,
although they are predominantly for retail stores, include wholesale
establisliments as well. From the Dun and Bradstreet classification the
clothing, furniture, books and paper, and miscellaneous groups have been
combined and presented by months, 1929 to date in Chart I, Analysis of
these figures indicates that ih the 5eai"1932 failures in the Retail Trade
reached their peak both in nuraber and total liabilities involved, and were
successively lower in 1933 and 1934. In the latter year, retail failures
were lower, both as to number and total liabilities involved, than in any
of severril years preceding the depression.
Total Net Sales
Net sales of stores in the Trade as defined by the Retail Code were
$8,664,000,000 in 1933, as coi:pared with $17,946,000,000 in 1929. (See
Table XII, ) Tlie Census defines sales as the total receipts of retail stores,
consisting of cash or its equivalent accepted in exchange for merchandise,
repairs or other service, space or concession lea.se, and the like. Refunds
or allo\7aiices on returned merchandise are deducted.
8489
Ch--)rt T
RETAIL TRADE
-e-
3
AyCHASC HOURLY WACC IN CENTS
-I 1
MIRAGE HOURS WORKED PER WEEK
AVERAGE WEEKLY WAGE IN
so.
200
INDEX OF VARIETY STORE SALES
INDEX
WH(bLesALe PftldES
(/)(<)I00
UJ (71 Oi
U —
Eio 80
INDEX OF RETAIL PRICES,
FIRST or MONTH '
^ 8
120 7
100 loN
90 :C*
70 PW
192* r»30' 1931 lfla< 193? 1934 (935
Sources of Data: Rireani of Labor Statistics - Labor data, HB& estimate of average weekly
wages froQ indexes of eaployment and payroXlj index of wholesale prices, NBA. oonposlte
of boot and shoe, textiles, and hotttsefumishings grofup, Jederal Jtoeerva Bulletin -
Index of department store sales and stocks. Bareaa of Foreign and Domestic Oommeroe -
Indox of variety store sales; index of rural salos of general aerohandiae. Ifeirohild
Publications - Index of retail prices. Chart prepared by Hesearch and Planning Division.
nail.
- 7 -
Total Sales by Kind of 3usiness
Including sales made by stores in tovras of less than 2,500 population,
net sales by the hinds of business subject to the Code, amounted to
$10,529,000,000 in 1933, and $21,813,000,000 in 1929, as shown in Table IV.
Separate details by kind of business are not available for the smaller
places.
Of the total sales for 1933, 58 per cent consisted of sales of the
folloT/in;^- 8 kinds of stores: _l/
Department Stores (including Mail Order Sales)
Dry Goods Stores
Variety Stores
Apparel Stores (excluding Shoes and Custom
Tailoring)
Shoe Stores
Furniture Stores
Hardware Stores
Drug Stores
This group of stores numbered 206,567 or 46,3 per cent of the stores in the
kinds of business subject to the Code.
1/ It should be noted that in 1933 the kind-of-business classification
wcs based on the usual designation of the store or the principal line
of goods handled in the absence of information on sales by comjaodities
which were utilized in classifying reports for 1929. For this reason
a store may have been differently classified by the Census in 1933-
even though the nature of its business was the same as in T-oes".
8489
TJLBLE IV
Total Sales in Trades Covered "by the Code,
by Kinds of B-asiness a/
—
- ■
Value
of
Sales
Number c
f Stores
(In mill
-ions)
Kind of 3u.Einess
1929
1933
19 29
1933
Total
541,457
444, 579
$
21,813
$
10,529
Departi-ient Stores
(including Hail Order)
4,321
3,544
4,350
2,545
Dry Goods
25,450
12,746
663
150
Variety Stores
12,110
12,046
904
678
Apparel (E;:cluding
Shoes and Custom
Tailorini^-)
78,753
60,726
3,269
1,445
Shoe Stores
24, 259
18,835
601
425
Furn it-are
25,155
17,418
1,510
554
Hardware
25,330
22,844
705
311
Drugs
58,258
58,407
1,690
1,055
Total 3 groups
253,534
206,567
13,899
7,174
Otiier
237,925
238,012
7,914
3,355
Source: U. S. Census of
Ret.
ail Distri
but ion, 1930
: U. S.
Sor.'L.iary,
Table lA;
and Census of Ar.ierican irasiness
: U. S.
Sum.iary
of Retail
Trade ,
19:
53, Tables
1 and 3.
a/ ri^ires include stores in places of 2,500 or les£
population which are eicempt from the Code.
m
Inde::es of department store sa,les, of variety store sales, and of
rural scJes of f;eneral merclicuidise show the monthly movements of sales of
a fev/ of the more important kinds of business which are included under
this Code. A comparison of these may be seen in diart ITumber I.
Principal ConEodities Sold
Tlie relative importance of the principal commodities sold is available
for one of the more important groups under the Code, namely, variety stores.
These data, which are presented in Table V, show that apparel, notions,
and home furnishings account for more than a third of the total sales in
these stores.
8489
- 9 -
TABLE V
Principal Com]?.odities Sold "by Variet:' Stores, 1934
(in Order of Sales Importance)
Per Cent
of Total
Commodity Variety Sales
Total 100.0
AjDparel and Accessories 13.4
Notions and Snie-ll ITares 10.1
Home Furnishings (principally China, G-lassv/are,
and Crockcr^O 10.0
Confectionery and Huts '''•9
Drugs and Toiletries 7.8
Hardware V.V
Stationery, Books (princi j-.lly Paper and Fa-ncy
Paper Goods) * 5.4
Dry Goods 5.4
Toys and Gaiaes 5.4
Soda Fountain Sales and Lmiches 3.9
Clothing- and Fumishin^ss (Men's and Boys') 3.8
Jewelry (principally Costume) 3.0
Electrical Supplies and Materials 2.3
Miscella:ieous 12.4
Source: Presenting the Limited Price Variety Stores Association. Inc.,
pace 1.
Competitive Trends Within ?.etail Trade as a. Tnole
Possihly as a result of the depression, there has heen a notal)le
tendency for retail stores to widen their lines of merchandise and go
outside of their regular fields of tra,de. For e::ai.:ple in the drug field
there ha.ve sprung up the so-called "pine-hoard" shops which specialize
only in the fast selling a-iid more profitable lines of merchandise such as
cosmetics and toothpaste, while items comi.i.only found in hardv;are stores,
dry goods stores, and jewelry shops can he purchased in drug stores.
A-iother trend aas heen the development of direct selling hy manufac-
turers aaid mail order houses. A fui-ther development in recent years has
"been the establishment hy nail order houses of retail outlets throughout
the United States. These stores are, of course, in direct competition
with those owned by chain and independent coi-raetitors.
pLecent changes in the relative importance of chain stores are
indicated in the report on "Changes in ITnolesaling and Retailing "between
1929 faid 1933," issued by the Research and Planning Division of the
national Recovery Administration and based on Census figures. Chain
8489
- 10 -
stores wliich ntuiitcr 9.5 per cent of the total outlets in 1933, find 9.6 per
cent in 1929, sold 25,3 per cent of the value of all merchandise retailed
in 1933, as a;:;ainst onl^ 20 per cent in 1929. l/ Althoiogh the nuj-iber of
such outlets was sli,;htl7 smaller, reL-^.tive to the total, than in 1929,
sales shov;ed an increase rclativo to total sales. Independents, on the
other hand, showed a decrease lioth as to their per cent of total sales raid
of total outlets. Their sales decreased from 77.5 per cent of total in
1929 to 71,2 per cent in 1933, aiid the nuriber of outlets declined fron
89.1 per cent of the total to 83.4 per cent.
1/ "Changes in YJholesaling and Retailin^^ between 1929 and 1933,"
(Llarch, 1935) Tables 10 and 11.
8489 #
-11-
CHAPTER II
LABOR STATISTICS
ITunljer of IPall-Tine Er.Tolo?/ees
Analysis of Census data for tlie years 1929 a^id 1933 shows that enploy-
ment of full-time employees in the Trade as defined "by the Code declined
fron 1,6UU,10G in 1329, to 1,06S,750 in 1933, ?- decrease of 35.2 per cent.
(See Table VIII.) The eniploynent data incliide all persons \7hether on a
salary or v;age "basis.
Seasonal Variation in Drployment
Enploynent in the trade groups subject to the Ba.sic Retail Code is
higlily seasonal. Inde:: nur.foers of employnent for each month of 1933 i^^'-'^e
"been calculated separately for full-time, part-tirae, and tot?JL employment
and are presented in Table VI. For each group, the average for the year
was used ?,s the "base (monthly average = 100).
In each of these series the lorr point of employment occurred in the
early months ' of the year and \7as followed "by a graduaJ rise to the spring
pealc which occurred in April. The slightly lower employment of the ne::t
four months was followed "by a sharp rise which started in Septem"ber and
culminated v;ith a decided peal: in Decem'ber. It Tiei^ he presumed that this
seasonal variation \7as characteristic of years other than 1933 i "ith pos-
si'ble changes in the location of the spring pe£>2: according to the month
in which Easter occurred.
TABLE VI
Inde--es of Em.ployment, "by Ilonths, 1933
(Monthly Average - lOO)
Month
Total
Eull-Time
Part-Time
Average
100.0
100.0
100.0
January
90.2
07 7
79.6
Pe"braar3'
S9.7
92.1
SI. 3
March
90. U
92.0
SU.S
April
9S.S
97.0
105.0
May
96. s
96.6
97.5
June
9S.2
97.7
99.9
July
96.0
96.5
9U.6
August
97.6
9S.6
9U.3
Septem"ber
loU.U
105.2
101. s
Octo"ber
107.7
107.5
10s. u
Eoven"ber
10s. 9
lOS.O
111.3
Decem'ber
121.2
115.5
lUl.O
Source:
Construct!
3d "by lOlA. Research raid
Planning Division from
da.t
cf
a in Cj
Retail
3nsus of Arier:
Distri'bution
Lean Business,
United States Sur.ii.iar?,'-
, 19r^, T£
ihles
h and Ua
iUS9
-12-
Pp,rt-ti:-.ie euploynent vras lo'.rest during Jantiar^-, in \rhicii nonth enploj''-
nent v-p.c fy.S per cent of the yearly averace. ZXirinf; the month of Decerfoer
part-tivie er.ploy^ient 'jas "-i-l per cent higher thrjn the average for the yea.r,
Fall-tine enploynent \7as lor/est in I.Iarch rath an inde;: nanher of 92.1,
a,nd highest in Decejiber, for • hich i:onth the inde:: nunher 'jas 115.5j ^s
coupared vrith 100 for the year.
Total euploynent, iierjilng "both full aiid part-tiiie, v/as lov/est in Jeh-
ruar;', rhen it stood at S9.7j p^^^'- highest in Deceiioer, vrhen it ^jas 21.2 per
cent ahove the year's avera.ge.
Total Aiinual Payrolls of Fall and Part-Tine Hi-oloyees
Total payroll figares ac used in this report represent the salaries,
v;ages, co:v.-issions, and "bonuses padd part-tine and full-tine employees cjid
sa2a.ried officers during the yea,r. They do not include conpensation of
proprietors e::copt for fi::ed salar;'' of active partners if such salary is
paid supplenentary to the pa,rtner* s participation in profits. Such se-laried
partners are considered hy the Census to "be conparahle ;7ith salaried e::eai-
tives of a corporation and axe counted as en.ployees rr.ther tha.n proprietors.!/
After decuction of groups si-ibject to separate codes aiid also of stores
in towns rith population of less than 2,500, which were e::enpted hy Presi-
dential Order, total annual payrolls of fall-tine and part-tine employees
for the groxips later subject to the Code amounted in 1329 to $2,222,000,000,
as against $1,19S,000,000 in 1933. The decline as het'jeen the t'jo Census
Shears rxiounted to U7.5 per cent. (See Table XI.)
Monthly Inde::es of Eir,olo:/Tient ajid Pa'/rolls
Por inde::es of enploynent raid payrolls by :ionths, 1929 to date, in
the general merchandise group, see Chart IToi-.ber I. This group includes de-
partment, variety, and general nerckandise stores and nail-order houses.
The enplojrnent and paj'-rolls series sho'.in on this Chart are less inclusive
than the Code coverage, but are more nearly'' coyiparable vdth Code coverage
than are the only other avails-ble inde::es, nanely, the Bureau of La.bor
Statistics series for the entire Retail Trade. Carrent data are based on
appro::inately a 50 per cent saLiple.
Avera.^e Hourly learning s_
Accorc'lng to figures obtained from the U. S. 3u.reau of Labor Statis-
tics, and bs,sed on a sai^ple of the General herclor.ndise Group in the Retail
Trade, average hourly earnings in tha.t group increased from U2.7 cents in
1933 to H7.5 cents in I93U. (See Table VII.) Average hourly earnings by
months, 1933 to date, e.re sho".7n in Chart !?a:;.ber I.
1/ Census of American Business, 1933 > Retail Distribution,
Vol. I, page 69.
gl+29
-13-
TABLE VII
Average Hourl;^'' Waf-^e Hate, Average 'iTeel:!" Earnings, and.
AvcraQe Hours Per T'eek in the C-ener?2 I.Icrc>.r.ndise Group
Averaf^e Ho\irl3' Average T/eehly Average Hours
Year Tfoge Kate Earnings Per Weel:
$ 19.07 a/
15.07 aj
15.50 33.0
Source: Conputed Ijy IIEA, Research oiid Planning Ditsion,
froa unpublished Bureaii of Lalior Statistics data.
1329
^
1931
a/
1933
$ .U27
1S3^
.U75
a/' ilot a-vailahle.
Averri.f^-e TJee]:ly Hours per Erroloyee
According; to a sai.iple oS the Genera,! Merchandise Group of the Reta-il
Trade ohtained froia the Bureau of Later Sta.ti sties, the average hours per
en-oloyee "oer v/eeh declined frora Ul.l in 1933, to 3.:;.0 in 193^- (See Tahle
Yli . )
G-iart lluii'ber I shovs average hours -jorhed per ueek during each month,
1933 to date.
Average TJechly Wages vev Enployee
Estimated average v;eekly \7ages per enployee in the General Merchandise
Group in I929, aiiounted to $19.07 per week. In I93I the corresponding fig-
ure vas $1S.07, and in 1933, $l'+'7'7 per neek. As the resu.lt of operation
of the ninirmn wage provisions in the Setail Code wages per week averaged
somewhat higher, nanely, $15.50 per e/nployee in I93U. (See Tahle VII.)
The foregoing figures are estiuates ootained hj' dividing the esti-
nated payi-oll for the group hy the estimated enploynent. Estimated employ-
ment and payroll figures are ootained hy niultiplying the inderces of e'lploy-
ment and pr.3''rolls "by their respective Census "base figure.
Por average weekly wages in dollars, 1S:29 to date, see Chart Numher I.
Uiinher of SiToloyees. hy States
E:--roloj~ient in the Retail Trade closely follows the number of estah-
lisliraents. Table VIII shows that in 1933 6^-7 per cent of all of the
full-tine employees combined were found in the identical 10 sta^tes, wliich
were shown in Table I to contain bl.2 per cent of all establishments.
New York employed lU.g per cent of the totaJ under this Code, and Pennsyl-
vania employed 9.1 per cent.
2US9
-14-
TABLE VIII
Avei-ajTie ITuralier of Full-Tine Er.iployecs in the Trade
as Defined "by tlie Code, by Frincioal States a/
State
1S29
llunber Per Cent
1333
Jll.lJil'l
3er Per Cent
066,
,750
100.0
71,
,900
6.7
ss,
,300
2.3
56.
,500
5.3
UO,
,200
3.S
37,
,100
3.5
33,
,500
3.2
15S,
,Uoo
lU.S
67,
,Uoo
6.3
96,
oOO
9.1
ho.
000
3.7
6S9,
900
Gk.i
376, S50
35.3
U. S. Total 1,SUU,100 100.0
California
Illinois
Ma s s achu s e 1 1 s
Michigan
Missouri
Hev; Jersey
lle-.T York
Ohio
Pennsylvania
Te::as
Total,
10 states
Other states
109,700
1140,500
34,700
67,200
55,500
U9,S00
2^12,100
102,200
151,900
61,900
1,066,100
57:;, 000
6.7
S.5
5.2
k.l
3.4
^.0
1U.7
6.2
9.2
3.3
6U.G
35.2
So"arce: United Stater. Censiis of Distrioution, 1030, Tahle 1;
and Census of jxierica:: Basi-iess, United Sta.tes Sannary of
Retail Distribution, 1933. Taole 3» and State Heports, Table D.
a/ Data for places with popula,tio;i of less tlian 2,500 and for
trades excluded fron the Code v.'ere estimated by NEA, Rese?.rch
and Planning Division, and subtracted fron the Census totals
to give code coverage.
The fiiiount of part-tine enploynent in to'./ns having a population of less than
2,500 is not published by the Census. The conparison in Table IX between
full and part-tine enployees, conbined, sjid part-tine enployees is therefore
necessarily based on da.ta -jhich include stores in snail places. Reference
to this table shov.'s that in 1929, 6I.I per cent, and in 1933, 6O.5 per cent
of all full and part-tine enployees conbined \7ere located in the 10 princi-
pa.l states.
sUsg
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Pro:i 1S2S; to 1933 the clir.nf-jes in the total ntu.i'ber of full aiad part tine
eriployees conoinec. and of full-time einploj-eeG rere apiDroxinately the same
for these 10 states as for tJie country as a vfhole. (See Tahle X.) During
thds period the nuiiiber in the former group decreased about 30 per cent, in
the latter, about 35 pei' cent, both for these 10 states as a group and for
the entire countrj'. On the other hand an increase of appro::imately 1 per
cent in the number of part-tine employees v.'ac found in the group of 10 states,
\7hile for the country a,s a uhole, part-time employment increa.sed appro::ima,tely
2 per cent.
The shift from full-tine employment to part-time v/as considerable.
Prom Ciata presented in Table IX it ha,s been computed that in I929 part-time
employment in this group of businesses aiMunted to 15.S per ceiit of the total
employment but in 1933 it had increased to 22.5 P^'^" cent.
TABLE X
Per Cent Change in Total ITiimber of r;m]plo3'eea, in Pull
pjid in Part'-Time Employees, in Trades Covered by
the Code, by Principal States, 1929~1933 a/
Total Pull
and Part-Time
Ei;plo3'-ees
Pall-Time
Part-Time
State
Com-bined
Eriployees
Employees
U. S. Total
-23.3
-35.1
+ i-S
California
-26.1
-3^N5
-1-36. "S
Illinois
-3S.7
-37.1
- 1.5
Massachusetts
-2S.6
-33. U
- 2.5
Michigan
-33. s
-U0.6
+ 7.1
Mi s sourl
-26. s
-33.2
4-10.6
Nev,' Jersey
-2S.9
-32.7
- 9.3
lTe\7 York
-31.0
-3U.6
- 5.2
Ohio
-27. s
-3U.1
^ H.7
Pennsylvania
-31.5
-36. U
- 5.3
Te::as
-30. 3
-35.U
-10.2
Total, 10 states
-30.0
-35.3
-(. 0.9
Total, 33 other
states
-2o.2
-3^^.7
■h 3-2
Source: Derived from Table IX.
a/ Pigures include stores in places havin/^
2, '^00 nhich i.7cre ercerrpt from the Code.
a "ooT)ulation of less than
TotaJ. Arj-ua-l Payrolls, by States
According to Census data, the total annual payrolls paid to all
employees in the Trade as defined ^oy the Code (e::cluding places having a
population of less than 2,500) v/as $2,282,000,000 in I929, and $1,192,000,000
in 1933.
sUsg
-17-
As already'' noted aoove, the decrease in total pa3'rolls aonoanted to U7.5
per cent. It has likev;ise been noted that the vast hulk of employment oc-
curred in 10 states, and total ann:J.^.l '.rages lollov: the sa:ie course. In
1329, 67.6 per cent of \7ages paid in the Retail Trade and in 1933> 66. S per
cent of such v;ages were paid to enployees vdthin the sane 10 states (See
Tahle XI) .
Ne'.T York accounted for hy far the largest i^roportion of v/ages paid
to retail enployees, and in 1933 this amounted to a,ppro::inately I7 per cent
of the total. Pennsylva,nia followed with 0.5 per cent, Illinois with 2.2
per cent, and California v;ith 1,6 per cent of the total of retail payrolls.
A conparison of the relative importance of state payrolls with that
of enploynent can he made only on data including stores in small places,
since figures on part-time enploynent are not availahle, hy states, for
places with population of less tha.n 2,500. Fror. Te.Dle IX and the left-hand
side of Ta^hle XI it is apparent that the 10 principal states accounted for
a larger proportion of total amiual payroll thpji of the total numher of
employees.
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-19-
CHAPTER III
KiraS Al^ SOURCES OF l.nSHCHAliDISS SOLD
K i nas of ;: erchaiidise Sold 1)7 1.1611136 rs of the Trade
The -orincipal ]:inds of merchandise sold by meinters of the P.etedl Trade
as defined hy the Code are:
Ta.rn i ture Sho e s
Hardvfare ilusical Instruiaents
Clothing Drags
Dry Goods Cosmetics
notions Variety Store Merchandise
Sources of merchandise Sold
The sources of ijroauction of goods sold "by the Retail Trade vary ac-
cording to the type of merchtindise under considerationo Some types of mej>-
chandise are produced in practically ever:/ state in the United States and a
considerable portion is laiovm to be imported from Europe, Japan, the
Philippines, and Puerto Rico.
A fe-j -.liscellaneous examples illustrate this variation, as well e.s the
wide range in the sources of retailers' merchandise. Cotton textiles are
made in Hev? England and in the Southern States. HandJcerchief s are made both
in the United States and in Puerto Eico, but they are also imported from the
Philippines and Japan, Shoes are produced chiefly in Massachusetts, Ecj York
and Pennsylvania.
In the last fev/ years the importation of cheap Japanese goods, v.hich
compete on the sam.e counter with those of do!.iestic origin, has increased.
The glass factories of Czechoslovakia are in direct competition with those
operated 'o-j domestic m;uiufacturers, and the products of each are to be found
within the same retail stores. In the dinnerv/are departments of department
stores, the products of Great Britain, Prance, and Japan, compete directl;'-
with those of domestic producers.
It CDZi be stated in general that the sources of material sold by members
of the Retail Trade cover an immense geographical range. An analysis of such
sources would involve a detailed brea!:-down of figures contained in the Census
of HanrJractu.res as well as those on imports reported by the Bureau of Foreign
and Domestic Commerce,
8489
-20-
CHAPTES IV
S.A1ES Ai:ID DISTRISUTION
Het Sales by States
In Doth 1929 and 1933 approximately t\70-thirds of the value of the net
s:iles in the Trade as defined uy the Retail Code were made in 10 states.
These states \7ere Calif oi-nia, Illinois, Massachusetts, Michigan, Missouri,
New Jersey, New York, Ohio, Pennsylvania, and Texas. In 1953 Ne\7 York ac-
coxmted for over 16 per cent of the total; and Pennsylvania, ?/hich \7as the
second most ira-oortant state, accounted for over 8 per cent of the total,
Illinois and California sold 7.9 and 7,4 per cent of the total, respectively.
Sales in the 10 foregoing states amounted to $11,736,000,000, or 65.4 per cent
of all sales in 1929, and $5,576,000,000, or 64.3 per cent in 1933. Net sales
in the groujj of 10 states decreased 52.5 per cent as oetween the ti70 Census
years,
TABLE XII
Net Sales in the Trade as Defined "by the
Code, "by Principal States^:/
State
U. S. Total
1929
AxAOunjb.
Per
(in millions)
Cent
$17,946
100.0
1933
Amount
(in millions'
$8,664
Per Cent
100.0
California
Illinois
Massachusetts
Michigan
Missouri
New Jersey
Neirr York
Ohio
Pennsylvania
Texas
Total, 10
states
Other states
1,210
6.8
1,531
8.5
830
4.6
774
4.5
569
3.2
595
3.3
2,957
IS. 5
1,056
5.9
1,543
8.6
670
3.7
.1,756
65.4
6,210
34.5
640
7.4
682
7.9
437
5,0
309
3,6
278
3,2
305
3.5
1,400
16.1
511
5.9
707
8.2
307
3.5
5,576
64.3
3,088
35.7
Sources;
a/
United States Census of Distribution. Retail Trade, 1950, Tahle 1;
Census of Araerican Business. United States S-ommary of Retail Distri-
"oution, 1955, Table 5, and States Reports, Table D.
Data for places vdth population of less than 2,500 and for trades ex-
cluded from the Code were estimated by NSA, Research and Planning
Division c^nd subtracted from Census totals to give code coverage.
Voluiae of Sales
Owing to the miscellaneous character of merchandise sold in the Retail
Trade, no information is available as to the total of each of the individual
8489
-31-
unitG of lueas-urement (yards, poujfids, mm^er, etc.) sold in each state or in
the United States as a vrhole. The data are limited entirely to dollar volime
of sales
Evidence of Interstate Character of Retail Trade
The National Retail Code Authority in a doc-ument entitled "Reply to
Questionnaire of Litigation Division - m>A, on Code for Retail Trade," dated
Aijril 1, 19S5, stated:
"As to the question of selling' in interstate commerce hy re-
tailers, it is possible to establish the natiire and the e::tend of
such selling by an examination of three factors:
1. The aaount of retail business done oy retailers located
in cities and tov.Tis whose trade obviously includes neigh-
boring cities and towns across state borders;
2. Amount of business done bj' retail concerns clearly en-
gaged in interstate commerce such as chain stores and
mail order houses;
3. Amount of advertising done by retailers in newspaoers
whose circulation to buying public transcends state lines."
The first two points and others in evidence of interstate commerce are
discussed just below. The third point is discussed later in connection with
advertising media.
Retail Sales in Selected ^Interstate Trading Areas. -
In connection with point n^uraber 1, the Code Authority included in the
above-;;ientionod re;oort a tabulation entitled "Net Sales of Stores Operating
Under Retail Code in Cities and To'.tls located on State Boundaries or Otherwise
having Interstate Trading Are-."
This table has been reproduced as Table XIII of this report. It indicates
that sales in su.ch cities for the stores selected amo^mted to $2,047,096,000
as against a total for the United States of $7,821,741,000, This suggests that
at least one-quarter of the total b-asiness of the Retail Trade is handled by
establishinents located in cities and towns either on state boundaries or with-
in inter sts.te trading areas. The amount of such sales actually made in in-
terstate commerce is not sho'-/n.
8489
-22-
TABLE XIII
Net Sales of Selected Stores in Cities and Towns
Having an Interstate Trading Area
(in thousands)
City or Torn
Net Sales
New Yorlc City
Philadel;ohia, Pa.
Chicago, 111.
St. Louis, Mo.
Pittsburgh, Pa.
Cincinnati, Ohio
Memphis, Tenn.
Omaha, Nebraska
Louisville, Ky.
Portland, Oregon
Toledo, Ohio
Chattanooga, Tenn
Duluth, Minn.
lioline, 111. )
Rook Island, 111. )
Davenport, la. )
Bristol, Va. )
Bristol, Tenn.)
Dubuque , Io'.7a
Texarkana, Texas )
Te:car)'ana, Arkansas)
Augusts., Georgia
Total, above stores
Total for U. S.
$ 888,251
239 , 854
434,006
105,676
96 , 239
64,483
29,981
25,577
29,211
41,392
29,473
10,817
9,291
16 , 842
3,262
5,
,660
2,
440
14
, 641
$
2.
,047
,096
$
7,
,821
,741
Source: National P.etail Code Authority, Inc., "Reply to Questionaire of
Litigation Division - NRA, on Code for Retail Trade," (April 1,
1935).
Interstate Character of Mail-Order Trade. - The National Retail Code
Authority in the docanent already r ef erred to stated: "An indication of the
amoimt of sales made by firns clearly engaged in interstate coranerce is ob-
tained from the folloi/ing totals of sales by mail order houses ,and chain
stores during 1933; Mail-Order Houses, $228,600,000; Chain Stores $1,853,-
474,000."
8489
-23-
Details regardiiv the interstate character of the raail-order husiness,
which have been obtained from the 2 leading mail-order houses, are jresented
helou.
Montgomery Ward and Company operates ap-oroximately 489 retail stores
located in 45 of the 48 states of the Union, 9 nail-order stores, and 2 main
Avarehouses for shiptiing mail-order merchandise. Its mail-order business in-
volves sales to customers in every one of the 48 states. Total sales for the
business year ended Janue.rjr 31, 1334, both mail-order and retail, araoimted to
$243,805,721, Its merchandise is purchased from aT-;proximately 12,000 manii-
facturers who are scn,ttered thrcjghout most of the states of the Union,
Montgomery Ward and Company distributes e, mail-orf'er catalog-ue t-'ice a
year to between 5,500,000 and 6,500,000 customers. This mail-order catalogue
carries aporoximately 90,000 different items of merchandise. The company e^lso
distributes smaller special catalOc^es to as many as 7,000,000 to 10,000,000
custoi.iers,
InfoCTiiation received from the Vice President in charge of mercliandising
of Sears, Roebuck and Company, indicates that its retail stores are located in
fotir zones, namely. Eastern, Midwestern, Southeastern and Southwestern, GJid
that there is a large nximber of retail stores in various states reporting to
each of these zones. In addition, the Con;uany maintains districts located in
Chicago, New York, and on the pacific Coast, to each of which a large addition-
al group of stores reports. A further set of stores is located in and about
16 large cities throughout the country r'ithout regard to state lines; these
stores rewort to headquarters located in each of these cities.
Other information s\ipplied 'b^'' Sears, Roebuck and Company indics-ted that
they purchase manufactured tires in Akron, Ohio, Gadsden, Alabama, and Los
Angeles, California, and that the Company maintains the follov/ing mail-order
plants from which they ship tires:
Chicago, 111. Minneapolis, Minn.
Kansas City, Mo. Boston, Mass.
Seattle, Wash. Philadelphia, Pa.
Los ATxgeles, Cal, Atlanta, Ga.
Da.llas, Tex. Memphis, Tenn.
Ho direct information could be obtained as to the percentage of shipments
made by these ma.il-order houses to customers in each state.
Interstate Character of Department Store and Other TrvTes of aetai]. -Trade -
Information received by the writer from the United Pa.rcel Service shov'S that
its customers, located in Manhattan Borough, City of New York, shi^o roughly
15 to 19 per cent of their merchandise across state lines into New Jersey and
Connecticut*
It has been estimated by one authority-' that 25 to 30 per cent of New
York City de-partment store sales are shipped across state lines. That there
are extreme variations from this average is indicated in the case of one store
from which not more than one-half of one per cent of the merchandise is said
to be shi-rped out of New York State. ^/
1/ J« A. Kaylin, Associate Editor, Fairchild Publications.
2/ Statement by the Vice Pi-esident of a Brookl^nri department store,
8489
-24-
Intei-strte Shipment of Stocks to Retailers. - According to Dr. Paul H,
K^Astrom, President of tiie Limited Price Variety Store Association, Inc., chain
stores liave v/arehouses in large cities and ship across state lines. No figure
are available, as the individual members refuse to make this information publi
or to re iort it to the Limited Price Variety Store Association.
Information as to value and voltime of products sold by nholesalers in
each state to retailers in other states is not directly available. The Census
of \Tnolesale Distribution provides a great deal of information as to the state:
in v/hich wholesale sales are made but does not indicate the points to to 'rhich
the mercheaidise involved is shipped.
The Census of Wholesale Distrib\ition (1930) vol-ume II, page 10, contains
the follouing statement:
"....the operations of many wholesale establishments
cover T7ide territories, considerably beyond the boimd-
aries of tiie state in which they are located,"
It is evident, therefore, that a considerable portion of merchandise ]3ur-
chased b'- retailers ia shipped to them from beyond the confines of the states
in v/hich they are located.
In recognition of this situation the Research and Planning Division of
the Rational Recovery Administration in Februr.ry, 1935, prepared a Stp.dy of
Natural Areas of Trade in the United States, based upon the 37 major trade
areas corresponding to the 57 Federal Reserve Divisions, as adjusted to the
flow of trade. These major trading areas in no instance were found to coin-
cide with tiie boundaries of an individual state,
Natyg-e of Advertising iJedia Used
Advertising media used are the radio, fashion magazines — such as
Harriers 3azaar-the Mew Yorker, aaid also daily newspapers.
The annual survey of the Sales Promotion Division of the National Re-
tail Dry Gonds Association has indicated tliat the cost of publicity for
approxiraateljr 300 depart, ;ent stores ranges from 4,5 cents per sales dollar,
for stores with sales voluiie of less than one million dollars, up to 5,7
cents for stores selling over ten million dollars worth of merchandise.
As shown in Table XIV, 2.75 per cent of each sales dollar was ejcoended
in newspaper advertising- in the case of stores selling \mder one million
dollars annually. As the sa.les volxune increased this percentage increased,
also, to a uazdmuiu of 5.82 cents per dollar for the group having an annual
sales volume of more than $10,000,000 ajinually.
8489
-25-
TABLE XIV
Per Cent of Piitlicitjr Cost ver Dollar of Sales
Total Per Cent Per Cent Spent
Spent for for NerrsTja,per
Sise of Sales Vol-ume Publicity Publicity
Under $1,000,000 4.50 2.75
$1,000,000 to $2,000,000 4.65 2.90
$2,000,000 to $5,000,000 5.18 3.39
$,5,000,000 to $10,000,000 5.50 3.60
Over $10,000,000 5.70 3.82
Su^Trce; Annual Analysis of Sales Promotion Division of the National
::ietail Dry Goods Association.
An analysis of tne distriliiition of the 1934 retail publicity dollar in-
dicatac. that 66 cents of each dollar used for advertising purposes ','as e:cpendr-
ed for ne'vspaper publicity, 5 cents for miscellaneous media, 2 cents for radio
hroa,dcasting, and 2 cents for direct nail advertising. The hplance xras e:roend"
ed in -n-oduction cost, advertising payroll, display, and other items.
Distribution of the 1934 Retail
Publicity Dollar
Nensijaioers
66
Cents
Production
4
Cents
Miscellaneous media
5
Cents
Eadio broadcasting
2
Cents
Direct mail
2
Cents
Advertising ipajToll
8
Cents
Total display
10
Cents
All other
3
Cents
Source: Annual Anedysis of Sales
Promotion Division of the
National Retail Dry Goods
Association.
Interstate Clis-racter of Me-gspa-ner Advertising
The Rational Retail Code Authorityi/ has stated that:
"Advertising statistics for newspapers in 52 representative cities
indicate that in the year 1934, the total lineage of retail advertising
amounted to 700,000,000 lines out of a total of 1,179,000,000 lines for
all advertising. In 1933 retail lineage amounted to 597,000,000 lines
oiit of a total of 1,066,000,000 lines,
Uhile it is difficult to ascertain to v/hat extent this retail ac^ver-
tising is carried to customers across state lines, it is safe to say that
by far the major part of this advertising nas in newspapers which have an
interstate circulation and vmich serve to bring purchases from other states
to retail stores, either in the person of the customer himself or by mail
order. "
1/ "Reply to Questionnaire of Litigation Division-NRA, on the Code for Retail
Trade" (A-oril 1935).
8489
-26-
CHAPTER V
THADS PIIA.CTICES
Unfair Trade Practices Prevalent Prior to the Code
1/
Unfair trade practices prevalent in the Trade prior to the Code veve
misrepresentations of ^'^oods, false advertising, and the use of loss leaders.
These practices developed dTirin;^ the fight for sales which tecame Eiore and
more intense o,s the depression progressed. The imoortant consideration to
retailers was the meeting of expenses rather than the malcing of a profit.
Consequently the entire Trade was disturbed "by price cutting.
Trade Practices T/hich. Became Detrimental Because of
Abusive UseEZ
The follovring trade practices are not necessarily in themselves unfair,
"but "because of the depression they v/ere carried to such an extent that thejr
"became abuses.
1. Price cutting
2. Unlimited privilege of returning merchandise
3. Irresponsible advertising statements
4. General disposition to reduce the quality
of merchandise
Unfair Trade Practices Prevalent Under the Code^
The UJifair trade -oractices which existed prior to the Code prevailed
also under the Code but to a lesser degree. G-enerallj'- some improvement oc-
curred in trade practices and certain abuses were fairly regularly checked.
Effect of Unfair Trade Practices on Retail Trade and
Sources of Sao'oly
The effect of imfair trade practices on the Retail Trade is rell ex-
pressed in the following quotation from the National Retail Code Authority,
Inc.!/
"The effect of this frenzied process of competitive methods was marked.
Advertising and sales promotion methods became more and more reckless
of dignit]/ and truth — even of cost. The merchant whose advertising
included the loudest and most blatant exaggerations took business
away from those who clung conservatively to the truth. At the outset,
these methods -ere confined to a few of the more desperate and less
1/ Based on opinions of such qualified -itnesses as Ivir. Le-- Hahn,
Dr. Paul H; Nystrom and lir. William Girdner. (See list of
q'oalixied witnesses at the end of Chapter VI.)
2/ Based on a statement by Mr. Hahn.
3/ Based on the opinion of Mr. Hahn.
4/ "Re-oly to Questionnaire of Litigation Division-IJRA, on Code for
Retail Trade" (April 1, 1935).
8489
scrup-ulous , out f^radually more and more stores '.--ere forced to adopt
thein as a measure of self-defense.
"One of the notalDle results of these methods -ras the increasing use
of novel and costly uromotions of lotteries, contests, -oremium ex-
travagances and siiiiilar trade stimulation devices. While nan;r or all
of these had lonr teen recognized as valuaole adj^mcts of sound ner-
chandisineT policy, their use between 1930 and 1933 threatened to
eliminate competition in merchandising and store service and to sub-
stitute therefor comoetition for the doubtful honor of telling the most
engaging untruths or giving the "biggest prizes. It is questionable
v'hether the ' soraething-for-nothing' mania had ever been so whole-
heartedly indulged since the advent of modern retailing.
",This or,r."* was not only destructive of sound merchandising; it drew
the c ''.psfeitive advantage to the less scrupulous ajnong those retail
institutions vrhose financial resources permitted of vTidespread and
expensive advertising. This widespread disregard for truth in adver-
tising and selling m.ethodE on the part of a fer.' tended to undermine
the confidence of consumers in all retailers - which placed the bur-
den most heavily on the most ethical.
"The , period ending in 1933 saw the development of the so-called
'loss leader' to the point of absurdity. A 'loss lea.der' is an
article of merchandise, ostensibly desirable, oriced far below
a normal figure - at times below invoice cost - to entice trade,
in the expectation that customers so attracted to the store will
P'orchase other and more profitable merchandise. Some stores which
used this method extensively relied upon the natural grants of their
custor.ers in other lines to stimulate other sales and recompense
them for the loss entailed in the profitless selling of the 'loss
leader.' Others ased 'loss leader' merchandise of so low a quality
that the customer 'c ov.ti common sense could be relied upon (with
subtle stimailation of salesmanship) to switch the purchase to better -
and more profita.ble goods.
"One of the inevitable results of 'loss leader' merchandising was a
wave of price wars. The offering of such a leader in a community
would inaiogurate a series of ^orice cuts among the competing stores,
termina.ting, more often than not, in sales far below cost. The
resulting losses wrought unfair competitive hardshir) upon specialty
stores and small establishments carr^/ing a limited number of lines,
since such an establishment might be caught up in a price war involving
one of its few lines - perhaps its only line. This was particularly
true because nationally advertised branded lines, which form an im-
portant part of the stock of many such stores, were the favorite items
of such 'loss leader' merchandising.
"The obvious effect of the 'loss leader' was to disrupt fair competi-
tion. Hesourceful stores could, by judicious price-cutting, drive
weaker competitors out of business - preparrtory to raising prices
when the competition had been disposed of. This was particularly
true whenever a new store utilized this device to lure the patronage
of a community a-way from the established merchants.
8489
" Tlie coraoetitive pressiire in retailing backed up against
the manufsctiorer and wholesaler in the forn of insistent demands
for lorer and lovv-er prices to meet or imdersell competitive retail
prices. The manufact'orer or wholesaler not only watched his volume
decline; in addition, he v;as forced to grant price concessions to
absorh part of the loss that was "being forced on the retailer.
This was one of the factors which forced the manufacturer to drive
do\m \7a.ges of his own labor, in order to meet the demand for
cheaper orices. .. .Further, this pressure on manufacturers and
wholesalers was greatest when it was exerted by retailers and
groups of retailers with large buying power and plentiful cash
reserves, resulting in further increasing their competitive ad-
vantage. "
8439
-29-
CHAPTER VI
GEl-jlRAL IIJ^ORI.^TION
Retailing- as a Fart of the Dist.ri"butive Process
Once merchandise is readv for distribution, it may te sold to ultimate
consuir.ers 133- a nu-iber of different methods. The merchandise sold by retail
stores may be purchased by such stores either direct from manufacturers or
through wholesalers (and in a number of instances oossibly tlirough jobbers
or sub- jobbers) , who in turn purchase direct from manufacturers. Oftentimes
om-chp.ses are made from the a.^ent of the manufacturer by the P\irchasing Agent
of a chain store orgnjii -nation and distributed either direct from the mill
to the individual stores — as in the case of certain paoer oroducts — or
delivered to the chain store 'jorehouse a,nd shipped thence to the individual
retail stores.
Opoosed to the foregoing t-roes nf distribution are those in v/hich the
manufactrjrer sells direct-by-nail to the ultimate consumer; and the more
imoortant division of mail-order selling in \7hich the mail-order house as-
seT.ibles its stock from msnixf actui^ers located all over the United States in-
to varioxxs central i.7arehouses, sends its catalO:gij.es to a mailing list of
customers in the varioas states, and ships uoon recerot of a mail-order
from the customer. The transaction may be on a CCD. basis, '¥hich means
tna.t the customer pays the oostmn for the merchandise UDonreceiot of the
order.
Still other types of retailing exist in T;hich the retailer acts as agent
of the manufacturer, transmits the order, and the merchandise is delivered
to the customer from the factory. This latter t--oe has very little appli-
cation to merchandise sold under the Retail Code. Another t^'pe of merchan-
dising is found in cases in which manufacturers have appointed state or re~
gional distributors to sell to a selected list of dealers who in turn sell
direct to customers, as for example, in the distribution of radio sets.
Trade Associatio n Activity
The Code of Fair Competition for the Retail Trade was sponsored by nine
national associations, some of which are made up of direct memberships, and
others of which are made up of member associations. These associations are
as follows:
The National Retail iVrniture Association
The National Retail Hardi.vare Association
Mail-Order Association of America
The Ifetional Association of Retail Clothiers
and Furnishers
The National Retail Dry Goods -"-ssociation
The National Siioe Rete.ilers Association
National Council of Shoe Retailers
The Limited Price Variety Stores
National Association of Iviusic Merchants
3489
-30-
The National Retail Hardv/are Association represents small independent
retailers; the liail-Order Association of Anerica represents the large mail-
order houses; and the National Retail Dry Goods Association represents a
group of department stores among which is the J. C. Penny Company's entire
chain. The National Shoe Retailers Association and the National Council of
Shoe Retailers represent different t^,npes of shoe retailers; the former teing
comoosed chiefly of independently owned and opera.ted stores, while the
latter is composed chiefly of the shoe chains. The Limited Price Yarietj'-
Stores Association represents the 5i3f-10^--$1.00 groiJp of stores.
Documents presenting information in support of a Retail Code of Fair
Compeitition were submitted by several of the ahove associations in August
1923. i/lhey include the following data on menhership and number of employ-
ees covered.
National Retnil F-jrniture Association. - An undated meraorandmn from
this Association stated that it was composed of a total membership of 3,439
members.
National Retail Hai'dware Associntion. - On August 19, 1933, this asso-
ciation, Aiirith heada;mrters in Indianapolis, filed a document with the HRA
containing a certification of the membership in the Association within each
state. Total membership wa.s placed at 11,303 members.
The I.lail-Order Association of America. - This Association was organized
July 9, 1933. Its membership as of August 19, 1933, consisted of the follow-
ing:
Montgomery Ward and CoraiTany, Chicago, Illinois
Sesrs, Roebuck and Company, Chicago, Illinois
Siegal, May, Stern, Inc., Chicago, Illinois
Walter Field Company, Chicago, Illinois
Chicago ilail-Order Company, Chicago, Illinois
N. ¥. Savage Corapa.ny, Minneapolis, Minnesota
The National 3ellas-Hess Company, Kansas City, Missouri
Larkin Comnany, Inc., Buffalo, New York
Lane-Br^^ant , Inc., New York, N. Y.
It is re 'Orted that the Association is "truly representative and has
sent letters and application blanks to about 105 persons throughout the United
States advising them to join the Association. These persons and firms are
said to be engaged in the retail mail-order business."
The National Association of Retail Clothiers and Furnishers. - This
Association, which was organized nineteen years a^o under the laws of the
State of Iowa as a membership corporation, has had uninterrupted activity
since that time. Its total membership was comoosed of 1,789 distributors
located in all but two states in the Union. In addition, there were 2,000
others that receive the official maga^^ine of the Association "thus indicating
their desire to continue contact with the Association, although they are
unable to continue to pay thuir dues." Prior to the depression, its member-
ship was approximately 6,700.
1/ These documents are filed with the Code Record Division, National Recovery
Adniinistration, under "Material pertaining to Code Number 60."
8489
-31-
The ITational Ketr.il Dry G-oocls Acsoci-'^.tion. i/ - In Auarust 1933, the
r.n.L.G-.A. consisted of 4,157 stores loc?ted in evsr-r state in the Union, as
"."'ell S3 in the District of Coliu-nbia and the Territory of Ha-vaii. The ap-proxi-
rnate nunher of employees of such stores ^''as 450,000, pnd the arariror.irnate ^oliime
of sales \7as estimated at $3,000,000,000 annuall;'. The names and addresr.es of
the neriber stores r'ere individ^uilly listed in a 64-pa^e document. Hernhership
includes the J. C. Penny Conoany group of sone 1,500 chain stores. There has
been sone increase in tl'.e nunher of small stores in the Association since ap-
plicp-tion '"'as made for the Retail Code.
The H.R.D.G.A. publishes an annual report entitled The 'Torh. in r.-hich is
^iven a detailed cccouiit of the activities of each of its committees and de-
partraents.
Tlie ITational Shoe Eetailers Association. - The document submitted oy this
Association in support of a Retail Cede containes an eriiihit of 75 sectional,
state, and local associations affilir. tec? '■'ith the Nation Association, or for
'7hom the Association had heen aathorised to act.
The membership of the ITational Shoe P.etailers Association is comToosed
chielfly of independent cealers hut also includes chain store o-oerators. Hem-
hershi-Q consisted of 124 chain store operators '^ho controlled. 1,201 stores plus
2,317 individual members and 4,220 affiliated members. The nuxiber of independ-
ent members as of Au^-u-t 29, ""933, vras 6,637 \ hich, to.'~ether rrith the chain
store members, gave a total of 5,761, The total nunher of stores represented
in the Association ras air^-^Da^rently 7,c'33.
The chief functions of the Association are to inforri members of important
trade affairs; to supply them fith forecasts of seasona.l styles, colors and
materials; to furnish information and a.dvicc on matters oertainin? to the manu-
facturing or retailing of shoes; to a.djust cTievances arisin'^ bet'-reen mantifact-
urers, rrholesalers, or tra-veling sa.lesmen; anc'. to eliminate or control unfair
trade oractices.
I'ationr.l Co'up.cil of Shoe r.ete.ilers.S/- Although this Association includes
menbers of all t.^Ties of stores, it is predominantl;.'' composed of national, sec-
tional, and local ch-'ins. On lia.y 1, 1935, the membership consisted of 78
cuains ''hich controlled 3,53 6 stores. Eighty per cent of the volume of chains
in the shoe business is controlled oy members of this "'roup.
The Council supiDlies its members ^'ith praictical information on business
changes and informs them prompily of all state tax legislation. Under the Code
it furnished its uembers r/ith specific information on fair practice provisions
of the Code, rith correct interpretations based upon ITational Retail Code
Authority rulings, and "ith a complete lilc of all interoretations and regula-
tions issued ''^2'' the Code Authority.
1/ Statement of Mr. G. P. Plant, iianager of the Store management Grou^^ of the
ITational Retail Dry Goods Association,
2/ Information given by Mr. Girdner, Executive Secretar", ITational Council of
Shoe Retailers.
8489
-3C-
The Limited Price Vgriety Storer, Associatio'i. 1/ - The limited price vrrie^
store trade, including both chains and independent rtores, is i-epresented by
the Limited price Variety Store Association, '"'hich vas incor7porated "Luac'er the
membership corporation "' ar's of the State of lle^- York, on Au.^st 17, 1933.
Nearly every national chain store conpany, as, for exa/rale, "oolrorth, Kresge,
Grant Kress, Nenberry, G. C. Kurohy, ScotL-Burr, Keisner Brothers, and H. L.
Green Conpanj''; practically every sectional chain store conpany; and the Ben
Pranlrlin League, rith a raenbership of over 2,000 individua.llj'' or,Tied variety
stores, joined the AGSOcia.tion irr lecTiately. The Association soon hpd s, ijenber-
ship of 2,294 coni^anies vrhich operate ap-oroxinately 7,000 stores, or 60 per
cent of a.ll vnriety stores in the country. The sales ^'•olume of these raeinber
coniDanies represente nore than 80 per cent of the variety store trade in the
United States.
In cooperation rith other retail groups, the L.P.V. S.A. "orked rith the
IIRA in obtaining the Retail Code, rhich '."'as approved on October 22, 1937;,
The major a.ctivities of the Association consist of serving as a central
research bureau for the trade by collecting:, compiling, a-ns-lyzing, inter-Dretin
■and distributing infornntion axid data of timely interest; serving as a clearin
house for member companies on all logisla.tive and ta:: matters affecting them;
and siipplying information on variety stores to interested non-members of the
trade. Under the Code it represented the indu.stry before the ITational Pietail
Code Authorit]'' pnd before the VRk, sind. served as a clearing house for all I^^
interpretations and amendments to the Retail Code.
Corn'oetitive Trade Asrocia.tions
Competitive trade associations exist in at least '^n.e field of retail trad
- the shoe trade. The ITatipna,]. Shoe Retailers Ansociatiom is con-oosed of a,
group of associa-tions of indeioendent shoe reta.ilers and of chain store opera-
tors, but the great majority of its members are independent dealers. The
ITa.tioi'.a-l Cov-ncil of Shoe Retailers, on the other hand, consists chiefl;'- of
chain store operators. !;e:-ibers of this association handle 80 per cent of the
sales ma.de by cha.in stores, as already indicated.
The E::tent of Union Activity
Labor unions in the retail trade are relatively fe'^. In most instances
these are comr)osed of carpenters, painters, needle ''•orkers, or alteration hand:
'^ho are employed in rork-rooms. i- a fe'" c^ses the ^sales clerks are organized.
One such organization, The Retail Sales Peo'nles Internati-'mal Protective
Association, is located in Lafayette, Indiana, It is affiliated rith the
American Pedera'r.ior .i'' Labor.
An ertample of union activity is found in the Butte (Montana) Clerks Union,
rhich ras formed in 1886.-'/ Tliis organization is one of the ler groups in the
United States rhich is able to bargain collectively rith employers. In :iost
cities the i"'Jiions present their require-ients to individual emploj^ers. In ""iittt
horever, a general agreement has been in effect since 1925, betreen the Butte
Clerks Union and members of the Silver Bor Eminloyers Association, rho com-prise
1/ Presenting the Linitec' Price Varietv Store Association, Inc., pp. 3,4,7,
and 9,
2/ "Closed shop in stores of Butte, since 1925," in Retailing. (Executive
Edition, Februa^ry 11, 1S35).
8489
-33-
most of tho nerchants of the city. This agreement, in effect, covers also all
independent merchants vrho, clthou^h the3'" are not neubers of the Employers
Association, subscribe rea'^.ily to the union ar,-reenent.
The general contract nov effective rnc. enforced betrreen the clerks and em-
plo^'-ers lorescribes n closed saop and miniraura r^a^^e scales; a five-day veek chir-
Ing the s^rl^^er; a '.-:orl:inr day of 6 hours and 40 iiinutes, ' ith an hour for lunc
time off for holidays; overtime pay; and rigid stirsulations regarding pay for
apprentices.
In Great Palls, I'.ontana,; Coffeyville, Kansas, and a fer P.oclcy Kountain
tonns, the retail stores have been unionized, and although no strikes have oc-
curred there lia,s been some picketin^^.l/
The most notrble recent strike occurred in The Boston Store, iiilraulcee,
Wisconsin, as a result of an attempt by the union to gain recognition as I'ell
as TTB^e adjustments. There have also been strikes for the same rea.sons in bot
the Klein and Ohrbach stores in Keu Yorl:,
Labor Conditions ""^ithin Various Trade Cttouv^SJ
In General. - Controversies bet^veen labor and management are considered t
have been practically non-e;:istent in stores '"iiich ?,re members of the ITational
Shoe Eeta.ilers Associa.tion. The same situation exists among the members of th
lTa.tional Cotmcil of Shoe Retadlers, but non-members rre said to have labor dif-
ficulties, l^enbers of the ITational detail Dry Goods Association are reported
to have had- little trouble. Friendly relations betrreen employers and emploj^'ees
have been outstanding.
In Department Stores. - A recent survey of en-olo;;'-Tent conditions in de-
partment stores made by George ?. Plant, lianager of the Store I'anagement Group
of the National Retail Dry Goods Association, covered a,pproximately 440 stores
i.7ith r, total of 170,000 emplo;^ees,2/ While not fully complete as yet, it is
believed to be the broadest stud^r thus far made in the department store field.
Inforraa.tion nas obta.ined concerning the follo^"'ing Subjects;
1. Company Unions. - Only tvelve of the total nui-iber of stores h8,d com-
pany unions. In four or five of these stores membership in the luiion r^as not
storevide, but vac confined to one ma.jor division, usually the deliver]'- de-
partment. Several of these imions \7ere organized a.boat the time of the Presi-
dent's Reemployment Agreement.
2, Mutual Aid Assoications. - "niile the number of direct employee repre-
sentation associations 'jas small, mutual aid societies ^"ere found in appro xi** '
mately 130 stores. These mutaal aid societies, nhich are usually organized an
administered by the employees, have as their principal features the payment of
sick axid death benefits as veil a.s the carrying on of various aocial activitie
for the employees.
The management of the stores "ids in the a.ctivites of these a ssociations,
by contributing funds in some cases pjid in almost all instances by riernitting'
1/ Statement by Dr. Paul H. ITystrom.
2/ Based on opinions of LIr. Girdner, Mr. Holden, and llr. Plant. (See list of
qualified witnesses at the end of this Chapter.)
3/ HeT7 York Times. June 30, 1935.
8;439
-34-
the uce of store time c?jic1 oy cooperatini=; in the preioaration of forms and
notices.
3, Old Ar^e Pensions. - Dealin']; r'ith the question of old age pensions, the
survey indicated tnat old age pension plp.ns on a contri'butory tasis x'ei-e found
in only 5 or 4 stores. A jiajority of the larger stores, however, have informal
pension plans ur.der ^rhich the expense involved is "borne by management alone.
4, G-ro\ip Insurance. - Approximately onc-thirc", or 140 of the total number
of stores provide some organized form of grouo insurance for employees. In the
::iajorit3' of ca.ses this covers straight life insurance and is usually administer-
ed thror^i'h one of the established life insurance companies. IiiT3lo7/ees contrib-
ute to the e:rpense of carrying the insurance, .although in most cases the e::tent
of their contribution is limited to a maximum set b;r the state, usually a.bout
60 cents per $1,0(jO of insurance.
Although group insurance is not usually available to organisations having
less than 50 employees, stores find that wholesale issuance of insurance can be
obtained in such ca.ses. It is interesting to note tlia.t out of 100 stores
Trhich have less than 50 employees each, nineteen "Drovide some form of wholesale
insurance.
Financial Condition of P.etail Trade
Herchandising vnd. operating results of department and specialty/ stores have
been ajia.lyzed and published by the Controllers' Congress of the National Retail
Dry Goods Association.!/ Table XV contains excerpts from these reports and in-
dicates t;'nDical gross "largins, opera.ting expenses, and operating profits or
losses for stores r-ithin various selling ranges. The figures ore averages
based upon a large number of stores.
G-ross margins 'jere smaller in the smaller establishments. In 1933 operat-
ing expenses, in practically every case, veve slightly larger than gross mar-
gins; in 1934 the opposite vir\.s true. As the result, the "tj'pical" store in
nearly every instance shov;ed an operating profit in 1934 as against a loss in
1933.
!_/ Controllers' Congress of the iJational Retail Dry Goods Association, Deioart
mental Herchandisinr a,nd Q-oeratin-T: Results.
8489
-35-
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Under date of ipril 1, 1935, the National Retail Code Authority, Inc.,
suimnarized the operating results of typical department stores 1929~1933, in-
clusive, as published "by the Harvard University Bureau of Business Research.iy
The figures indicated that "between 1930 and 1933, in practically every in- --.
stance, department stores operated at a net loss, although during 1929 net
profits were achieved. The heaviest losses occurred during the year 1932,
(see Tahle XVI.)
In the document mentioned ahove — ' the operating results of hardware
stores as collected by the National Retail Hardware Association, were also
summarized. These results were in terms of percentage of sales and indicated
a loss for each year ranging from a low of 1.8 per cent in 1930 to a high of
12.7 per cent in 1932. For the year 1933, a loss of 5.6 per cent was in-
curred hy these stores.
Although the foregoing figures represent a ccTiposite of over 1,000 hard-
ware stores, a certain proportion reported net profits in each year. In
1930, 50 per cent of the stores reported a net profit while in 1932 only 17
per cent so reported. For the year 1933, 43 per cert of the stores reported
that they had made some net profit. (See Table XVII.)
TA3I.E XVI
ITet Profit or Loss in Retail Stores, Classified
by Size of Annual Sales, 1929 - 1933
(in Per Cent of Annual IJet Sales)
Amoimt of Annual
i^et Sales
1929
1930
1931
1932
1933
Less than $150,000
$150,000 - $300,000
$300,000 - $500,000
All under $500,000^
$500,000 - $750,000
$750,000 - $1,000,000
$1,000,000 - $2,000,000
All $500,000 - $2,000,000^
$2,000,000 - $4,000,000
$4,000,000 -$10,000,000
Over $10,000,000
All over $2,000,000^
—
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-
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-10.3
-
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—
—
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—
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-
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—
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-
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- 6.2
-
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4.
0.3
_
3, 2
_
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_
3.8
»^
_
1.7
_
4.5
- 8.2
—
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—
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2.3
—
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- 9.5
-
3.3
—
-
1.8
-
3.9
- 6.8
-
2.7
+
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—
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- 8.2
—
2.4
__
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_
3.5
- 7.8
_
2.9
--
-
0.6
—
2.6
- 7.4
-
2.4
—
+
0.1
-
1.9
- 4.8
-
1.3
+
1.2
—
0.5
—
2.9
- 6.8
-
2.3
Source:
National Retail Code Authority, Inc., "Reply to Qp.estionnaire of
Litigation Division - NPA. on Code for Retail Trade" (April 1, 1935).
Data are from Harvard University, Bureau of Business Research.
The figures in this line of the Table are not from exactly the same
stores as the three above. Consequently, they do not represent a
sui-rna,ry of the three preceding figures. ^^^_^^_^
1/ i:a,tional Retail Code Authority, Inc. , "Reply to Questionnaire of Liti-
gation Division-KRA, on Code for Retail Trade" (ij^ril 1, 1935).
a/
8489
-37-
TABLE XVII
Operating Results of Herdrare Stores, 1930-1933^/
Ratio of Net Loss Per Cent of Total Stores
Year To wet Sales Reporting Ket Profit
1930 1.78 50
1931 6.5S 37
1932 12.66 17
1953 5.55 43
Source: l-T^.tional Retail Code Authority, Inc., "Reply to Questionnaire of
Litigation Division-lCPJl, on Code for Retail Trade" (April 1, 1935).
Data from Harvard University, Bureau of Business Research,
a/ Conpos ice results from more than 1,000 stores in each j^esr, collected
by National Retail Hardviare Association.
Effect of the Code on the Retail Trade
Prices and Stocks. - For comparison of index nunhers of wholesale prices
hv months , 1929 to date; and retail inrices, 1931 to date, see Cha.rt Nxunher I.
The spread ■bet\/een the tFO series has narroT^ed gradualj?- through 1934. An in-
dex of department stor'e stocks at end of each month, 1929 to date, is also in-
cluded in this chart.
Uage s . - Experts in the retail trade vary in their opinion as to the
effect nhich the Retail Code lias had on v/ages in the Trade. One Author it j'=t/
has eicoressed the opinion that the average \7age is not higher as the result
of the Code and may possibly he lower. Another has asserted^/ that the Code
resulted in a payroll increase of 18-20 per cent at the same -..tine that there
was only a 12 per cent increase in employment. Data compiled "by the Bureau of
Labor Sta^tistics from a sample of the general merchandise group indicate that
average v/eekly wages as well as average hourly wage rates vrere considerably
higher in 1934 than in 1933. At the sane tine the average hours worked "oer
week decreased. (See Table VII and Chart I.)
Einplo-yees in variety stores have been more affected by the minimum wcge
than have any other large grouv in retail trade.—' Average wages jumped from
$11.84 to $14.00, an increase of about 25 y<er cent over the pre-code period.
During the sane period employment incre.'-sed 11 per cent and payrolls increased
aLout 23 per cent. Less efficient employees liave been gradually replaced b^'-
those considered a,ble to earn the minimum wage. Consequently, operative
standards, insofar as the members of this group are concerned, have been rais-
ed above the levels existing prior to the Code.
Hours. - It is generally agreed that the Code has resulted in shorter
houTs and in more part-time enplojonent. Chart I presents average hours worked
per week, by months, from January 1933 to date.
1/ Mr. Earl W. Elhart.
2/ Ilr. Plant.
3/ Dr. Paul H. Nvstrom.
8489
-38-
O,oeratin<g: Costs. - One authority^' has maintained that opera.ting costs
increased a,s a, result of the Code. This vms attributed to Increased pa3Tolls
and a higher cost of sup"olies and equipmont,
Pro'^ortion of Trade-Harked Merchandise
The follo\/ing information concerning the relative amount of retail mer-
chandise v/hich is trade-raarlced is based upon the opinion of experts in the re-
tail field, and is consequently limited in scope.
Limited Price Variety Stores. - Of the Products sold by Variety Stores,
onl;,- drugs and toiletries are sold under trade-marks v/hich have any meaning. 2/
Sales of drugs and toiletries in 1934 sjnounted tq nearly 8 per cent of the
s
total saler ra3.de by this group of chain stores.—/ About 56 per cent of the
mercha,ndise sold b"''' members of this group had no trade-mark, and about 36 per
cent of the merciiandise carried trade-marks ^7hich Fere more or less meaningless
Merchandise v;hich bore trade-raa.rks of little mea.ning is found in the
following classes:
Notions and Small Wares
Confectionery and ITuts
Stationery and Books
Toys and Games
Clothing and Fiu-nishings (Men's and Boys')
Electrical Sup jlios and Materials
Hon- trade -narked merchandise is found in the following cl?.sses:
Apparel and Accessories
Home Ftu-nishings (princiTjally China, Glassware,
and Crockery)
Eardrare
Dry Goods
Soda. Fountain Sales and Lunches
Jevvelry (principally Costume)
fetional Council of Shoe Hetai]ers. - All of the merchandise sold by
members of the Kational Council of Shoe Retailers is trade-marked^/. The pro-
portion of total sales re^oresented by registered trade-marks is not yjioxm., but
is thoiigiit to represent a very large percentage of the total.
Rational Retail Dry Goods Association. - In department stores, the follow-
ing lines of retail merchandise are those in v?hich trade-marked items are most
prevalent*^
1. Toilet Articles and Cosmetics
2. Books
3. Groceries
4. Notions
5. Hosiery
1/ I.ir. Plant.
2/ Statement by Dr. Nystrom.
3/ See Table V.
4/ Statement by Mr. Girdner.
5/ Statement by Mr. Dibrell
8489
-■69-
6.
Totacco
7.
Gloves
8.
Corsets
9.
Domestics (sheets)
10.
Blankets
!!•
Ho\ise J-urnisliings
Tlie most iwpoi^tant items, 'dth resoect to trade-marks, aonear at the top of the
list, Ver;-- fev- trade-marks are fotuid in fiirniture, jenelry or p.pparel. Trade-
marked items, which constitute less than 10 per cent of total sales, are
usToally sold on the main floor,
Effect of Im'oorts of ?orei^n Merchandise
In General. - On the v/hole, the effect of forei^jn imports on retail trade
is slight. i/ Imports amoiinted to not more than 5 per cent of the total mer-
chandise sold in 1929, and possitly is not nov; in excess of 2-g per cent.
Departm.ent Stores. - The effect of foreign goods on retail trade varies
with the line of merchandise handled oy the various kinds of stores. Depart-
ment store sales are little affected by such imports, 2/ Devaluation of the
dollar and increase in tarifi" rates h;ive raised the cost of foreign merclian-
dise over that existing in the past. One store, which, in 1929, purchased 11
per cent of its merchandise in Europe, today huys 85 per cent less in foreign
markets (this figu.re is ahout 1.65 per cent). Higher selling prices of im-
ported OTods make their sales prohihitive.
Variety Stores, - Variety stores, on the other hand, are considerably
affected by imports of foreign merchandise. 5/ Formerly a large part ras in-
ported from Germany, but as the result of a boycott on German goods, such
imports have decreased. Japanese goods have recently been imported in large
quantities.
Sxioe Stores. - Imports of shoes from Czechoslavakia and Japan ha.ve de-
moralized the trade of independent shoe retailers, 3/ j^ chain of shoe stores
is maintained in Chicago by the Bata Organization for the purpose of selling
shoes made by their factory in Czechoslavakia. This ty;ie of merchandise is
mostl]'- found in so-called bargain basements.
List of Qualified Witnesses
Mr. Edwin 11. Dibrell, Vice President in charge of Merchandising, Associat-
ed Dry C-oods Corporation, wnich o\ims and operates a chain of department stores
including Lord and Taylor, and James t'cCreery and Company. Mr. Dibrell joined
Lord and Taylor in 1919, where he merchandised piece goods and became Vice
President in 1926, at the age of 37. In 1927 he became Executive Vice Presi-
dent and Publicity Director of H. H. Macy and Company; and has been active
recently as Vice Chairman of the Retail Protective Committee in representing
retail interests before the 1\[RA in Washington. Mr. Dibrell has served as
Chairman of the Merchandise Managers Groun of the National Retail Dry Goods
Association, and also ?.s Chairman of the Sales Promotion Division.
1/ Statement by Mr. Elhart.
2/ Based on the opinion of Mr. Dibrell.
3/ Statement by Dr. Nystrom.
4/ Statements ty Mr. Girdner and Mr. Holden.
8489
-40-
Mr. Earl W. Elhart, 1 East 13th Street, Ne-7 York, Weu York, Editor, Fair-
child putlications. ur. Elhart lias "been associated rdth Fairchild Piihlications
for a m-unlDer of years. He is the Editor of the Executive Edition of a weekly
paper entitled Retailing.
Mr. William C-irdner, Executive Secretary, National Council of Shoe Re-
tailers, Inc., 1 East 42nd Street, New York, Neu York.
Mr. Lew Halin, forner Chairrnan, National Retail Code Authority, and nemher
of the Industrial Advisory Board of the NRA; and president, National Retail
Dry Goods Association, 1933. Mr. Hahn played an important part in the forma-
tion of the Retail Code ajid represented the Trade hefore the NRA in Washington.
He 'vrs formerly connected with the Hahn Department Store.
Mr. John J. Ho 1 den, National Shoe Retailers Association, Empire State
Buildin-, Room 3022, New York, Hew York.
Mr. S. ICatzen, Vice President, A. I. Nam and Sons, Brookljni, New York,
Mr. J. A. Kaylin, Associate Editor, Fairchild Fablications.
Ua.jor Ben.iaiuin H. Naiim, President, A. I. Nam-n and Sons. Major Namii has
■been one of the outstanding supuoi-ters of the Retail Code and has delivered a
numher of sxieeches throughout the country in supiaort of NIHA. He was active
in the formation of the Code at the time of the original puhlic herrings in
August 1953, and attended a large numoer of conferences for the ptirpose of
formulating a Code prior to that date.
Dr. Paul H. Nystrom, Vice Chairman, National Retail Code Authority,
President of the Limited Price Variety Stores Association, Inc. Dr. Nl^strom
was a-o lointed Economic Adviser of the L.P.V.S.A. shortly after its origin on
July 24, 1933, and rei^resented the Industry in negotiating "ith the NEA for
a satisfactory Code, prior to his work with L.P.V.S.A., Dr. Nystrom had the
following connections: Director, Trade Research, U. S. Ruhher Company; Sales
Manager, International Magazine Company; Director, Retail Research Association,
and Associated Merchandising Corporation; professor of Marketing, Colvjnhia
University, and Business and Marketing Consultant. He is also author of
nuiTierous hooks, the most recent of which are Economics of Fashion (1923),
Economic Princinles of Consmrotion (1929), and Fashion Merchandising (1932).
Mr. C-eor^~e F. Plant, Manager of the Store Management Grouo of the Nation-
al Retail Dry Goods Association, 225 West 34th Street, New York, New York,
8489#
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