The Shops of Britain by Hermann Levy

Author:Hermann Levy [Levy, Hermann]
Language: eng
Format: epub
ISBN: 9781136255403
Google: QCz7zQEACAAJ
Barnesnoble:
Goodreads: 18703992
Publisher: Routledge
Published: 1999-01-15T00:51:42+00:00

“No retailer,” so warns Mr. Courtney, “should look upon turnover as being the most important factor in his business; one has only to look through the list of failures to be found any day in the bankruptcy court to realize how very many traders have sacrificed the profit for turnover”.36

A practical example of what margins may mean in relation to the net profits of a single business was once given for the retailing of cycles. The typical dealer’s margin in the cycle and motorcycle trade amounts to 33per cent. According to estimates there are about 100 cycles sold per dealer a year on the average, and this would mean a gross margin of about £200 per dealer. Even when the sale of accessories and repairs is taken into account “the livelihood of a dealer—on the basis of the average sale per shop—is not likely to be a very fat one”.37 One point in this connection requires particular attention. In industry variations in the costs at which manufacturers produce invariably tend to eliminate the producers with the higher costs; in retail trade we find that wide divergencies may exist between retailer’s profits, even in the same branch of retailing, and yet the higher profitability of the one unit does not necessarily have the effect of destroying the existence of the others. Of course, it will not happen that in the same street or locality retailers with widely different net profits will go on indefinitely next to each other. In the long run the structure of their businesses will be more or less assimilated to an approximately equal level of relative profit. A small gentlemen’s outfitter in a certain locality could not be expected to live next to a bigger one if the latter were able to undersell him considerably; nor would a small grocer, even with mainly price-maintained branded goods, be in a position to hold on in face of a modern large-scale grocer next to him employing all the modern means of advertisement, window display and offering a greater variety of goods for sale. But where the retailer is located in streets or districts where other advantages form an attraction for buyers, such as the proximity of the shop or the personal handicraft services rendered, the net profit of a shop may be far lower than with others elsewhere (even taking into account a lower rent) and yet it may exist in perfect financial safety and not be endangered by the competition of such other shops. It is, one might say, enjoying a protected position just as in industry it may happen that some high-cost producers enjoy that protection through the fact of low transport charges to nearby consumers. It is very interesting to note how with pharmacies, for instance, profits show great discrepancies:38

ANALYSIS OF AVERAGE FINANCIAL POSITION OF 1,254 SHOPS CLASSIFIED ACCORDING TO TURNOVER

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