Get It Wholesale

"It's getting so that anyone is just a damned fool to buy anything at retail," said James Shea, a big Dallas electric-appliance distributor. Shea, like many another U.S. appliance jobber, is finding that more & more of his business is coming from "discount houses" which offer everything from washing machines, refrigerators and TV sets, down to fountain pens, at 20% to 30% below list price.

The discount house is the biggest current phenomenon of U.S. merchandising. It has department stores, small dealers and other established merchants worried sick. To meet the "I can get it for you wholesale" competition, many established dealers have had to cut their own prices. One Chicago department store recently cut $335 General Electric refrigerators to $229, just $4 above actual cost. Said an executive of a Chicago merchants' association: "I would estimate that 90% of nationally branded major appliances are sold below the list price."

Discount houses have sprung up all over the U.S. because of 1) the big postwar increase in appliance stores which crowded the field and made things ripe for cutthroat competition; and 2) the U.S. Supreme Court's breach in fair-trade laws a year ago. Like after-hours saloons, discount houses often issue "membership cards" to their customers. Some discounters have little more than a small office and a catalogue; the customer orders from the catalogue, and the discounter calls a distributor and has the product delivered.

Free Riders. In effect, the discount houses get a free ride on national advertising of nationally distributed brands. Few of them do any advertising of their own, beyond direct mail or the printing of catalogues. Their customers have usually got their preliminary information on comparative quality, model numbers and prices from patient clerks at department stores.

Many of the "bargains" are not as good as they look; frequently they are discontinued models. Furthermore, many discounters tack on "extras" for delivery, provide none of the servicing and repair offered by established dealers. Most also sell for cash only. On the other hand, many of the fastest-growing discount houses, e.g., Los Angeles' big B.& T. Sales Co. (1951 volume: $1,100,000) and Manhattan's Masters, Inc. ($5,000,000), give the normal guarantees and servicing and offer the latest models. Masters, Inc. has even made a deal with the National City Bank by which customers can make time payments.

Free Selling. Many retailers angrily denounce manufacturers for failing to cut off supplies to the price slashers. Sunbeam Corp. (Shavemaster, Mixmaster) and Simmons Co. (mattresses) have done so; Sunbeam is being sued by Masters for refusing to supply it. But most big manufacturers and distributors look the other way because discount houses move big volumes of goods rapidly. Said a big Westinghouse Electric jobber: "Some of these stores are necessary for our business because they keep us going in slack times."

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