Word: markup
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...discount house is not a new idea. "Wholesale" houses of one kind or another have existed for years. What is new, and frightening to retailers, is the small markup on which the discounters operate. Since they usually spend no money on displays, give no credit or free delivery, and rarely advertise their wares, their overhead is small and the saving is passed on to the consumer. "In addition to the trade discount, we get an extra 1¼ discount by paying cash for everything we buy," says Los Angeles' William E. Phillips, whose discount house grossed...
...lawsuit on every small discounter. Some big companies such as Sunbeam, Magnavox and General Electric are trying to police their dealers rigidly. But many companies are none too anxious to lower the boom on discount stores that move large quantities of goods, since the manufacturer still gets his full markup. In fact, even businessmen who publicly condemn discount houses often deal with them privately. One big Chicago corporation recently bought all its employees Christmas presents from a discount house, picked up 700 radios at $9.45 each, v. $19.75 list price...
...developments have been the rapid increase in automatic vending machines (which last year dispensed more than $1.5 billion worth of goods) and the spread of self-service selling, even to department and drug stores. The self-service supermarket has not only trimmed distribution costs enough to cut its average markup to 16%, but it has done much to change the manufacturer's selling methods. Johnson's Wax, which was once sold primarily through hardware and department stores, now moves mainly through supermarkets, which now sell dozens of items that have no connection with food...
...fatten up for market, are lucky to make a 10% profit-provided that they guess right on what the price will be when they sell. Meat packers' profits are smaller: last year they were six-tenths of a cent on each dollar of sales. The retailer, whose average markup on beef is 16%, often has an overhead that eats up much of this...
...their income on living essentials, and 2) it cuts the buying power of the groups that buy the biggest share of goods, thus is apt to hurt sales. Moreover, a manufacturer's tax would pyramid if a retailer included it in the price on which he figured his markup. Thus a 5? tax on a manufactured item could get marked up to 10?. Above all, such a tax would cut sales now when there are evidences of overproduction and possible deflation...