OCR Text |
Show Those Fixed Costs There has been much discussion of the fact that the cost at wholesale of many of the things we eat and wear and use is often a great deal less than the price we must pay in the retail store. And that tends to create an impression im-pression that retailers are a bunch of bandits who are making extortionate profits at the expense of the hapless hap-less housewife. What this attitude fails to take into consideration is that, in late years, the fixed costs of carrying on a retail business have tremendously increased. These costs include labor, taxes, rent, transportation and everything else. And there is still another factor, which is found in changed consumer preference. As an example, people now want processed foods where they used to buy the raw product. They want goods in a wide range of packaging and sizes and varieties. And all this costs money. The retailer, like the producer and manufacturer, has no choice save to pass the cost on to the buyer. The real test of whether or not retailing is exploiting us is found in its net profit the money typical stores have 3eft at the end of the year after all the bills are paid. Major Ma-jor food chains earn a net of as little as one per cent. Other Oth-er types of stores customarily earn three or five per cent on the dollar of sales. As anyone can see, if the profit were eliminated entirely, there would be small change in the cost of merchandise. |