 Self-Service Food Stores by Carl William Dipman, Robert W. Mueller, and Ralph E. Head, joint authors. Chapter 1. Why the Trend to Self-Service? Why the Trend to Self-Service? A number of things have taken place over the years that are responsible for the rapid trend to self-service food retailing. Let us review them briefly so that we may better evaluate the importance of self-service food store operation and the necessity for it. Not only one trend but several different trends have taken place all at the same time in food production and distribution. In some respects these trends have been in conflict with one another, but in other respects they have all led to the same results. Sales through retail food stores have increased tremendously. The margin at which these foods sold has been constantly shrinking at the same time that wage rates for store employees have been rising. This situation almost suggests a paradox, but it is not a paradox if we think through carefully and detect each of these trends and consider their impact, and finally the effect that self-service merchandising is having on food store selling. In colonial days running a food store was a very simple affair. The grocer sold only a limited line of merchandise consisting largely of dry groceries. There were very few perishable items and fresh goods sold then. People lived largely on farms and they were able to raise a large part of the food they ate. They bought only a few stable groceries. The family money expenditure for food was exceedingly small. Most of the merchandise the colonial grocer sold was handled in bulk. Generally, the grocer required no help because his sales were so small that he could do all the work himself. If occasionally he required help, wage rates were very low. Yet his margins were high and averaged between 30% and 40% of sales, and sometimes more. In those days there was no need for a grocer to adopt labor-saving measures. He had plenty of time to stand around and weigh out bits of tea, pepper, and other groceries when customers bought them. The colonial grocer knew nothing about intensive competition of declining margins or of sales per employee. But if he had stopped to figure his sales per employee they would have been exceedingly small, only around $2,000 to $3,000 a year. In the modern sense it might be said that his operating expense was very high, but it did not matter much in those days. But in due course of time many things started to happen that have all had their effect on food store selling. Some of these things frequently confused grocers. Grocers then as now often complained about the new innovations. Slowly mass production made its way into food manufacturing. The machine production line made its appearance in food factories. The manufacturer was turning out an ever-increasing quantity of food products in much greater variety. Lines and brands began to multiply. More packaged items that saved labor for the grocer came onto the market. The machine age had come. In a different way similar changes took place on the farm where so much of our food is produced. Grocer also became mechanized. The unit of food production for each day of labor the farmer expended increased rapidly. The cost of some food products slowly declined as production in factories and on farms increased in terms of hours or units of labor. This enabled employers to pay higher wages but still keep the cost of products low enough so that consumers in turn could constantly increase their expenditures for food. The economist calls this period of mechanization the industrial revolution. But you may ask what does all this have to do with running a retail food store? Just this. In a sense we are going through a similar evolution in food retailing. Just as the producers applied more food in greater variety at relatively lower cost just so must the retailer sell more food in greater variety at relatively lower margin at the same time that he pays higher wage rates. Sounds impossible doesn't it? But that is exactly what has come about over the years and there is still more to come. We may not like this situation but whether we like it or not every food merchant is confronted by it. A food merchant single handed can do nothing about it so he had better recognize this trend and make whatever adjustments may be necessary to meet it. Like the manufacturer and farmer have done the food retailer must mechanize his business insofar as he can. He must strive to get a higher output sales per hour of labor so that he can keep his margin low and possibly lower it yet at the same time pay high or higher wages if he is to stay in business and make money for himself and his family. And now we come to the main point. Within limits self service food store operation makes all this possible. In fact many food retailers have already made these adjustments. Many of us who have spent years in food merchandising may not be fully conscious of the changes that have already taken place. These changes may have come so slowly that we may have failed to grasp their full significance. We have already referred to the fact that the old colonial grocer who puttered through the day weighing out trifling bits of coffee and tea on a cumbersome scale had sales per employee of only two thousand or three thousand dollars a year. Slowly as more packaged groceries came onto the market which saved store labor and consumers bought more foods and greater varieties and merchants slowly improved their methods sales per employee kept climbing upward. This is simply another way of saying that the operating expense was coming down. By nineteen hundred sales per employee in grocery stores had reached four thousand to five thousand dollars a year. By nineteen twenty five they had reached between eight thousand and ten thousand per employee. But by the end of the second world war sales per employee in self service markets had climbed to an average of over twenty thousand dollars and in a few outstanding markets to over thirty thousand dollars a year. Of course some of this increase was due to changes in food prices but allowing for price variations the tonnage sales per employee have been constantly rising. No single factor has contributed so much to the recent improvement in food store efficiency as self service operation. Self service stores have become so numerous and so successful that they now set the pattern of food distribution. There is some question whether many old fashioned store operators can in the long run continue to remain prosperous unless they adopt the labor and expense saving features of self service in the period ahead nor has the technique of self service food store operation reached the ultimate as yet. There is still much progress to be made. There are still many things to be learned about self service and its application to different food products and departments. Self service was first employed in the sale of packaged dry groceries. Many food store operators thought it would stop there but it did not stop there. Self service was extended to dairy products and household items. A few years ago many food store operators never dreamed that self service operation could possibly have any application to fresh goods like fruits, vegetables and meats. But now self service is being extended into those areas and we shall see many far reaching developments in the self service merchandising of fresh fruits, fresh vegetables, fresh meats, delicatessen and frozen foods in fact to every item and department in the food store. There may be limitations here and there yet on the whole the application of self service will expand tremendously and we already have complete food markets in which every single item is sold self service. So it behooves every food merchant whatever the nature of his business whether his store be large or small, whether in the country or the city, whether cash carry or charge delivery to think through with an open mind and adopt all of those features of self service operation that have an application to his business. Under most conditions food retailers must adopt some if not all of the features of self service store operation if they are to prosper in the competitive period ahead. Let us enumerate some of the reasons why self service will be so important in the period ahead. First of all the vast majority of women prefer to do their food buying in self service stores. Enumerable surveys have been made that indicate that from 65% to 85% of all women prefer to do their shopping for foods in self service stores. It is true that in communities where women have never seen self service stores there may be some resistance when self service is first suggested. But that resistance soon passes when women once learn about the ease with which they can shop in self service stores and the many benefits they derive. Invariably they always buy more. This must also take into consideration the large number of young housewives. The younger buyers associate economy and value with self service and the vast majority of them prefer to do their shopping in self service stores and in fact most of them will fully avoid the old fashioned counter service stores. This vast army of young housewives now setting up homes and raising families must not be overlooked by food merchants. Women prefer to buy their food in a pleasant harmonious store in which the merchandise is well displayed. Preparing three meals a day, day in, day out is a tedious task and the fact that their meal planning can be so easily done in self service stores is what they like. Self service stores permit them to walk up and down the aisles, examine products, labels, and values and make their selections with ease and greater satisfaction. In short their shopping is greatly simplified and made more delightful and properly arranged and well managed self service stores. Food merchants must constantly keep in mind that not only now but in the period ahead margins must be kept low and in some cases lowered. Competition is forcing this pressure on margins just as it has over the years. This means that many food merchants must set up their business so that it can operate profitably at a lower expense. In as much as labor expense is such a big factor in total operating expense, food merchants must make every effort to keep the labor costs down or to put it the other way around, food merchants must strive to realize larger sales per employee and this can usually be done best through self service operation. Margins in many of the perishable lines are headed for a sizable shakedown and unless food merchants employ as many of the features of self service as can be applied to their business many of them will find it impossible to lower their margins in line with competition. Most merchants also feel the need for better and more capable help in their stores. To provide better help they must pay higher wages. Moreover labor unions are becoming increasingly active in organizing retail food store employees. This all adds up to higher wage rates for store employees but it does not follow that better help and higher wage rates must result in a high operating expense in terms of 1% of sales. Frequently by taking advantage of all the labor saving that can be affected through the application of self service, well managed stores are able to pay higher wages for better help but at the same time reduce the operating expense percentage by increasing average sales per employee. By eliminating unnecessary work, by saving steps, by eliminating lost motion and confusion through the skillful application of self service there is usually no difficulty in keeping wage expense well in line even though higher wages are paid for better employees. The trend to full line one stop markets is still another factor that must be given consideration. Full line market stores now do over 60% of the total food store volume as compared with 31% in 1929. The full line one stop market means that the food merchant must carry more lines that his stock must be more diversified. The proprietor must accordingly spread his activity over more lines and departments. Under those conditions he can do an effective job of management and supervision only by simplifying his operation. Self service permits that simplification. Taking the time formally taken up by drudgery enables the proprietor to do a better job of management, sales promotion and supervision. Whatever opinion merchants may now hold about the limitations of self service store operation they must bear in mind that tremendous technical advancements in packaging are ahead. There will be advancement and technique, materials and machines available for the packaging of perishable foods in stores themselves. Wholesalers will also do more packaging of foods for self service retail sales. Producers particularly those supplying perishable goods will package more of their products so that they can be sold self service in food stores. A merchant must not permit present limitations to obscure his view of the future of self service but must instead conclude that tremendous advancements are in the making. After these improvements make their appearance it is likely that the retail margin on some lines will decline. Only by the adoption of self service principles and so far as they apply can many merchants meet the competition that lies ahead. Shorter hours for both store operation and store employees also appear to be ahead. This makes it all the more necessary that each hour that the store is open or an employee is on the job be used effectively. By the simplification of operation by getting consumers to do some of the work now done by employees can a merchant make the greatest use of the fewer hours available to the store and employees. On the other hand there are still a few food merchants who conclude that because their business is partially or largely charge and delivery self service has no application. This misconception has been pretty well removed by now. It has been proved beyond a doubt that charge and delivery business can be carried on in a store arranged for self service as well as in any other store and usually better. Ordering orders for delivery or handling charge customers can usually be done more efficiently in a store with a self service arrangement than in the old counter service store. Moreover a self service arrangement in a service store generally attracts more cash carry business business that now goes elsewhere. Many service food store operators need this additional cash carry volume if they aren't prosper in the future. People need a store lose character or personality simply because it is self service. A properly managed self service store can be just as personal as any other kind of a store. In this respect medium sized and small self service markets have an advantage over the large stores. Throughout this discussion we have placed considerable emphasis on margins but it must not be concluded that if through self service operation the margin is reduced the net profit must decline accordingly. Net profit does not need to come down with a margin if a store is well managed. There are many examples throughout the country of when counter service stores converted to self service operation lower margins and higher net profit resulted. Being an overall store margin by 4% or 5% or more need not interfere with profit. In fact it may help the profit for higher sales generally follow. Self service food store operation is no longer on trial it is rapidly becoming the dominant form of food retailing. Self service is being extended to all food departments. It has been amply demonstrated that self service has its application to most any kind of a store large or small city or country service or cash carry. For the present self service operation may have some limitations in certain departments or under certain conditions but these limitations will slowly be alleviated and in many cases completely eliminated. And of why the trend to self service from self service food stores by Carl Dipman, Robert Mueller and Ralph Head.