Chapter XXVII
RETAIL MERCHANDISING OF ROASTED COFFEE
How coffees are sold at retail—The place of the grocer, the tea and coffee dealer, the chain store, and the wagon-route distributer in the scheme of distribution—Starting in the retail coffee business—Small roasters for retail dealers—Model coffee departments—Creating a coffee trade—Meeting competition—Splitting nickels—Figuring costs and profits—A credit policy for retailers—Premiums
Coffee is sold at retail in the United States through seven distinct channels of trade; the independent retail grocers (about 350,000) handling about forty percent of the 1,300,000,000 pounds sold annually; and the other sixty percent being sold by chain stores, mail-order houses, house-to-house wagon-route distributers, specialty tea and coffee stores, department stores, and drug stores. Since the beginning of the twentieth century, the independent grocers' monopoly in retail coffee-merchandising has been dwindling at a rate that has seriously alarmed those interests and their friends.
B.C. Casanas of New Orleans, addressing a convention of the National Association of Retail Grocers in the United States, in 1916, said that the wholesale coffee roasters of the country had invested in their business $60,000,000; and that $135,000,000 worth of roasted coffee was sold by them every year.
Considering the methods of merchandising, the seven retail distributing agencies may be grouped into three distinct classes. The first class would comprise the independent grocer, the chain store, the department store, the drug store, and the specialty store, all of which maintain stores where the consumer comes to buy. The second class takes in the mail-order house, which solicits orders and delivers its coffee by mail, and sometimes by freight or express. The third class covers the wagon-route dealer, who goes from house to house seeking trade, and delivers his coffee on order at regular periods direct to the consumer in the home. As an inducement to contracting for large quantities to be delivered in weekly or bi-weekly periods, the house-to-house dealer generally gives some household article, or the like, as a premium to establish good-will and to retain the trade of his customers.
New impetus was given to the method of selling coffee by mail when the parcel post system was adopted by the federal government in 1912; and since then this plan has become an important factor in retail coffee-merchandising. Generally, the mail-order houses confine their sales efforts to agricultural districts and small towns, soliciting trade by catalogs, by circular letters, and by advertisements in local newspapers, and in magazines which circulate chiefly among dwellers in rural districts.
The majority of wagon-route distributers depend upon the lure of their premiums, and on personal calls, to develop and to hold their coffee trade. The leading wagon-route companies, sometimes called "premium houses", maintain offices and plants in large cities adjacent to the territories to which they confine their sales efforts. At strategic points, they have district agents who engage the wagon men that do the actual soliciting of orders and that deliver the coffee. All wagon-route companies handle other products besides coffee, specializing in tea, spices, extracts, and such household goods as soap, perfumes, and other toilet requisites that promise a quick sale and frequent re-orders. Some of their competitors complain that they handle only the more profitable lines, leaving the independent local grocer to supply the housekeeper with the items on which the margin of profit is comparatively small.