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Mac's Radio Service Shop: Discount Houses
November 1954 Radio & Television News Article

November 1954 Radio & TV News
November 1954 Radio & Television News Cover - RF Cafe[Table of Contents]

Wax nostalgic about and learn from the history of early electronics. See articles from Radio & Television News, published 1919-1959. All copyrights hereby acknowledged.

Those Controversial Discount Houses, Time magazine, August 9, 1954 - RF Cafe

"Those Controversial Discount Houses," Time magazine, August 9, 1954

"Mac's Radio Service Shop" episodes nearly always reflected the season in which they appeared in Radio & Television News magazine, and were also very often concerned with pressing issues of the day. This November 1954 issue's story opens by setting the scene with a gray, windy late autumn day, and then launches into a discussion between Barney and Mac about the situation where discount merchandise outlets were pawning off service responsibility for large volumes of sales on anybody but themselves. Being both a sales and service concern himself, Mac was torn between welcoming the additional business provided by the discount houses and the bad name they were giving reputable sales people. Whenever a specific product or business is mentioned in the article, I put some effort into finding examples on the WWW to provide extra context to the story. In this case Mac mentions an article having appeared in a Life magazine "a few months ago." Knowing the contemporaneous nature of John Frye's creations, I searched for mid-1954 editions of Life and actually identified the August 9, 1954 cover with "Those Controversial Discount Houses" on the cover. Bingo! A copy of the article could not be found, but there are some available on eBay if you are interested.

Mac's Radio Service Shop: Discount Houses

Mac's Radio Service Shop: Discount Houses, November 1954 Radio & Television News - RF CafeBy John T. Frye

Outriders of approaching winter could be seen on every hand. Bloated dark gray clouds rolled endlessly overhead; the northwest wind had a sharper bite to it; and the oil furnace in Mac's Radio Service Shop, nudged by the chilling thermostat, had awakened from its summer hibernation and quietly taken over its task of keeping the rooms warm and cozy.

Mac and his helper, Barney, had plenty to do, but by mutual consent they were taking a short break. Mac was perched on a high stool tilted precariously back against the wall, and Barney sat dangling his long legs over the edge of the radio service bench.

"Hey, Mac," the youth said suddenly, "Last night I got over to Margie's early for our date, and I had to wait while she put on her face. This takes no little while, considering what a nice face she has to start with; so I spent the time threshing through the magazine rack. Her old man is an appliance salesman, and the magazines were mostly those published for appliance dealers. I couldn't help noticing that several editorials and articles in them were devoted to what was termed 'the serious problem of discount houses.' Seems these are stores that sell nationally advertised refrigerators, dryers, washing machines, ironers, toasters, radios, TV sets, and cameras at a considerable discount below list price to the general buying public.

"A typical store of this kind cuts overhead to a minimum by doing away with all plush store furnishings, employing only a few 'order takers' instead of several trained clerks, and omitting all service and store guarantees. The customer walks into one of these stores, picks out what he wants from factory-sealed cartons sitting on bare tables, pays the price asked - which is usually twenty to thirty per-cent below list-and walks out. His purchase is then his baby. The only guarantee he has is that provided by the manufacturer, and if anything goes wrong, he can either have it repaired at his own expense or return it to the factory for a possible adjustment. In spite of this, the inducement of the lower prices draws enough customers to worry the heck out of regular dealers."

"I mentioned this to Margie's pop, and that was a mistake. He immediately got all steamed up and started explaining to me what, an evil thing discount houses were. By the time I finally pried myself loose from him, we were ten minutes late for the beginning of the feature picture."

"I know what you are talking about," Mac drawled. "'Life' ran a story on the subject two or three months back. They mentioned this discounting was rearing its ugly head even in automobile selling. All the time I was reading the article, though, I kept thinking that if misery really did love company, this development ought to make the service fraternity feel real good."

"How's that?"

"Simply because we have been living with this 'new' problem for several years. In practically every large city there is a radio parts house that will sell at wholesale prices to anyone who walks through the doors or who will send in a two-cent postcard for a catalogue. In other words, any customers can buy condensers, tubes. resistors, TV antennas, and so on, from one of these places for the same price we have to pay our distributor. Now and then this leads to some amusing experiences. For example a customer will slyly intimate he is 'on to' our little game; then he will triumphantly whip out one of these wholesale catalogues and point out where he could have bought the tube for which we charged him two dollars for only a dollar-twenty-plus postage, of course."

"What do you do then?"

"Express surprise that he could be so naive as to think we should sell parts for the same price we pay. I ask him if he knows of any other store that does this - and stays in business. As gently as possible, I disabuse his mind of the mistaken idea that the difference between list and net prices on the parts we install constitutes 'something extra' added on to a legitimate charge for a service job. I explain that service charges are not just numbers plucked out of thin air but are realistically geared to hard facts and figures in the service business. The gross profit in those charges must do three things: (1) cover all overhead expenses such as rent, light, telephone, fuel, truck expenses, insurance, advertising, depreciation, wages for you and Miss Perkins, and so on; (2) provide a reasonable return on the capital I have invested in instruments, furnishings, truck, service library, and parts stock;  and (3) give me a fair salary for doing service work and operating the business.

"Money to do these things comes from just two sources: first, there is the actual service charge for doing the work; second, there is the difference between the list price we charge for the parts we put in and what these parts cost us. Income from both sources is anticipated in "drawing "up our scale of service charges. If income from one source disappears, the income from the other source must be boosted to take care of the lost revenue; otherwise, we should soon find that we were not making money at all but were just handling it.

"We do everything we can to buy parts as cheaply as we can without making any sacrifice in quality. Quite often we buy in quantity to get a better discount. Sometimes one distributor will offer a better discount in an effort to get new customers. Whatever saving we accomplish through wise buying is actually passed on to the customer in the long run through the reduction we are thus able to make in our service charges. It does not take any great intelligence to see that if we did not make a profit on the parts we should have to raise those service charges considerably to achieve the same net income from the same amount of time and effort expended."

"You mean that if a guy brought one of our in some filter condensers and wanted us to install them, you would charge him the regular service charge for the job plus the profit normally made on the sale of new condensers?"

"That's it exactly. It is the only way of doing it so that the job can be made to bring in its fair share of service income."

"I don't think the customer's gonna like it," Barney said dubiously.

"Possibly not," Mac agreed with a broad grin, "but he would like it even less if I tried to take advantage of a situation that would cause a reduction in his income. You've got to keep in mind the important commodity a service technician has for sale is his know-how. If he sells that cheap, he is a fool. If I put in the customer's condensers at just the usual service charge, I'm guilty of selling my knowledge-which he lacks, or he would put them in himself - cheaply."

"You're right, of course," Barney agreed. "But who do you think is really to blame in this discount business? Is it the man who operates the store, the manufacturer who sells to him, or the guy who buys from the store?"

"I blame no one," Mac said amiably.

"Certainly you can hardly blame the store operator for seizing an opportunity to make money. After all, he simply depends upon greatly increased volume to compensate for the small mark-up he uses. That's no sin. And he must be satisfying a real demand or he wouldn't be in business. By putting out a complete and well-illustrated catalogue he enables his customers to compare one product with another and to buy more intelligently. These catalogues are especially helpful to service technicians who live in isolated areas and have to depend upon mail order service to get all of their parts. What's more, these mail order houses compete keenly with one another and so serve to bring down prices.

"Neither can I blame the people who buy from these stores. It is a good old American privilege to be able to drive your pigs to the best market. If a fellow buys parts that he can install himself, I have no quarrel with him. On the other hand, if he buys them and then expects me to install them at the same price I would charge for putting in my own parts, he is going to be disappointed.

"Personally, I prefer to buy from my regular distributor for a number of reasons: first, he goes out of his way to keep me informed on all new products that come out, even going so far as to send samples along with the salesman for my inspection. Secondly, he conducts meetings for service technicians at which leading authorities talk about various problems in servicing radio, black-and-white TV, and color TV sets. If I get a little short of cash, he is perfectly willing to carry me for a month or so. Back when tubes were tight and I could not obtain scarce types from the mail order houses, my distributor saw to it I got my fair share. Finally, if I receive a defective part, I simply hand it back to the salesman and promptly get a new one in exchange. There's no wrapping up, mailing back, and so on.

"To me these are all valuable services that I appreciate, and I try to show my appreciation by buying all I can from the distributor. At the same time I occasionally buy a particular part not carried by my distributor from one of the mail order houses, and the service I get on these orders is usually prompt and satisfactory; so I have no crow to pick with them. It is highly possible I might feel differently about these stores if the major part of my income came from sales instead of service, but as long as most of our customers have to call on us to install the parts they buy, we are not going to be hurt much. I could find it in my heart to wish they would not mail out these catalogues to every Tom, Dick, and Harry who requests one; but maybe it wouldn't be practical to try to sort the deserving from the undeserving."

"How about the manufacturer who sells to the wholesale house when he knows it is going to sell those parts to anyone who wants them at far below list price? Isn't that being unfair to technicians who are expected to sell the same parts at list?"  

"In a way it is, but you must admit there are extenuating circumstances. Keep in mind the wholesale house will buy a carload of parts for every hatful the individual technician buys. What's more, the wholesale house will picture and describe the good features of that product in a catalogue mailed all over the world free of any extra expense to the manufacturer. It's asking almost too much of human nature to expect a manufacturer to turn down a proposition like that.

"All in all," Mac concluded as he heaved the stool on four legs, "there must be room for both the mail order wholesale house and the regular distributors or both would not have flourished all these years. For the legitimate technician, the mail order house is just another handy source of needed parts. As for the fellow not really eligible to receive a discount on radio parts but who buys from one of these catalogues anyway, thinking he is saving money, I know from long observation he will buy enough wrong parts or ruin right ones trying to install them without sufficient knowledge so he will waste money instead of saving it."

"Yeah," Barney agreed as he slid off the bench. "It's just like the guy who tries to beat the doctor out of a fee and prescription by dosing himself with patent medicines. He ends up going to the doctor anyway after he has squandered the cost of several fees doing his own doctoring."

 

 

Posted February 16, 2021


Mac's Radio Service Shop Episodes on RF Cafe

This series of instructive stories was the brainchild of none other than John T. Frye, creator of the Carl and Jerry series that ran in Popular Electronics for many years. Mac's Radio Service Shop began life in Radio & Television News magazine (which itself started as simply Radio News), and then changed its name to Mac's Service Shop after the magazine became Electronics World. "Mac" is electronics repair shop owner Mac McGregor, and Barney Jameson his his eager, if not somewhat naive, technician assistant. "Lessons" are taught in story format with dialogs between Mac and Barney.

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