"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
 By 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
technodrama™
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 April 1948 in Radio News
magazine (which later became Radio & Television News, then
Electronics
World), and changed its name to simply "Mac's Service Shop" until the final
episode was published in a 1977
Popular Electronics magazine. "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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