Turn of the Tide

After five years of flood, the tide in retail trade seemed about to turn last week. Sales were still enormous (see Earnings), and the upcoming Christmas shopping binge would keep them high, but more & more sales clerks heard two long forgotten phrases: “How much is it?” and “No thanks.” All over the U.S. there were more & more signs that the sellers’ market was turning into a buyers’ market because 1) prices were too high or 2) the free-&-easy spenders of the first postwar rush had run out of money.

Butcher shops felt the full weight of buyers’ disdain. Prices fell rapidly in most cities. When the price of a pair of pajamas was quoted at $5.75, a San Antonio bank clerk snapped: “I’ll keep on sleeping in old shirts instead.” Boston’s R. H. White department store, which for years could not keep any bedroom furniture on its floor, got a carload at the beginning of the week, still had almost all of it at week’s end.

Down Furs. Luxury goods were hardest hit. Sales of fur coats were down; so were fur prices. Brooklyn’s Abraham & Straus announced a one-third reduction in the price of $113,170 worth of “truly magnificent fur coats.”

Sales of jewelry, perfume, paintings, luggage, along with nightclub business, were also slumping. Diamond prices in the New York market dropped more than 15% in a week. Asked about business, an Atlanta luggage dealer who had canceled his advance orders replied: “Confidentially, it stinks.” Said the agent for Boston’s two swanker nightclubs: “[Business] is positively lousy.” Said an unhappy Seattle bellhop: “They’re diming me to death again.”

In Boston, the New England Sales Management Conference announced the theme for its forthcoming session: “Getting Ready for the Buyers’ Market.”

Down with Fantasy. As in a traffic jam, the slowdown was felt all along the line. A leading Atlanta department store stopped its practice of “open ordering” (i.e., buying anything that wholesalers will sell). New York retailers began to tell manufacturers to deliver by certain dates or they would cancel the orders. They were no longer willing to take goods any time in the future—and get caught with top-heavy inventories. (This week the New Jersey Bakers Board met to consider a general shutdown to force flour prices down.)

Even manufacturers joined the resistance movement. Said the National Association of Purchasing Agents: “[Prices have become] so fantastic that purchases cannot be justified. Buying at any price to keep a plant running may be approaching an end.”