The young man starting in the retail meat business with the thought in his mind of advancing himself by owning his own store, tries of course, to first select a proper location for the market. As a rule, considerable attention is given to many factors which may influence his future business success. A check is made to see if the store is located on the sunny or shady side of the street. A careful count is made of the number of people passing the store. The number of families are counted in the immediate vicinity where he proposes to open up a store. Future building activities are also estimated. The number of men employed in factories and the number of men on local payrolls are studied, as are also the general business conditions of the town.
Fundamental Facts Overlooked
All such factors influence the success of a market, but many men starting in business overlook the basic and fundamental fact necessary for the success of a business, a knowledge of the exact total population of a city or town, and the number of markets doing business there.
As an example, if in a city of 5,000 people there are six retailers, the population is theoretically divided into 833 people per market. If another market is now opened in this same town, there will be seven stores. If the new market expects to do a volume of business equal to that of the stores already established, it figures out theoretically that there would then be only 705 people to every meat market in the town.
Importance of Population
The failure or inability to analyze these fundamental factors of population figures as related to the number of existing markets is, no doubt, the greatest curse of the retail meat industry, inasmuch, as it results in too many markets per given population. Although the above instance may sound like theory, a very important fact must not be overlooked, namely, that if the new-comer in business is securing the trade, the other market or markets are being deprived of some of their business.
In actual practice, however, this generally works out differently. It will usually be found that in an average town of this type, there are two or three good markets which do the bulk of the business, while the balance struggle along, trying to get enough business to be able to pay expenses. Investigations have proved that many market owners of this type would be better off if they would close their market and seek employment in the other markets, which would benefit the trade and the general public.
The Number of People Per Market
The fundamental principle by which one should be guided in establishing a meat market is, first, to find out if there is sufficient population in that locality, or if there will be sufficient increase over the present population in the near future to sustain a market expecting to do a reasonable amount of business.
According to observations made by the author, and judging from all available statistics, it requires at least 800 people to support a meat market profitably. That is the average minimum figure. A population of 1,000 people per market is good, and of course any further increase in population per market is still more desirable.
These figures apply to the average market in a typical American city. There are, of course, exceptions. A town may have a population of only 800 people and still two markets can do a business of several thousand dollars per week. Investigations will prove, however, that the large percentage of this heavy business is drawn from rural communities and from the farmers who come to town and buy their meat supplies. Therefore, the fundamental thought of the retailer who may want to start in the re-tail meat business should be to make a very close survey of the population in relation to the number of market owners established in a given community.
Some interesting figures substantiating the fact that there are too many retailers per given amount of population is shown in the results of an investigation made by the United States Department of Agriculture, as contained in Bulletin No. 1441:
In a study of the retail meat industry in 28 cities in various parts of the United States during 1919 and 1920 the average number of persons per store at that time was found to be 821. In this study the number per store in different cities ranged from 300 to 700 persons per store. New York City, for instance, with an estimated population of 6,000,000, has 13,000 retail meat markets, or 1 market to 462 persons according to records of the license bureau of that city. Chicago, with an estimated population of 3,000,000, had 7,000 licensed retail meat dealers in 1925, or 1 market to 429 persons.
There is an old saying that competition is the life of the trade, but to have one meat market to every 300 or 500 people, as is true in a good many cities in the United States, is unsound from an economic standpoint.. Instead of competition being the life of the trade, it is in reality, the slow death of many meat markets.
In order that some of these surplus meat markets may secure a sufficient amount of business to sustain them, price cutting, untruthful advertising and unfair business methods are being practiced extensively, and naturally such tactics result in destructive competition. This is harmful, not alone to the good meat retailer, but reflects on the retail meat industry in general.
Business of any nature, whether it be steel, jewelry or meats is the survival of the fittest, and it is very desirable that educational measures be provided by the leading trade associations and other agencies in the industry so that an over-supply of meat markets can be prevented.
It is the desire of every ambitious meat cutter who has saved some of his money to start in business for himself, but a thorough knowledge of such facts as have been mentioned, will tend to discourage young men from going into the meat business on a shoe-string and becoming a nuisance to other retailers, with their practices of price cutting, and untruthful advertising in order to get business by any means.
Causes for Surplus Meat Markets
Economists in the industry who have made a study of this important subject claim that the surplus meat markets is due greatly to the over-anxiety of supply houses and meat packers for business. The extending of too liberal credit terms on equipment, coupled with the freely available credit of a meat packer too anxious for business, have helped to bring about this condition. Such practice is very short-sighted on the part of a meat packing firm. The same is true of the fixture and equipment supply houses.
From the meat wholesaler or meat packer’s standpoint, nothing has really been gained. The very fact that another market in town has been opened does not indicate that additional meat will be consumed as long as the population is not increased. The only change is that a new account has been created on the books of the company, which merely results in additional overhead and sales expenses, while the accounts of the other retailers in the town will be proportionately smaller.
Since the surplus of meat markets is one of the most detrimental factors in the retail meat industry, it is of such importance that it deserves the attention of the leading trade associations, meat packers and supply houses in this field. Failures in business always mean an economic loss. The fact that there are too many retailers in relation to population can be substantiated by turning to Table No. 20 on page 60 showing the credit losses in the retail meat industry.
In determining the location of a future meat market, one should not be guided alone by the average population per market, but also study general market conditions in a particular locality. This is especially true when the opening of a typical neighbor-hood market is contemplated. In a market of this type a study of the immediate neighborhood from which possible trade can be drawn is of great importance.
Downtown Shopping Centers
In recent years it has become a great habit of city or country people to go to the downtown shopping centers in the larger cities. The automobile has made it possible for the rural buyer to go to “Main Street” with the result that even meat is bought today in the downtown shopping centers to a much greater ex-tent than in former years. This is evidenced by actual investigations made of downtown markets which report that 50% and often as high as 60% of their week’s business is done on Saturdayand also a large percentage on Friday. This trade has usually been drawn away from neighborhood markets, and very often is made up of people who buy on credit from the regular market during the week, but make their cash purchases on Fri-days and Saturdays at a downtown market where they can secure lower quality meats at a lower price. Therefore, the location of a neighborhood market also depends a great deal upon the number of downtown markets which are in the city.
The very fact that there may be ten markets in a city of 10,000 population does not indicate that each market does an average of $1,000 worth of business per week, but in practice it will be found that two or three downtown markets will do the bulk of the business, and the other markets will get what is left.
Desirable locations for the average meat markets are, of course, the neighborhood shopping centers, and if a straight meat market is operated, a connection with a grocery store or a location ad-joining a grocery store, or vegetable or fruit market, is highly desirable. The parking of automobiles also has a great influence upon location in sections where the housewife may travel into town to make her meat purchases. All these facts must be taken into consideration by the future market owner. The man who is starting in business, however, should realize that it requires at least a population of 800 to sustain the market and to maintain a fair business and for the business to yield a fair profit.
Since the chain store companies study locations very care-fully, many retailers try to locate near a chain store market. It is peculiar to note that where there is one chain store quite a few more will be found in the immediate vicinity. Thus good-life chain stores often create a shopping center, either on account of their reputation for quality products or for lower prices.
There are, of course, exceptions where markets are located at far away points and still do a very large business. As an illustration, there is a meat market in Rochester, New York, located on the outskirts of the city in a thinly populated part of the town. This market does a business of from $6,500 to $7,000 per week. The immediate neighborhood could not sustain this large market which keeps from 10 to 12 men busy on a Saturday. This particular market owner, however, has one of the most sanitary and up-to-date markets and enjoys a very high reputation for his quality products. The result is that buyers travel many miles to this market to buy their Saturday meats. This is due not only to the fact that they are sure of quality pro-ducts, but to the parking facilities which is lacking in the congested downtown district.
Practically every man starting in the meat business knows the typical advantages of location as mentioned, but failure is very often due to ignoring the total population per market. While there are progressive meat merchants, who through their progressive business methods, coupled with advertising and salesmanship can go even into an overcrowded section and do a good business, this cannot be said of the average type of retailer. It is therefore, very important to know how many meat consumers are in a given locality per market.
Buying Habits of the Consumer
Every retailer is, of course, familiar with the meats he sells to his trade. Therefore, information on the buying habits of the consuming public have limited practical value to him.
What the per capita consumption of meat is can readily be seen from the table on meat consumption. An investigation made in 1925 to ascertain buying habits brought out some facts and figures which will be of interest to the average retailer. This investigation was made in the City of Chicago by Parker L. Holmes. It covered all districts of the city, and a total of 4,000 people. The following facts were discovered:
It was found that 19.8% of the families interviewed eat meat for breakfast, 26.4% eat meat for dinner, and 82.6% eat meat for supper. It showed that the consumption of pork chops was highest in the negro group and least in the Jewish group. It also showed that more veal was consumed by the Scandinavian, and that the Italians were the heaviest buyers of stew. It further showed that the Polish population were the largest meat consumers, and the Italians the lowestthat the Negro was the heaviest pork consumer, and the Polish group second heaviest.
It is also interesting to note from this investigation that the Jewish group consumed 3.1 pounds of pork per capita.
Buying habits of the consumer are entirely regulated by the location of a store, and the class of trade catered to, and although the retailer may not be familiar with the exact figures as to what his trade consumes per capita, he soon becomes familiar with their requirements and demands as he serves them daily.
While the markets in Louisville, Kentucky, may sell thous-ands of dollars worth of chitterlings per year, the market in New-port, Rhode Island, or Oyster Bay, Long Island, may never sell a pound in a lifetime. For the same reason, filet of beef, or filet mignon which may be a fast seller in the market catering to society trade, will hardly find a demand in a southern market catering to the negro trade.
Therefore, buying habits of the consumer are, what the consumer wantsand what the retailer must give.