Modern Jobber

Almost axiomatic is the belief that jobbing is doomed as an economic function. The wholesaler, runs the argument, will be inevitably squeezed to death between chain-store competition and direct-to-retailer selling by manufacturers. One jobber who has refused to accept this fate is Butler Brothers, one of the biggest U. S. wholesale houses.* Last week Butler's President Frank Simpson Cunningham told his stockholders that in 1935 their company sold $73,000,000 worth of hardware, cutlery, jewelry, furniture, notions, dresses, towels, etc., and retained $1,285,000 as net profit. That was a little better than Butler had done the year before, though below the figure for 1933, when rising prices helped boost profits to $1,572,000.

"Thus far in 1936," wrote President Cunningham, "the unprecedentedly severe weather has impeded retail trade, especially in stores serving rural communities, and likewise made it difficult for buyers to come to market. . . . The tone of business is good, and we have every confidence that as soon as weather becomes normal, increases in volume will resume."

If President Cunningham had not started to make some heroic adjustments in the affairs of his venerable company about ten years ago, he might have had no annual report to sign last week. Founded as a one-room store in Boston in the 1870's by the late Edward Burgess ("E. B.") Butler and his two brothers, the company was a mail-order wholesale house for nearly half a century. Indeed, the company claims it issued the first mail-order catalog in the U. S. As late as 1923 Butler Brothers was making more than $3,000,000 annually on its catalog alone.

Founder Butler's brothers died not long after the firm was moved in 1879 from Boston to Chicago, where its headquarters have been ever since. Prospering exceedingly, ''E. B." Butler lived until 1928, sinking some of his catalog millions into philanthropies like Jane Addams' Hull House and the Glenwood Manual Training School south of Chicago. He fathered the enabling legislation that promoted Chicago's Lake Front development. But before he died, old "E. B." reluctantly admitted that the cherished catalog that had made him rich could no longer serve as a wholesaler's sole support.

Under President Cunningham, who got his start as ''E. B." Butler's personal stenographer, Butler Brothers has changed its skin. Catering chiefly to small-town merchants, the company began to suffer in the 1920's. Automobiles and good roads, carrying shoppers to larger cities, cut into the rural merchant's trade. Better transportation also carried salesmen to the merchants that survived, undercutting Butler's mail-order business still further. Meantime chain stores were mushrooming.

Working on the theory that every new chain store brought the point of chain-store saturation just that much nearer, President Cunningham proceeded to overhaul his whole wholesaling methods. Hundreds of salesmen were put on the road to sell the Butler line direct. Buying offices were transferred from Manhattan to Chicago to be close to selling headquarters, which knew what John Customer wanted. To get even closer to the customer, Butler itself went into chain stores. Serving principally as merchandising laboratories, Butler now has two chains, one the 5-c--to-$1 Scott variety stores with 115 units in the Midwest, the other a string of 25 L. C. Burr & Co. dry goods stores in the Southwest. Burr stores are called "junior department" stores. On this retail division Butler is now making a little money.

Meanwhile the wholesale division was expanded by adding San Francisco to the list of cities where Butler maintains a '"house"--a complete jobbing unit with showrooms, offices and warehouse serving a definite trade area. Other houses were already established in New York, Chicago, Minneapolis, Dallas and St. Louis, where Butler has one of the biggest buildings in the city. In 1930 a wholesale company known as the "Baltimore Bargain House" was acquired to distribute through the Southeast.

Most significant innovation was Butler's development of two voluntary chains, the Ben Franklin League of variety stores and the Federated dry goods stores. Founder Butler conceived and named the Ben Franklin stores in 1923. The plan is simple. Any honest person with $4,000 capital and some storekeeping experience can negotiate for a Ben Franklin franchise. If satisfied that the prospective merchant has a reasonable chance of success, Butler experts will help pick the store's location, order equipment, select stock, assist in hiring and training clerks, send a representative to the opening. Thereafter, Butler furnishes the storekeeper with constant advice on how best to run his business. Each month he receives a list of fast-selling items with instructions for their day-to-day promotion. He is given photographs and charts of suggested window and counter displays. No less than 35 Butler supervisors spend all their time traveling from store to store teaching the fundamentals of good merchandising, good business practice.

Ben Franklin stores are owned by the individual storekeeper. Butler never invests a cent, never extends credit. But Ben Franklin owners agree to give Butler "preference" in their buying, and in practice Butler gets 70% of their purchases. This provides Butler with some $20,000,000 of cash business annually. First Ben Franklin store was opened in 1925. Today their red-&-gold signs are displayed on the fronts of 2,500 stores in every State in the Union, largely in towns of under 5,000 population. Only 500 were brand new stores, the rest having been remodeled or renovated. Less than a dozen have gone under. The 1,500 Federated dry goods stores operate on the same principle, buy some $13,000,000 worth of merchandise from Butler annually.

Butler still sells an enormous volume to independent stores. One reason it has been able to hold its jobbing ground is that it never hesitated to handle low-priced goods, which sell fast and easily. Butler's fellow Chicago wholesaler, Marshall Field & Co., stuck exclusively to quality, finally abandoned jobbing entirely (TIME, Dec. 9). Not until last week, however, was it known what a miserable failure Marshall Field's jobbing activities had actually been. In reporting 1935 profits of $199,000 for Marshall Field as a whole. Chairman James O. McKinsey revealed that the wholesale division had lost no less than $12,000,000 in the past five years. Butler's President Cunningham, in Florida last week for a quick vacation, must have had a few chuckles over that Field report, for he expects to grab off a fat slice of the business Field has abandoned.

During Depression Butler piled up deficits of $7,000,000. Trend of earnings was steadily down from the $3,363,000 reported in 1925 through a 1932 deficit of $2,084,000. That was in part the inspiration for President Cunningham's rejuvenation program, in part a result of the program itself, which was costly. And the program was hardly launched before Butler had to adjust itself to a Depression sales drop from $63,000,000 yearly to a low of $46,000,000. In his 1930 report President Cunningham dolefully observed : "Everything conspired to make it the most trying and unsatisfactory year in our experience."

President Cunningham at 69 is well past the age at which chief executives usually turn their companies inside out. Son of a Goshen, Ind. druggist, he was a Butler vice president & director before he was 33, was made president in 1918, the same year his only son was killed in France. Mr. Cunningham has established a Yale scholarship in his son's memory in the high school of Evanston, Ill., where he lives, helped build a War memorial in Thiaucourt, France, where his son fell. The directors of Butler Brothers also replaced the Thiaucourt chimes, which had been destroyed by German gunfire.

*Not to be confused with Manhattan's James Butler Grocery Co., which last week offered to sell its 483 stores to their 483 managers, or with St. Paul's Butler Brothers, one of the few remaining independent iron mining companies in the U. S. Operating in Minnesota's ore-laden Mesabi and Guyana Ranges, this Butler Brothers was founded by five sons of an Irish immigrant father. The sixth son is U. S. Supreme Court Justice Pierce Butler.

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