End of the Boom?

Mail-order men think the two-year boom in retail sales is about over. Said Sears, Roebuck President Thomas J. Carney last week: "We do not expect so large a volume of sales next year." Montgomery Ward told stockholders it had set up a $2,000,000 reserve against "price declines."

The mail-order experts deserved a respectful ear. In the 1930s they outwitted, outsold and outearned most U.S. merchants. While Sears, Roebuck and Montgomery Ward boosted combined sales from 1930's $600,000,000 to 1940's $1,219,000,000, department-store volume slumped 9%. While mail-order profits jumped sky-high many a department store plopped into receivership.

In 1941 mail-order sales and profits will hit new all-time highs. But in 1942 the catalogue merchants expect the Government to emasculate public purchasing power through still higher taxes, perhaps enforced savings.

The mail-order firms also anticipate a shortage in goods. Already they are feeling the pinch. "Hard" line inventories (refrigerators, radios, tires, bicycles, etc.), are dangerously low. Montgomery Ward's refrigerator sales have dropped 35-40% because of the shortage. Neither Ward nor Sears expects a shortage in "soft" lines.

To offset the expected sales decline, both houses have reduced forward buying almost to a standstill. Until last April both were buying in slam-bang fashion, were taking commitments two years ahead (normal: three to five months). Then Sears began slowing down. Montgomery Ward woke up two months ago to find its inventory at record heights, its forward commitments 80% above normal. It began buying only for replacement.

This week few retailers shared the Sears-Ward fears. Department-store owners happily prepared for the biggest Christmas rush in U.S. history. They are not so dependent on "hard lines" as Sears and Ward, and possibly they are not so farsighted.

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