The Bargain Man

Manhattan's Liberty Music Shops, Inc., which claims to be the biggest U.S. retailer of phonograph records, reached its eminence with a strict policy against cut-price sales. But in half-page ads last week, it astonished the record industry by cutting prices 30% on "ALL MAKES--ALL SPEEDS --ALL SIZES." As sales jumped tenfold, Macy's and Gimbels reduced their own record prices by 30%; Brooklyn's Abraham & Straus advertised cuts of 40%. As some Boston retailers also slashed prices, it looked as if the price war might spread across the country.

The war came when the record business was good (sales were close to $200 million last year) and getting better. Liberty's explanation for the cuts: 1) record prices were too high, 2) manufacturers were ready to cut them, and 3) the list prices have been violated left & right for months. Hole-in-the-wall shops have not only been selling Victor and Columbia records at 30% or more off list, but selling pirated or bootlegged brands even cheaper.*

Free Players. The man who had done more than anyone else to bring on the war is a little-known supermerchant of cutprice records close to Times Square named Sam Goody. "I'm the bad boy," Sam Goody, 48, cheerfully admits. He also insists that he has passed Liberty as the No. 1 record seller. When long-playing records first appeared in 1947, Goody was selling about $200,000 worth of records a year in a small shop. Goody, deciding that LPs were the coming thing, dumped most of his stock of 78-r.p.m.s at 50% off. To push the LPs, he offered them at 30% discount. He threw in an LP attachment free with every $25 worth of records, to date has given away 20,000. He flooded schools and colleges with direct-mail literature touting his 30% discounts word-of-mouth advertising did the rest. His sales shot up to an estimated $1,900,000 last year; in the first two months of 1952, they ran at a 28% higher rate. Goody has another dollar-catching trick. All retailers are allowed to return 5% of their purchases, but Goody claims he sells so fast that he never needs the full credit. However, he buys up distress merchandise of other dealers at bargain prices, then turns it in at full credit on his 5% allowance.

Supermarket. Goody has no salesmen and no listening-booths in his huge store, only self-serve shelves and a big directory in front, telling where everything can be found. Three adding-machine operators check out the customers, as in a supermarket. He now does 60% of his entire business by mail, has given retailers jitters as far away as Chicago.

Some record sellers predicted that the price cutting will wash the small retailer down the drain, since he is unable to get the volume to compete with Goody's phenomenally low (8%) markup. The manufacturers themselves, drawing lessons from Goody's demonstration of what big volume and low markups can do, may trim their own prices.

* The New York supreme court last month enjoined Paradox Industries from pirating any more of Columbia's records under its impudent "Jolly Roger" label (TIME, Feb. 11), ordered it to surrender all duplications on hand, plus any master records or tape recordings from which further records could be made.

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