Department Stores Under Threat 1927
UTILITY COMPANIES AS APPLIANCE RETAILERS
DEPARTMENT stores and chain stores have been showing considerable opposition to the new competition which has arisen from the policy of public utility companies of operating appliance stores in order to spread the gospel of the maximum use of electrical appliances in the house-hold. The stores, in fact, have been making serious objections to this competition on a basis of fairness and economy, notes the New York Journal of Commerce. The metropolitan daily goes on to explain why the utility companies have felt compelled to go into the retail business, and why the competition seems so objectionable to spokesmen for the regular retailing establishments. It reaches the conclusion that “when the present pioneering stage in the electrification of the household is past, the utilities may rely upon the department stores and other retailers to sell these appliances.” But until then, we read, “the latter must be content to stand this at times unfair competition which is playing its part in the evolution of a great industry.” To quote further:
When an electric-light and power company or a gas company opens an appliance store, it does not make profit the first consideration. The sale of a washing-machine or electric heater will give it a steady source of revenue over several years. Furthermore, the refrigerator, the washing-machine, and many other appliances consume current during the day, when the utilities generally find the greatest difficulty in keeping their plants profitably employed. Hence, the sale of appliances at cost is good business for them.
The retailing establishments, however, must rely upon the profit from the sale of the appliances. Hence they look upon the steady growth of utility-merchandising departments with anything but satisfaction. The president of “The Fair” store in Chicago and several other spokesmen of retailers have quite frankly told the utility executives on several recent occasions that they thought the whole proceeding unfair.
Now department-store and chain-store spokesmen are putting their pleas on the basis of economy. They see a great waste in special appliance stores maintained by utilities in places where department stores and other retail establishments are quite willing to push the sale of these goods as rapidly as is needed.
In the matter of credit terms, the controversy has been particularly bitter. The utilities, to push appliance sales, have often asked for very small cash payments, or sometimes no cash payments at all. Here the department store has become a critic of present methods of instalment selling, and has criticized the practise as unsound. The utilities are in fact running the risk of substantial losses by engaging freely in this method of selling.
 Looking at the matter squarely, it is difficult to see how the utilities can be induced to abdicate from the merchandising field. They apparently find it profitable, for reports reach us continually of new stores being opened for the sale of appliances, and in some cities, these stores have taken on so wide a variety of products as to begin to resemble the department stores themselves in size and variety. Some of them make money, others show a loss—the great bulk probably break about even. But there is no doubt that these stores have played a big part in increasing consumption of electricity. In Boston, for example, the Edison Electric Illuminating Company has been able to show a marked increase in sales of current, despite a slow growth in population, by energetic appliance-selling methods.
Source: The Literary Digest for October 1, 1927
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