6 BULLETIlSr 1044, U. S. DEPARTMENT OF AGRICULTURE, 



greater volume evidently possible under self-service than under the 

 cash-and-carry plan, even though both utilize the same floor space. 



Such " fixed charges," as for rent, heat, light, insurance, deprecia- 

 tion, and perhaps telephone, would remain the same, no matter how 

 much business was done in any particular store. If a certain store 

 under the cash-and-carry plan, with only space enough to do a $500 

 business, changed to self-service, studies show that it could probably 

 handle a $1,000 business. All fixed charges when measured as per- 

 centages of total sales would in such a case be reduced one-half. The 

 fixed charges in cash-and-carry stores amount on an average to 

 about 2 per cent of sales. If the change were made with the result 

 assumed above, the fixed charges would be reduced to about 1 per 

 cent of sales. Such expenses as advertising, management, buying, and 

 miscellaneous expense would be slightly higher in doing a $1,000 busi- 

 ness instead of a $500 business, but they would not be twice as much. 

 It would require a doubling of the actual expense mentioned in order 

 that its percentage of the sales remain the same. Since such expense 

 would be increased only slightly when sales were doubled, the per- 

 centage of sales would therefore probably be between 1.5 per cent 

 and 2 per cent, as against 3 per cent for the $500 cash-and-carry 

 business. The wrapping expense in terms of percentage would re- 

 main about the same, as it is directly proportional to the amount of 

 merchandise sold. 



Up to this point, under the conditions assumed, a saving of about 

 5 per cent in expense would be effected. The figures used have been 

 more or less arbitrary, but are representative enough for this demon- 

 stration. In a later chapter more exact figures as to self-service 

 operation will be given. In some instances stores operating under 

 the plan have effected a saving of around 10 per cent of sales over 

 the average expense necessary for the operation of a cash-and-carry 

 store. This has resulted from efficient management and the taking 

 of full advantage of those economies inherent in the self-service plan, 



SMALL INVESTMENT. 



As previously stated, the principle of operating on a small margin 

 of profit, rapid turnover, and large volume should go hand in hand 

 with self-service. 



• As perhaps twice the amount of business can be done under self- 

 service with practically the same capital investment and floor space, 

 the same percentage of net profit on sales is not necessary under this 

 plan as compared with the cash-and-carry or credit-and-delivery 

 plans in order to return to the operator a reasonable profit on his 

 investment. 



So many factors, such as location, type of trade, trend of business 

 conditions, enter into the volume of trade of a given store that 



