70 BULLETIN 1317, U. S. DEPARTMENT OF AGRICULTURE 
(See Table 38.) In some of the individual concerns the difference 
was substantially as great as in the chain systems, while in some 
of the largest the gross margin was substantially the same in gro- 
ceries as in meats. 
The principal reason for the narrower margin in groceries is 
clearly the policy in some instances of using groceries as leaders and 
in general of meeting active competition by low retail prices on 
groceries while making the necessary profits of the combined busi- 
ness by a wider margin on the fresh meats sold. The possibility of 
such a policy lies in the readiness with which differences in prices 
of standardized groceries are recognized and appreciated, while in 
the fresh-meat trade differences in grade are but little understood 
and differences in trim are but little appreciated by the ordinary 
customer. Under widely accepted modern methods of merchandis- 
ing, trade is drawn by leaders or standardized brands strongly fea- 
tured in advertisements, and the necessary profits must be made in 
those lines in which differences in prices are not so readily notice- 
able. When meats are sold in connection with groceries, the fresh 
meats offer the best opportunity for profits. If on the basis of net 
sales the gross margin is to be made 2 per cent higher than it would 
otherwise be, it is merely necessary to make the price on preferred 
cuts 4 or 5 per cent higher, perhaps 2 cents a pound, with a smaller 
difference on less desired cuts, or that in selling a side of beef weigh- 
ing 300 pounds, 3 or 4 pounds less of bone and fat be removed in 
trimming the high-priced cuts. 
From the somewhat limited data available, the policy of main- 
taining a wider margin on meats than on groceries seems more preva- 
lent among chain-store systems than among individual concerns, 
possibly because of an aggressive policy of expansion, since new ter- 
ritory must be opened up by vigorous competition. This competition 
is likely to be based upon standardized merchandise, whereas meats 
offer special opportunity for profit when trade has been drawn to the 
premises by leaders. 
COMPARATIVE MARGINS ON DIFFERENT KINDS OF MEATS 
Few retail dealers have records showing the comparative margin 
or spread between cost at wholesale and sales at retail of different 
kinds of meat, but estimates of the margins they ordinarily expected 
to obtain were obtained from more than 500 of the more repre- 
sentative markets in the cities canvassed. These estimates were 
obtained in 1920, when the dealer's margin was undoubtedly higher 
than in 1919, and in most instances they were based on costs at 
wholesale, as this is an easier method of calculation than if based 
on selling price at retail. Accordingly, the percentage of margin 
as shown by the average of the replies is somewhat higher than 
that shown by examination of the records of the year before, even 
though dealers would be more likely to give estimates too low than 
too high. Since a general average of the estimates accords fairly 
well with the actual average margin of those concerns that furnished 
accounting records and the difference between cash-and-carry stores 
and service stores in these estimates accords closely with the differ- 
ence shown by examination of accounting records, the estimates may 
