1940: Men's Apparel Industry

In the Men's Apparel Industry, 1940 was a swiftly moving year crowded with novel situations that had to be met and solved quickly.

It started as a normal year with normal sales increases, but it was soon swept into a whirl of rising and falling markets caused by war scares, peace rumors, defense programs, a presidential election, an unprecedented conscription act.

It was a year that showed the remarkable adaptability of American business. It closed about as it had begun — normally, without bending to the shocks of international, national or local economic disturbances.

The year got off to a good start in men's apparel stores, opening as it did with a decided up-trend. Seventy per cent of a representative group of stores reporting showed an improvement over January 1939 that averaged 17 per cent. Another 15 per cent noted that sales were just about the same. A cold wave that brought snow and low temperatures aided overcoat sales.

As the Spring season opened, the merchants looked forward to some price rises in woolens but few changes in cottons. Averaging the prices on low and high range garments for the entire country, the average for 1939 was $22.39 as compared with $23.65 for 1940 for low range; and for high range the average of $46.50 for 1939 compared with $48.00 for 1940. In many instances stores that were featuring a $22.50 garment as a starting price offered a better quality $25.00 garment to take its place. Where $50.00 had been the top price in retail stores, the tendency was to hold the price at that figure, but the popular ranges of $32.50, $35.00 and $40.00 were all moved up a notch, usually with an advance of $2.50.

March was a good month, with Easter sales well ahead of those of 1939. Improved business conditions reached into the credit department where it was reported that collections for the year were about 12 per cent better than for the corresponding period in 1939. A slight increase in the percentage of business done on credit was also noted and it was estimated that almost 53 per cent of store volume was on a credit basis.

A change in the credit buying habits of the public was to be noted as the third-a-month payment scheme reached new levels of popularity and replaced to a large extent the old 10-Pay and 20-Pay plans. Most merchants were becoming convinced they could show better results collecting a third each month for 90 days than by trying to collect it all on the regular 30 day open account basis.

In April 1940 the National Association of Retail Clothiers and Furnishers announced its survey of costs for 1939 and its comparison with the ten previous years. The survey reflected a more favorable condition among men's apparel stores for 1939 than 1938, particularly among stores with a volume below $100,000. Total operating expenses were slightly lower, dropping from 31.2 to 30.02 per cent.

Executive and buying salaries showed only a fractional change. Busheling expense, rent and advertising increased but the increase was offset by selling salaries and some of the more constant overhead expenses that dropped as volume climbed.

The smaller stores were in a substantially better position than the larger stores. Not only were they able to cut costs while the large-volume firms showed increases, but turnover in all departments was speeded up and they were able to maintain a better gross mark-up than they did the previous year.

Substantial improvement was made in the gross mark-up of the stores with volume over $100,000 but such gains were offset by a poor turnover record and higher costs which went from 34.8 per cent in 1938 to 35.37 per cent in 1939. Executive and buying salaries were at the highest point of the eleven year period.

Net profits of both groups improved. Among the smaller stores they went from 4.36 per cent in 1938 to 6.02 in 1939. In the large volume group the increase crept up from 1.1 per cent to 2.79 per cent.

Improved conditions for the farmer were reflected in the increased turnover in the work clothes department. For long a nuisance department in the men's apparel stores, changing economic conditions are making it one of the most profitable. In twelve months the average turnover shot from 1.82 to 2.35 among the stores with volume under $100,000 and from 2.39 to 3.72 among stores with volume over $100,000.

Somewhat alarming were the sharp increases in costs of large stores during the past two years. In 1937 they were 31.1 per cent; in 1938 they went to 34.8 per cent; in 1939 they climbed to 35.37 per cent.

In April 1940 the industry had its first bad month of the year, due possibly to an unfair comparison, since the Easter season had come a month earlier. Of the men's stores reporting, 80 per cent noted sales declined over the same month in 1939, the decrease averaging slightly over 20 per cent. Some merchants began to fear that prices rising beyond the public's ability to absorb might retard volume.

In determining their Fall purchases most stores based commitments on 60 per cent of the previous Fall volume, a normal commitment. Buyers were certainly not in the mood to gamble on merchandise — a sane policy that proved its merit later in the year.

Helped by the most favorable straw hat season in years, the industry showed a ten per cent increase in May over the previous May and by Mid-Year the record appeared quite favorable, with 64 per cent of the reports noting an improvement over the previous six month period.

July and August both showed improvement but conscription was in the air and merchants were freely predicting that the Act would materially retard sales of civilian apparel.

Events moved rapidly in the industry during the month of September as volume began to slow down. In an effort to combat buying inertia caused by the draft, a leading Chicago men's apparel store startled the country by offering to refund the full purchase price on any garment purchased by customers called for army service. Within twenty-four hours practically every credit man in the country was aware of the offer and within two weeks thousands of stores were advertising the same plan.

Meanwhile retailers were becoming concerned over the possibility of runaway prices. The National Defense Advisory Commission was organized and functioning and various retail organizations, including the clothiers, were appointing their own defense committees to cooperate in the effort of holding prices at normal levels and of discouraging advertising ballyhoo along the lines of 'Buy Now — Prices are Rising.'

There was definite evidence in October that the impending draft was hurting trade. Reports from 48 per cent of the clothiers indicated declines in volume over the same month in 1939.

In November prospects were much improved. The defense program was well under way; the national election was a thing of the past; draft numbers had been assigned and the first men called for service. Early snow and cold weather over most sections of the country combined with these other factors to reverse the trend and to bring promise of holiday running well ahead of 1939. Christmas shopping started early and men's apparel merchants for the most part were describing the year as 'satisfactory.'