A rack jobber (also known as a rack merchandiser) is a company or trader that has an agreement with a retailer to display and sell products in a store. The outlets for the products would be ones that traditionally don't stock such products such as gas stations, grocery stores and others not traditionally associated with the products sold. Often the products are of a budget variety.
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Etymology of the phrase
Rack Jobbing began in the 1930s with the Music Dealers Service with their music sheet racks which they operated. Because the ownership of the products remain the property of the rack jobber, the potential loss incurred by the seller is reduced if nobody buys the product. The proceeds of the sale from the product are then divided/shared by the rack jobber and retailer. Historically, possibly, one of the main products that have been supplied to stores in this fashion are record LPs. Other items that rack jobbers supply have been beauty aids, greeting cards, hardware, paperback books and toys. The display, maintenance and stock rotation of the merchandising are the responsibility of the rack jobber who must periodically come into the store.
Record LPs
The first LP rack jobber in the U.S. was Elliott Wexler (1913–1966) who started Music Merchants in Philadelphia in 1952.
One record label whose catalogue was sold via rack jobbers was Sutton, which was founded by Bob Blythe, the former president of Tops Records. In 1963, the label began with 225 records in its catalogue, which was sourced from labels that included Music Craft, Omega and Tiara. Another record label that found its way into the racks was Crown Records, a budget label owned by the Bihari brothers. In the 1960s, one third of record sales were from records sold via rack jobbers. Eventually the rack jobbers moved into more traditional department stores by making arrangements with the retailer in various ways. One of them was asking the retailer to allow a certain amount of sell-space and the rack jobber deciding what goes in the space. Also there could be a verbal guarantee that all of the products would be sold and if not, the next time around, the rack jobber would bring back merchandise that would.