The Department Store

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The Department Store

Origins. By the end of the nineteenth century, the American economy was changing not only in its workshops and factories, but in the marketplace as well. Changes in how goods were distributed accompanied changes in how they were manufactured. The most visible and dramatic of these changes was the spread of department stores—sprawling retailing establishments that centralized much of the nation’s retailing. They had already taken root in the largest cities by 1880: Lord and Taylor (1826), Macy’s (1842), and Gimbel’s (1842) in New York; Jordan Marsh in Boston (1841); Carson, Pirie, Scott (1854) and Marshall Field (1865) in Chicago; and Wanamaker’s in Philadelphia (1861). These establishments offered urban customers wide assortments of goods and obtained their stocks via buyers who set up direct relationships between manufacturers and the stores. Meanwhile, beyond metropolitan boundaries, most Americans bought goods from small, local stores that sold limited selections of dry goods—stores supplied by larger wholesalers based in nearby cities. After 1880, as towns became small cities and cities became vast metropolises, department store retailing spread outward into the countryside.

Expanding Stocks. The mainstay of business for these stores was made up by clothing, dry goods, and household goods. As they grew they added new departments and took on what became a dazzling array of stock: men’s and children’s clothing, furs, carpets and rugs, upholstered goods, furniture, silverware, parasols and umbrellas, jewelry, hats, shoes, toys, books and stationery, china, glassware, crockery, flowers and feathers—whatever might sell. By selling at low prices and maintaining low profit margins, the stores (when successful) kept a high volume of sales and a high turnover flow of business: profits were made by volume, rather than markup.

New Ways of Selling. Like the railroads and the largest manufacturing firms, department stores, too, expanded the scale of doing business, forming chains across the landscape, and they concentrated distribution by cutting out the mercantile middlemen—the wholesale “jobbers”—that had pinned together the earlier network of selling via local stores. More fundamentally, they promoted new habits of buying. Although they sold bolts of cloth, the new department stores offered ready-made clothing, factory-made, at prices and in assortments previously unknown. Unlike the country stores they replaced, the new retailers dealt in cash rather than trade or credit. Prices were no longer negotiated between storekeeper and customer; they were standardized and printed on tags on merchandise (a practice that made sense, given that these new stores, unlike their country cousins, deployed hundreds of salesclerks at a time). Most of the stores instituted money-back guarantees to dissatisfied customers. They also advertised more aggressively and enticingly, luring customers with handbills, printed cards, and newspaper and print ads that grandly extolled the virtues of stores’ wares. Taken together, these developments helped to transform the consumer economy into a recognizably modern marketplace.

Montgomery Ward. A few pioneering businesses began retailing their goods through mail-order catalogues in the 1860s and 1870s, and the innovation caught on quickly. By 1874 Chicago retailer Montgomery Ward’s catalogues had grown from one-page price lists to booklets seventy-two pages long that included woodcut illustrations. Business boomed, and Ward’s catalogues grew accordingly; by the end of the decade they were more than five hundred pages long, offered more than twenty-four thousand different products, attracted some 750,000 letters from customers, and required three hundred clerks to manage. The 1896 edition featured the first live model—a little girl displaying a bonnet, apron, and dress. By 1900 the Ward catalogue weighed in at more than one thousand pages and generated between fifteen thousand and thirty-five thousand orders daily. Sewing machines, musical instruments, guns, farm equipment, bicycles, batteries, kitchen appliances, and ready-made clothing flowed out from the company into the countryside via this vehicle. Riding the profits of this wave of selling, Montgomery Ward in 1898 moved its operations to new quarters in Chicago covering an entire city block, surmounted by a tower twenty stories high, overseeing the flow of its goods.

NEW SOUTH CREED

In the 1880s a movement arose that called for industrialization and outside investment in the South. The individual who became the most prominent spokesman of this movement was Henry W. Grady. The managing editor of the Atlanta Constitution between 1880 and 1889, Grady first gained national attention for his coverage of the August 1886 earthquake in Charleston, South Carolina. In December of the same year he was the main speaker at the New England Society of New York. The occasion was the society’s annual dinner to commemorate the landing of the Pilgrims at Plymouth Rock. Grady’s topic was “The New South,” and his eloquent words became the most celebrated statement of the New South Creed. According to Grady, “The old South rested everything on slavery and agriculture, unconscious that these could neither give nor maintain healthy growth. The new South presents a perfect Democracy, the oligarchs leading in the popular movement — a social system compact and closely knitted, less splendid on the surface, but stronger at the core — a hundred farms for every plantation, fifty homes for every palace — and a diversified industry that meets the complex needs of this complex age.”

Source: George Brown Tindall, America: A Narrative History (New 1 York & London: Norton, 1984).

Shop Windows. Along with long-distance mail-order outreach, the new department stores expanded their business by luring customers into the stores themselves using increasingly lavish window displays. It was between 1880 and 1900 that window trimming became a science and an art. Previously, merchants had paid little attention to their Windows, perhaps piling up an ad hoc assortment of goods for sale, perhaps showing nothing at all. People such as writer and salesman L. Frank Baum ushered in a new style of in-store merchandising. As a young man on the rise Baum grew up the son of an industrialist and banker; as a young man he traveled as a salesman and thespian, writing, producing, and performing in theatrical tours through the Midwest. After trying to set up a store in Aberdeen, South Dakota, and going bust in 1891, he relocated to Chicago, where he vigorously promoted the power of shopwindows, as he put it, to “arouse in the observer the cupidity and longing to possess the goods.” He founded a journal, The Shop Window, in 1897 and established the National Association of Window Trimmers the following year. With characteristic flair for theatrical flourish (and racial sentiments typical of his day), Baum urged shopkeepers to “Suggest the possibilities of color and sumptuous display that would delight the heart of an oriental.” Baum’s later career as a children’s writer (he made a fortune and wider fame as author of The Wizard of Oz

[1900] and various sequels) in many respects echoed his earlier one; he and those who followed his lead transformed downtown city streets into visions of artfully arrayed merchandise—a series of Windows each (as Baum praised one display) a “peep into Elysium.”

The Five-and-Ten Store. The new department stores grew as large as they did ultimately because they managed to sell not just luxury goods to the upper classes, but mass-produced goods to the masses. No business embodied this success better than Frank W. Woolworth’s chain of five-and-ten stores. As a clerk at Moore & Smith’s corner store in Watertown, New York, Woolworth in 1878 set up a “5-cent counter” offering what were then known as “Yankee Notions”—tin pans, washbasins, button hooks, dippers, and other small items that a collapsing wholesaler had unloaded cheaply. As Woolworth later recalled, “Like magic, the goods faded away.” His initial effort to capitalize on this discovery—his first “Great 5-cent Store” in Utica—failed, but undeterred, Woolworth pulled up and moved to Lancaster, Pennsylvania, after a few months, adding a line of ten-cent offerings, and business thrived. Woolworth found he could buy goods cheaply if he bought in large lots, selling more cheaply than competitors and, over time, monopolizing the output of leading manufacturers. Among his early offerings were Christmas tree ornaments, novelties that the entrepreneur discovered while touring in Europe. By these methods he expanded rapidly into small cities: by the time he combined his chain with several others in 1911, he had established 319 Woolworth five-and-dimes across the nation and throughout the world (in England they were called “three and sixes”).

The First Grocery Chains. The same period also witnessed the spread of grocery chains. One of the first, the Great Atlantic and Pacific Tea Company (founded in New York City by G. F. Gilman and G. Huntington Hartford, and later called A & P), already operated twenty-six stores by the time it added a grocery line to its tea business in 1865; by 1880 it ran more than one hundred stores. Competitors proliferated alongside: Grand Union in the 1870s, Kroger in the 1880s, and Jewel Tea in the 1890s. These stores were not yet the supermarkets they would become. They did not yet sell meat or produce; butchers and fruit and vegetable stands, respectively, sold these goods. In addition customers were still served by clerks who got the food off the shelves (Piggly-Wiggly would introduce self-service in 1916.) Still, the new grocery chains laid the foundation for the later supermarket chains, following other retailers as they spread out along regional and national transportation networks into the countryside.

Sears, Roebuck. What would become the most sprawling of the new emporiums—the largest retailer in the country, in fact, and the epitome of the new trends in retailing—began in 1886 when a railroad freight agent named Richard W. Sears bought a shipment of five hundred watches from a Chicago watchmaker for twelve dollars apiece and sold them up and down the railroad line for fourteen dollars apiece (many of them to station agent salesmen who, in turn, hawked them to customers for twenty dollars apiece). Sears founded the R. W. Sears

Watch Company within a year and took on a partner named Alvah C. Roebuck shortly thereafter. Readily perceiving the possibilities of national marketing (he had, after all, worked for a railroad), Sears put together a small mail-order catalogue advertising his watches and, as he added to his line of goods, jewelry and diamonds. Sears, who wrote all the copy for his catalogue, pushed products with wide-open flamboyance and boosted sales by instituting installment payment plans and money-back guarantees. By September 1893 the business had taken form as Sears, Roebuck and Company, with a catalogue that had grown to 196 pages and sales of more than $400,000. Two years later, when the firm moved to Chicago, the catalogue’s page count had climbed to 507 and its sales to $750,000: Sears was now proclaiming itself “The Cheapest Supply House on Earth.” Like Montgomery Ward, Sears, Roebuck attracted the enmity of local rural merchants whose business it was swallowing; opponents dubbed the mail-order giant “Rears and Soreback” and “Shears and Rawbuck.” Nevertheless the company continued to grow at a blistering pace: by 1899 it had expanded to twenty-four merchandising departments; the following year Sears, Roebuck surpassed Montgomery Ward with close to $11 million in sales.