In the final analysis, there are many things modern retailers might learn from their successful predecessors. The fact that downtown department stores dominated local retailing for nearly 150 years says much about them. They provided their customers with merchandise and services deemed important. However, it represented much more than fulfilling the daily needs of their shoppers. They were spectacular palaces appreciated by the buying public everywhere. Most everyone over the age of sixty remembers shopping at local department stores. These establishments afforded excitement especially during the holiday season. Their unique merchandise and product staging transported shoppers from their everyday world to exotic places.
Many modern retailers, in their haste to make quick profits, often lose sight of such aesthetic considerations. They prefer to focus on present needs and wants with little regard as to what happened in the past. They contend that the past has little to do with today’s retail scene so why bother with it. In overlooking the important business lessons of the past, many modern-day retailers may be forced to face similar dilemmas in the future. The way past retailers handled daily and long-term issues might provide some valuable guidance for today’s retailers wishing to avoid a similar fate in the future. This is especially true as they attempt to handle the economic challenges posed by an ever-changing, and at times, capricious customer-base. These formable challenges must be addressed directly to stay in the retail game. Past experience may afford some valuable insight into what kind of business strategies and tactics work successfully and which ones do not. It is essentially a blueprint of effective and ineffective retail practices. When used adroitly, it might enable modern-day retailers to avoid some of the worst economic pitfalls inherent with the industry. Ignoring these dangers may lead to re-living them. With those thoughts in mind, what are some of the most valuable lessons from the past, and how might they help us become better retailers?
There are many valuable lessons to learn. Perhaps, one of the most important lessons is that “the customer is always right.” Some attribute that phrase to Marshall Field, while others say that Rowland H. Macy (1822-1877) first coined it. Although its origins are obscure, its message is very clear. The purpose behind retailing has always been and will continue to be to serve its customers. Everything else is of secondary importance. The principal responsibility of all retailers is to provide their customers with the best possible retail experience within a pleasant shopping environment.
Shoppers, in turn, agree to pay fair market prices for goods and services that they cannot provide themselves easily. It is essentially a for-profit service-related industry even if retailers never admit this connection. Retailers achieve their profit goals through calculated risk-taking. They meet this formidable challenge by doing all the background work upfront. That includes acquiring set merchandise; preparing it for sale and then marketing it. These business actions relieve shoppers of the frustration resulting from the reckless pursuit of affordable, quality merchandise from a multitude of reputable and un-reputable jobbers or vendors. As everyone recognizes, uncontrolled shopping is at best a grueling task with questionable rewards. Retailers minimize their anxiety by enabling their customers to walk into their premises, purchase whatever they want and leave with these items in hand. What could be easier? However, it is anything but simple. In order to run smoothly, retailers must be willing to handle any-and-all financial difficulties and resolve all human resource issues related to their operations. That was true in 1900 and it is still true today.
Successful store owners with rare exception use the capital generated from customer purchases and outside investments to meet debt obligations; pay employees, restock merchandise and compensation investors. They may also use these funds to enlarge their premises, change merchandise, close unprofitable outlets or build new facilities. Long-term financial success often involves further capital outlays through either buyouts or consolidation. However, before any of this unfolds, retailers must first establish a solid financial foothold within their community. That begins with repeat business.
Frequent visits to the same stores often prompt cordial relationships between store owners and shoppers. Each learns to trust the other, since each needs the other. Any breach in this trust may prove disastrous especially for the retailer involved. Many owners regret the day when they hired a disgruntle employee, placed a defective item on their shelves or failed to lower prices quick enough to meet customers’ needs. Fierce competition affords no place for error.
Adopting “the customer is always right” policy provides a safety net for retailer and shopper alike. However, there are times when it does not apply. For example, retailers readily prosecute shoppers who engage in shop lifting or writing forged checks. Today’s security-conscious world with its surveillance cameras, metal detectors, inked security tags and security guards reflects this kind of thinking. Modern safety measures, in many instances, do prevent or stop crime. However, they are far from foolproof.
Perhaps more publicity releases warning shoppers about tough new laws might deter some criminal activity. It has worked in the past. Store officials also might use psychology to appeal to shoppers’ vanities. Past department store owners often reminded customers that “unreported thefts meant higher prices for everyone.” Retailers often asked shoppers to report any instances of criminal activity occurring within their store. This appeal to their sense of right and wrong frequently worked. In exchange for their cooperation, shopkeepers often routinely lowered the price of merchandise. Customers loved to save money and this tried-and-true psychological approach helped to curb petty crime. Human nature has not changed that significantly over the last several centuries, even if the way our society handles criminal behavior has changed.
A second lesson from the past involves the issue of pricing. Of course, everyone wants the greatest number of quality items for the lowest possible price. It is an inherent part of capitalism. However, the predicament facing many retailers today is not pricing in itself; but rather, what happens when price considerations supersede all other in-house amenities. Traditional amenities common in earlier department stores included such things as beautiful display windows, attractive counter space, racks upon racks of quality clothes, luxury fashion shops and computer monitors detailing coordinates, sport suits, stilettos or hats. Remove those amenities and an entirely different retail experience unfolds.
Today’s warehouse clubs such as Sam’s Club; Costco and BJ’s Wholesale Club reflect the bare essentials. In their eagerness to provide the lowest possible prices, they have eliminated virtually all the traditional amenities one might associated with shopping. Some specialty shops still offer the ambiance and individual attention once an integrate part of department store traditions; however, their numbers are disappearing fast. Retail chains, such as Walmart and Target, offer limited amenities; unfortunately, many of their outlets appear dated. Updating them will undoubtedly increase the volume of business. Welcoming environments encourage leisurely shopping and more per capita spending.
Quality customer service is another valuable service from a bygone era. Today’s consumers are smart shoppers and smart shoppers seek out the best possible merchandise at the lowest possible price regardless of the vendor. Well-trained sales staffs may serve to reverse this trend. Assistance by competent sales staffs in choosing the best possible item, product or service at the lowest price may ultimately outweigh exclusive price considerations. Salesmanship has always played an important role in retailing, although, it may manifest itself in different forms at different times. Today’s Macy’s, for example, relies on electronic communication sources such as Facebook, the store’s blog, Twitter and Pinterest to interact with customers 24 hours a day. Other national and local department store websites do much the same thing. The interaction existing between customers and sales representatives helps to distinguish one retailer from another and one item, product or serve from another.
Many department stores, as pointed out earlier, took great pride in offering top quality customer service. Personal interaction played a key role in their ultimate success. Store clerks talked freely with their customers about the many advantages of their products. Retailers went out of their way to carry the kind of merchandise desired by their shoppers. Salespersons with well-chosen words and personal charm often went a step further to lessen customer anxiety especially when it came to purchasing luxury items. This kind of top notch salesmanship most often resulted in shoppers leaving that store happy. They knew that they had bought quality merchandise at a reasonable price from an honest merchant.
It represented a wining experience for all involved. This positive interaction established between sales staff and customers guaranteed repeat business annually. Large modern retail chains might learn a great deal from their predecessors regarding the importance of salesmanship. Traditional sales staff knew how to close a deal. Most importantly, they did it in a friendly and honest way. The same cannot be said universally about today’s salespersons. Self-service department stores notwithstanding, many retail concerns still rely on salespersons to sell merchandise. Unfortunately, many store managers do not have the time or predisposition to train their staff on the art of effective salesmanship. This often results in less than enthusiastic salespersons who may offend the very shoppers they are supposed to assist. No wonder many customers choose to buy only from stores with the lowest prices. Price, not store loyalty, often determines where the final sale occurs.
Décor also distinguished one traditional department store from another. It became an essential part of their identity. For example, New York-based Lord & Taylor’s often featured signature parquet floors, while Cleveland’s Halle’s contained ornate glass counters. A massive ceiling dome with elongated recessed lighting highlighted Jordan Marsh’s Shopper’s World store in Framingham, MA, while Wanamaker’s in Philadelphia incorporated non-functioning staircases into its massive street level edifice. Customers readily identified certain kinds of décor with particular stores. That identification subconsciously enhanced their shopping experience.
Large national chains no longer invest in such lavish décor. Everything today is functional. However, Target is an exception to this rule. Its decor with its elliptical, multi-colored, brightly lighted neon tubes strung out end to end is unique. Placed against red trimmed walls, red colored metal counters, and red colored phone stations these neon tubes add some flair to what would otherwise had been an unadorned background setting. Walmart and K-Mart do not feature that kind of ornate wall designs or patterns in their various stores.
Warehouse club owners place even less emphasis on décor. Plain exposed cement and concrete blocks topped by functional large steel rafters lend little charm to these functional structures. These retailers intend to process customers through as quickly as possible. This business approach works well when purchasing everyday staples; however, sterile surroundings, such as those, are not generally conducive for those buying luxury items. Most customers purchasing luxury products want to be pampered to a certain extent by the retailer. Fanciful décor heightens that kind of shopping experience. Traditional department stores knew that. Those retailers, who sold luxury items within beautiful background settings, profited the most. Small specialty shops still rely on décor to help sell their merchandise why not large warehouse clubs?
Competition is indispensable to retailing. It forces retailers to remain on the cutting edge of change and innovation. Continually expanding the customer-base still represents one of the most effective ways to insure longevity. However, it must be done along ethical lines. Unmercifully underselling a competitor, with the intention of pushing that store into bankruptcy and then raising prices to new unprecedented levels, is considered by most retailers unethical. Although some retailers may on occasion abandon business ethics for their-own advancement, the majority still refrain from such overt practices. Many department stores, in the past, avoided ethical entanglements by concentrating on one kind of merchandise or a specific service. For example, one merchant focused on furs, gloves and hats, while another sold children clothes, dresses and shoes. They had plenty of items to choose from, no overlapping needed.
Large cities, such as Cleveland, successfully operated a wide range of retail establishments, each with their-own select group of loyal customers. Geographical considerations, transportation lines and potential markets most often determined location. Large department stores in Cleveland most often concentrated downtown, while smaller outlets settled in outlying neighborhoods. Districts such as Broadway, Collinwood, Cudell, Glenville, Newburg, Ohio City and Tremont, beginning in the 1870s, boasted a wide array of mom and pop stores. Many of these operations were forced to either close their doors or merge with others during the Great Depression of the 1930s. Those that survived became stronger. The post-war years were especially profitable for large Cleveland department stores.
The increased availability of high quality merchandise at reasonable cost, in conjunction with the migration of Cleveland’s middle and upper class to the suburbs in the 1950s and 1960s, convinced many large downtown retailers to expand their operations into more remote outlying areas. Competitors often congratulated the “loyal opposition” on the opening of their latest suburban store. Most retailers believed that there was plenty of opportunity for everyone. Those taking the financial plunge to the suburbs, in the late 1940s and early 1950s, picked the best sites. Late arrivals also profited by establishing themselves either within the same retail complex or another nearby location.
Retail market size along with the availability of inexpensive large land parcels and future growth possibilities determined actual location. More prosperous, densely populated communities such as Cleveland Hts., OH or Parma, OH took precedent over other less affluent, smaller regional market areas such as Elyria, OH or Stow, OH. However, in the end all these areas enjoyed the benefits of this kind of first class retailing. Department stores giants, such as Halle’s, Higbee’s and the May Company, increasingly depended upon their branch stores to generate high profits. Each branch outlet successfully catered to a particular customer-base. These stores cared about their customers and took great pride in the community they served. This commitment to serve their community no matter what is not so overwhelmingly evident in today’s world. Perhaps the fact that most department stores are national and not local based may account for this change in attitude. The necessity of these national corporations to continually generate high returns for various investment groups may also serve to explain this mindset. Whatever the case, these stores follow a proscribed business formula. It thrives on cutthroat competition, standardized items and set pricing. Those retailers not subscribing to this formula are often eliminated from this game. Innovative, locally owned stores rarely, if ever, pose a sustained threat to these national big box stores.
With little direct competition, most shoppers buy from these national chains. The limited number of choices means that modern-day customers no longer identify with a certain store or group of stores. Instead, these shoppers seek out the best bargains. It is a never ending quest and they pursue with a vengeance. Price, not loyalty to a retailer, determines where they shop. Modern-day retailers could learn a great deal from their predecessors. Past success depended on their ability repeatedly to offer reasonably priced items readily identified with their store. Retailers accomplished this task by establishing their-own niche and then carving out their-own regional market based on their own proven strengths. Occasionally regional markets overlapped. When that happened, retailers reached an amicable agreement whereby the new arrival would either not sell within that targeted area or provide unique merchandise and services not sold by others there. Those kinds of “unofficial” agreements no longer exist in our highly competitive world.
Self-service discount department stores first emerged in the U.S. during the late 1940s. Derived in part from highly successful self-service groceries, these outlets provided both convenience and reduced prices. A unique retail approach whose time had arrived, many discounters soon discovered the pitfalls in operating this kind of previously untried store. As stated earlier, fair trade acts prevented them from selling top-of-the-line merchandise at discount prices. Their elimination in 1975 opened up the retail market for the first time in nearly seventy years. Discounters wasted no time before selling the same name brand items sold by downtown department stores but at lower prices. Although many discounters have come and gone over the last four decades, self-service discount department stores are still a crucial component of U.S. retailing. Discounters still generating sizeable profit margins include T.J. Maxx, Target, K-Mart, Wall-Mart, and Marshall’s to name but a few. These establishments fit the lifestyles of many shoppers. Yet, there are still some problems facing this kind of retailing especially when it comes to such things as customer check-out process.
Some technical advances in recording sales represented the extent of innovations made within the check-out process during the heyday of department stores. Retailers firmly believed that better documentation would insure more accurate records. Aside from that, they did little to speed up the check-out process itself. Standard procedures prevailed whereby a shopper paid a cashier for items bought using either cash or a credit card. After properly recorded the sale, the salesperson then handed the customers a sale receipt acknowledging the transaction. This purchasing process took anywhere from one to ten minutes to complete depending on the complexity of the sale in question and/or the number of shoppers ahead of that particular customer. Some national retailers, in the 1990s, such as J.C. Penney and Sears & Roebuck tried to speed up the process by establishing centrally-located check-out stations placed strategically throughout their stores. Asked to form a check-out line, customers waited to be called by the next available cashier. That may have insured an orderly process; however, long check-out lines persisted.
Self-service check-out stations in discounters such as Costco or Sam’s Club represent a more modern approach to this age old issue. But, they are not perfect. Under this arrangement, customers scan their items and then pay for them with either a credit or debit card through a specially designed electronic registers. Fast and simple, it represented a major breakthrough in check out procedures. Yet, it is far from foolproof. In many instances, electronic registers fail to scan bar codes properly. Their inability to record correctly often requires customers to rescan items several times. Rescanning is tedious to say the least and most especially as the number of customers behind that individual continues to grow. On-site supervisors often assist confused shoppers through this process. Perhaps check out stations with better scanning devices might be able to resolve this issue. Encouraging shoppers to scan the prices of their items while shopping and then pay for them with either a credit or debit card at the check-out station or through their-own electronic communication devices represents another viable way to sped up the check-out process. Whatever the approach, something must be done soon.
Retailers, in our fast paced world, often downplay their obligations and responsibilities to their customers. Many analysts emphasize the importance of customer loyalty and how public mistrust has led to the closing of many quality stores over the past fifty years. However, few view it the other way around. Historically speaking, traditional downtown department stores, in large cities like Cleveland, recognized the importance of maintaining their customers’ loyalty and trust. Customers depended on their local retailers to do the right thing by them.
Store owners insured a loyal following by providing their patrons’ quality customer service and affordable merchandise all within easy reach. Reputable retailers rarely used bait-and-switch tactics. Most refrained from random price changes or false product claims. After all, their business reputation was on the line. Unfortunately, the same could not be said for fly-by-night operations. They often relied on unethical business tactics to gain quick access and profits within lucrative retail markets. Many of these stores folded quickly once the public discovered that they have been cheated.
Unfortunately, some retailers today do not see consider customer loyalty that important. In their never ending pursuit of profit and low overhead costs, they think of customer loyalty as a quaint relic of a distance past, totally out of step with the modern era. Many of these retailers are not malicious in their intention it never occurs to them. Their lack of concern leads them to act quickly and, at times, irrationally all under the cloak of business efficiency. They claim their changes are “best for the business long-term even it negatively impacts the store currently.” Their unpleasant remedies run the gamut from arbitrary price hikes; sudden closing of branch stores and consolidating non-essential departments to eliminating popular clothing lines, reducing shopping perks and downsizing sales forces. These actions may make perfect sense to modern-day retailers on a tight budget, but they fail to please many customers who see these stores as serving them and not the other way around.
Customers want consistency whenever and wherever they shop. They expect certain things. Arbitrarily changing operations without some public input may have disastrous consequences. J.C. Penny’s unsuccessful attempt to change its image is such a case. This medium-prized store, in 2012, adopted a brand new retail strategy. Seemingly overnight, it transformed itself from a conventional department store into a new retail concern characterized by what they called boutique-like shops. The television star Ellen Degeneres beame its spokesperson. Executives at J.C. Penny’s also eliminated traditional money saving coupons by proclaiming that their everyday low prices spoke for themselves. Bloomingdale’s recent re-emergence as an upscale, boutique-like department store served as its business model.
However, unlike Bloomingdale’s, which catered primarily to wealth, fashion-conscious customers, J.C. Penny’s long-term success had depended on hardworking, middle class shoppers. These customers wanted consistency and value. They did not identify with slick advertising campaigns, clever promotional activities or in-house store gimmicks. Such promotions appeared less than genuine, and they wanted nothing to do with them. Suddenly, officials at J.C. Penny found themselves losing customers at an alarming rate. Its board, on the brink of bankruptcy, returned to traditional policies.
However, there was more problem needing resolution. Store managers had marked-up certain items with the intention of applying discount coupons or current reduced sale prices at the registers. Customers, who had been trained to seek immediate bargains, did not appreciate such tactics and they let the managers know it. J.C. Penny officials immediately halted this practice. Fortunately, that blunder did not prevent shoppers from returning to the J.C. Penny fold. Projections for 2014-15 predict a bumper year for this national chain. Retailers, like J.C. Penny, should never lose sight of the fact that they are first and foremost a business whose chief responsibility is to sell goods to the buying public at fair prices. Loyalty to the customers while following traditional business practices symbolizes is a big part of that responsibility. J.C. Penny was indeed lucky.
Unfortunately, the Target chain cannot boast similar success over the past year. A traditional favorite of middle-class customers looking for fashionable, reasonably priced clothing and specialty items, Target enjoyed tremendous growth over the past twenty years. However, a major security breach during the 2013 Christmas season that allowed professional hackers to steal the identity of credit and debit cardholders all but destroyed this proud retailer. Investigators estimated that anywhere from 70,000,000 to 150,000,000 of Target’s customers were affected by this breach. 
Unable to resolve this issue quickly, thousands of loyal Target shoppers flocked to other retailers. Target officials responded by offering identity theft protection. This optional coverage called Protect My ID Alert costs $159.95 annually. (2) Many customers wondered, at the time, why pay for theft protection at Target when other stores guarantee protection for free. It seems to make no sense. However, the more basic question is why did it happen at all? Security leaks, of this magnitude, seriously undermine the reputations of retail chains such as Target. Breaches in security should never be tolerated. Target, in May 2014, unveiled a new credit card that contains an imbedded chip. Store officials claim that this new, tamper proof card will protect their shoppers from illegal usage.
Another major downfall in downtown department stores, not dissimilar to the recent J.C. Penny debacle, occurred in the 1970s and 1980s when many successful retailers turned their backs on their loyal following. Seemingly without warning, retailers ordered employee cutbacks and store closings. These actions signaled the beginning of the end for many long-established retailers. Modern leaders might be able to avoid a similar fate by publicizing pending changes upfront especially when it significantly affects customer buying habits. The public will accept changes as long as they believe that they are involved in the decision-making process. Exclude them and all may be lost.
Success breeds success or so the old adage goes. However, other unforeseen business and economic forces may intercede to change the course of events. One lesson modern retailers might learn from the past concerns saturating the market. Customer convenience is one thing, flooding the market with stores that offer the same or similar items and services is another matter. Often, only a fine line separates the two. However, that line does exist and it should not be breached for what appears to be only immediate economic gain.
Department stores rarely concern themselves with local market saturation. Store officials generally believe the greater their exposure to the buying public, through multiple branch stores, the better the changes for consistent high profits. There may be some truth to this thinking; however, there is a fine line that separates success from failure. If a retailer breaches that line, then all may be lost. What appears so clear in today’s light concerning the rise and fall of downtown department stores in cities like Cleveland did not impact their thinking then. No guidelines existed in the 19th and 20th centuries regarding retail expansion. Trial and error as much as anything else determined site selection and size of operations.
Common sense and standard business traditions also played crucial roles in determining locations. As long as outside competition remained limited and/or self-contained, this approach worked well. However, problems arose once more retailers entered the scene. Everyone believed that they were entitled to a piece of the action. This resulted in fierce competition among rival stores within the same proximity. The numerous shopping centers and malls built in Greater Cleveland, from the 1950s to 1970s, substantiate that premise. Increased competition, in itself, did not adversely affect profits at least in the beginning. After all, successful retailers were very well-versed when it came to dealing with competition. They had been handling it successfully for years. However, unexpected changes within Greater Cleveland including population decreases and an uncertain economy changed everything. Many retailers remained puzzled by the changing economic scene during the last decades of the 20th century. In particular, they wondered how a once vibrant economy suddenly found itself caught in such a devastating downturn. With no end in sight, retailers did not know what to do next.
Local retailers found themselves in a most precarious position. Earlier long-term investment in numerous suburban branches made their current financial condition worst. The short distance between local shopping centers and malls made competition extremely fierce. Department stores found themselves facing two nagging problems. One involved rebranding themselves for the next generation of shoppers. What new marketing techniques might they adopt to insure a loyal customer-base in the years ahead? A second concerned was how to divest themselves of unprofitable branch outlets. These were two very perplexing questions with no clear-cut answers.
None of these problems would have surfaced had Greater Cleveland continued to grow. Regrettably, the area’s declining population and saturated retail market resulted in diminishing profits and mounting expenses for all local department stores. This reversal in fortune meant that they would not be able to successfully rebrand themselves fast enough. With seemingly nowhere else to turn, local department stores exercised their only remaining option closing. Their closing symbolized the end of this heroic period in local retailing.
Modern-day retailers must realize that two major contrary forces: a declining population and no-growth economy played havoc on Greater Cleveland. They both ended during the first decade of the 21st century as the expanding local health industry brought new economic life to this district. Although, local population projections for 2020 through 2030 indicate little change that does not mean stagnate development. Northeast Ohio will continue to prosper but at a more reasonable level. Current location choices made by national chains are, with rare exception, quite good. However, there is still some overlapping of goods and services. In order to survive, these chains need to more closely define their-own retail niche. This is something few have been willing to do lately.
This writing has concentrated on the evolution of the department store in the U.S. with special emphasizes placed on its impact in Cleveland. Unlike other works dealing with this experience, it focused on pertinent business and economic breakthroughs, and how these developments affected local retailing decisions and future outcomes. It also stressed how these important developments, many beginning with the Industrial Revolution and the wide-scale manufacturing of ready-made clothing, shaped the course of shoppers’ habits for over one hundred and fifty years. The fast growing city of Cleveland represented an ideal model for such a study. Its eight major downtown department stores epitomized successful retailing in the 19th and 20th centuries.
The hope is that in reviewing the past, some of today’s store owners might see their-own concerns in an entirely new light. The value of history should never be lost. In this case, it represents a microcosm of national business and economic development from the perspective of retailing. It is as such a readily understandable story with a defined beginning, middle and ending. This enables the reader to fully understand the popular economic trends of that day, and to see how leading retailers incorporated their business skills to create enduring commercial enterprises.
Local retailers had endured a great deal over that century and a half. They survived numerous economic reversals; dramatic demographic changes, innumerable changing fashion styles, civil strife and two world wars. Perhaps, their optimistic outlooks, more than any other single factor, accounted for their longevity. Regrettably, nothing lasts forever. Change is an evitable part of life, and so it was for these stores. Having said all that, one thing is undoubtedly true. It was a great ride while it lasted. Their legacy is remarkable, well worth cherishing as we attempt to cope with the fast-paced world of the 21st century.
- Rachel Adams, “Target’s Woes May Have Been A boom for Security Firms,” Blog, January 13, 2014. ↵