{"id":38,"date":"2016-02-24T19:51:39","date_gmt":"2016-02-24T19:51:39","guid":{"rendered":"https:\/\/pressbooks.ulib.csuohio.edu\/lets-go-shopping\/?post_type=chapter&p=38"},"modified":"2018-11-28T12:04:06","modified_gmt":"2018-11-28T17:04:06","slug":"the-shopping-experience-of-a-lifetime","status":"publish","type":"chapter","link":"https:\/\/pressbooks.ulib.csuohio.edu\/lets-go-shopping\/chapter\/the-shopping-experience-of-a-lifetime\/","title":{"rendered":"The Shopping Experience of a Lifetime"},"content":{"raw":"By the 1970s, discount department stores, shopping centers and large malls accounted for 35% of the entire U.S. retail market.\u00a0 Discount department stores in particular, represented the fastest growing part of this phenomenon with annual profits exceeded $20,000,000,000.\u00a0 Leading discounters, at that time, included Ames, Bradlees, Caldor, E.J. Korvette, Fisher\u2019s Big Wheel, Jamesway, K-Mart, Kuhn\u2019s-Big K, TG&Y, WalMart and Zayre\u2019s.\u00a0[footnote]Defunct Discount Stores of the United States.<\/em> General Books, 2010.[\/footnote]\r\n\r\nSome of the largest traditional department store chains tried to counter this competition by opening their-own discount outlets.\u00a0 For example, Montgomery Ward\u00a0introduced Jefferson Ward, while Chicago-based Jewel unveiled Turn Style stores.\u00a0 Not to be outdone by their competitors, J.C. Penny opened The Treasury\u00a0and Atlanta-based Rich\u2019s\u00a0debuted Richway.\u00a0 Marginally successful, the majority of national chains never ventured into these uncharted waters.\u00a0 Economists, in the 1970s, castigated the local department store industry for not readily changing with the times; however, few predicted its demise.\r\n\r\nAfter all, large local department stores had ruled the retail industry for nearly a century and a half.\u00a0 Well-run organizations with a full range of affordable, quality goods and services, they served millions of shoppers annually.\u00a0 They represented a success story well worth talking about.\u00a0 The fact that many U.S. cities in the late 19th and early 20th century boasted two or more department stores illustrated their continued popularity.\u00a0 Customers loved buying there and these highly motivated retailers committed themselves to the cause. This is my new text.\r\n\r\nCompeting for the same customer-base within a specified market area never fazed these enterprising leaders.\u00a0 They relished any-and-all challenges.\u00a0 In their minds, fierce competition promoted innovation, this in turn, resulted in a steady flow of high quality goods and unmatched professional services.\u00a0 Most retailers began by selling nearly everything.\u00a0 With time, they discovered their particular retail niche and increasingly catered to customers who valued their specific products and services.\u00a0 Shoppers showed their loyalty to these shopkeepers\u00a0through repeat business.\r\n\r\nAdditional buying incentives such as periodic sales on certain items along with valuable store services brought hordes of new shoppers into their premises regularly.\u00a0 Prized services, in particular, denoted one retailer from another.\u00a0 These services ranged from award winning restaurants and stylish beauty salons to exciting travel agencies and delicious wine and cheese shops.\u00a0 Such luxuries were new to late 19th and early 20th century retailing.\u00a0 Add into this favorable business mix, heightened one-on-one customer service, as demonstrated through competent salespersons and shrewd store buyers, and how could shoppers lose?\r\n\r\nThe public looked forward to the splashy window displays announcing different holidays and special store events.\u00a0 St. Valentine\u2019s Day, Washington\u2019s Birthday, Easter, Mother\u2019s Day\u00a0and Memorial Day\u00a0followed by Graduation Day, Father\u2019s Day, Independence Day, Thanksgiving and of course Christmas enticed thousands of customers to these establishments annually.\u00a0 Crowds often began their day\u2019s shopping adventure outside the store\u2019s main entrances where they gazed at the beautiful display windows showcasing the latest fashions, sports outfits and\/or housewares.\u00a0 Once inside the premises, customers strolled leisurely through the store\u2019s many levels.\u00a0 Some shoppers found themselves drawn towards the shoe department where they tried-on the latest sandals, shoes or slippers.\u00a0 Fashionable ladies often headed towards the cosmetic counters where they sampled the latest fragrances, many imported from Paris.\u00a0 Still others investigated the latest household appliances, kitchen gadgets or furniture ensembles.\u00a0 Those interested in the latest fashions hurried to the men\u2019s and women\u2019s departments, while children eagerly led their parents to the toy department.\u00a0 There was something for everyone.\r\n\r\nMany retailers enhanced the shopping experience even further through their-own special incentives.\u00a0 Special events, such as annual white sales in January followed by spring fashion shows in February and March, brought thousands of customers out of their winter hibernation.\u00a0 The April arrival of colorful women\u2019s blouses, knitted sport shirts, Madras shorts, floppy sun hats and dreamy swimwear meant that summer time was just around the corner.\u00a0 Sales on children\u2019s clothes beginning in mid-August signaled back to school for the youngsters and the annual Christmas shopping rush after Thanksgiving rounded-off the year.\r\n\r\nIf those events were not enough in themselves to draw people into their stores, many shop owners offered their premier customers special private sales.\u00a0 Others furnished trading stamps, free glassware and\/or towels.\u00a0 In-house raffles and professional demonstrations of the latest kitchen gadgets were equally popular.\u00a0 Retailers, with a strong sense of civic commitment, often sponsored community-service activities.\u00a0 They included American Red Cross\u00a0blood drives, public forums, education classes and clothing drives.\u00a0 Some provided gala events honoring those who served in the Armed Services.\u00a0 Special appearances by celebrities along with Easter\u00a0and Thanksgiving Day\u00a0parades and free instructional sessions on such things as personal grooming and etiquette also appealed too many.\r\n\r\nDepartment store owners continually added new amenities and services to existing ones.\u00a0 They hoped that customers would spend several hours, perhaps the entire day, in their store purchasing a wide array of everyday merchandise and luxury items.\u00a0 In-house services, in the form of supervised playground for children and low-cost secured parking, provided patrons with carefree, leisurely shopping.\u00a0 It also gave those customers wishing to purchase expensive items such as electronics, furs, furniture or bedding enough time to make wise decisions.\r\n\r\nAt the same time, it encouraged others, who intended initially to buy a few staples, to stay longer and explore the many unique departments.\u00a0 They might even watch product demonstrations, eat in the store\u2019s restaurant or slip into the latest fashions.\u00a0 Such an adventure provided a nice escape from the hectic world surrounding them.\u00a0 Unlike earlier dry goods establishments in which a limited selection of high priced merchandise predominated, these new department stores offered a multitude of affordable goods and services.\u00a0 Astute retailers symbolized master showmen who could convince customers that they could find anything they needed or wanted within their emporiums.\r\n\r\nHowever, for these same local retailers to remain profitable their annual profits had to well exceed overhead costs.\u00a0 That axiom, so true today, was equally cogent then.\u00a0 Lower operating costs based on limited technology and less complicated customer demands distinguished 19th century department store owners from modern-day retailers.\u00a0 That being said, it did not mean that competition among shopkeepers, in the past, was less cutthroat than it is today.\u00a0 In fact, fierce competition characterized by a highly competitive market ruled that day.\u00a0 With a smaller customer-base to draw upon, local retailers in the late 19th and early 20th centuries knew the economic importance of remaining abreast of the latest fashion and shopping trends.\u00a0 That also meant adopting the latest methods of accounting.\u00a0 By the late 19th century, the vast majority of major downtown establishments relied on highly-trained store buyers and competent accountants to keep their businesses financially afloat.\r\n\r\nStore buyers played a crucial role throughout.\u00a0 Not only did they kept abreast of the latest fashion trends, but also, negotiated the best possible prices for the items they sold.\u00a0 Well-trained accountants helped by performing two invaluable services.\u00a0 First, they balanced the store\u2019s ledger on a daily basis.\u00a0 Second, they relied on the latest accounting methods to insure financial stability and promote future growth.\u00a0 This kind of scrutiny not only enabled retailers to remain on top on recent financial gains and losses, but also, make crucial adjustments to policies to better suit new customer demands.\u00a0 Cost accounting became the new byword for economic success.\r\n\r\nSeveral retail determinants played major roles in defining long-term growth and prosperity for department stores in cities such as Cleveland.\u00a0 At the top of this list was pricing.\u00a0 Determining appropriate pricing for merchandise required managerial finesse.\u00a0 As everyone soon learned, the cost of goods and in-house operating expenses defined pricing.\u00a0 The amount allocated for specific items, in conjunction with the incurred costs resulting from shipping and handling set products, served as the basis for cost analysis.\u00a0 A precarious balance existed between mounting payroll expenses and escalating overhead costs\u00a0vs. changing market needs and increasing in-house administrative requirements.\u00a0 Store owners knew that the retail price of merchandise must exceed the expenses of the items, in question, and any additional incurred overhead costs.\u00a0 To do otherwise over an extended period of time would result in bankruptcy.\r\n\r\nBasic accounting principles, such as these, were easy enough for most retailers to understand.\u00a0 Unfortunately, they became hazy over time as the business and financial complexities of successfully operating mammoth stores intensified.\u00a0 As downtown department stores diversified the need for more accurate methods of measuring profits and loses became acute.\u00a0 This led enterprising retailers to adoption new, far-reaching technical approaches to accounting especially in regards to cost-related issues.\u00a0 This resulted in such things as mark on costs, mark ups\u00a0and profit margins.\u00a0 Store owners determined mark on costs\u00a0by adding pre-set costs and\/or percentage increases to the basic prices of the merchandise in question.\u00a0 Those within the retail industry established the criteria for any-and-all pre-determined costs.\r\n\r\nMark ups represented the percentage added to the initial cost of items to determine their actual selling prices.\u00a0 Using mark ups\u00a0prevented retailers from deliberately underestimating the final costs of the items in question.\u00a0 Profit margins enabled store owners to measure all their earnings from individual dollar levels.\u00a0 This method also created a profitability\u00a0ratio.\u00a0 Taking current store earnings and dividing them by the generated revenues produced this ratio.\u00a0 Store owners used this method of accounting to assess the present ability of their businesses to generate more earnings and less overhead expenses for a specific period.\u00a0 In particular, they measured their store\u2019s current performance in relationship to present sales.\u00a0 A higher ratio meant that the store\u2019s profit exceeded its competitors at least for the moment.\r\n\r\nOther price variables, developed at the turn of the last century, ran the gamut from competitive and prestige item pricing\u00a0to psychological and keystone pricing.\u00a0 Multiple pricing and discount pricing also played pivotal roles in separating leading companies from others.\u00a0 Competitive pricing, unlike other price variables, truly leveled the playing field by encouraging customers to engage in comparative shopping.\u00a0 Under this scenario, two department stores in the same market area sold the same popular toaster for $8.00.\u00a0 Each hoped that customer loyalty would result in more sales for them, and, in many cases, that happened with one store a clear winner.\u00a0 However, if that did not occur, then individual department store owners would often sweetened the deal even further through price reduction.\r\n\r\nIn this instance, competitive pricing strategies reduced the cost of these toasters to $6.50 each.\u00a0 In lowering the cost and taking the financial loss, those retailers counted on their customers to buying many things in their stores including the specially priced toaster.\u00a0 Those additional items sold at full price.\u00a0 The more these shoppers bought, the less the loss incurred by selling these toasters at a rock bottom price.\u00a0 These same enterprising shopkeepers\u00a0might sweeten their deal even further by including a special protective plastic toaster cover for free or providing an extended warranty.\u00a0 This kind of sales practice worked especially well when the sale items in question had been sitting on the shelves for months or when cheaper substitutes flooded the market.\r\n\r\nPrestige pricing symbolized another successful late 19th century retail practice.\u00a0 In this case, storekeepers intentionally raised the price of certain items to advertise their high quality.\u00a0 Sometimes the high price tag was legitimate especially if the item, in question, was a labor-intensive, limited distributed product made of top quality materials.\u00a0 The fact that a prestigious company manufactured the item may have further justified this approach.\u00a0 Whatever the reasons cited at that time, high priced articles conveyed status whether they warranted or not.\r\n\r\nIn the case of psychological pricing, many retailers sold their merchandise at slightly below round numbers.\u00a0 This meant charging $0.99 or $3.99 for certain items rather than $1.00 or $4.00.[footnote] Frost, Shelly. \u201cWhat is Psychological Pricing?\u201d Houston Chronicle<\/em>, 2004. www.smallbusiness.chrom.com<\/a>.[\/footnote] This business maneuver often increased sales.\u00a0 In fact, many customers jumped at the chance to purchase items at $0.99 and $3.99; however, they showed reluctance in purchasing those same items at $1.00 and $4.00 respectively.\u00a0 In their minds, that one penny savings made all the difference.\u00a0 A great many local retailers also relied on keystone pricing.\u00a0 Under this arrangement, department store owners sold their merchandise at double the wholesale price.\u00a0 This method of pricing represented a very easy way to maintain sound records.\u00a0 However, customers frequently complained claiming that it raised the price of products appreciably.\r\n\r\nMultiple pricing represented yet another clever way to promote sales.\u00a0 In this case, local retailers sold several of the same items as a bunch at a slightly lower price.\u00a0 Buying them individually raised the cost no matter the amount purchased.\u00a0 Under this arrangement, a store might have sold five men\u2019s dress shirts worth $2.50 each for $10.00, or two women\u2019s scarfs regularly priced at $3.10 a piece for $6.00.\u00a0 Multiple pricing often served to unload overstock or outdated merchandise.[footnote]\u201cMultiple Pricing.\u201d www.commerce.wa.gove.[\/footnote]\r\n\r\nLarge downtown department stores in cities like Cleveland dominated retailing well into the post-war era.\u00a0 In the 1950s, over 4,000 department stores operated nationwide.[footnote]chs.org.finding-aides\/fox\/welcome.html.[\/footnote] The proliferation of new suburban stores at that time had little direct impact in downtown sales.\u00a0 In fact, it often increased activity.\u00a0 Downtown anchor stores retained their pre-eminence in local retailing by giving customers the greatest selection of products and services under one roof.\u00a0 Regrettably, they soon lost their economic edge to outsiders.\r\n\r\nPrior to the Second World War, the majority of urban residents lived and worked within the central city.\u00a0 This dedicated group depended on public transportation to transport them everywhere.\u00a0 Since the majority of public transportation systems originated from the heart of the downtown and most quality stores were located there, logic dictated that the majority of people would shop at those stores.\u00a0 With the advent of affordable, easy to reach suburbs with their abundant housing choices, modern industrial areas, office parks and top quality shopping centers, the economic advantages once enjoyed exclusively by downtown retailers soon vanished.\u00a0 In their wake another kind of retailer emerged.\r\n\r\nBy the mid-1960s, over half of the post-war department stores had closed their doors.\u00a0 This was especially noticeable in medium-sized U.S. cities many of which only had one or two downtown stores.\u00a0 The next three decades prompted further department store closings.\u00a0 This included some prominent retailers.\u00a0 To illustrate this last point, New York City\u00a0lost major stores over those 30-years.\u00a0 They included Abraham Strauss; Arnold Constable, B. Altman & Company, Best & Company, Bonwit Tellers, Gimbel\u2019s, and Ohrbach\u2019s.[footnote]www.departmentstoremuseum.blogsopt.com\/2010.[\/footnote]\u00a0 By the 1990s, only three traditional department store chains remained in New York City\u00a0and that number soon dropped to one.\r\n\r\nAnother force to emerge in the late 1960s and early 1970s played an equally crucial role in their demise.\u00a0 The arrival of a new generation of customer called Baby Boomers\u00a0changed retailing forever.\u00a0 Not satisfied with the status quo, this latest generation of shoppers demanded a whole new range of items and services not previously provided by department stores.\u00a0 In particular, they insisted upon affordable, high quality products and services within less formal shopping settings.\u00a0 Unlike their parent\u2019s generation, Baby Boomers were happy to travel great distances to get the best possible bargains.\r\n\r\nCustomer loyalty soon became a relic of the past.\u00a0 Savvy new shoppers were more than willing to sacrifice the amenities of downtown department store for cheaper prices.\u00a0 It was always the price.\u00a0 Self-service stores with long check-out lines, indistinguishable departments and aisle upon aisle of items of picked-over garments became the norm, not the exception to the rule.\u00a0 This new retail experience was more reminiscent of the local A&P Food Store\u00a0and not a bustling department store.\u00a0 Yet, in spite of these obvious limitations, new discount chains such as Bradlee\u2019s, K-Mart, Korvette\u2019s, Target, Woolco\u00a0and Zayre\u2019s\u00a0thrived.\r\n\r\nCleveland, Ohio was no exception to this rule.\u00a0 Like many other cities, Cleveland witnessed the demise of its downtown department stores over a forty year period beginning in the 1960s.\u00a0 New discount stores such as Clarkins, Gold Circle, Fisher\u2019s Big Wheel, Gaylord\u2019s, Giant Tiger, and Uncle Bill\u2019s\u00a0replaced them.\u00a0 Crowds also flocked to the new shopping centers and malls where national retail chains such as Montgomery Ward\u00a0and Sears & Roebuck\u00a0often predominated.\u00a0 Critics wondered how could this have happen?\u00a0 More specifically, how could this once dominant regional economic force disappear overnight without a trace?\u00a0 What business contributions did downtown Cleveland retailers make to this phenomenon, and how did these venerable institutions lose their competitive edge to others?\u00a0 In the final analysis, what lessons might modern-day retailers learn from this experience?","rendered":"

By the 1970s, discount department stores, shopping centers and large malls accounted for 35% of the entire U.S. retail market.\u00a0 Discount department stores in particular, represented the fastest growing part of this phenomenon with annual profits exceeded $20,000,000,000.\u00a0 Leading discounters, at that time, included Ames, Bradlees, Caldor, E.J. Korvette, Fisher\u2019s Big Wheel, Jamesway, K-Mart, Kuhn\u2019s-Big K, TG&Y, WalMart and Zayre\u2019s.\u00a0[1]<\/sup><\/a><\/p>\n

Some of the largest traditional department store chains tried to counter this competition by opening their-own discount outlets.\u00a0 For example, Montgomery Ward\u00a0introduced Jefferson Ward, while Chicago-based Jewel unveiled Turn Style stores.\u00a0 Not to be outdone by their competitors, J.C. Penny opened The Treasury\u00a0and Atlanta-based Rich\u2019s\u00a0debuted Richway.\u00a0 Marginally successful, the majority of national chains never ventured into these uncharted waters.\u00a0 Economists, in the 1970s, castigated the local department store industry for not readily changing with the times; however, few predicted its demise.<\/p>\n

After all, large local department stores had ruled the retail industry for nearly a century and a half.\u00a0 Well-run organizations with a full range of affordable, quality goods and services, they served millions of shoppers annually.\u00a0 They represented a success story well worth talking about.\u00a0 The fact that many U.S. cities in the late 19th and early 20th century boasted two or more department stores illustrated their continued popularity.\u00a0 Customers loved buying there and these highly motivated retailers committed themselves to the cause. This is my new text.<\/p>\n

Competing for the same customer-base within a specified market area never fazed these enterprising leaders.\u00a0 They relished any-and-all challenges.\u00a0 In their minds, fierce competition promoted innovation, this in turn, resulted in a steady flow of high quality goods and unmatched professional services.\u00a0 Most retailers began by selling nearly everything.\u00a0 With time, they discovered their particular retail niche and increasingly catered to customers who valued their specific products and services.\u00a0 Shoppers showed their loyalty to these shopkeepers\u00a0through repeat business.<\/p>\n

Additional buying incentives such as periodic sales on certain items along with valuable store services brought hordes of new shoppers into their premises regularly.\u00a0 Prized services, in particular, denoted one retailer from another.\u00a0 These services ranged from award winning restaurants and stylish beauty salons to exciting travel agencies and delicious wine and cheese shops.\u00a0 Such luxuries were new to late 19th and early 20th century retailing.\u00a0 Add into this favorable business mix, heightened one-on-one customer service, as demonstrated through competent salespersons and shrewd store buyers, and how could shoppers lose?<\/p>\n

The public looked forward to the splashy window displays announcing different holidays and special store events.\u00a0 St. Valentine\u2019s Day, Washington\u2019s Birthday, Easter, Mother\u2019s Day\u00a0and Memorial Day\u00a0followed by Graduation Day, Father\u2019s Day, Independence Day, Thanksgiving and of course Christmas enticed thousands of customers to these establishments annually.\u00a0 Crowds often began their day\u2019s shopping adventure outside the store\u2019s main entrances where they gazed at the beautiful display windows showcasing the latest fashions, sports outfits and\/or housewares.\u00a0 Once inside the premises, customers strolled leisurely through the store\u2019s many levels.\u00a0 Some shoppers found themselves drawn towards the shoe department where they tried-on the latest sandals, shoes or slippers.\u00a0 Fashionable ladies often headed towards the cosmetic counters where they sampled the latest fragrances, many imported from Paris.\u00a0 Still others investigated the latest household appliances, kitchen gadgets or furniture ensembles.\u00a0 Those interested in the latest fashions hurried to the men\u2019s and women\u2019s departments, while children eagerly led their parents to the toy department.\u00a0 There was something for everyone.<\/p>\n

Many retailers enhanced the shopping experience even further through their-own special incentives.\u00a0 Special events, such as annual white sales in January followed by spring fashion shows in February and March, brought thousands of customers out of their winter hibernation.\u00a0 The April arrival of colorful women\u2019s blouses, knitted sport shirts, Madras shorts, floppy sun hats and dreamy swimwear meant that summer time was just around the corner.\u00a0 Sales on children\u2019s clothes beginning in mid-August signaled back to school for the youngsters and the annual Christmas shopping rush after Thanksgiving rounded-off the year.<\/p>\n

If those events were not enough in themselves to draw people into their stores, many shop owners offered their premier customers special private sales.\u00a0 Others furnished trading stamps, free glassware and\/or towels.\u00a0 In-house raffles and professional demonstrations of the latest kitchen gadgets were equally popular.\u00a0 Retailers, with a strong sense of civic commitment, often sponsored community-service activities.\u00a0 They included American Red Cross\u00a0blood drives, public forums, education classes and clothing drives.\u00a0 Some provided gala events honoring those who served in the Armed Services.\u00a0 Special appearances by celebrities along with Easter\u00a0and Thanksgiving Day\u00a0parades and free instructional sessions on such things as personal grooming and etiquette also appealed too many.<\/p>\n

Department store owners continually added new amenities and services to existing ones.\u00a0 They hoped that customers would spend several hours, perhaps the entire day, in their store purchasing a wide array of everyday merchandise and luxury items.\u00a0 In-house services, in the form of supervised playground for children and low-cost secured parking, provided patrons with carefree, leisurely shopping.\u00a0 It also gave those customers wishing to purchase expensive items such as electronics, furs, furniture or bedding enough time to make wise decisions.<\/p>\n

At the same time, it encouraged others, who intended initially to buy a few staples, to stay longer and explore the many unique departments.\u00a0 They might even watch product demonstrations, eat in the store\u2019s restaurant or slip into the latest fashions.\u00a0 Such an adventure provided a nice escape from the hectic world surrounding them.\u00a0 Unlike earlier dry goods establishments in which a limited selection of high priced merchandise predominated, these new department stores offered a multitude of affordable goods and services.\u00a0 Astute retailers symbolized master showmen who could convince customers that they could find anything they needed or wanted within their emporiums.<\/p>\n

However, for these same local retailers to remain profitable their annual profits had to well exceed overhead costs.\u00a0 That axiom, so true today, was equally cogent then.\u00a0 Lower operating costs based on limited technology and less complicated customer demands distinguished 19th century department store owners from modern-day retailers.\u00a0 That being said, it did not mean that competition among shopkeepers, in the past, was less cutthroat than it is today.\u00a0 In fact, fierce competition characterized by a highly competitive market ruled that day.\u00a0 With a smaller customer-base to draw upon, local retailers in the late 19th and early 20th centuries knew the economic importance of remaining abreast of the latest fashion and shopping trends.\u00a0 That also meant adopting the latest methods of accounting.\u00a0 By the late 19th century, the vast majority of major downtown establishments relied on highly-trained store buyers and competent accountants to keep their businesses financially afloat.<\/p>\n

Store buyers played a crucial role throughout.\u00a0 Not only did they kept abreast of the latest fashion trends, but also, negotiated the best possible prices for the items they sold.\u00a0 Well-trained accountants helped by performing two invaluable services.\u00a0 First, they balanced the store\u2019s ledger on a daily basis.\u00a0 Second, they relied on the latest accounting methods to insure financial stability and promote future growth.\u00a0 This kind of scrutiny not only enabled retailers to remain on top on recent financial gains and losses, but also, make crucial adjustments to policies to better suit new customer demands.\u00a0 Cost accounting became the new byword for economic success.<\/p>\n

Several retail determinants played major roles in defining long-term growth and prosperity for department stores in cities such as Cleveland.\u00a0 At the top of this list was pricing.\u00a0 Determining appropriate pricing for merchandise required managerial finesse.\u00a0 As everyone soon learned, the cost of goods and in-house operating expenses defined pricing.\u00a0 The amount allocated for specific items, in conjunction with the incurred costs resulting from shipping and handling set products, served as the basis for cost analysis.\u00a0 A precarious balance existed between mounting payroll expenses and escalating overhead costs\u00a0vs. changing market needs and increasing in-house administrative requirements.\u00a0 Store owners knew that the retail price of merchandise must exceed the expenses of the items, in question, and any additional incurred overhead costs.\u00a0 To do otherwise over an extended period of time would result in bankruptcy.<\/p>\n

Basic accounting principles, such as these, were easy enough for most retailers to understand.\u00a0 Unfortunately, they became hazy over time as the business and financial complexities of successfully operating mammoth stores intensified.\u00a0 As downtown department stores diversified the need for more accurate methods of measuring profits and loses became acute.\u00a0 This led enterprising retailers to adoption new, far-reaching technical approaches to accounting especially in regards to cost-related issues.\u00a0 This resulted in such things as mark on costs, mark ups\u00a0and profit margins.\u00a0 Store owners determined mark on costs\u00a0by adding pre-set costs and\/or percentage increases to the basic prices of the merchandise in question.\u00a0 Those within the retail industry established the criteria for any-and-all pre-determined costs.<\/p>\n

Mark ups represented the percentage added to the initial cost of items to determine their actual selling prices.\u00a0 Using mark ups\u00a0prevented retailers from deliberately underestimating the final costs of the items in question.\u00a0 Profit margins enabled store owners to measure all their earnings from individual dollar levels.\u00a0 This method also created a profitability\u00a0ratio.\u00a0 Taking current store earnings and dividing them by the generated revenues produced this ratio.\u00a0 Store owners used this method of accounting to assess the present ability of their businesses to generate more earnings and less overhead expenses for a specific period.\u00a0 In particular, they measured their store\u2019s current performance in relationship to present sales.\u00a0 A higher ratio meant that the store\u2019s profit exceeded its competitors at least for the moment.<\/p>\n

Other price variables, developed at the turn of the last century, ran the gamut from competitive and prestige item pricing\u00a0to psychological and keystone pricing.\u00a0 Multiple pricing and discount pricing also played pivotal roles in separating leading companies from others.\u00a0 Competitive pricing, unlike other price variables, truly leveled the playing field by encouraging customers to engage in comparative shopping.\u00a0 Under this scenario, two department stores in the same market area sold the same popular toaster for $8.00.\u00a0 Each hoped that customer loyalty would result in more sales for them, and, in many cases, that happened with one store a clear winner.\u00a0 However, if that did not occur, then individual department store owners would often sweetened the deal even further through price reduction.<\/p>\n

In this instance, competitive pricing strategies reduced the cost of these toasters to $6.50 each.\u00a0 In lowering the cost and taking the financial loss, those retailers counted on their customers to buying many things in their stores including the specially priced toaster.\u00a0 Those additional items sold at full price.\u00a0 The more these shoppers bought, the less the loss incurred by selling these toasters at a rock bottom price.\u00a0 These same enterprising shopkeepers\u00a0might sweeten their deal even further by including a special protective plastic toaster cover for free or providing an extended warranty.\u00a0 This kind of sales practice worked especially well when the sale items in question had been sitting on the shelves for months or when cheaper substitutes flooded the market.<\/p>\n

Prestige pricing symbolized another successful late 19th century retail practice.\u00a0 In this case, storekeepers intentionally raised the price of certain items to advertise their high quality.\u00a0 Sometimes the high price tag was legitimate especially if the item, in question, was a labor-intensive, limited distributed product made of top quality materials.\u00a0 The fact that a prestigious company manufactured the item may have further justified this approach.\u00a0 Whatever the reasons cited at that time, high priced articles conveyed status whether they warranted or not.<\/p>\n

In the case of psychological pricing, many retailers sold their merchandise at slightly below round numbers.\u00a0 This meant charging $0.99 or $3.99 for certain items rather than $1.00 or $4.00.[2]<\/sup><\/a> This business maneuver often increased sales.\u00a0 In fact, many customers jumped at the chance to purchase items at $0.99 and $3.99; however, they showed reluctance in purchasing those same items at $1.00 and $4.00 respectively.\u00a0 In their minds, that one penny savings made all the difference.\u00a0 A great many local retailers also relied on keystone pricing.\u00a0 Under this arrangement, department store owners sold their merchandise at double the wholesale price.\u00a0 This method of pricing represented a very easy way to maintain sound records.\u00a0 However, customers frequently complained claiming that it raised the price of products appreciably.<\/p>\n

Multiple pricing represented yet another clever way to promote sales.\u00a0 In this case, local retailers sold several of the same items as a bunch at a slightly lower price.\u00a0 Buying them individually raised the cost no matter the amount purchased.\u00a0 Under this arrangement, a store might have sold five men\u2019s dress shirts worth $2.50 each for $10.00, or two women\u2019s scarfs regularly priced at $3.10 a piece for $6.00.\u00a0 Multiple pricing often served to unload overstock or outdated merchandise.[3]<\/sup><\/a><\/p>\n

Large downtown department stores in cities like Cleveland dominated retailing well into the post-war era.\u00a0 In the 1950s, over 4,000 department stores operated nationwide.[4]<\/sup><\/a> The proliferation of new suburban stores at that time had little direct impact in downtown sales.\u00a0 In fact, it often increased activity.\u00a0 Downtown anchor stores retained their pre-eminence in local retailing by giving customers the greatest selection of products and services under one roof.\u00a0 Regrettably, they soon lost their economic edge to outsiders.<\/p>\n

Prior to the Second World War, the majority of urban residents lived and worked within the central city.\u00a0 This dedicated group depended on public transportation to transport them everywhere.\u00a0 Since the majority of public transportation systems originated from the heart of the downtown and most quality stores were located there, logic dictated that the majority of people would shop at those stores.\u00a0 With the advent of affordable, easy to reach suburbs with their abundant housing choices, modern industrial areas, office parks and top quality shopping centers, the economic advantages once enjoyed exclusively by downtown retailers soon vanished.\u00a0 In their wake another kind of retailer emerged.<\/p>\n

By the mid-1960s, over half of the post-war department stores had closed their doors.\u00a0 This was especially noticeable in medium-sized U.S. cities many of which only had one or two downtown stores.\u00a0 The next three decades prompted further department store closings.\u00a0 This included some prominent retailers.\u00a0 To illustrate this last point, New York City\u00a0lost major stores over those 30-years.\u00a0 They included Abraham Strauss; Arnold Constable, B. Altman & Company, Best & Company, Bonwit Tellers, Gimbel\u2019s, and Ohrbach\u2019s.[5]<\/sup><\/a>\u00a0 By the 1990s, only three traditional department store chains remained in New York City\u00a0and that number soon dropped to one.<\/p>\n

Another force to emerge in the late 1960s and early 1970s played an equally crucial role in their demise.\u00a0 The arrival of a new generation of customer called Baby Boomers\u00a0changed retailing forever.\u00a0 Not satisfied with the status quo, this latest generation of shoppers demanded a whole new range of items and services not previously provided by department stores.\u00a0 In particular, they insisted upon affordable, high quality products and services within less formal shopping settings.\u00a0 Unlike their parent\u2019s generation, Baby Boomers were happy to travel great distances to get the best possible bargains.<\/p>\n

Customer loyalty soon became a relic of the past.\u00a0 Savvy new shoppers were more than willing to sacrifice the amenities of downtown department store for cheaper prices.\u00a0 It was always the price.\u00a0 Self-service stores with long check-out lines, indistinguishable departments and aisle upon aisle of items of picked-over garments became the norm, not the exception to the rule.\u00a0 This new retail experience was more reminiscent of the local A&P Food Store\u00a0and not a bustling department store.\u00a0 Yet, in spite of these obvious limitations, new discount chains such as Bradlee\u2019s, K-Mart, Korvette\u2019s, Target, Woolco\u00a0and Zayre\u2019s\u00a0thrived.<\/p>\n

Cleveland, Ohio was no exception to this rule.\u00a0 Like many other cities, Cleveland witnessed the demise of its downtown department stores over a forty year period beginning in the 1960s.\u00a0 New discount stores such as Clarkins, Gold Circle, Fisher\u2019s Big Wheel, Gaylord\u2019s, Giant Tiger, and Uncle Bill\u2019s\u00a0replaced them.\u00a0 Crowds also flocked to the new shopping centers and malls where national retail chains such as Montgomery Ward\u00a0and Sears & Roebuck\u00a0often predominated.\u00a0 Critics wondered how could this have happen?\u00a0 More specifically, how could this once dominant regional economic force disappear overnight without a trace?\u00a0 What business contributions did downtown Cleveland retailers make to this phenomenon, and how did these venerable institutions lose their competitive edge to others?\u00a0 In the final analysis, what lessons might modern-day retailers learn from this experience?<\/p>\n

  1. Defunct Discount Stores of the United States.<\/em> General Books, 2010. ↵<\/a><\/li>
  2. Frost, Shelly. \u201cWhat is Psychological Pricing?\u201d Houston Chronicle<\/em>, 2004. www.smallbusiness.chrom.com<\/a>. ↵<\/a><\/li>
  3. \u201cMultiple Pricing.\u201d www.commerce.wa.gove. ↵<\/a><\/li>
  4. chs.org.finding-aides\/fox\/welcome.html. ↵<\/a><\/li>
  5. www.departmentstoremuseum.blogsopt.com\/2010. ↵<\/a><\/li><\/ol><\/div>","protected":false},"author":1,"menu_order":2,"comment_status":"closed","ping_status":"closed","template":"","meta":{"pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[47],"contributor":[],"license":[],"class_list":["post-38","chapter","type-chapter","status-publish","hentry","chapter-type-standard"],"part":3,"_links":{"self":[{"href":"https:\/\/pressbooks.ulib.csuohio.edu\/lets-go-shopping\/wp-json\/pressbooks\/v2\/chapters\/38","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pressbooks.ulib.csuohio.edu\/lets-go-shopping\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/pressbooks.ulib.csuohio.edu\/lets-go-shopping\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/lets-go-shopping\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/lets-go-shopping\/wp-json\/wp\/v2\/comments?post=38"}],"version-history":[{"count":14,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/lets-go-shopping\/wp-json\/pressbooks\/v2\/chapters\/38\/revisions"}],"predecessor-version":[{"id":184,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/lets-go-shopping\/wp-json\/pressbooks\/v2\/chapters\/38\/revisions\/184"}],"part":[{"href":"https:\/\/pressbooks.ulib.csuohio.edu\/lets-go-shopping\/wp-json\/pressbooks\/v2\/parts\/3"}],"metadata":[{"href":"https:\/\/pressbooks.ulib.csuohio.edu\/lets-go-shopping\/wp-json\/pressbooks\/v2\/chapters\/38\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/pressbooks.ulib.csuohio.edu\/lets-go-shopping\/wp-json\/wp\/v2\/media?parent=38"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/lets-go-shopping\/wp-json\/pressbooks\/v2\/chapter-type?post=38"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/lets-go-shopping\/wp-json\/wp\/v2\/contributor?post=38"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/lets-go-shopping\/wp-json\/wp\/v2\/license?post=38"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}