Friday, November 23, 2007

Korvette's Spartan Existence


I hope that you’ve had a Happy Thanksgiving! Maybe you had a chance to watch the Macy’s parade or the broadcast of "Miracle on 34th Street" that followed. The pictures above are of Korvette’s 34th Street store which opened in 1967 in New York City’s famed Herald Square, right next door to Macy’s famous flagship. Two years earlier, Korvette had announced its intention to take over the Saks-34th Street store (which was a sort of outlet or “basement” store operation Note: See comment section for a correction regarding this statement) from Gimbel Brothers, Saks’ owner at the time. The first photo is an artist’s rendering of the original concept as announced with great fanfare at a 1965 press conference. Korvette’s plan as announced called for a complete renovation to the existing eight story building with a grand “neo-classical” façade and an additional seven story office tower built on top to house the company’s corporate offices. The second rendering and photo (from Isadore Barmash’s excellent Korvettes history book) show the store as it actually opened, vastly scaled-down from the original plans. The office tower addition did not materialize, and instead of the neo-classical façade, a series of alternating narrow marble strips and black spaces were installed to basically “cover up” the Saks façade, resulting in a modern but definitely odd appearance. The store was a moderate success, but came nowhere close to duplicating the magic of the 5th avenue store that Korvette had opened earlier. The whole thing was a metaphor (Ok, you can roll your eyes now. My apologies.) for what was happening to Korvette in general.

In 1966, Korvette merged with Spartans Industries, who at the time owned a very successful private label clothing manufacturer and two underperforming department store chains known as Spartan and Atlantic. Spartans was founded by Charles Bassine in the early 1940’s as Sparta Mfg. Co., with a single sewing plant in Sparta, Tennessee. Bassine, a New Yorker, was one of the earlier manufacturers to realize the advantages of locating in the South, where labor was cheap, land was plentiful and local governments were willing to bend over backwards to offer freebies if it would serve to build their industrial base. By the early 1960’s, Bassine’s company was raking in tens of millions each year making private label shirts and blouses for Sears, Penneys and Montgomery Ward.

Bassine, who had recently become a friend of Korvette founder Eugene Ferkauf, was the one Ferkauf turned to fend off the Coan challenge and to help stabilize Korvette’s business, and the marriage became official in September 1966. Spartans, although only half of Korvette’s size, became the surviving entity with Bassine as chairman and Ferkauf staying on as President.

By the mid 60’s the Korvette organization was developing serious cracks, and the merger did little to remedy this. Sales growth had slowed down, the furniture, carpet and supermarket entities were dumped, and the company struggled to find a consistent identity that consumers would identify with. Fashion became the company’s focus, but was also its biggest problem, with the cheaper Sparta goods having replaced Korvette’s earlier private label lines. The two-story suburban store design also led to an unforeseen and vexing problem that was only discovered over time – the stores were patterned after the more upscale department store mode, where two or more levels are commonplace and escalators aren’t compatible with shopping carts. This goes against the grain of the department store shopper’s mindset, where one can “load up” their carts with bargains as they pass by. Without carts, people tend to be more selective, if only so they don’t have to lug the stuff around. To cite a modern day example, Kohl's has keyed into this and wisely offers carts.

In 1968, Eugene Ferkauf resigned and cut all ties with Korvette. The “Duke of Discounting”, a man who done a great deal to create and popularize an entire retail category was gone. From here, the Korvette story becomes a long series of management changes and failed merchandising strategies. New store growth was sharply cut back. Plans to expand into Florida, long a standard move of northeast-based retailers, were scuttled. In a very controversial move in 1971, Bassine sold control of the entire company to Arlen Realty and Development, which was run by Bassine’s son-in law, Arthur Cohen. Arlen was one of America’s largest real estate developers at the time, with major holdings in New York City and other top markets, and had built many of Korvette’s stores over the years.

The early 1970’s brought more attempts to turn the company around, including shortening the stores’ moniker from “E.J. Korvette” to simply “Korvettes”, discarding the distinctive script logo in favor of a more conventionally lettered version. The biggest problem continued to revolve around the clothing lines, where an attempt to go upscale and compete with Macy’s head on proved to be disastrous. Facing increasingly severe competition upline from Macy’s and their ilk and downline from Kmart, the company would never again be able to effectively answer a fundamental question – “Why would someone shop at Korvettes?”

To make matters worse, Korvettes’ parent, Arlen Realty, found itself in the midst of its own downward spiral, due to the very difficult real estate economy of the early 70’s and a horrendous loss incurred from the shutdown of the moribund Atlantic stores chain. In April 1979, one last merger took place, when the struggling Arlen sold Korvettes to Agache-Willot, a French retail conglomerate. Agache-Willot kept Korvettes on a short leash, immediately pulling them out of Chicago and the other non-East Coast markets and paring down the store count in the other areas. It all came to naught, and Korvettes closed its doors for good on Christmas Eve 1980.

Gene Ferkauf would engage in a few small-scale retail ventures in the years immediately following his departure from the trendsetting, game-changing company he founded. Alive and well in his eighties, he and his wife Estelle live in New York City and are actively involved in a number of charitable causes.

21 comments:

  1. Spartan-Atlantic, as the stores came to be known were a real bottom of the barrel operation. People were embarrassed to say they shopped there. The merchandise was of very poor quality and even before the one near me had serious competition, it didn't do much business. I could just imagine how their people would have wrecked a chain like Korvette's. Coan didn't do so well at First National, they were in decline when he arrived and went into an even steeper decline as time went on. They were slow to build large stores and tended to be a "penny wise" "pound foolish" operation. he did get thim into "Super Finast" discount stores which, at best, tended to cannibalized sales from nearby regular First Nationals.

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  2. The building is still grand but in a weird sort of way.

    Does the clothing manufacturing aspect of Spartan still survive today or is that gone too?

    Correct me if I am wrong but I know that Spartan-Atlantic had the image of cheap and not good and I am wondering if Korvettes suffered that fate as it was getting harder and harder to retain the customers and carve out a niche after the merger.

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  3. Anonymous - Thanks for the insight on the Spartan-Atlantic and First National Stores. I have a few late 60's photos of the Atlantic stores and they look like bare bones opeations. I'll have to throw them on here one of these days. I've seen them described as "junk stores" which goes right along with what you've said.

    Didi- The Sparta Mfg. Co. is long gone. When I first moved to the South in the late 80's I called on them as a customer and they looked like they were on their last leg then. That type of garment (along with darn near everything else) is almost exclusively made in Asia now.

    Your assumption is right, the cheaper goods severely damaged Korvette's reputation. Ferkauf had a knack for obtaining high-quality clothes even without the manufacturers knowing it sometimes - he would buy through third parties and have Korvette labels sewn in. They were great value for the price. When Spartans took over they forced Korvette to buy their stuff. Years later Korvette would try to go "upscale" to compete with Macy's. It didn't work, and in fact cost them most of the few lower and middle income customers who had stayed loyal. Yikes!

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  4. This must have been one awkward discount store. As the vertical mall Herald Center, it survives mostly because of its real estate, but stores come and go quite often, especially on the upper floors.

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  5. Steven- Thanks for your input - I always enjoy your site. There's an interesting footnote about the Herald Square store. When Korvette closed down the last of the chain in 1981, they hired the Columbus, OH-based Schottenstein Brothers (of Value City fame)to liquidate all of the stores' stock, which only took weeks. The Herald Square store they kept open to operate for themselves, renaming it "Vet City".

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  6. As a former employee of Saks 34th, I must take umbrage at your reference to it as 'basement' and 'outlet'. Saks carried high-end merchandise in ALL of its departments!!! And, it had as many or more departments as Gimbels and Macy's!!!!!

    Saks 34th was my first employer, and I remember many years, and people, fondly. Some are still friends.

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  7. My primary source for the Korvettes information, beside many old newspaper articles, was a great book entitled "More Than They Bargained For" by longtime New York Times retail writer Isadore Barmash. In it, Barmash only uses the phrase "specialty store" to describe Saks-34th Street.

    A number of articles I've read implied that the merchandise at Saks-34th was of a somewhat less upscale nature than that sold at Saks Fifth Avenue. An article from a 1940 "Guide to New York City", reproduced on the web, calls it "the less expensive sister of the very swank Saks Fifth Avenue".

    "Less expensive" certainly doesn't necessarily mean "basement" or "closeout", and I was no doubt mistaken to characterize it as such. My apologies, and thanks for setting the record straight!

    I love hearing from people who actually worked in those stores back in the day. Were you there at the time the store transitioned over to Korvettes?

    Thanks again!

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  8. Hi, and thanks for responding.

    It's all in the address. Fifth Avenue real estate costs more than 34th Street, which costs more than 33rd Street. The same mink coat might cost $10,000.00 at Saks 5th, $9,000.00 at Saks 34th, and $8,000.00 at Gimbels.

    Saks was indeed called a 'specialty store' -- most probably because we carried some of the same merchandise as 5th at a lower price. I remember we carried several of the same lines of cosmetics, including Coty, Faberge, Elizabeth Arden and Charles of the Ritz.

    It appears that there is another misconception to deal with. Saks 34th never 'transitioned' to Korvettes. The store was closed in mid-1965, with employees being transferred to Gimbels or severanced out. With the exception of Bridal, Furs, Men's and Women's Suits, and Fine Jewelry, all departments were 'sold to the walls'. If any merchandise remained, it was transferred to Gimbels. The aforementioned departments were also transferred to Gimbels in their entirety. At the time, there was never any mention of Korvette's taking over.

    I was there for the last day of sales, the day the departments closed, and the very final day. I worked in the Credit Department, and volunteered my lunch hour from my new job at Lerner Shops to help close out the department. We were the last to go. This was probably the saddest time in my life. I had started with Saks 34th on my 16th birthday, and left just before my 21st. I had pretty much grown up here, and these people were my family.

    If I can provide any more info, please let me know. I love discussing the New York that was.

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  9. i just got a pair of very vintage saks 34th street high heels. they have a saks 3th street broadway 33rd 34th st. beige shoe box. the shoes are beige with sparkly faceted cut metal diamante buckles sewn on. inside the show says saks+company and is written in pen ink size 4B, D262 6663. any one have any ides what era these are from? they appear to be quite old. very curious on how to find out how old. thanks

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  10. You know, the Manhattan Korvette's wasn't the only one to be carved up into a mall. Five Towns in Cedarhurst (later Bay Harbour Mall) was a huge Korvette's that later became a small mall anchored by Service Merch and Burlington Coat. Burlington is still there, having spilled out into most of the old mall. Also, the Korvette's in Roseville, Michigan became a small mall anchored by Marshalls, and was demalled for Marshalls expansion and an Office Depot.

    Similarly, Clearmeadow Mall in Clearmeadow was an entire Service Merch-anchored mall made from the bones of a former Great Eastern Mills->Woolco building; the whole building is now part of a Walmart.

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  11. TenPoundHammer - Interesting details on the Korvette store conversions. About the Roseville, location, are you sure that was a Korvettes? I had no idea they had any stores in Michigan. Thanks!

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  12. My Dad was the Store Manager of the Roseville, MI location of Korvettes.

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    1. may i ask whom your father was? Maybe he remembers my dad Robert Dulecki

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  13. Anonymous - Very cool, and thanks for confirming that! I'd welocme the chance to pick your brain on that sometime if you wouldn't mind. My email address is in the "profile" section. Thanks again!

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  14. I remember the Korvettes, at the corner of Telegraph Rd, and West Chicago Rd, in Redford Township, MI. The shopping center, also had a Chatham Supermarket, and a McCrory. As well as some other stores. This was a huge complex, built on the site of the Town Drive-In movie theatre. One thing about the Town Drive-In. One night they had a huge fireworks display, and the output from them, drifted into our neighborhood, on the east side of Telegraph, and did damage to automobiles. Maybe, some other objects also. Anyway, the owners of the Town Drive-In, paid to repair the paint damage to the automobiles. Back to Korvettes, the shopping center complex, covered a large area, and a problem developed. Retaining ponds were not code then, and when there was a large rain storm, the storm drains could not handle it, and the street I lived on would flood. However, this was not the worst part, basement would also flood. This was very bad, waste water would surge through the basement drains. There was a couple of ways to deal with this. One was to put large plugs on top of the drains. This would work, however, if the volume was large enough, the pressure build was enormous, and this could damage the basement. Another, way was safer, this was to put a long tube over the drain, to give the water a place to back-up into. Of course, if the volume was too great, it could flow over the top of the tube. Since we moved from there in 1968, we do not know what was done to correct this situation long term. Anyway, we did like shopping at the Korvettes, and we purchased many items from there. We still have many of those items today. This reminds me of another store we shopped during that time, do you have any information on Topps?

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  15. worked for spartan-atlantic in okc in the late 60's. the 3 stores their did make money for them. they were not junk stores good local management. big competitors were Gibsons, Arlans,TG&Y and some I have forgotten.

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  16. There was a Spartan-Atlantic in Independence, Mo. for a while. We went there probably twice, could be more, and then on the way home we would stop at another store... any other store, just so my mother could shake the "odd feeling" she would get at Spartan-Atlantic. All she would say about it was, "It's a creepy, creepy store". We would never buy clothing there, in fact, the couple of times we went there was probably because they had yarn for sale really cheap.

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  17. I'l bet she was right. I haven't heard the "creepy" description before, but things I've read about the Atlantic stores in particular makes me think they were less-than-pleasant places to shop.

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  18. I'm reading about "More Than They Bargained For: The Rise and Fall of Korvettes". Reading about the "multiple story" problem, I don't see how Korvettes went ahead and tried to pursue one of two different paths:

    - The department stores that were two level were often huge, sometimes 160k-220k square feet. They could've rented out the top level to offices, then halved and remerchandised the store and competed head-on with discount stores (80k-110k square feet, more manageable). Perhaps they could've done mergers with Kmart or Caldor. If that was too "low-brow", perhaps Target.

    - If they didn't want to do discount stores, they should've competed directly with J.C. Penney, Montgomery Ward, and Sears. Perhaps a merger.

    P.S.: Speaking of Penney's, you should probably continue the saga--I have a feeling that by the time it ends, Penney's will be gone forever.

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    1. Great book. As far as the "two-story" problem goes, my impression is by the time anyone realized it was a problem, it was outweighed by far greater problems, most importantly market positioning.

      They simply couldn't decide what they wanted to be. A discount style leader ("The Other Korvettes") or a bombs-away low price outfit. Their ownership in the 70's was poorly suited to solve this. Arlen Realty and Development (who built most of the two-level stores for the original owners) was much more a developer than a retailer, and Agache-Willot, the French company Arlen sold Korvettes to, obviously knew little about the American market.

      Ironically I'm working on a Korvettes piece at the moment, then Penneys. Didn't plan for my posts to coincide with their demise, but I fear it could work out that way. Hard to see, if present trends continue, past selling out by year's end.

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