Thursday, November 29, 2007

7-Eleven - How Conveeenient

Today, pulling up to a gas station that does not have a convenience store attached is a very rare thing indeed. At virtually any gas station, be it a mom-and-pop operation, a small regional or citywide chain or a major chain that may or may not be oil company owned, the convenience store is an expected part of the deal. The “service stations” with their auto service bays and tow trucks parked out front are just about consigned to history, their operators long ago having realized that selling soft drinks and food were much more profitable than towing and servicing cars.

More than any other company, the Dallas-based Southland Corporation, better known by the name of its stores, 7-Eleven, pioneered the convenience store concept. Originally, Southland’s drawing card was not gasoline but ice, which was a sought-after commodity in the early part of the 20th century when many homes did not own electric refrigerators. Gasoline would come later. The Southland Ice Company was formed in 1927 through the combination of four local Dallas-area ice companies by entrepreneur Claude S. Dawley. Through the 20’s into the 1930’s, Southland gradually added milk, ice cream and other food items for the convenience of its customers. The company really took off under the leadership of Joe C. “Jodie” Thompson, who joined one of Southland’s predecessor ice companies in 1922 and would become Southland president in 1931, a position he held for thirty years until his death. In the late 20’s, Southland adopted the name Tote’m for its stores, with a genuine Alaskan totem pole as a store logo (they were later painted on the buildings). In the 30’s and 40’s, Southland bought out a number of other small chains in north Texas, maintaining their original names.

In 1945 the company decided it was time for a common identity and a new image for all of their stores, which by that time had evolved into mini-supermarkets, minus the meat and produce sections. With an ad agency’s help, they decided on “7-Eleven”, a catchy name that played off the stores’ operating hours. The first of a succession of green and red logos was adopted, and all existing stores were converted to the new image in 1946. Interestingly, 7-Eleven offered curb service for decades. The stores utilized an “open front” design with roll-up garage-style doors across nearly the full face of the store, which were kept open when weather permitted (which in Texas, of course, is most of the time). The open front design was maintained well into the 1960’s, although by then the door design was changed to a glass sliding type.

By 1950, with 80 stores under its belt, Southland opened its first stores outside of the north Texas area with a move into Austin that year and Houston in 1952. The first stores outside of Texas were opened in the Jacksonville and Miami, FL areas in 1954. From here, Southland moved into other markets at a breathless clip, adding Washington DC, Baltimore, Philadelphia, Kansas City, Salt Lake City, and several others by 1963 for a total of more than 1000 stores. Mr. Thompson passed away in June 1961, and the company leadership passed to his eldest son John. Southland didn’t miss a beat, and through the rest of the sixties and well into the seventies the company would experience phenomenal growth.

The sign and the two exterior photos (showing the sliding-door storefront) date from 1964. Note the promotional banners above the doors, a tradition that continues with 7-Eleven stores today. The photo of the impeccable counter man and his well-dressed customer (whose car appears to be still running outside – those were the days) is from 1966. “Oak Farms” was located in Dallas and was one of several regional dairy (and I guess, bakery) firms that were owned by Southland.

Sunday, November 25, 2007

The Foods of Chicago!

Several weeks back I was contacted by members of the production team at WTTW, Chicago’s PBS affiliate, who had seen a post I did early on about Dominick’s Finer Foods, a major Chicago grocery chain with a rich ethnic history. They contacted me with regard to a new special they’ve produced called “Foods of Chicago: A Delicious History”, which will be premiering this coming Tuesday, November 27, 2007 at 7:30 pm central on WTTW (Channel 11 in most Chicago-area locations). The show will cover a variety of topics, including Chicago’s great, enduring ethnic food traditions, its history as the candy capital of the US (it really was!), local favorites such as Jay’s Potato Chips and Chicago-born legends such as McDonald’s (the corporation, not the first store). They will also feature the Billy Goat Tavern, inspiration for the famous Saturday Night Live “Cheezborger, cheezborger” skit, which would be reason enough alone for me to watch.

Growing up in Chicago way back when, Channel 11 was the source of my daily “Electric Company” and “Zoom” fixes. They have always had a fine tradition of locally produced programs in addition to our PBS favorites. Don’t miss this show if you live in the area.

Just for fun, here’s a photo of that other Chicago legend, a Dominick's store from 1972.

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.

Friday, November 16, 2007

The Korvette Supermarkets

As mentioned previously, one of the key initiatives undertaken by the larger supermarket chains in the late 50’s/early 60’s was to expand into the area of non-food, general merchandise offerings. The reverse was true with a number of discount chains as well, including E.J. Korvette, the nation’s hottest and most successful discount store chain at the time.

Korvette went about it a bit differently than most of the others. Rather than try to put both grocery and general merchandise functions under one roof, from about 1960 on Korvette would typically build a series of buildings either adjoined or tied together by covered walkways – a two-story department store, a supermarket, a furniture and carpet center and a detached tire and auto center. The furniture/carpet and tire units were leased operations. Virtually shopping centers unto themselves, these “Korvette Cities” (as the company called them) had a striking visual presence. By 1965, Korvette was almost exclusively building “Cities” in their core East Coast markets and the newer markets of Chicago and St. Louis.

By 1965, however, it became obvious to Korvette management that the non-core businesses – furniture, carpets and most notably the supermarkets were causing a significant drain on the company's profitability. From 1960 to 1965 Korvette posted record sales increases every year, while profits lagged far behind. The furniture and carpet problems were due to in part to the slow moving nature of the products themselves, but mostly because Korvette’s lessees had become insolvent, forcing Korvette to take over ownership of the operations. As far as the supermarkets were concerned, it became clear that more depth of management expertise was needed in the grocery area. This expertise would come in the form of a merger, for which Korvette was finally ready and willing.

On February 1, 1965, Korvette merged with Hill’s Supermarkets, a family-owned, Long Island-based chain of 42 nicely profitable stores, most of which were located on Long Island itself. All stores would be renamed “Hills/Korvette Food Centers”. Hill's chairman, Hilliard J. Coan, was similar in age to Korvette’s Eugene Ferkauf, but couldn’t have been more different in temperament. Coan was a buttoned-down executive of serious demeanor, while Ferkauf, ever the idea man, didn’t even maintain an office or desk at Korvette Headquarters. Coan was named board chairman while Ferkauf held the title of CEO. On the surface, the mix should have worked; the personalities should have been complementary. Ferkauf excelled in what today would be called “management by walking around” – prowling the stores, monitoring merchandising and firing up the troops. He had little desire or patience for the tedious details of running the $700 million corporation Korvette had become. But tensions appeared, and as often seems to be the case with mergers even today, company executives split into two factions - in this case the Ferkauf and Coan loyalists.

Things rolled along in a sort of uneasy truce until a fateful day in May 1966, when Coan summoned Ferkauf to a meeting, and in the presence of two other Korvette execs demanded that he surrender the chief executive officer’s title and effectively leave the company. Understandably furious, Ferkauf (who was still the largest Korvette stockholder by far) right away pursued another merger, this time with Spartans Industries, owners of the Spartan and Atlantic discount stores and a very lucrative private label clothing manufacturer. Talks began immediately, and within months Korvette was no longer an independent stock company – it was now a division of Spartans. Coan was forced out, and in October 1966 he would become president of First National (Finast) Stores. Ferkauf would remain as Chairman of the Executive Committee of Spartans. Almost immediately, the supermarkets would begin to be sold off, first the Chicago units (to Dominick’s, as mentioned), then the Baltimore units to Food Fair, eventually followed by the others to various buyers.

This story (along with the rest of the Korvettes saga) is told in great, entertaining detail in an excellent book by the late New York Times retail writer Isadore Barmash, "More than they bargained for-The Rise and Fall of Korvettes". Highly recommended reading for retail fans.

The first three photos, from 1965, are of a brand new Hills/Korvette store in Lawrence, Long Island, NY. If you look carefully you can see the reflection of the Korvette Auto Center in the window, with the rarer red signage variant. The fourth photo is a 1962 produce department, and the last one an artist’s rendering of the Korvette Food Supermarket (what other kind is there?) as built in the earlier Korvette Cities.

Monday, November 12, 2007

Korvette Summer

Here are a few more shots from 1962 -65, near the end of Korvette’s golden years. In 1963 Korvette planted its flag for the first time outside of the East Coast market, opening four stores in Chicagoland. The first two, located in Oak Lawn at 87th and Cicero and in Elmhurst at Route 83 (Elmhurst Rd) and St. Charles Rd opened on April 29. Two more stores would open before the end of the year, in the south suburb of Matteson at Crawford and 111th street and in Morton Grove at the intersection of Waukegan Rd and Dempster Street. Each of these stores were built as “Korvette Cities” with a two-story main store, an adjoining Korvette supermarket, furniture store/carpet center, and an auto center at the edge of the parking lot.

The fifth and last Chicago area Korvette is the only one I remember from personal experience. Opening in November 1965, over two years later than the other Chicago locations, this store was located at the corner of Harlem Avenue and Cermak Road in North Riverside, across the street from Berwyn’s Cermak Plaza, a circa-1956 strip mall which would later become an unlikely pop-culture icon with the addition of some, uh, "recycled" art works and a cameo appearance in the movie “Wayne’s World”. On the opposite side of the Korvette store would be the future location of North Riverside Park Mall, which opened around 1974. The originally-intended supermarket for this last Chicago location opened up as a Jewel Food Store instead (they basically closed their Cermak Plaza location and moved across the street), since earlier in the year Korvette sold off its grocery business in Chicago, with three locations going to Dominick’s.

We moved to the West Suburbs in the mid-70’s, and I vividly remember being mesmerized by the funky blue-and-white script Korvette logo on the face of the buildings and on the sign tower. Even though the store was only ten years old at the time, it looked positively ancient in the middle of that Helvetica decade, the 1970’s. As young as I was then, I still tried to imagine what the place would have looked like brand-new and full of 1960’s shoppers. My family didn’t shop there often, due to the virtually new mall right next door and the fact that Korvette was in steep decline and the store really showed it. The store became a Kmart after Korvette's demise, and has been a Kohl's for many years now.

The photos above include a 1965 exterior view of the Douglaston, Long Island, NY store (which opened a month after the North Riverside store discussed above), and various interior shots dating from 1962 and 1965. The Douglaston Korvette store was the home of a fine art gallery in the 1960's which was a pet project of founder Eugene Ferkauf. The health and beauty section shows a sign for “Kor-Val”, Korvette’s house brand for shaving cream, shampoo and the like, and the second photo shows a Korvette camera department with a great selection of telescopes – the chandelier peeking at the top of the photo would indicate that this was from the flagship 575 Fifth Avenue location, the subject of the previous post.

One type of photo I would love to be able to show is of Korvette’s legendary record department. The company was one of the very largest record dealers in the country, and it was truly one of Korvette’s main and most fondly remembered calling cards. It’s a safe bet that a great many Beatles, Dylan and Simon and Garfunkel albums flew through those front doors shown in the first picture. To say nothing of The Four Tops, The Mamas and the Papas, Herb Alpert and the Tijuana Brass…

Friday, November 9, 2007

Breakfast at Korvettes

In 1962, Korvette opened a store that not only gained the company national publicity but proved to be hugely profitable in its own right, and also helped cement the direction of a major part of Korvette’s merchandising going forward. I’m referring to the famous eight-floor “Fifth Avenue Korvettes”, which opened on July 24, 1962 at the corner of Fifth Avenue and 47th Street in the heart of Manhattan’s “Gold Coast” retail district.

In the months leading up to the store’s opening, the store became the subject of many jokes (and much genuine concern) within Fifth Avenue’s elite retail enclave, which at the time included such luminaries as Lord & Taylor, Tiffany and Co. and Saks Fifth Avenue, among others. The basis of this was a fear that Korvette would open a stereotypically tacky discount store with barren walls, poor lighting, pipe garment racks and substandard goods, thus tarnishing the area’s image.

They couldn’t have been more wrong. The store (which was opened in the former location of W.J. Sloane, a famous New York furniture store which had resided there for the previous 50 years) was very tastefully decorated in a classy, elegant manner via a million-dollar renovation. Moreover, Eugene Ferkauf and his subordinates did a superb job of merchandising, stocking the store with a fine array of upscale apparel, including cashmere sweaters, furs (very much in vogue at the time though extremely controversial now) and other high-end items, in addition to their normal midprice offerings.

The store was a smashing success, and limousines picking-up and delivering well-heeled patrons were a common sight. On top of that, the store became something of a tourist attraction and would remain so for much of the next decade, even after Korvette declined in other areas. The Fifth Avenue store greatly influenced Korvette merchandising, leading to an increased emphasis on soft goods (clothing) and more upscale store décor.

The photos shown are all from 1962, the store’s first year, and show a bustling Fifth Avenue sidewalk scene, a beautiful night view, and a sizable crowd shopping in the women’s department. I really like the night picture. You can almost picture this scene several hours later – the sun is rising, peering between the buildings and down the street, which is still virtually devoid of people – then Audrey Hepburn appears, holding her cup of coffee and danish and gazing through one of the windows as “Moon River” strains in the background. You know, “Breakfast at Korvettes”, right? Well, maybe not.

Monday, November 5, 2007

E.J. Korvette - The Dawn of Discounting

In the history of American retailing, The E.J. Korvette Story is a fairly brief chapter. This brevity does not do justice to the tremendous, arguably unparalleled influence the company and its visionary founder, Eugene Ferkauf, wielded during its halcyon years – the mid-fifties through the early nineteen-sixties.

E. J. Korvette, Inc. was founded by Brooklyn-born Eugene Ferkauf in May 1948 with a single, cramped second floor store in Manhattan, where the main product sold was luggage. The store’s name (contrary to the popular legend which said it stood for “Eight Jewish Korean War Veterans”) was derived from Ferkauf’s first initial along with that of Joe Zwillenberg, a childhood friend, who would join Ferkauf in his new business. “Corvette” was the name of a class of Canadian Naval ship. The name was modified in deference to Canadian Naval regulations of the era which apparently forbade commercialization of military nomenclature (this was several years before General Motors’ Corvette).

Small appliances (sold at very low markup) were soon added to Korvette’s product mix, and after only two years sales passed the $2 million mark. By 1957, nine years after its founding, sales were at $71 million, and only five years later were over $237 million. By the end of the 50's, Korvette had begun to place a huge emphasis on clothing and and other soft goods, which helped fuel the company's rise.
Korvette played a major role in the downfall of “fair trade” laws – where goods manufacturers were allowed to set retail prices (today’s laws only allow them to “suggest” prices). To a large extent, these laws protected traditional department stores, who sold at typical 40% markup versus the discounters who often sold at margins of 20% or less. On hundreds of occasions, Korvette was sued by manufacturers for undercutting their mandated prices. Korvette’s response in nearly every case was to switch to a different manufacturer of the same product. The court cases also resulted in a ton of free publicity for Korvette, burnishing their image as an advocate for the poor, hapless, overcharged consumer.

Korvette also led the charge toward building in suburban locations, often arriving ahead of their department store competitors, including Macy’s and Gimbels. By the early 60’s, the company was building huge 200,000-plus square feet “Korvette Cities”, consisting of a “promotional department store” (they avoided the term “discount store” like the plague) with an adjoining Korvette supermarket, furniture/carpet center and tire store.

The department photos (and exterior artist’s rendering) shown above date from 1962, as the company continued to ascend at a furious pace. That year, Korvette opened 6 stores for a total of 21 in the New York, New Jersey and Philadelphia markets. A push into the Chicago area would come the following year, with St. Louis the year after that. Most of the stores opened in ‘62 were suburban locations, with one very notable exception – the company’s new flagship store on New York City’s legendary Fifth Avenue, which opened in June. Discount retailing, still a fairly new phenomenon at the time, had from the start been rebuffed and ridiculed by critics as a passing fad. Korvette’s success was a vital factor in showing those critics (along with everyone else) that discount stores were here to stay. Undeniable proof that Korvette’s influence had expanded far beyond its geographic boundaries came in the July 6, 1962 issue of Time Magazine, which featured a glowing cover story on Eugene Ferkauf and his brainchild.