Murphy's Mart By The Numbers

At the end of 1973 there were 22 Murphy’s Marts in operation, most of which were in G.C. Murphy’s western Pennsylvania home territory. Even in this core market - the “Heart of Murphyland” as it were, the company’s late entry into discounting had put them at a major competitive disadvantage, especially in relation to Kmart, whose presence in all of Murphy’s key areas now well established. Added to that was the general economic situation of the day, with no foreseeable end to rampant inflation. The combination of the poor mid-70’s economy with an oversupply of loosely managed, poor performing discount chains would soon precipitate an industry shakeout, affecting names mentioned here many times before– Topps/White Front, Turn-Style, and closer to home, longtime variety store competitor W.T. Grant. All in all, Murphy’s found itself in a most challenging environment.

Nevertheless, the company now appeared ready to cast its lot with the Marts, and a major ramp-up of new store openings would soon be underway. Twenty-plus stores had taught the company a major lesson, however – that in many cases, the typical 80 to 100,000 square foot Murphy’s Marts were too large for their respective trade areas. To rectify this, the company came up with a scalable concept to be used for all Murphy’s Marts going forward. Four basic store footprints were developed and described by the company in 1973.

The “900” series signified the “heavyweights of (Murphy’s) store mix”, being the largest Marts at 98,000 square feet. These were free-standing units, paired with a 30,000 square foot top-name supermarket to create a “true one-stop shopping complex”, and were reserved for the company’s most densely populated markets. The larger floor space would “accommodate broader selections and trade-up priced merchandise at competitive discount prices”. Next were the “800” series stores, 88,000 square foot units that would either be either free-standing or would “anchor a mall-type shopping center”, the company’s preferred setting for the “800” stores, “where available”. Then came the “700” stores, similar in all respects to the “800” stores except for their smaller square footage of 66,000. Here again, mall locations were Murphy’s preference. The company was careful to point out that the “700” stores offered “substantially the same selection of merchandise as the larger ‘900’ and ‘800’ series”, only in smaller quantities. It’s clear that Murphy felt that the “700” stores hit the proverbial sweet spot, and would “play a significant role in (their) future expansion plans”, and that “Present experience, though limited, seems to indicate “700” series Marts are more economical than larger Marts yet are still capable of high volume retailing”. More problematic were the 45,000 square foot “600” series Marts, which “were initially conceived as ‘swing stores’, and could be operated as Murphy’s Marts in some locations and as conventional (G.C. Murphy-branded) stores in others”. (Hey, Pennsylvania’s a “swing state”, isn’t it?) The dual branding idea was scrapped and whatever “600” stores were opened did so as Murphy’s Marts, although their similarity in size to the company’s variety stores led in many cases to customer confusion.

With the new store formats set, the company turned its focus to making up for lost time, rolling out new Murphy's Marts at a much faster pace than before. In 1976-77 alone, 56 new Marts were opened, forty of which were former W.T. Grant locations, picked up in the wake of that company's tragic bankruptcy in 1975. Many of these Grants locations were located in the Southern states. The company was unable, however, to leverage the famous G.C. Murphy name - one of their key strategies in building up the Marts in the Eastern and Midwest states - in the new Southern market areas, due to the relative paucity of G.C. Murphy stores in the Southeast and the fact that their Southwestern stores still went under the Morgan & Lindsey name.

Even in their strongest markets, though, the "Murphy's" name recognition factor was a double-edged sword. The book "For the Love of Murphy's" by Jason Togyer mentions customer frustration with the G.C. Murphy variety stores' higher pricing level as compared to the Murphy's Marts, and the fact that they weren't allowed to return or exchange merchandise purchased from one chain at the other's stores. Several retired Murphy's executives are quoted on this issue, ruefully noting that S.S. Kresge did not experience the same problem. Kmart was different enough in name and meteoric enough (how's that for a measurement?) in its success that the Kresge/Kmart association was largely forgotten in the minds of most consumers by the mid-1970's. And it didn't help that Murphy's newspaper ads continued to routinely promote both chains' sales in the same space, a practice that was finally scuttled in 1979.

By the end of the 1970's, G.C. Murphy was losing money. A November 1979 Business Week article was painfully sharp in its analysis of the company's problems, placing a large chunk of the blame on the increased number of Murphy's Marts, which the company was "still trying to assimilate", due to the fact that it "expanded its Mart operations faster than it could control them". The basic contention of the article was that G.C. Murphy had never recognized "that it runs two distinctly different types of retail businesses". That year, major changes were made, including the forced retirement of Murphy's president, who was replaced by Chuck Lytle, a veteran Murphy executive, amiable and extremely well-liked by the troops. The Marts and variety store operations were finally separated into two groups, and advertising would no longer be shared. Interestingly, the Murphy's Mart store footprint would shrink even more, with "the greatest share of the new units (to) be 32,000 sq. ft to 38,000 sq. ft". Eight of the oldest Murphy's Marts, which at an average 90,000 square feet were gigantic by comparison, were shuttered.

Over the next few years there would be a few more closings, both of Murphy’s Marts (some of the weaker performing ex-Grants stores in the South) and of variety stores. The early 1980’s would also see a couple of major retoolings of the Marts, including an attempt to bolster the quality of the apparel offerings (a perennially weak area for the company) and to update the stores’ décor, the early 70’s green , gold and orange having grown stale by that time. In his book, Togyer likens the updated 1984 Murphy’s Mart look to that later adopted by Target, incorporating “expensive-looking displays lit with baby spotlights” as part of interiors “done over in sleek, corporate white with red and blue accents and simple, handsome signs”. These new signs featured a stylized “M” that looked like a neon tube. A November 1983 Chain Store Age article highlighted some new additions to the merchandise mix as well: “Gitano color-fit jeans, Gloria Vanderbilt black denims and Wrangler cords”, all part of an effort to make soft lines “the central focus of the Marts”. Also, it was mandated that the song “Maniac” from the Flashdance movie soundtrack be played on a continuous tape loop in all Murphy’s Mart adult apparel departments.

These efforts (All except for the “Maniac” song loop – I just made that up.) were paying off. According to the same article, G.C. Murphy sales, despite a store lineup of 19 fewer units, were $872 million for 1983, up six percent from the previous year. Profits, however, were up an astounding 56 percent, a feat the magazine credited to the “increased emphasis on the Murphy’s Mart stores”.

At any previous time in the 20th century, this upturn in fortunes might possibly have been seen as the beginning of an exciting new era – at the very least a “mini golden age” for the Murphy organization. But these were the 1980’s, an era in which the old rules of business were rapidly going by the wayside. Murphy was about to become a victim of its own success.

From a business standpoint, the 1980’s were a drama like none that had gone before. “Hostile takeovers” formed the plot, and “corporate raiders” were the villains. The helpless victims were staid, old-line companies with large reserves of cash and little debt, conservatively run and largely owned by “Gram-and-Gramp”-type investors, who faithfully acquired the stock in small amounts and held onto it forever. All too often, there were no heroes in these real-life tales. Under a hostile takeover typical of those that took place in the 80’s, the corporate raider, or “investor”, would target a company and seek to sow discord among its shareholders, charging inefficiency or malfeasance of some sort on the part of the company ‘s board and management. Well-heeled or well-backed, the investor would begin to acquire blocks of the company’s stock, eventually gaining a controlling interest. At that point, sensing the writing on the wall, the remaining shareholders were usually more than willing to sell their shares. All that was left then was for the raider (excuse me, I mean “investor”) to break up the company and sell it off in pieces, usually resulting in a huge profit. It was a scenario that played itself out time and time again through the 80’s. Eventually, government regulations, prosecutions and (just a theory here) a possible latent desire for respect on the part of the raiders caused the trend to wind down. To learn more, you can find any number of books on the subject, or you can just rent the 1987 movie “Wall Street”, which sums the whole sordid thing up remarkably well. (And the hairstyles are awesome.)

To be sure, The G.C. Murphy Company was an old-line, cash rich, low-debt, (very) conservative company, with investor rolls filled with Grandmas and Grandpas. And nowhere were the corporate raiders more brutal than in the retail world. The most (in)famous of these was Herbert Haft, who in the space of a few years went after Safeway, Federated, Stop & Shop, Eckerd, Kroger, Dayton-Hudson and others, leaving very little time for hobbies, I’m sure. None of these takeover attempts succeeded, but in most cases Haft walked away with a pile of cash and left a lot of damage in his wake. Haft’s basic tactic – he’d buy an interest in a company, threaten a hostile takeover, and refuse to back off unless the company bought back his shares at a huge premium, which they invariably did - came to be known as “greenmail”. He apparently considered G.C. Murphy too small to bother with, as there is no record of any advances made toward them.

Others were interested, however. New Jersey-based investor Arthur Goldberg, characterized as “one of Wall Street’s sharks” by Togyer, had acquired 7.5 percent of Murphy’s stock by early 1984. Just prior to that, Murphy proposed a new policy to its shareholders that would have mandated an 80 percent majority of shareholders to approve the dismissal of any member of the board of directors or a merger with another company. Goldberg sought to defeat the proposal, and when he lost, decided to dump his stock. After some hemming and hawing, Murphy management tried to corral a group of investors friendly to the company to buy Goldberg out, almost putting it together, but ultimately falling short. Goldberg sold out to an apparently bigger shark - Irwin Jacobs, a Minneapolis-based investor charmingly known, according to Togyer, as “Irv the Liquidator”. Eventually Jacobs would rack up an astounding 19 percent of Murphy’s common stock, and all of the power that went along with it.

Now having to deal with a new, even tougher adversary, Murphy brass tried to prevail upon Jacobs to sell his shares back to the company. Togyer’s book describes some fairly humorous scenes of facility tours the company hosted for Jacobs, instructing store and distribution center managers beforehand “not to clean up”, the intent being to leave a shoddy impression - convincing Jacobs he’d made a dubious investment and compelling him to sell his stake back to the company, cheap.

Once again, Murphy attempted to put together a coalition to sufficiently finance the repurchase of its stock, and once again, sadly, it failed. On April 13, 1985, the announcement was made that Irwin Jacobs had struck a deal to sell his G.C. Murphy holdings. The buyer? Rocky Hill, Connecticut-based Ames Department Stores. After an agonizing summer filled with offers and counteroffers, legal maneuverings, jockeying for position and considerable fear and loathing, the deal was finally done on August 6. The G.C. Murphy Company, a proud 90 year old organization, one of America’s retail pioneers, was gone.

Off the bat, plans were announced to close nearly one-fourth of the G.C. Murphy variety stores. Ames’ main interest in the transaction was to gain control of the Murphy’s Marts and convert them to Ames units, a process that ended up taking nearly two years. Immediately, however, management responsibility for the Marts was shifted to Rocky Hill, while the variety store division continued to report to McKeesport.

As expected in most any merger situation, considerable vitriol flowed from both sides of the Ames-Murphy’s merger, which the Togyer book and several press articles I’ve read expound in fascinating detail. Murphy partisans described the Ames operation as follows: “Honky-tonk operations…a mess…a terrible store with terrible merchandising…We should have been the one to take Ames over”. A Wall Street analyst “who asked not to be named” (gee, I wonder why…) took up the cause for Ames in a September 1987 New York Times article: “My assumption is that there’s something really rotten at the Murphy’s operation. Ames was beautifully managed all those years before it bought Murphy’s”. (While reading this stuff, the Ramones song “We’re a Happy Family” kept running through my head. Not at all fitting, I know, but it’s like trying to stop thinking about a hippopotamus when a friend dares you that you can’t!)

The variety store division, which in 1989 consisted of 131 G.C. Murphy stores and 25 “Bargain World” outlets was never a fit for Ames and in August 1989, Ames sold it to E-II Holdings, a company controlled by legendary financier Meshulam Riklis. E-II (later called McCrory Corp.) had pretty much become the repository for the five-and-ten biz by that time, with a stable that included McCrory (which had been a Riklis property for decades under his previous company, Rapid-American Corporation), J.J. Newberry, H.L. Green, S.H. Kress, T.G. & Y and Britts, among others. Despite this, Riklis was probably most famous for his marriage to Pia Zadora, an aspiring actress/singer. Riklis had famously invested several of his McCrory millions in an effort to make her a star. I met the diminutive Ms. Zadora in my youth at a record signing at Atlanta’s Lenox Square while visiting my cousins there in ’83 or so, and thought she was nice, and even better looking in person than in all of her ridiculously expensive publicity. At that point I deemed her new single, called “The Clapping Song” if I remember right, to be a non-deleterious issue.

The G.C. Murphy story’s ending coincides with that of the 20th century, upon the folding of its two successor companies. In 2002, McCrory Corporation, last of the variety store operators with a paltry 200 stores left of its “empire” (a handful of which operated under the G.C. Murphy banner to the bitter end), closed its doors for good.

Ames, a fascinating story in and of itself, closed down in August of that same year. Having acquired several large retailers in the 1980’s and 1990’s, including several chains outright – King’s, Murphy’s, Zayre, Hills – and prime locations from a slew of other defunct chains, Ames struggled for years prior to its demise. The prevailing opinion is that Ames finally collapsed under the weight of the Zayre acquisition, finding the assimilation of the stores far more costly and difficult than anticipated.

A few of the former Ames units are first-generation Murphy’s Marts, sitting vacant to this day, just waiting for an enterprising soul to show up and open “Big Murph’s Flea Market”. You never know.

Shown above are Murphy publicity photos from 1973-4. Ok, by the numbers: First, a great-looking “900” series Murphy’s Mart/Acme combination, this one being the first Mart to open in Baltimore. Next up are an exterior view and the inside mall entrance of the Butler, Pennsylvania, location, an “800” store. Note the fine examples of 70’s art to the left of the inside entrance (the paintings, not the cornstalk man). Following are similar views of the DuBois, Pennsylvania location (right, a “700” store – you’re getting this!), with the young lady in the foreground in the de rigueur plaid flares. Last is a “600” store, from Westernport, Maryland, which leaves me at a loss for words. (If I think of any, I’ll edit the post. Don’t wait up.) Below is kind of a strange one, from 1975. A photo of a similar looking facade (sans the happy-looking store crew in the foreground) is featured in the Togyer book and is captioned in a way that leads me to believe it’s one of the former W.T. Grant stores, fitted with a Murphy’s Mart logo that’s an odd throwback to an earlier version.

****A special note to everyone – thanks for bearing with me through the longer stretches between posts lately. I’m working towards resuming my former blistering, frenetic posting pace (haha) that you’ve all grown accustomed to, and to responding to your comments on a much more timely basis. They are wonderful, informative and greatly appreciated as always. One thing I’ve learned, to my horror, is that a number of responses I’ve written to emails I’ve received over the last month or so (which I definitely have attempted to respond to promptly) have apparently not gone through. I’ve had this problem with Hotmail before. I will try to look them up and resend them on another email account. If you have written me recently or were expecting communication from me on something or another, and are sitting there thinking “Wow, Dave’s been one poor correspondent. He’s been too, too hard to find. I guess that means we ain’t been on his mind!”, nothing could be further from the truth. Please drop me another quick line and I’ll resend my original response. (Or I’ll at least apologize like heck!) Thanks again.****