Thursday, September 9, 2010

The Newly Repackaged Wards

More than eight years had passed, and during that time Montgomery Ward had been largely successful in reinventing its image. Once best known for dowdy downtown stores with green awnings, few services and a highly eccentric company president, the public perception of Wards now reflected an operator of large, modern stores with auto centers, charm schools and fashion shows - a good fit for the sparkling (and sprawling) shopping centers they now inhabited.

The fiscal rewards from all this change were excruciatingly slow in coming, however, so much so that by the mid-60’s Wards had picked up an unflattering but descriptive nickname within financial circles – “Wards, the watched pot that never boils”.

By 1967 the pot had begun to simmer, but not because of an upturn in fortunes. Indeed, the bottom fell out in 1966, with a disastrous 30 percent decline in profits despite a one-year sales record of nearly two billion dollars. There were a number of factors behind this, with just one example being the company’s infrastructure. Behind the shiny new stores, Wards still limped along with an antiquated distribution and inventory control system. The situation was particularly bad with their direct mail operation, where thousands of orders shipped out every month from ancient multi-floor “catalog houses”, just as they had in the 1920’s or 30’s.

Wards’ profit woes contributed to a sharp decline in its stock price. The company’s overall “book value” remained high though, leading to an unexpected turn of events and one of the 1967 business world’s hot stories – Montgomery Ward was now a takeover target! “Somebody loves Ward’s”, read the headline in an April 1967 Business Week article, “but no one seems to know who, or just why”.

The article spelled out three of the rumored suitors, an eclectic bunch for sure: First up was The Sperry & Hutchinson Company, eagerly looking for ways to diversify their business in light of the fact that store chains were dropping trading stamps (including their market-leading S&H Green Stamps) at an uncomfortable rate. Eventually, S&H turned to acquiring a number of furniture manufacturers who would prove extremely vulnerable to the recessionary climate of the 70’s, decimating the company. Another name bandied about was Litton Industries, a massive, diversified conglomerate with interests ranging from aerospace to microwave ovens (at a time when they were cutting-edge technology and cost a relative fortune) to retail design, of all things. In 1968, Litton purchased Brand-Worth, the L.A. - based interior design firm, celebrated here in an earlier post. Third up in the rumor mill was fellow mass retailer and newly-minted cataloger J.C. Penney. For Penney, a pitch-perfect operation on a scorching growth trajectory at the time, such a move would have made precious little sense. All three companies denied any overtures to Wards management.

To squelch the rumors and avert the hostile bid that was certain to eventually come, Montgomery Ward chairman Tom Brooker took steps to ensure the company stayed in control of its own destiny. Brooker conceded that a merger was in fact necessary, but that Ward’s merger partner would be of the company’s own choosing. In mid-1967, Brooker approached a company from a totally different industry with the prospect. He was given a polite “thanks, but no thanks”.

A year later, Brooker approached the same company again, ring in hand, figuratively speaking. This time, owing to Ward’s vastly improved financial performance in 1967-68, the reception was much warmer, and merger talks began. The object of Ward’s ardor was Chicago-based Container Corporation of America, a leading manufacturer of paperboard packaging and a rumored takeover target itself. Together, the two companies would form “a whale too big to push through a door”, as a Wards vice president phrased it for a 1969 Dun’s Review article. Container Corporation was one of the top suppliers to the largest food and consumer products companies, including Procter and Gamble (in an era when virtually all detergents were boxed powders vs. today’s liquid versions in plastic jugs, and Pampers came exclusively in cardboard boxes instead of plastic wrapping), Kimberly-Clark and a host of others. Container Corporation was unique in that they were the first major packaging company to establish their own graphic design studio (in the early 50’s), and years later their design capabilities continued to set the pace for the packaging industry. In August 1968 the Montgomery Ward/Container Corp. merger was finalized, and both companies became wholly owned subsidiaries of a new holding company called Marcor, with Wards stockholders owning two-thirds of the new company.

Predictably, the pairing was soon dubbed “the odd couple” in the press, and objectively it was in many respects. Some advantages were evident – certainly, Wards required vast amounts of packaging for their store-brand goods, and of course the two companies shared Chicago as a home base. (And presumably the syntax that went with it – “Okay, the June sales figures are in. Let’s see where we’re at.”) In a May 1970 Fortune magazine article, Brooker outlined the three keys reasons he sought the merger – one, Ward’s abovementioned vulnerability due to the company’s high value and low stock price, two, Container Corporation’s very attractive cash flow, and three, Container’s president, Leo Schoenhofen, was ten years younger than the soon-to-be-retirement age Brooker, and importantly he had Brooker’s confidence as a worthwhile successor.

By 1970, the verdict was in – the marriage was a success, profits were up, and Brooker was credited with “the strategy that saved Montgomery Ward”, as Fortune put it. Guess it was “all in the packaging”, right? (Ugh.)

Speaking of packaging, the Marcor merger era coincided with the introduction of a new logo for Wards, which began appearing in 1968. Sensing the need for an updated image and seeking a more compact, versatile logo that would work with the company’s rather long name, Wards convened a panel of “experts in design psychology and visual communications” that among others included the art directors of Look and McCall’s magazines, Ford Motor Company’s director of corporate identity and the head of Famous Artists correspondence school (“Can You Draw This Puppy?”) along with luminaries from the fashion, advertising and architectural worlds. The “Blue Bar” logo that they came up with is arguably the most remembered Montgomery Ward logo today.

The Montgomery Ward publicity photos above date from 1968 through 1970. The first photo depicts the very first store to feature the new Montgomery Ward logo, located at North Valley Shopping Center in Denver and opened in 1968. The second photo, of a new Wards store in Sacramento from 1969, shows a “hybrid” featuring the new logo on the parking lot signs and old school lettering on the store itself. (Sorry, I just can’t bring myself to type “old skool”.) This store is now a Burlington Coat Factory, as documented by the ever-reliable Romleys. Also shown are typical housewares, appliance and sporting goods departments, along with a fashion show scene and a friendly Wards service call.

Below, a couple of atmospheric photos to give you a feel for the Wards ‘vibe’…their ‘ethos’, if you will. (Ok, I’ll stop that now.) The model Wards-furnished living room, sporting plastic framed furniture, some cool fibers, lots of chrome, spherical lighting and the obligatory clear globe full of mysterious yellow liquid and accessory light. Toss in a couple of Hermann Hesse paperbacks, and this scene is complete. Lastly, a “group of young people”, resplendent in the latest Wards fashions and carrying (establishment-approved) protest signs. Might have been a rehearsal for an “Up with People” rally - you never know!

19 comments:

  1. The Denver store picture reminds me of the Wards store in Hudson Plaza, Poughkeepsie, NY. I grew up in the 70s and 80s and Wards was my first job in 1986. The upper floor was an enormous warehouse space equal in size to the entire main floor, with a small area dedicated to offices (some also mysteriously converted at some point to warehouse space) break room and training space. Our store featured a full auto center, catalog counter, and every department from greeting cards, furniture, electronics, lamps, paint, apparel, and so on. So many memories of that store but photos are very hard to find.

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  2. Thanks Dave for the interesting bit of Wards history. I now have an idea of how Mobil Oil wound up getting control of both Wards and Container Corporation. It looks like this "successful marriage" is what eventually led to Wards ultimate demise, but that's just my opinion.

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  3. I like MW's blue logo. Cool, groovy, 60s. Definately my favorite.

    I love the fourth photo with the classy dressed housewife and that huge thingy in her hair. Probably how I would have looked back in the day had I been my age forty plus years ago and I was interested in a gigantic microwave (???). These photos always want to make me walk back in time. I echo Armpit Studioes, that IS my kind of Pro Shop and I don't don't pro shop much at all.

    Oh and that living room of the future shall be mine one day.

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  4. It would've made little sense if Penney's ended up buying Wards. Even if they kept both names, they would've run into lots of problems...there have been many a mall that was anchored by both a Montgomery Ward and JCPenney.

    Great to see you back, by the way.

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  5. Growing up in an area of the country that had sporadic Wards locations, the company had a solid reputation while simultaneously viewed as dowdy and an also ran in comparison to Sears and JCPenney.

    JCPenney was still int the early stages of adopting the mass merchant approach of Sears and Wards. Wards would have been an upgrade as Penney's still had many dry goods locations, but there were mall overlaps. Generally a mal with Penney's and Wards lacked Sears and conversely, Penney's and Sears anchored malls lacking Wards. However, the consolidation that has since swept the department store industry hadn't occurred. There were plenty of regional department stores that could fill the overlapping anchor spot. Additionally, since Sears was often absent from Penney's/Wards anchored malls, any required divestures may have favored Sears.

    Wards resurgence is an example of the right step being taken too late. Sears was beginning to show some tarnishment by the early 70's when compared to JCPenneys' newer more upmarket image. Sears attempted to follow JCP upmarket, only to lose focus, leading to today's Sears which lacks a consistent coherent concept of what kind of merchant it should be or wants to be.

    The liquidation of Wards along with JCPenney's successful transition to focus on soft lines has left Sears as the last standing mass merchant. Unfortunately, its a segment that has been shrank by discount stores and big box retailers. Wards, Sears and JCPenney couldn't all three operate as mass merchants in today's retail environment, much as the mid-tier department stores have seen their piece of the pie shrink. But for a short moment, all three chains earned their iconic presence among America's shopping malls.

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  6. That last photo is hilarious! Big-time LOLs.

    Anti-establishment without actually being anti-establishment ... Looks like a cross between "Sesame Street" and "Hair."

    What a whacky time in our cultural history -- but so very missed too.

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  7. I knew about Ward's and Mobil, but I never was award of Container Corporation's role in it. If anything, a box manufacturer is even more an unlikely paring with an oil company than a department store.

    Didi--that item the woman was admiring was simply a double oven range. In later years a microwave would as likely be the eye-level unit, but not when this picture was taken.


    In fact, it was only around this
    time the microwave oven as we know it came into being. It was 1967 when the first countertop unit that used standard 115V household current was introduced...the Amana RadarRange. Interestingly, it too was part of an another aerospace to appliances conglomerate, Raytheon.

    Before that, microwaves had to be built into a wall/cabinet and hooked up to 220V current, like an electric oven. I have a large collection of old game show and it includes an episode of the original version of THE PRICE IS RIGHT that gave away one of those type of microwaves in 1960.

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  8. I grew up near a mall that had both a J.C. Penneys and a Montgomery Wards. When the mall opened (early 80s), Penneys was phasing out its dry goods line and going into soft line items. The Wards had both dry and soft goods, but there not as good quality as other retailers. I remember Wards having a selection of cheap dowdy clothes for juniors and women. I would get my clothing elesewhere, including J.C. Penney.

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  9. I always felt Wards was sort of a runner up in the retail business. I did make several large purchases there because their prices were very good. I am still using an air compressor that I bought in 1984. As time went on they seem to deteriorate more and more. I finally quit going in there when they allowed concessionaire type vendors to do the hard sell on whoever happened to be in their sight at the time, things like portrait studios and such. I think Wards reached their peak in the late 60's to early 70's, and then started to decline. That was unfortunate, the potential was definitely there.

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  10. Amazing stuff. This continues to be my favorite blog, and I've been spreading the word via Facebook.

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  11. Armpit – Mine too! Makes me want to go shopping for a new tennis racket.

    BHS – Maybe the Hudson plaza was built around the same time, accounting for the similar look – sounds like your store carried a full line! Interesting to hear about a New York-based Wards, since they never had much of a concentration in the Northeast, and come to think of it, I can’t recall seeing any photos of mall-based Wards from that era. Will keep a lookout. Thanks!

    Mike – You’re welcome. As strange as the Wards/Container merger seemed, the Mobil/Marcor one was even more so. Talk about burning off those “windfall profits”!

    Didi – Those hair thingys were very popular at the time, and my mom had several of them. The living room is a classic, isn’t it? When I was very young, our living room was decorated in what I now call “Cheesy Early American”. My dad worked in the furniture industry, and was always able to score killer deals from furniture manufacturers that were his customers, and around 1970 our decor went completely modern. We didn’t have the giant “liquid ball”, but we did have a giant white Plexiglas cube with colored light bulbs inside (pink, orange, etc.) that lit up in a random sequence and made the thing glow in those colors. I’m still feeling the effects from that.

    Later on things switched back to Traditional/Early American, this time the non-cheesy variety.

    Pseudo3D – No question about that. The last thing Penney needed was a rehab project, when they were so successful at growing their own new stores. And the “two anchor units at one mall” thing would have been a real albatross. Not until all the consolidation of the last fifteen years or so have we seen much of that, and I doubt that Dillard’s or Macy’s could honestly say it’s an ideal setup.

    Thanks, good to be back.

    Ken – Great insights as usual. Penney is the only one of the three companies to successfully navigate the hard goods/soft goods issue during those years, at least in hindsight.

    Your point about Sears being the last standing mass merchant is a good one, especially as they have been traditionally defined. Tough state of affairs, isn’t it? I would love to see Sears latch onto a solid comeback formula, as I’m sure many others would.

    Nightdragon – I agree, it’s a great pic, and the era is missed in many ways. “Sesame Street and Hair” – I love that! Now I’m wondering if Sesame Street ever did a Hair knockoff back in the day. They’ve sent up the Beatles (“Letter B” to the tune of Let It Be), and R.E.M.’s Shiny Happy People, renamed “Furry Happy Monsters” (with R.E.M. actually participating).

    And fake protests are generally more entertaining than real ones, aren't they?

    Paul – Mobil was in the midst of a big diversification push in that golden age of the conglomerate. This one came back to bite them, though.

    I had forgotten about Raytheon’s ownership of Amana. My folks bought a Radarange in ’76, and it lasted for 20 years or so. At that price, it needed to!

    Kathleen – We bought some clothes at Sears and Wards, but we bought far more at Penneys, now that I think about it. All three stores were fun to shop at back then, though!

    David – I certainly agree, Wards sure had the potential. A big problem was that they were completely missing from some of the largest markets until very late in the game- Atlanta, for example. Because of this they couldn’t take advantage of national TV and magazine advertising as effectively as their competitors.

    I’m afraid I don’t remember the concessionaire vendors – guess my family had pretty much phased Wards out by the late 70’s.

    Mike – Heartfelt thanks, for the kind words and for spreading the word!

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  12. Dave, I hope you're planning a future post that will go more into the Mobil/Marcor merger and why you think it came back to bite them. The way I hear it, it was Wards and CCA that wound up getting the raw end of the deal in the long run.

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  13. Kind of off-topic but I'd like to touch on the issue of Wards corporate sister, CCA. Actually CCA didn't end up like Wards. They were merged into Jefferson Smurfit Packaging when Mobil got rid of it in 1987-88, around the same time Wards was sold.
    Jefferson Smurfit/CCA merged with Stone Container and is now one of the largest box companies in the world.

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  14. Mike-CS – Our research staff (i.e.: me) is hard at work on that right now! :)

    In short, the Wards purchase ended up being an economic drain on Mobil, and on top of that, it brought them criticism from many quarters – the business press ridiculed it as a waste of money on a dud operation, and President Carter singled them out for public criticism over their use of “windfall profits” to buy Ward, despite the fact that it happened two years before he entered office.

    Roy – Thanks for that information. CCA was definitely the healthier entity, and as you say, Smurfit-Stone is a leader in the field. Growing up, I remember the Stone Container building as a major landmark in downtown Chicago.

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  15. Completely off-topic, but related to an earlier article about General Cinema Theatres:

    Thought you guys would like this video, a 1964 Ohio Bell Commercial.

    Listen to the music closely and see if you recognize it.

    Link to Ohio Bell Commercial

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  16. My uncle pulled a 1960's Montgomery Ward sewing machine out of a dumpster several years ago and gave it to me because it was working perfectly. I have been sewing on it for over 5 years now without a single problem. They must've made real quality that you don't see anymore nowadays!

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  17. Hi Dave,

    In the Wards Model Living Room 1969 picture, do you have ANY idea of the name/artist of the "Ship Mast & Rigging" print/poster? My memory was that it was quite common/famous in the 1970's and it seen framed/mounted in public buildings, doctor's offices, etc. On TV, it was behind the desk of Dr. Brackett at Rampart Hospital for years on Emergency!

    Thank you for all you do,
    Todd

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  18. Excellent spotting, Anon! I always dug that painting in Bracket's office. There was another one too, similar to that one, but maybe not in every season.

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