Thursday, April 11, 2013

Remembering Korvette's Eugene Ferkauf
















Last year saw the passing of one of the most influential figures in retailing history, one who deserves more recognition than he receives today, I’m afraid. Eugene Ferkauf, founder of the legendary E.J. Korvette chain of promotional department stores, passed away on June 5, 2012 in New York City at the age of 91.

In the early sixties, Ferkauf found himself the subject of a fair amount of media attention as his company ascended. By all appearances, E. J. Korvette looked to be on the verge of breaking out into a national chain. As the decade rolled on, however, things changed drastically – the company ran into trouble, the dreams were scaled back, and with Ferkauf’s departure in 1968, “Korvettes” (as it was then officially known) began to wane rapidly. His influence continued, but more on the discount industry as a whole rather than on the company he founded.

The origins of E.J. Korvette, which have been discussed to some extent here before, fall squarely within the realm of the bootstrapping American dreamers of the mid-20th Century:  Eugene Ferkauf, a young man from Brooklyn, seeks a career in retail upon his discharge from the Army. Offered a slot in R.H. Macy & Co.’s training program, he turns it down and instead follows in the footsteps of his father, opening in 1948 a luggage store in an East 46th Street  second floor walk-up (for you non-New Yorkers, that means “building with no elevator”).  Breaking away from his father’s approach, he sells at reduced markups and starts to move large volumes of product, selling everything from a simple “traveling case” for a college-bound son or daughter to 20-piece top-grade leather luggage outfits for U.N. diplomats.

Along the way, he decides to stock some small electric appliances - virtual red meat to ravenous postwar consumers eager to upgrade their lifestyles now that The War was over. (Not that the words “upgrade” and “lifestyle” were common to the American vocabulary in those days. They weren’t. Mostly, folks were just eager to toss Grandma’s old wind-up clock in favor of a nice, self-starting electric Telechron.) The appliances are marked well below “manufacturer’s suggested prices”, and sales go through the roof. Ferkauf begins to open to open more stores in the city – in first floor locations.

His employees are his friends – high school pals from Brooklyn, with a few Army buddies peppered in - the people Ferkauf feels most comfortable with, and whom he trusts above all others.  They start as sales clerks and shelf stockers in the early stores, and many move into executive positions as Korvette rapidly grows into a full-blown corporate entity. Even then, they continue to call each other by their adolescent nicknames – “Doodie” and “Schmultzie” being two examples cited in Time Magazine’s 1962 profile of Ferkauf.  Within a few years, many of these guys acquire another nickname - “millionaire”, as a result of their association with Korvette.

The roots of the company name itself extend to Ferkauf’s Brooklyn boyhood. “E.J.” stands for Eugene (Ferkauf) and Joe Zwillenberg, friend and Korvette employee from the very beginning, and “Korvette” is inspired by the Corvette, a class of World War II warships operated by the Royal Canadian Navy. A popular, and false, story behind the name’s origin soon arises - that E.J. Korvette stands for “Eight Jewish Korean War Veterans.”  (Where the myth started remains a mystery, but it endures to this day. Evidence of that turned up in NBC Nightly News’ report on Ferkauf’s passing, where Brian Williams made mention of it and briefly outlined the name’s true origin. Personally, I was just delighted to see the story covered on network news.)

By 1953, five years on, Ferkauf has four more stores – on Third Avenue and 42nd Street in NYC, in White Plains, at Rockefeller Center, and in Hempstead, Long Island.  These stores share common characteristics with the first (sans the “second floor walk-up” aspect) in that they’re “noisy, cluttered, and so pressed for space that they have lapped over into annexes next door or down the block”, as Fortune magazine would put it in November 1956. The next store, however, Korvette’s first suburban “shopping center” location near Westbury, Long Island, would be markedly different.

And that’s where the legend of E.J. Korvette and its founder, Eugene Ferkauf, really began.

The late author David Halberstam, in his masterwork The Fifties, an essential read for anyone interested in that decade’s massive effect on late 20th century American culture – consumer, popular and otherwise, devotes an entire chapter to the rise of E.J. Korvette.  Halberstam sets up a memorable scene: “As Ferkauf looked at the potato fields of Westbury, he experienced a vision of the new suburbia: a sparkling, huge new store with vast parking facilities.” (Surely you’ve heard of “Westbury potatoes”, just like Idaho or Maine potatoes, right? Well, no one else has either; that’s why they built a shopping center on top of the place.)
    
More of Halberstam’s vivid picture painting: “There would be no more taking whatever real estate agents gave him and adapting buildings that could never be made to fit his needs. In fact, he had always wanted a store that was not merely successful, but also beautiful – like Lord & Taylor, a showplace the customer would also admire. Westbury would be the site for that store; there was plenty of space, easy access to the highways that connected Long Island to New York City, and best of all, it was only ten minutes from Levittown.”

Korvette’s “Westbury store” (actually located in Carle Place, L.I., on the corner of Westbury Avenue and Glen Cove Road), constructed on an insanely short schedule and opened just in time for the Christmas 1954 selling season, soon validated Ferkauf’s line of thinking, grossing $2 million in the month of December alone, and $28 million the following year. Ferkauf was “one of the big boys now”, as Halberstam put it.

The Westbury store was the first of what would become known as “Korvette Cities”, integrated shopping complexes comprising a general merchandise discount store, a supermarket, and (eventually) carpet and furniture centers. The supermarkets were only marginally profitable, but they drew customers in. And Ferkauf had no desire to go into the carpet or furniture business himself – the turnover was “too slow”, and these items “require(d) too much after-sale service” according to the 1956 Fortune article, so he franchised the Korvette name to two outside firms.

A popular feature was the beloved pretzel vendor, stationed just outside the main entrance at Westbury at $800 a month rent. These would soon become a fixture at Korvette stores and other discounters throughout the region. (800 bucks a month in the 50’s. That was a bunch of pretzels.)

In the ensuing years large, beautiful Korvette stores popped up regularly in major suburban areas all over the Northeast: West Islip, Long Island in 1956, followed by Springfield, Pennsylvania and North Brunswick, New Jersey in 1957, Scarsdale, NY in 1958, Camp Hill and Philadelphia, Pennsylvania in 1959, Audubon and Trenton, New Jersey and Huntington, L.I. in 1961. As Ferkauf’s fame reached a new peak in 1962, new suburban Korvette stores were opened in Nanuet, New York, West Orange, New Jersey, the Baltimore suburbs Towson and Glen Burnie, Maryland and at the massive new King of Prussia Mall in suburban Philadelphia. And of course, the famous Fifth Avenue store, covered numerous times here, opened in June of that year.    

The timing for Ferkauf’s push into the suburbs couldn’t have been better, and it put his company in a rarefied position to capitalize on the sweeping changes taking place in American life.  One trend was fairly obvious, of course – the hordes of families actually relocating to the suburbs from the cities and naturally desiring convenient places to shop, but there were other factors at work.

A brilliant 1962 Fortune magazine article about the discounters, “The Revolutionists of Retailing” by Charles E. Silberman, touches on several of these reasons. For one thing, the suburbs were “changing character”, and not all of the new suburbanites were high or middle income families. Through the 1950’s, many of the country’s best known main line department stores began to open branch stores in the suburbs. As often as not, these branches were stunning from an architectural and design standpoint, but many were missing a key component of their downtown flagships’ success – the “basement store”, where bargains and discontinued items sold in volumes.  “During the flush years of the early postwar period, however, (department) store managers became infatuated with the explosive growth of the middle income group and the consequent possibilities for “trading up”…(but) they failed to see that their basement customers were moving to the suburbs, too. As a result, they left unsatisfied a substantial demand for low-priced staples and semi-staples – children’s clothing, sheets, towels, women’s lingerie, men’s sport shirts, etc.” said Silberman. In doing so, they created a huge opening for Ferkauf and his fellow discounters.

As far as “trading up” is concerned, the article goes on to note an interesting countertrend that also benefited the discounters. While many middle income consumers were indeed trading up, equally significant, maintained Silberman, were those consumers who were “trading down.”  The consumer culture was now running at full tilt, the article noted, and “Far from being sated with goods and services…Americans are finding it difficult to accommodate all their desires even with their rising incomes, so they stint where stinting is possible. Consumers who want a new car, a boat, a trip to Paris, and a college education for their children are likely to go out of their way to save 10 to 20 percent on the children’s underwear.”  So the discount store was finding its place even among the well-to-do, and those who felt they were.

But the discount stores’ appeal went beyond price: “strange as the notion may seem to devotees of Marshall Field’s or Neiman-Marcus, a good many Americans actually enjoy shopping in discount houses.” In a survey cited in the Silberman article, “Convenient location, good parking, self-service, and the opportunity to browse without being browbeaten by a clerk” all ranked above price concerns. (Funny how the notion of “being browbeaten by a clerk” seems almost quaint today, even in full-service department stores. “Spending less than 20 minutes searching for a clerk” might be more applicable now.)

And at the forefront of all this, according to Silberman, was Eugene Ferkauf, “due to the chain reaction he helped set off.” Undoubtedly the most prestigious endorsement, cited in this article and numerous others, came from Malcolm McNair, professor of retailing at the Harvard Business School, who in 1962 declared Ferkauf among the six greatest merchants in history, alongside Frank W. Woolworth, John Wanamaker, James Cash Penney, General Robert E. Wood of Sears and Michael Cullen, founder of King Kullen, widely credited as the first supermarket. Three of the group had long since passed on and two others, Penney and Wood, were in the “Chairman Emeritus” stage of life, leaving Ferkauf as the greatest contemporary retailer. And you know you’ve made it when you’re profiled in a children’s book, as Ferkauf was in “Famous Merchants for Young People”, a 1965 title by Sigmund Lavine.  (Rumors that the book is being re-released as “Famous Hedge Fund Managers for Young People” are unconfirmed at this point.)

Arguably it was the opening of Korvette’s Fifth Avenue store in New York City, on March 15, 1962, that prompted the brightest spotlight on Ferkauf and his company. Though untypical in many ways – a stately, seven-story Roman columned building in the heart of Manhattan’s toniest shopping district as compared to Korvette’s standard sleek, sprawling suburban shopping cities (need more “s” words, there, don’t you think?) – the sheer boldness of the move caught the media’s fancy.  

There was a Business Week cover story on February 10 - “Korvette’s Eugene Ferkauf pits his brand of discount selling against the carriage-trade tradition of Fifth Avenue”, featuring a cover photo of Ferkauf, looking natty in a trench coat on a dark, rainy New York day. In April, Ferkauf and Korvette figured prominently in “Rise of the Superstores”, a Dun’s Review piece about the tidal wave of discounting and its effect on manufacturers –“few indeed can match Ferkauf’s performance in retailing –a field where only a new concept, carefully nurtured, can bring in the millions.”  

But probably the most coveted media prize in those days, long before the decline of print sales and the rise of the “Google Doodle”, was the cover of Time Magazine. Each week the Time cover featured a top national or international personality from the area of government, science, sports, the arts or business, and on July 6, 1962, it was Ferkauf on center stage in a painted portrait, (as most Time covers were then) amid a downdraft of discounted-price tags and a lamppost bearing the address of his new flagship store.

The Time article itself is a fascinating account of Korvette’s history up to that point, and it offered considerable insight into Ferkauf’s thoughts on his company and its place in the retail world. On Korvette’s role in the marketplace:  “If Macy’s, Gimbels and Carson’s are selling at lower prices, it’s because we’ve inspired this competitive situation. We have done more to stretch that buck than anyone in American distribution. I don’t know by what percentage we’ve increased the purchasing power of the American dollar, but I know it’s significant.” On Korvette’s lack of stockholder dividends:  “As long as I have anything to do with this company…all the profits will go to expansion. The hell with the stockholders. (and, grinning) …don’t forget I’m the biggest one.” On the future: (and “not wholly kidding”, as Time put it) “All we hope for this company is that it should do all the merchandising business in the U.S.”

It also afforded an interesting glimpse into his unconventional working style: “He has no office, no secretary, no personal files. He has never dictated a business letter or made a speech…He shuns credit cards; he regards them as a temptation to spend company money. He never goes to cocktail parties or conventions; they cost time.” And into his family life as well: “No matter how far he must travel to inspect one of his stores, whether to Hartford or Harrisburg, he is always home before the children bed down. Only six nights during the past 14 years (since Korvette’s founding) has Ferkauf spent away from home, and four of them were on a recent business jaunt to Italy.” Not a lot of us can say that.

For the next several years, Korvette’s growth continued on the trajectory the magazines had raved about. New stores were opened in 1963 in Paramus, New Jersey next to Bergen Mall (and a stone’s throw from Garden State Plaza) and in Trumbull, Connecticut. Then came the company’s first stores to be built outside the “Northeast Megalopolis” (Boston to Washington, DC, or in Korvette’s case, Hartford to DC) – by the end of 1964, Korvette had four stores in the Chicago area – in Oak Lawn, Elmhurst, Morton Grove and Matteson (a fifth area unit would open in North Riverside in late 1965), three in suburban Detroit – Southgate, Roseville and Redford Township, and two in greater St. Louis – Sunset Hills and Cool Valley. Back in the megalopolis, two D.C. area stores - Rockville, Maryland and Baileys Crossroads, Virginia opened around this time as well.

But as the mid-60’s approached, problems began to surface. Some of these were rooted in the company’s increasingly upscale approach to the market (read: fancier stores), a progression that started with the first suburban Korvette locations in the mid-50’s and accelerated after the overwhelmingly positive reception to the opulent Fifth Avenue store. Business Week succinctly described the concerns of retail observers: “How, they ask, can you operate a palace on a discount base?” Despite the prettier (and more costly) stores, the additional services offered, and a newly expressed preference for the phrase “promotional department store” over “discount store”, Korvette president William Willensky took pains to reassure them: “…when it comes to pricing, we are a discount house, no ifs, and(s) or buts about it.” Eventually, however, these moves began to take a toll on Korvette’s profits. As long as volume grew it wasn’t a huge concern, but they stood vulnerable in the event of a sales downturn. Also, they were now closer than ever to direct competition with Macy’s and other full-line department stores at the same time these firms were finally grasping the new rules of the price game.

Another issue concerned the company’s “Western” stores in the expansion markets of Chicago, Detroit and St. Louis. On the whole these stores (all massive “Korvette Cities”) did reasonably well, but the results fell short of those Korvette enjoyed a few years earlier upon entering Philadelphia, where they virtually crushed the competition, or of their very strong showings in Baltimore and Washington, DC. Things were particularly contentious in Chicago, a land rife with discount stores as it was, but also the home turf of Sears, a name that rhymed with “unassailable retail powerhouse” in those years. They “met Korvette’s incursion head on”, as Fortune magazine put it in February 1966. But Ferkauf, quoted in the same article, had no regrets: “I’m glad we went in when we did. Today we’re enjoying the fruits of the move.”

A major hassle occurred when Korvette’s longtime furniture lessee, the H.L. Klion Company, imploded. Lacking the infrastructure to cope with Korvette’s continuous expansion and crippled by two labor disputes, Klion’s furniture deliveries became hit-and-miss, resulting in a whopping $2 million in customer order cancellations in 1964, many of those with custom-ordered upholstery. The crux of the matter, of course, was that the signs all over the department read “E.J. Korvette”, (the customers most likely never even heard of Klion), so Ferkauf and company were compelled to act in order to preserve Korvette’s good name and to attempt to ameliorate the damage.  In August 1965, Korvette took over the Klion operation, and around the same time bought out their carpet lessee, the Federal Carpet Company, as well.

But the most vexing problems stemmed from the Korvette supermarkets. For all of their mastery at selling appliances and other products for the home, and despite their growing experience in affordable fashion and other relatively new areas, when it came to running supermarkets Korvette was light on expertise. By the mid-60’s that part of the operation was raining red ink. For one thing, there was no central warehousing capability, “(so) close day-to-day control over the inflow of goods was impossible – a fatal flaw in the low-margined food business”, said Fortune in 1966. Especially affected were the supermarkets “in the unfamiliar land of Detroit and Chicago, to which Korvette could not profitably ship staples from the East, and where it had no experience in the local purchase of meat and produce.” They soon leased off the Detroit and Chicago supermarkets to other operators, with several in the latter market going to Dominick’s. The issue continued to plague their core Eastern markets, however, and food store competition there continued to intensify, complicating the matter.  Ultimately these problems led to a merger that, in sad hindsight, would mark the beginning of the end for Korvette.     

According to former Korvette vice president Eve Nelson, Ferkauf was prone to “crushes” on companies, an assertion well supported in his 1977 autobiography “Going Into Business : How To Do It, By The Man Who Did It”. (Half Korvette history, half tutorial for aspiring retailers, it’s a fun and informative read.) From the moment Korvette hit the big time in the early 50’s, it seems he was constantly involved in merger talks with one firm or another, often multiple companies at once.

For the most part, Ferkauf pursued the talks with a singular goal in mind: to bolster Korvette in areas where it was weak, creating a combination where both parties brought complementary strengths to the table. In the early years, when Korvette was strong in appliances and other hard goods but lacking in soft goods experience, he focused on department stores with an emphasis on fashion at discount prices.

Three of these were based in New York – J.W. Mays, Ohrbach’s and Alexander’s. Ferkauf had great respect for the merchandising acumen of Joe Weinstein, head of J.W. Mays, a Brooklyn-based retailer with a few suburban branches, despite obvious reservations about Weinstein’s personal manner. (He relates a story where during one meeting, Weinstein sneezed into Ferkauf’s lasagna, “…and I was hungry.” Thus ended the merger discussions for that day.) J.W. Mays’ arch rival, the Bronx-based Alexander’s, had some years back moved into suburban White Plains. When George Farkas, who controlled Alexander’s, opened the company’s huge, attractive Rego Park, Queens branch, it set off “an undeclared war” with Mays.  Nathan Ohrbach, who took a fatherly liking to Ferkauf, opened his flagship store in NYC’s Union Square in the early 20’s (later moving it to 34th Street) and in subsequent years opened several branches in area suburbs. Ohrbach’s eventually flew its flag in California as well, with a very elegant location on Wilshire Boulevard opening in 1948. For a while, Ferkauf held out hopes a four-way merger with the above named firms, and went to great effort to orchestrate negotiations (seating Weinstein and Farkas on opposite ends of the table, of course) towards that end, but a Mays-Korvette-Orhbach’s-Alexander’s combination never materialized. In 1955, Ferkauf did acquire a 43 percent stake in Alexander’s for just under $10 million, but was never was allowed to buy the additional shares needed to wrest majority control from the Farkas family. In 1968, the Alexander’s interest was sold for more than double what Korvette paid for it.

Others entered the picture, including City Stores, who owned the department stores Lit Brothers (Philadelphia) and Maison Blanche (New Orleans), the variety store chain McCrory, and New York specialty stores Oppenheim Collins and Franklin Simon. When City Stores’ financier, Albert M. Greenfield (“who reminded me of Sydney Greenstreet”, said Ferkauf), made the magnanimous offer to buy out Korvette for half of the going stock price, the prospects there came to a swift end.

Later, there was even a brief flirtation with Montgomery Ward, following Korvette’s move into Chicago in 1963-4. Wards were several years into a major expansion drive by then, opening large, modern stores in malls and shopping centers across the country, but they had alarmingly little presence in their home base of Chicago. There, they were saddled with The Fair, a staid department store operation and perennial fourth or fifth-fiddle to Marshall Field’s, Carson Pirie Scott, Wieboldt’s and erstwhile others. Eager to open mainline Montgomery Ward stores (direct competitors with Sears and Penneys) in Chicagoland, they saw the (then four) area Korvette stores – brand new, attractive, well-located and the right size, as an ideal way to accomplish that. But Ferkauf considered Montgomery Ward’s consistently sluggish profit performance, despite years of investment in exciting new stores, to be “far from satisfactory”, and while the possibilities discussed ranged from a merger to simply selling off the Chicago area Korvette units to Wards, nothing ever came of it. Wards ended up converting The Fair units to standard Montgomery Ward stores, and would go on to anchor a number of Chicago-area malls in the ensuing decades.

And finally (in many ways), Ferkauf’s quest to merge with a supermarket chain, an endeavor that also began early on. First up was Penn Fruit, a very successful Philadelphia-based company that Ferkauf considered “one of the finest food supermarket chains in the United States”. (And that I consider to have had “some of the best-looking stores in history”.) Ferkauf was keenly interested in them and some talks were held, but Penn Fruit’s banker ultimately nixed the idea. Then came years of exasperating, often humiliating talks with Food Fair, another Philly-based food titan, which mercifully came to an end with Food Fair’s 1961 purchase of the Boston-based J.M. Fields discount chain. Ironically, it was Ferkauf they would turn to for advice (much more humbly this time ‘round) when J.M. Fields started to incur serious losses, and he was glad to oblige. 

The “one that got away”, according to Ferkauf, was New Jersey-based Supermarkets General, a member of the Shop-Rite cooperative and later the operator of Pathmark supermarkets. In his book, he professes great admiration for SG and Pathmark (ironic in light of Pathmark’s reputation of recent years but completely valid at the time), and describes the missed opportunity in failing to pursue a merger with them in very emotional terms. The failure, it turns out, was all based on a misunderstanding. As it happened, SG executive Herb Brody had told Ferkauf in an early 60’s meeting that “Shop-Rite will never merge with anybody”. But he meant the cooperative, not Supermarkets General itself, Brody clarified - a good decade later.

As mentioned, by the mid-60’s Korvette’s “supermarket problem” had reached a critical point, but at the end of 1964 it seemed the solution lay right in Korvette’s backyard.   Hills Supermarkets, a Long Island-based operator of 40-plus stores (mostly located on the Island) was growing fast. Best of all, they had recently opened a state-of-the-art distribution center smack dab in the middle of Korvette’s core territory. The song of synergy, complete with harps and celesta, was in the air, and in February 1965 a merger between the two companies was consummated.  Nelson Riddle couldn’t have arranged things better, it seemed.

But it proved to be a disaster from the start, with zero personal compatibility between Ferkauf and Hilliard Coan, Hills’ former chairman, and their respective teams. With Coan installed as chairman and Ferkauf as president and CEO of the combined organization (still under the name E.J. Korvette, Inc.), things bumped along uncomfortably for just over a year. It all came to a head in May 1966, when Coan tried to force Ferkauf out of the company.

Ferkauf, still Korvette’s largest stockholder by a wide margin, hastily put together a meeting with his friend Charles Bassine, the chairman of Spartans Industries, Inc., with the goal of merging the two companies. The net effect, of course, would mean a shift in the balance of power at Korvette. Spartans operated two discount department store chains, Spartan and Atlantic Mills. They also owned a huge garment manufacturing operation in Tennessee (Bassine’s original business), which annually churned out zillions of men’s sport shirts (connoisseurs’ items for today’s thrift-shopping hipsters) and other clothing items for their own discount stores and just about everyone else’s.  In just about a month, the deal was done. Korvette was now a division of Spartans Industries, and Coan and his deputies were shown the door. The Hills/Korvette food stores would soon be sold off altogether, most to Pueblo Supermarkets.

Ferkauf, who sold his Korvette stock at the time of the transaction, stayed on briefly in a largely advisory role, but by 1968 he’d had enough and decided to retire. A historic chapter was now closed. Sadly, in the midst of the tumult of Korvette’s previous few years, Harvard’s Malcolm McNair had removed Ferkauf from his “greatest merchants” list. But I submit that he still belongs there, for several important reasons:

He played a large part in defeating the “Fair Trade” laws. These were basically a form of legal price fixing, in which retailers were obligated not to sell products below the manufacturer’s set price. The very idea of not being able to shop for a bargain price has been unthinkable for eons, but through the 1950’s, Korvette was sued by company after company for daring to breach their sacrosanct list prices . When this happened, Ferkauf either brought in another product line or just defied them. One by one, the manufacturers rescinded these policies, and when General Electric finally caved in 1958, it was over.  The laws were repealed. Public sentiment had won, and discounting was now legal.  

He was early to see the potential in the suburbs. I know. You can read this site and innumerable other sources dealing with retail history, and after a while you get the sense that everyone and their Aunt Martha led the charge into the suburbs. But Korvette’s Westbury store opened in 1954, and that was early.

His management style was ahead of its time in many ways. In 1982, the book In Search of Excellence, by Peters and Waterman, was published to wide acclaim, and it’s still regarded as one of the most important business books ever written. One of the core principles of the book was described as “management by walking around”, which meant exactly that  - spending time on the floor, listening, interacting with employees , seeking their opinions and inspiring the troops where needed, as opposed to  hiding out in a corner office waiting for status reports and issuing directives. This is de rigueur among well-run companies now, but Ferkauf excelled at it decades before it was standard practice.

Also, Korvette arguably had the most powerful female executive in retail in the 1950’s and 60’s, with Ferkauf’s hiring of Eve Amigone Nelson. She was the company’s director of advertising and promotion during the halcyon years, and was given free rein to shape their marketing program, with magnificent results. There was little discussion of a “glass ceiling” back then, in an era when women were rarely even allowed on the floor. Ferkauf played a part in helping to change that.

He keyed in on the entertainment culture like no one else.  It was reported that one of the eulogists at Ferkauf’s funeral related the story of buying his first Beatle record at E.J. Korvette.  No doubt this story rings true for legions of record-buying fans (of the Beatles and every other artist imaginable) in those years. He hired a record producer, David Rothfeld, to run the operation, and throughout the 1960’s and beyond, Korvette easily had the top-selling record departments of any mass-marketer in the country.  Rothfeld’s group also developed a hugely successful electronics line under the house brand “XAM”. (If you’re curious as to what that stood for, it was “Max” spelled backwards. Max was Korvette’s audio equipment buyer’s cat. Now you know.)

Well, Professor McNair passed away in 1985. Maybe someone will create a new list at some point.

In any event, the pioneers tend to move on. They spend more time looking forward than looking back, and with the exception of writing the “history” portion of his book, that’s exactly what Ferkauf did in the years following his departure from Korvette. There would be other retail ventures – Bazar (not to be confused with “Baza’r”, the West Coast-based discounter), a Pier 1-style import store, Clubmart, a New York-area membership discount operation, and Sunbelt Department Stores among them. In 1976 he set up his own retail consulting practice, Penfield Retail Services, where he worked with a number of high-profile clients including The Southland Corporation (7-Eleven), Playboy and Citibank. The legendary New York Times retail writer Isadore Barmash dubbed him a “doctor for companies” in a 1981 article.

Better known than any of his post-Korvette retail endeavors, however, was his philanthropy. In addition to their charitable organization, the Eugene and Estelle Ferkauf Foundation, in the mid-1960’s, Ferkauf and his wife became the founding benefactors of the highly acclaimed Ferkauf Graduate School of Psychology, part of New York’s Yeshiva University.

In the fall of 2008, I wrote a series of short posts on the history of E.J. Korvette. I’ve received many responses via site comments and emails from folks who worked at Korvette since the posts first appeared, and over the years they’ve continued to come in. For quite a few of them, it was one of their first jobs, where they worked in high school or college. Some worked there for just a year or two, yet looking back now from their late fifties or sixties, virtually all consider their tenure at Korvette to be among their happiest experiences. If their stories are any indication, it’s safe to say that Ferkauf was very well-liked and respected by his employees.

And the Ferkaufs’ generosity even extended to me, in an unexpected, personal way. About a year after I’d done the series of Korvette posts, I heard from Mr. Ferkauf’s wife, Estelle, saying how much she and her husband enjoyed them. Not long afterward, I received a warm email from their daughter, Bobby, as well. Even the most successful business stories fade with time, but people tend to remember how they were treated along the way, and these acts of kindness underscored everything I’d read and heard about them.

Now, a few words about the photos that appear a couple of miles above this paragraph. They’re vintage Korvette publicity shots of early suburban stores, all of them sporting red signage, whereas on later stores it was typically blue. (Note my steadfast avoidance of dropping any Prince song titles here. Sheer willpower.)  The first, circa 1961, shows the historic Westbury store, the original “Korvette City” prototype, packing ‘em in some seven years after its opening. The second, also from that year, is an unknown location to me. Third up, from 1958, is the Springfield, Pennsylvania store, the first in Korvette’s very successful launch into the Philly area. Last, also from ’58, is what Korvette officially called their “Westchester store”, which bore a Scarsdale address but was actually located in an unincorporated area of Greenburgh at the Midway Shopping Center. This store has the rarer block letter signage in lieu of the well-known script.  In a fun side note, one of these signs was uncovered in 2010 when the former Korvette building in nearby Pelham was redeveloped. 

19 comments:

  1. Excellent post, Dave. Korvettes is one of the more fascinating retail stories out there.

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    1. Thanks, Steve. I've always thought so as well.

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  2. Wonderful article, Dave. Being a west coast kid, I knew that they existed but that's about all. I have never really understood the old fair trade laws, but do remember some items like electronics still being sold at ridiculous fair trade prices, which usually caused me to buy the off brand for far less money.

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    1. David - Thanks so much, I really appreciate that.

      It's a shame, in a way, that Korvette didn't make it out west, but they had a great influence over the entire industry, and no doubt the leaders of the big California discounters were following what Korvette was doing.

      For sure, a side effect of the fair trade laws was the huge growth of knockoffs and off brands.

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  3. Dave, this is absolutely stellar.
    One little correction: in the last paragraph you say the Westchester store bore a "Scarsdale, L.I." address, which of course it did not, as nobody would ever mistake Long Island for Westchester! A "Scarsdale, N.Y." address would be more accurate.

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    1. Jeff - I'm really glad you caught that - I must've had Long Island on the brain! I've fixed it.

      I'm really glad that you liked this. The whole Korvette story continues to intrigue me, and this post is something I've been wanting to do for a long time. Thanks again!

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    2. Of course Jeffrey is OCD about EJ Korvettes and the Scarsdale diet.
      I'm not going to say anymore about Mr. Morris and the downfall of Korvettes.

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  4. Thank you for such a wonderful post. My dad, Dave Cruhlac was one of the original executives at Korvettes. Eugene Ferkauf had introduced my dad to his "kid" sister Lauretta Ferkauf, whom my father married. So thank you Uncle Eugene.

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    1. What a neat story, Jolene! I'm very glad you enjoyed the post - your uncle was a true pioneer!

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  5. Just saw this today, Dave. Such a fascinating tale in the life of an iconic man. Forget Mcnair's list.

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  6. We had one store in the St Louis area - Big Loopy Logo sign on the front my parents used to love to drive out there and walk around in the 70's

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    1. Hi - There were actually two in the St. Louis area - one in Sunset Hills (Lindbergh and Rte 66) and the other in Cool Valley.

      And "Big Loopy Logo" is the best description I've read of the classic Korvette logo! ;)

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  7. Excellent post, as always, and, if you're a sharp-eyed Mad Men viewer, you would've seen on this week's episode that Peggy had just returned home at one point from a Korvette shopping trip!

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    1. Thanks very much. I've gotta check Mad Men out - I keep hearing things like this about it!

      Some good friends, whose taste I have lots of confidence in, never watched it before this year but have since become totally hooked and have caught up on it by watching 5-6 hour blocks at a time. But the Korvette thing is recommendation enough for me! ;)

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  8. I was just cleaning out some stuff and ran across a Korvette's branded hair dryer.

    Also ... I remember Fair Trade laws still being in effect, at least in California, in the early '70s. You couldn't buy a Sony TV for less than MSRP. I remember buying one at the late lamented Best Products. And even today, even though there are no such laws, some manufacturers like Apple create de facto Fair Trade situations by refusing to sell to retailers who sell their products for less than MSRP.

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    1. You're absolutely right - Apple is a rare modern-day example of the price protection that used to be universal with top name brands. Though there are valid arguments to the contrary (the loss of American manufacturing is blamed at least partly on the demise of fair trade), I'm not sure that's something we want to go back to.

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  9. Hello Dave,
    Loved your post (and this website as well!)
    I don't remember if I've ever posted here, but
    I grew up on Long Island and Korvettes was ever-present. In fact when I was 4, while our
    new church was being built, the parish held mass in an empty space right next to the Korvettes in West Islip (and this space then
    became Korvettes Furniture Store when we moved out.) For people not from the Northeast it's
    hard to describe what a huge deal Korvettes was back then. The West Islip store was about a 10-minute walk from my house and I spent so
    many hours there in their small Toy Department or looking at radios and phonographs. But I must have spent half my youth browsing in the
    record department. When I was a little boy I'd
    see the newspaper ads that touted "The World's
    Largest Record Department" and think wow, I go
    there all the time! Little did I know that the
    one they were talking about was in Manhattan!
    But it brings back so many memories. For several years in high school and college I worked evenings after school in Korvettes, in the Hardware & Sporting Goods depts (ironically the two subjects I knew absolutely
    nothing about!) But it was a great experience
    because so many on the night crew were high school and college kids, and we had a blast.
    The West Islip store was rather dumpy by the time I worked there (say 71-75 or so); all the
    fixtures were old and the floors were hideous.
    But it was probably the most fun work experience I've ever had, for the amazing salary of about 2 bucks an hour. As I grew up
    and was old enough to meet my college friends in Manhattan, I would always find time to stop
    at one of the Korvettes in the city, once again
    drooling over records, records, records! One of
    my most treasured "toys" is my "I Am A Korvettes Trainee" badge, which dates back to
    those early years. I was so sad when they closed, particularly that West Islip branch where I spent so many hours gabbing with my
    co-workers and lifting bags of fertilizer and
    cases of anti-freeze (which helped me to lose
    about 25 lbs my senior year in high school!) Time marches on, but E. J. Korvette is forever!

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    1. Jimbo - Thanks for sharing those truly wonderful memories with us. I promise you that the record department is where I would have spent 90% of my time.

      Hang onto that badge! :)

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