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.