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.


  1. Interesting how Korevettes merged with Spartan-Atlantic. I never knew that.

    Also, Coan went to work for First National where they bought out the Pick N Pay chain in the cleveland area which later became Topps. How lo9ng did he last there?

    1. I worked for Hills in Bayside Queens NY from 1973-1978, with erratic store managers that came & went. I worked there until the store closed in 1978. Once there was a tear gas explosive detonated in the store on a Saturday afternoon - rumour was it was a threat to the Manger that owed money to 'criminals' !

  2. That's a great question, Didi. I did a little bit of checking in the NY Times archive and the last reference I could find on him was from 1972 when he was promoted to Chairman of the Executive Committee at Finast.

    Pick N Pay was the lead on the 1978 merger and the HQ was kept in Cleveland, so I'm sure that Mr. Coan was gone by that time. Julius "Julie" Kravitz (Pick N Pay founder) ran the combined company, and tragically was murdered the next year.

  3. Okay, forget boring straighlaced Coan. This gets better. Why was Kravitz murdered?

  4. Pretty hideous story, as I've learned from a couple of newspaper archives. Kravitz and his wife were kidnapped by two guys dressed as police and held for a million dollar ransom. He was killed and his wife was wounded. The two guys eventually got off, the main guy on an insanity defense after being "cured" in just a couple of years and his accomplice ten years later. From the articles, it looks it was front page news on and off in Cleveland for years.

    Also, Kravitz did not found Pick N pay as I incorrectly said earlier. he started another chain (called Foodland or Foodtown or something like that)that was bought out by PNP. He later went to Fisher Foods. Years after that he left Fisher and put together a group to buy out Pick N Pay.

  5. Wow, I had never heard about the murder of Kravitz. Pick N Pay had been part of Cook Coffee, which also operated Cook's Discount Stores. Diversification and mergers seem to be de rigueur in the the supermarket industry.

  6. Yea, the name of the chain was Foodtown. That is one really sad, but interesting story you pianted on Mr Kravitz. It is very sad that these men virtually got away with it when the kidnapping plan was obviously something planned and not spur of the moment bout with insanity.

  7. I worked for Hills in the middle 60's then was drafted in 1968. When I returned from the army, I was placed where I left off without any lost time. I had about 14 years with them as FOOD FAIR took over. I was in local 888. I don't know how to find out if my vested time will give me credit for pension.

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  9. I originally posted that E J Korvettes was sort of an acronym for Eight Jewish Korean War Veterans but after diligent research on wikipedia, I realized my source was incorrect because the chain was founded (1948) before the Korean War started (1950) so I deleted the post. My apologies for continuing misinformation.