Thursday, June 24, 2010

Wards Strikes Up the Band

The weather couldn’t have been better on this sunny, sparkling Southern California afternoon. Excitement was in the air as the crowds gathered in. A speakers’ platform was in place, replete with the American flag and a group of men in suits, ties, carnations and broad smiles, beginning to take their seats near the dais. Soon the customary civic welcomes and corporate pledges would take place. And there would be special entertainment that day - the Disneyland Band was there! The whole unit, looking sharp in their bright orange uniforms, on a rare five-mile trek outside the gates of the Happiest Place on Earth. The real star of the show was the brand new Montgomery Ward store behind the stage – sporting a smart, modern look with a textured façade, three-toned sign and zig-zag awning. For a few hours that afternoon, it had to be the happiest store on earth. The date was August 11, 1960, and the place was the Honer Plaza Shopping Center, located at the corner of 17th and Bristol, in Santa Ana, California.

The opening of this store marked the five-year point of a complete reinvention of Wards’ image, which began with the forced resignation of longtime company chairman Sewell Avery. Cash-rich but moribund from a retail standpoint in 1955, the company’s leadership change became evident to the buying public two years later when Wards, whose store base had long consisted of aging urban and rural downtown units, began to open large, modern stores in the country’s storied suburban shopping centers.

Driving this expansion was Montgomery Ward chairman John Andrew Barr, who took the company reins after Avery’s ouster. Barr, a 20-plus year Wards veteran, came up through the ranks of the company’s legal department and was a rare individual in that he was neither fired nor driven away by Avery’s dictatorial manner, in a company notorious for massive turnover of upper management ranks. Author Booton Herndon, in his lively book “Satisfaction Guaranteed”, a 1972 history (and then-current portrait) of Wards, notes that company executives in the bad years seemed to profess a certain pride in the dubious honor that Wards had “trained” many of their competitors’ top people.

By any measure, Wards’ new store program was ambitious – according to a November 1960 Fortune magazine article, five new stores were opened in 1958, twelve more in 1959 and twenty-one more in 1960, mostly large, shopping center-based units. The article also sheds light on Wards’ store location strategy, which centered on locating stores in clusters within a specific market area, in order to be able to service the stores from centrally-located distribution centers (with the important additional benefit of maximizing the effectiveness of TV and newspaper advertising).

The market areas cited in the Fortune article were: “Detroit, Kansas City, San Francisco, San Diego, Phoenix, St.Petersburg-Tampa, Houston (and) Dallas-Fort Worth”. A carefully-selected set of markets that left many regions untouched, to be sure, but fleeing time and limited resources forced Wards to pick their targets carefully. Noticeably missing from this list is Wards’ home market of Chicago, where instead of opening new stores, Barr opted for an acquisition instead – In 1957, Montgomery Ward bought out The Fair, an old-line department store chain with a downtown State Street flagship and three suburban locations. Nonetheless, those fortunate enough to live in one of Wards’ chosen expansion areas were likely thrilled to have the gleaming new stores as a shopping option.

Five years of the “New Wards Era” and nearly three years of new store openings brought things to that August 1960 opening at Honer Plaza, where the light atmosphere became very heavy, for a while at least. The previous night, at a dinner held in Santa Ana for Wards stockholders and other dignitaries, Chairman Barr dropped a bomb. He announced, as Fortune later put it, “that the earnings prospects for the full fiscal year 1960 (to the end of January, 1961) were for a new low in the company’s postwar history”. The herculean effort, the new attitude and image, the beautiful new stores all appeared not to be paying off. (At this point in the evening, I would have said “Allriiiiight, waddaya say we bring the Disneyland Band out here? C’mon, everybody dance!! But that’s just me.)

To his credit, Barr had long realized the need for an infusion of top retail talent into Wards’ decimated ranks. For some odd, unexplained reason, the company’s board of directors had forbidden Barr to look to the one place that matched Wards’ business most closely – Sears, Roebuck and Company. (Although J.C. Penney had already surpassed Wards in sales by 1961, it would be a few more years before their business model fully lined up with Wards’, as Penney yet had no catalog operation and still sold mostly soft goods in their stores. By late 1963, Penney was in the catalog business as well and had also begun to open full line stores, complete with appliance sales and auto centers.) The Honer Plaza news was enough to get the Wards board to drop the needless restriction, though, so to Sears’ executives, current and former, Barr went a-calling.

Amidst all of this, rumors of a merger began to fly. In the fall of 1961, news accounts began to carry the story of a marriage between Montgomery Ward and Interstate Department Stores, Inc. as having all the earmarks of a done deal. Interstate, headed by Sol Cantor, was white-hot at the time - a formerly staid department store operator that was scoring big with newly-acquired discount chains on both coasts – White Front in Southern California and Topps in the East and more recently, Chicago. As quickly as it came about, however, talk of a Wards/Interstate merger fizzled. One reason for this, as Time magazine related after the fact, was that Cantor was miffed at being left out of the selection process of Wards’ new president.

In early November 1961, Barr announced he had chosen Robert E. “Tom” Brooker, a former Sears executive and since 1958, chairman of Whirlpool, the appliance manufacturing giant. Brooker, a one-time protégé (and according to author Herndon, bridge-playing partner) of legendary Sears head General Robert E. Wood, had been Sears’ vice president of manufacturing. This position didn’t even exist at Wards, marking a key difference between the two companies. Sears routinely held large investment stakes in their manufacturing suppliers as a means of implementing changes they desired, or shoring up weak operations. Oftentimes Sears would keep majority ownership of a manufacturer for years on end. (A popular business topic of modern times concerns the power that a certain well-known mass retailer wields over its manufacturing suppliers. In my opinion, Sears’ power back in the day was every bit as great, if not more so.) The Whirlpool Corporation, as it existed at the time, was largely the result of mergers engineered by Brooker from behind his desk at Sears. Montgomery Ward, by comparison, very rarely took an ownership stake in their suppliers.

Beyond Brooker’s years of high-level experience with Sears and his peerless ability to deal with suppliers, he projected an air of exceptional confidence that would prove essential to Wards’ survival. Indeed, immediately upon taking office, Brooker purchased a million dollars’ worth of Montgomery Ward stock, making him the company’s largest individual shareholder. Brooker accepted the Montgomery Ward presidency with the understanding that he would be in charge, and that was the case almost immediately, although initial press reports, including Time magazine’s, characterized the relationship between Brooker and chairman Barr as “on a par”. John Barr would stay on as Montgomery Ward chairman until 1965, when he resigned to take the reins of Northwestern University’s business school. There, Barr made the controversial decision to close down Northwestern’s undergraduate business program in order to focus the school’s resources on their graduate business school, which he also opened to women for the first time in its history. Under Barr’s tenure, the program (now called the Kellogg School of Management) became one of the most prestigious in its category, a distinction it continues to enjoy today.

Tom Brooker, of course, had his hands full keeping Wards on the road to recovery. To aid in the battle, he wooed a number of key people from Sears, none more important that Edward S. Donnell, who ran Sears’ Los Angeles territory, their hottest market area by a wide margin. Donnell, who himself had a reasonable shot at reaching Sears’ "mahogany row" within a few years was convinced by Brooker’s enthusiasm to forsake the ideal climes of SoCal and move to Baltimore to run Wards’ entire East Coast region. Within a couple of years, Donnell moved to Chicago, promoted to the number-two spot in the company. More Sears faces would appear at Montgomery Ward headquarters over the next several years. The aggressive building program would continue, with the sails trimmed back just a bit.

Would things get better for Wards? Yes, they would. But there would be times when they probably wished the Disneyland Band was waiting in the wings.

The pictures are Montgomery Ward publicity photos unless otherwise noted. The first store pictured was located in San Antonio, Texas, at the Wonderland Shopping Center (not to be confused with the Livonia, MI-based mall of the same name), and opened in 1963. Known in recent years as “Crossroads Mall”, it reverted to the Wonderland name earlier this year. Second up the Wards store at Houston’s Northline Shopping Center, which opened in 1960 and predated the mall itself by a couple of years. Third, a 1961 American Olean tile advertising photo which only identifies the store as a “Houston, Texas location”, which I believe to be the free-standing unit that was located across the street from the Palm Center shopping complex. Fourth, from 1962 and again from San Antonio, the new McCreless Shopping Center, complete with Photoshopped cars in the parking lot. (Wait, we‘re talking about 1962, right? I should have said “pasted-up cars” instead.) Fifth, from a 1963 Plexiglas ad, the famous Apache Plaza location, St. Anthony Village (Minneapolis), Minnesota. Lastly, the Honer Plaza location as it appeared on that exciting/exasperating 1960 summer day.