J.C. Penney, King of the Soft Goods

Reaching its silver anniversary in 1927, the J.C. Penney Company found many reasons to celebrate. The amount of Penney stores had more than doubled since 1920 to more than 750 locations “in practically every State in the Union” according to the New York Times (close to it - 45 of the then 48 states), and annual sales of nearly $116 million.  

By this time the founder himself, James Cash Penney, had largely turned over leadership of the company to others while he vigorously pursued various philanthropic interests, most importantly a program to enhance America’s agricultural production. A farm boy at heart, Penney donated millions towards the development of dairy cattle herds, soil improvement initiatives and crop science, particularly in the South.  An October 10, 1929 article in the Atlanta Constitution summed it up as follows: “In his breadth of vision, unselfishness of purpose and devotion to the upbuilding of our agricultural interests, Mr. Penney is doing a work which stamps him as one of America’s outstanding citizens”.    

Two weeks after the article appeared, though, came the great Wall Street crash - the prelude to years of hard times for many American individuals and institutions. J.C. Penney the company weathered the depression reasonably well, although it would be five years before it again reached the lofty peak of its 1929 sales of $209 million. For J.C. Penney the man, however, those years were devastating. 

As it happened, Penney literally “gave away” his personal fortune during the 20’s and early 30’s, funding the various farm interests and other good causes to the tune of millions, with little awareness of the increasing gravity of the country’s (and his own personal) economic situation. In 1931, Penney’s lawyers advised him he was “virtually broke”, a story recounted in author Bill Hare’s “Celebration of Fools: An Inside Look at the Rise and Fall of JCPenney”, a rattling read. A number of top Penney managers, in an effort led by Penney president Earl Sams, pooled money to buy the founder a new set of shares in own namesake company, and for the first time in years the company paid him a salary. These were the first steps towards setting Penney, “an incalculable asset to the company that (he) founded and built”, as Hare wrote (in Sams’ voice), back on his feet. “After three years he would cease taking the salary, and by 1940, when the company declared a dividend of $5 per share, he owned 51,000 of them. But the going was rough at first.”

This incident also sparked a much-publicized spiritual awakening in the despondent Penney’s life, which occurred during a visit to the famed Battle Creek (Michigan) Sanitarium, founded by John Harvey Kellogg (brother of W.K. Kellogg, the cereal king). Mary Elizabeth Curry, in her fine book Creating An American Institution: The Merchandising Genius of J.C. Penney, tells the story of one early morning when Penney walked the halls of the sanitarium and overheard a chapel service where an old hymn called “God will take care of you” was being sung. Penney joined the service, “and asked God to help him, and what occurred next was so personally dramatic he liked to call if a miracle. He felt as though a heavy burden, all his fears and worries, had immediately lifted from his shoulders”, Curry writes. Penney himself wrote numerous books and gave hundreds of talks on the subject in the ensuing decades, alongside and as part of his emissary work for the company. Penney was by no means the only “famous businessman - preacher” of his time, but certainly among the best known. Such a combination is relatively rare in high profile business today.

As if the economic conditions of the 1930’s weren’t difficult enough, the Penney Company faced another hurdle in the form of the brewing “Anti-Chain Store” movement. As early as the mid-20’s there were rumblings in the press about the “So-Called Menace of Chain Stores”, as a December 1926 New York Times article phrased it. The company generally offered a “low-key response” to such challenges, according to Mary Elizabeth Curry, preferring to “emphasize service and values for customers”. “It isn’t the purpose and it isn’t the desire for our organization or to destroy the independent merchant. Our job is to serve well a community through our plan of economic distribution”, Curry quotes a Penney executive from 1930.

Push came to shove a few years later with the advent of the Patman Bill, a proposed piece of legislation that would have literally taxed many chain store operations out of existence. Faced with this, the company was forced to take a much stronger tack, and it was Penney’s chairman, Earl C. Sams, who took the lead in the matter, testifying before Congress in 1940.  He laid out Penney’s case against the bill in five main points, as quoted in the landmark book “Chain Stores in America 1859-1950” by Godfrey M. Lebhar: “1) It would destroy the Penney company or any similar company. 2) It would destroy the finest field of opportunity that has ever existed in retailing for the young ambitious man born without family means. 3) It would add to the cost of living for every American family of limited means and would lower the American standard of living. 4) It would deal a staggering blow to the entire economic life of this country and would be especially destructive of the smaller cities and towns for the benefit of larger cities. 5) It would hurt and tax this entire nation for the protection and enrichment of a small minority of self-interested middlemen and of another small minority group of ill-advised marginal retailers.”

Beyond that, Sams attempted to debunk the theory “that chain stores were ruining the smaller communities”. The real culprit, he maintained, was the proliferation of quality, paved roadways that now enabled Americans to travel far afield to shop – no longer were they captive to the ‘local town square’ for the necessities of life. On the contrary, the chain stores had indeed served “as a check on the drying up of towns and small cities” (Godfrey’s words) because according to Sams, “(they) have brought  to these small centers the same values, the same crisp new styles, and the same modern stores that were available in the bigger cities. And the customers know it.” As it turned out, the arguments put forth by Sams and others did much to swing public opinion to the chains’ side. On June 17, 1940, Patman’s “chain store death sentence” bill “suffered the death sentence itself”, Godfrey wrote, when it was killed in committee, never to reach the House floor for a vote.

While J.C. Penney was known (and would continue to be for some time) as a “small town chain” despite its impressive sales and burgeoning store count, there were a growing number of exceptions to the “small town” aspect. In 1931, the company opened its largest store to date in Seattle, a new building on the former site of the Bon Marché flagship department store. (Some years later, Penney’s San Francisco unit would claim the distinction of largest store.) Around this time Penney opened other large stores in key Western cities, including Oakland, Ogden (Utah), Salt Lake City and Reno, all of which “(did) a large volume of business”, as the New York Times put it at the time.

From the mid-30’s to the mid-50’s Penney sales volume, from stores large and small, ballooned from $225 million to over $1.3 billion. An interesting side note, related in a September 1950 Fortune magazine article entitled “Penney’s, King of the Soft Goods”, was the way Penney store managers shared in the company’s good fortune, no pun intended. (Granted, they shouldered a great deal of responsibility, including all hiring, training, advertising decisions and ordering of all products stocked – no merchandise was “pushed” on a Penney store by the home office in those days.) The rewards were substantial, however - “A good manager in a fairly large store can make fancy money” (“fancy” meaning 1/3 of the store’s after-tax net –yikes!), the article said, citing the example of the aforementioned Seattle store’s manager who pulled $125,000 in one year. The plan was later modified to allow assistant managers and other key employees to share in the pie. Still, a good many managers earned $30 to 50,000 a year, and nearly a third (of then 1,600 store managers) raked in at least $15,000 annually – fancy money indeed when nice houses could be had in most corners of America for well below ten grand. 

By 1950 J.C. Penney was a solid third place in America’s department store sweepstakes, behind the mighty Sears, Roebuck & Co. and the faltering yet still formidable Montgomery Ward. One of the keys to continued growth, the Fortune magazine article surmised, was increased presence in the Eastern half of the country. Up to that time, Penney was still thought of as a Western retailer (with “a Penney store in practically town above 5,000 and many smaller ones”) despite recent inroads into some key Eastern and Midwestern markets. “In the East, nobody knows a damn thing about the Penney Co.”, one manager was quoted as saying.  To be sure, building up the Penney reputation to the same level it enjoyed in the West would take time, with rough going in a number of markets. In Camden, New Jersey for example, Penney went head-to-head with Gimbels, Strawbridge & Clothier and Lit Brothers, “(whose) heavy advertising pull(ed) customers away from Penney’s, not toward it”. And in Cincinnati, where Penney opened a stunning new store in 1948, fierce competition from Shillito’s and others kept the store in the red for nearly two years after opening, a most unusual occurrence for Penney.

Over time, Eastern Penney store managers, many of whom started with the company in its native West, would adapt to the unique needs of their new markets.  The article cites the Camden store manager, for example, who began with Penney in Spokane, Washington, transferring to Milwaukee then to Quincy, Illinois before landing at the helm in Camden, a market where a constant barrage of advertising was necessary to drive sales, a situation he hadn’t experienced in his earlier tours of duty.

The manager of the Springfield, Massachusetts unit worked in Penney’s San Francisco flagship store, moving to Santa Barbara before traversing the country to run the Springfield store. New England customers, as a rule, were very different from those in California. “In buying curtains a California customer wants to know first how wide the ruffle is, how full it is, and what the colors are; the Springfield customer asks whether the organdy (a type of fabric often used in curtains) is permanently finished, how securely the ruffles are sewed on and how long it will last”. Another cited example concerned towels, then as now one of Penney’s strongest product lines. Whereas bath towels typically outsold face towels 2 to 1 “presumably because a bath towel can serve either purpose”, in the Springfield store the opposite was true. The manager was undecided as to “whether the frugal New Englanders use face towels after they bathe, or whether they are just trying out Penney face towels before shooting the moon and buying the larger size.” (They also tended to say “ayuh” when responding affirmatively to questions, a point the article curiously omits.)

In any event, Americans were buying more face towels, bath towels, washcloths and all manner of other linens from their local J.C. Penney store than anywhere else, in addition to clothes for the whole family. “King of the Soft Goods”, indeed, but big changes lie ahead.

The first four photos above appear by courtesy of the J.C. Penney Archives at the DeGolyer Library at Southern Methodist University, the last is from an original slide in my collection. From the 1950’s, the following locations are depicted: Stockton, Long Beach and Glendale, California, followed by Rockwood, Tennessee (apparently a much older store, refaced) and Albuquerque, New Mexico, with a very nice hat tip to the area’s traditional adobe architecture. Note the gas stations represented in the picture – a Phillips 66 sign right next door, with a Conoco station across the street from it. Across the street from the Penney store itself, reflected in the store windows, is what appears to be a “Teague” Texaco. If you have a free week this summer, you can read about those and more here.      

Ralphs - Supermarkets, Spanish Style

Ralphs, a SoCal institution with roots extending to the late 19th century, certainly had one of the more interesting beginnings for a retail chain. In 1873, 23-year old San Bernardino County native George A. Ralphs was considered to be the Los Angeles area’s champion bricklayer. A freak hunting accident that year cost him his left arm, forcing Ralphs to abandon his chosen profession. He reset his sights on the grocery business, opening a store at the corner of 6th and Spring Streets. Two years later, Ralphs would be joined by his brother, Walter B. Ralphs. For the next quarter century, the brothers operated the single store, relocating it one block north in 1901 to make way for the Hayward Hotel, which still stands on the original Ralphs store site.

Interestingly, a large percentage (well over half) of Ralphs’ business in their early years consisted of mail order and home delivery of groceries. Much of their in-store trade was done via barter instead of on a cash basis.

In 1909, the company was formally incorporated as Ralphs Grocery Company, and two years afterward they finally opened a second store, located “way out in the country” (as the Los Angeles Times later put it) at the corner of Pico Boulevard and Normandie Avenue. A third store was established at 2601 Pasadena Avenue and a fourth at Vermont Avenue and 35th Street, part of Ralphs’ gradual growth over the next two decades, reaching a tally of ten units by 1928.

Ralphs scored points with customers in 1926 when it took on the Los Angeles “Bread Trust”, a local cartel of bakers who supplied the majority of area grocers. On a fateful Friday, Ralphs was informed that food retailers would be required to raise the price of a loaf of bread from five cents each to a dime. Defiant, Ralphs secured a building that very weekend and installed their own baking equipment. On the following Monday five-cent loaves bearing the Ralphs brand name appeared on the chain’s shelves.

In 1928, the already innovative Ralphs vaulted into the forefront of the industry with the introduction of self-service, a revolutionary development at the time, in its stores. The stores were rearranged and checkstands were installed near the front entrances. Home and mail delivery, longtime staples of Ralphs’ business, were dropped. Most significantly, the company launched a major expansion drive, opening six new, large, beautifully designed stores within a 13-month period. Twelve more stores would follow over the next decade.

To design these stores, Ralphs engaged Los Angeles’ premier architectural firms, including Morgan, Walls and Clements, with the design effort led by Stiles Clements. Russell Collins and W. Horace Austin designed several as well. The stores were built in the Spanish Colonial Revival (or Churrigueresque for you enthusiasts) style, a very popular look for Southern California at the time (and certainly to some extent still). To me, these stores’ amazingly elaborate, exquisite facades are without equal and are of a quality that is typically reserved for buildings of a greater stature than “mere” supermarkets. The sheer expense of the late 20’s/early 30’s Ralphs stores mandated that the design of future stores be simplified, which they of course were. (The Streamline Moderne facades that came a few years later proved to be far more economical.) Sadly, nearly all of the Spanish Revival Ralphs stores are long gone, many torn down in the 1950’s or 60’s to make way for larger, more modern Ralphs units. I’m confident that if these stores still stood today, they would have long since been accorded architectural landmark status.

I would like to extend my very special thanks to the Los Angeles Public Library for the use of these superb photographs, most of which are from their Security Pacific National Bank Collection . The first photo shows the Ralphs store at 6121 W. Pico Blvd in Los Angeles, designed by Russell Collins and opened in fall 1931. The photo itself was taken in 1945. The large rectangular sign atop the store is typical of those added to many Ralphs stores in the late 30’s. The second photo shows the Long Beach Ralphs, 2024 E. 19th Street, opened in 1931. This store was designed by W. Horace Austin. The third photo shows the 5711 Hollywood Blvd. store in a photo taken by Moss Photo shortly after its 1929 opening. The fourth photo, taken by Herman Schultheis, shows the same Hollywood Blvd. store, equipped with a larger sign and two new neighbors, including a new A&P store (!) directly to the left. Without knowing better, I think it’s safe to say that this particular A&P must have struggled to compete with its much more attractive next door neighbor. The fifth photo, taken by Luckhaus Studio, shows the 5615-23 Wilshire Blvd. Ralphs, designed by Morgan, Walls and Clements just after its 1929 opening. It’s amazing to see the open space around this store, which in time would find itself in the thick of one of the most fashionable, prosperous and densely built-up strips (Wilshire Boulevard) to be found anywhere. And how about those oil wells in the background! The sixth photo, photographer unknown, shows the same store from another angle. The seventh photo, from 1929, shows the new Chapman Park Market at 3465 W. Sixth Street. In 1933, The Market would be taken over and operated by Ralphs, whose signs would then grace the smaller tower to the right. This gem, also designed in the Spanish Revival style by Morgan, Walls and Clements, still stands. The final photo, from 1886 and photographer unknown, shows Ralphs brand new store, replacing the original 1873 store on the same site. George Ralphs stands out front leaning on a stack of boxes and his brother Walter can be seen in his shirtsleeves.