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.      

The Kroger Superstores!

In the early 1970’s, Kroger was at the proverbial crossroads. The closing years of the sixties and early years of the seventies had brought about many changes in American life - the most obvious, of course, being political and social in nature. Far less obvious, but sweeping nonetheless, were the changes in the retail business environment. The supermarket industry, in particular, was reeling. There were many factors behind this – inflation, wage and price controls, consumer advocacy (for the first time, a real public focus on nutrition and health), food shortages, strikes and a number of other concerns. On top of this, the age-old battle for marketing and competitive supremacy was becoming more heated than ever.

Throughout 1970 and 1971, Kroger conducted an arduous, in-depth review of every aspect of its operation – company structure, management, manufacturing, merchandising, store locations and design, personnel training, you name it. At the same time, they conducted the most in-depth review to date of their competition in every market – an assessment of their strengths and weaknesses and how Kroger was stacking up against them. Since this was the seventies, you might call it an “I’m OK, You’re OK”-type analysis, referring to a famous pop-psychology book that half of the country seemed to be into at the time. (My mom had the book. Of course, I never read it, but I vaguely remember a parody - in Mad Magazine or somewhere else - called “I’m OK, You’re Nuts!”).

Some results of the study were reassuring – Kroger’s balance sheet was strong, and their distribution centers and manufacturing/private label operations were going great guns, as it were. Most importantly, though, the study revealed Kroger’s problem areas –the things that had to be addressed to ensure Kroger’s survival in what would prove to be a very challenging decade for the industry. They could see clearly now –the rain was gone. They could see all obstacles in their way…

And there were two main obstacles to be dealt with. First, it became clear that Kroger would be better off withdrawing from unprofitable markets that showed little potential for a turnaround, those areas in which Kroger was a clear also-ran. These markets were Chicago (most remaining stores sold to Fisher Foods’ Dominick’s division in 1971), Wisconsin (55 stores statewide - including the remaining 19 Milwaukee units, some of which went to Jewel, in 1971), Minneapolis (most stores sold to Quality Foods, also in ‘71) and Birmingham, which Kroger left in 1972. Also, the number of retail divisions, known as “Kroger Marketing Areas”, was consolidated to 13 from the previous 23.

The other major problem was the state of the stores themselves. Averaging only 16,000 square feet in store size, Kroger found itself falling behind industry standards. The number of food items had proliferated wildly in the 15 years or so that Kroger ‘s stores had been that size, and just as significantly, the smaller stores placed severe limitations on the amount of (very profitable) general merchandise items that could be stocked. As a couple of folks have noted in their comments on this site, Kroger’s produce and service departments (deli, bakery, etc.) left something to be desired. Another issue was the relative blandness of the stores. What may have been “state of the art” or at least above par in the late 50’s was by this time sorely dated. Above all, Kroger's stores were in dire need of a distinctive new image.

They really went for it. Out of this painful process came the “Superstore”, a new concept in every way for Kroger, one which made an immediate and fairly long-lasting impact on the chain’s fortunes. Fondly remembered by many today, the superstores easily ranked among the most attractive stores of the era.

Bursting at the seams with pride in their new stores, Kroger described a typical exterior in 1972 as follows – “The new look starts when you’re several blocks away. A graceful white column topped by a room-sized cube bearing Kroger’s name towers 30 feet high to identify the store.” (If you’ve ever stood at the base of one these signs, as I do when I buy gas at a Kroger near us, you’ll notice it definitely is “room-sized”. Surprisingly so. Many of these signs still exist, long after the age of the superstores has passed.)“As you enter the parking lot, the store comes into view. Bigger. Longer. Often with a SupeRx store as an integrated neighbor. A sharply clean, crisp look. Soaring white arches with almost a Moorish look, silhouetted against smoke brick and blue sky.” (I’m assuming the “sky” part varied, but I was pretty young in 1972!)

Inside were the real delights – “Look around. The first impression is spaciousness and cleanliness. Then a warmer, more friendly look. Then it hits you. The colors. Pulsing and alive, accented with wooden beams. Even the cases have lost their pale pastel tones. Now they’re richly-hued green and gold and bittersweet (I always thought that was a kind of memory, not a color), sparked with walnut-vinyl trim. Bold colors transmit a sense of shopping excitement.”

Then there were the service departments – “The Village Bakery is like a transplant from an English Tudor village with its beams and cross-hatched windows. And if the Viennese tortes, gesundheit kuchens (I’d probably love ‘em if I knew what they were!) and buttery dinner rolls look particularly good, there’s a reason. They’re made especially for the Village Bakery in local custom bakeries … and in a growing number of areas, in Kroger’s own handcraft bakeries.” “Next door in the delicatessen, a pleasant-faced clerk proffers a sample of salami and calls attention to the delicatessen’s freshly-barbecued ribs, basted with a tangy sauce and broiled to a tantalizing brownness. She stands under a wood-shingle roof, accented with the golden glow of lighted panels. Her stock in trade is prepared foods ready to carry home…”

There’s not a lot I can add to these great descriptions or to what you can see for yourself in the photos, but I would like to point out the great, classic 70’s lighting fixtures – globe lights with red, yellow or smoke-colored plastic domes, and the wood and textured amber glass-framed globes above the checkstands. The textured amber “glass”’ is probably fiberglass-reinforced plastic, a very popular decorative material of the time.

The size range of the superstores, with some exceptions (see the comments on the previous post), was 25,000 to 42,000 square feet. By the end of 1974, with three years of intense superstore construction under its belt, Kroger had opened 300 new stores and converted 250 existing ones into superstores, with an average square footage per unit of 29,000 as opposed to the 1970 average of 16,000. The “converted” stores, as mentioned, were completely redeveloped existing Kroger stores, expanded and refitted with the superstore interior package. The company tended to go with larger stores in booming new suburban shopping areas, such as the 35,616 square foot superstore opened in late 1971 in Goodlettsville (Nashville), Tennessee, located on Two Mile Pike (later renamed Rivergate Parkway after the adjacent mall of the same name), or in upscale areas, such as the Hyde Park section of Cincinnati, where a 42,000 square foot unit opened in 1974.

Kroger’s aggressive approach for the superstore program was fortuitous. Had Kroger delayed the superstore rollout by even a year, the cost would have been far higher, given the unprecedented inflation of the 1973-75 period.

Just as a side note, as if all of this weren’t exciting enough, Kroger decided to enter the amusement business. As trading stamps fell victim to the price wars of the early 70’s, Kroger needed a means to bolster its Top Value Enterprises subsidiary. In May 1972, Top Value entered into a joint venture with Taft Broadcasting, a Cincinnati-based media empire, to form Family Leisure Centers, Inc. Taft was just about to open Kings Island, a theme park located northwest of Cincinnati off of I-71. The first project of the new joint venture was Kings Dominion, a new theme park to be built in Richmond, Virginia. The first phase of the project, Lion Country Safari, “where the people are caged and the animals roam free”, opened in 1973 with the rest of the park following a bit later. In early 1975, Family Leisure Centers purchased a second theme park, Carowinds, located in Charlotte, North Carolina, from an investor group headed by Duke Power. When Kroger sold Top Value in 1978, it retained its interest in Family Leisure for another couple of years, eventually dissolving the partnership with Taft. Kroger did retain majority ownership in Kings Dominion for a period of time after that.

One other area the company dabbled in at this time was that of convenience stores. “Happy Food Stores” was what they were dubbed, complete with a clown mascot, and an experienced executive from Lil’ General stores to head up the venture. Let’s just say that they didn’t exactly live up to their name.

But the real story for Kroger in the seventies was of course, the superstores, and they certainly did live up to their name. Customers responded positively to Kroger’s new stores, as evidenced by record sales increases from 1972 through 1976. Kroger’s competitive position in their midwest and central markets was strengthened, and huge inroads were made in the newer, booming southern markets.

So, for Kroger and their customers, it was a bright, bright, sunshiny day!

The photos, all Kroger annual report publicity shots, from the top: (1) A photo montage from the Cincinnati Hyde Park location, opened in January 1974 (2) an exterior from 1975, location unknown, (3) the checkout from the Mooresville (south suburban Indianapolis), Indiana store, a 1961 store expanded from 16,000 to 29,000 square feet in 1973 (4) and (5) interiors from 1975, unknown location (6) the produce section, big on celery, Mooresville (7) poultry case, Mooresville (8) a family in front of another poultry case, 1976 (Remember those huge gallon milk cartons? I was sure glad when they started putting handles on those things!) (9) meats, unknown, 1976 (10) the “Village Cheese Shop”, Hyde Park (11) Delicatessen, 1976, unknown (12) a more elaborate cheese/wine section, 1976 (13) a pleasant-faced clerk in the bakery area, 1976 (14) bread section, unknown, 1974 (15) greeting card and gift section, including a line of “famous brands” cards that I actually remember, 1976.

The Original Big K

Well, Big K, we hardly knew ye, and now you’re leaving us again. That’s right, the many Kmart stores which for some not well-explained reason took on the “Big K Mart” identity in the mid-90’s are being restored (thankfully) back to just “Kmart”, with a logo closer to their original 1960’s look, albeit with a single color, red. And a familiar sight to many Kroger shoppers is their age-old “Big K” private label brand, probably best recognized in recent decades on their soft drinks, but we’ll talk about that later.

Aside from these, however, was a Mid-South based chain by the name of Big K, which enjoyed a good deal of success as a regional discount store operation in the late 60’s and early 70’s. Big K was a division of Nashville-based Kuhn Brothers Company, Inc., which was founded as a variety store chain in the teens. The information I’ve been able to find about the Kuhn stores, which unfortunately is minimal, indicates that that they were very much cast in the standard Woolworth/Kresge variety store mold. As such they faced similar problems as those firms did in the fifties –footprints too small to accommodate a growing range of popular consumer goods, rising operating costs of counter service as opposed to self service, and most importantly the decline of downtown business districts with the advent of shopping centers with their vast availability of free parking.

In 1962, that historic year for the discount industry, Kuhn’s launched the first of their Big K discount department stores. Kuhn’s employed a strategy similar to Wal-Mart, opening the Big K stores in small-to-medium sized towns within a four-state market area – in their case Alabama, Kentucky, Tennessee and Georgia. Like Wal-Mart, they avoided the larger markets which were likely to be heavily populated with Kmart stores, as Atlanta most certainly was. Kuhn’s-Big K , as the company was renamed, would eventually adjoin the Wal-Mart market area, but there was very little overlap. The Kuhn family and Sam Walton, who were acquaintances, had chosen (for a time at least) to honor an old unwritten code between regional retailers to stay of each others’ territories. Of course another unwritten code, every bit as popular as the first, was to scrap the previous code and build right in your fellow retailer’s backyard. When Wal-Mart opened a store in Jackson, Tennessee, the heart of Big K-land, The Kuhns retaliated by opening stores in West Helena and Blytheville, Arkansas.

By the end of 1973, the company operated 57 Big K’s and 27 Kuhn’s Variety Stores, and had pushed into eastern Arkansas and Missouri, Wal-Mart’s operating area. The Big K stores carried the standard discount store mix of apparel, sporting goods, hardware, toys, etc., and averaged 45,000 square feet. There were three larger stores (65,000-75,000 square feet) ringing the Nashville area, the company’s home turf. In 1977, Kuhn’s-Big K moved into the South Carolina region with its acquisition of Edwards, Inc., a Charleston-based chain of 33 stores in South Carolina.

Soon after the Edwards purchase, the Kuhn’s - Big K operation spun into decline, losing money and experiencing management turmoil. In 1981, Chain Store Age characterized the company as “a broken chain”, citing increasingly intense competition, the strain from the Edwards acquisition and cost overruns on the company’s fancy new Nashville headquarters complex. The magazine was also critical of the Kuhn family’s management approach. Predictions of Big K’s demise were aflight.

Discussions regarding a possible acquisition by Wal-Mart had begun some months before the Chain Store Age article appeared. Wal-Mart, traditionally committed to internal growth, had only one major acquisition under its belt at the time, having purchased the 21-store Mohr Value chain, an Illinois operation, in 1977. When it became evident that Big K would be forced to sell out, the ideal store sizes (directly in line with Wal-Mart’s at the time), respectable customer base, and most of all the chain’s prime locations in new, adjoining territory made the proposition too powerful to resist. Even so, Wal-Mart’s board of directors was split down the middle over the idea. Sam cast the deciding vote in favor of the buyout, and the deal was done. Incidentally, Wal-Mart’s indecision over the buyout paid another dividend – as they hemmed and hawed over the prospect, the value of Big K’s stock continued to fall. The initial purchase price, according to the Wall Street Journal was $17 million in December 1980. By the following June it was $12.9 million, and by the time of the actual buyout in December 1981, it was $7 million - $2 million less than Kuhn’s -Big K had paid for the Edwards chain four years earlier. Sort of gives a new, unwanted meaning to the word “discount”.

The first photo, location unknown, is from 1973. The second and third photos are from the Dickson, Tennessee store and were taken the following year.

Wal-Mart Expands the "Magic Circle"

If Sam Walton harbored dreams of empire during Wal-Mart’s early years, he did a good job of keeping it to himself. That’s not to say he wasn’t interested in growth – he most certainly was, as is clearly evidenced throughout his autobiography. In Wal-Mart’s first decade and beyond though, the company flew under the radar, expanding slowly within the area that Walton called the “magic circle” – northern Arkansas, southern Missouri, southeastern Kansas and eastern Oklahoma. A typical retailer with a home base in northwest Arkansas could have reasonably been expected to try to plant their flag in Kansas City or St. Louis soon after their first flush of success, but Walton did not and wouldn’t for many years. In 1967, five years after the company’s founding, there were 18 Wal-Marts. By comparison Kmart, another retailer celebrating the five-year mark that year, had 250 stores.

Walton was much more interested in “growing internally”, saturating existing markets to create dominance. New markets were added incrementally, and only in areas that adjoined existing ones, to maximize efficiency. An early sign that this strategy was paying off came in the mid-70’s, as Kmart began to open stores within Wal-Mart’s market area. Until around 1974, Kmart rarely entered cities with a population below 50,000. At that point, they introduced a smaller store format and began to roll it out in various parts of the country. When Kmart entered such Wal-Mart strongholds as Springfield, Missouri and Hot Springs, Arkansas, Wal-Mart creamed them. It was a sign of things to come, on a much larger scale, in the coming decades.

Most importantly, Walton sought to improve the stores. As mentioned in the previous post, he relentlessly pursued competitive intelligence, trying to learn from the good and bad things chains across the country were doing. Conversely, he spent a great deal of time in the Wal-Mart stores, quizzing employees in his friendly but pointed manner, digging deeper if he sensed there was a problem. Walton practiced “management by walking around” long before Tom Peters and Robert Waterman made the phrase famous in the bestselling book “In Search of Excellence”.
At the close of 1970, Wal-Mart had 38 stores and $44 million in sales. Up to this point, a great deal of the financing had come from Sam Walton’s own family, leaving him $2 million in debt by that time. Reluctant to take on the scrutiny and hassles of going public, but weighed down by the heavy debt load and the realization that a stock offering was the only feasible way to keep expanding the company, Walton took the company public in October, 1970. In the space of one day, Sam was out of debt and would never have to personally contribute another dime to Wal-Mart’s expansion. The stock sold out immediately, and of course a major expansion ramp-up was to come. By 1974, Louisiana, Tennessee, Kentucky and Mississippi had received their first Wal-Mart stores.

Then Sam, age 56 at the time, did something that is not well-remembered today and in retrospect seems more than a little surprising. In November 1974, he resigned as Chairman and Chief Executive Officer of Wal-Mart and turned the reins of the company over to a younger man.

The new Wal-Mart chief was 40-year old Ron Mayer, a former Duckwall-ALCO executive who more recently was a Wal-Mart vice president, instrumental in setting up the first version of Wal-Mart’s vaunted computer infrastructure. Walton moved over into a new position, chairman of the executive committee, an oversight position in most companies. He even gave up his office to Mr. Mayer, moving down the hall and out of the way. Had things remained as they were, Sam would have had plenty of time to perfect his tennis game and bird hunting skills, and Wal-Mart would have probably become a decent-size regional player, and probably an eventual acquisition candidate for the likes of Kmart or Target, no offense to Mayer intended.

The vigorous Walton, try as he might, learned quickly that standing on the sidelines was not something he could do. In June 1976, Mayer stepped aside and Walton reassumed leadership of the company. Sam was frank when interviewed about it by the Wall Street Journal –Mayer had left “because I wasn’t able to assume a passive role… I wasn’t about to force myself to stay out” of the company’s decision process. Walton offered Mayer a vice chairmanship, but he declined and chose to leave the company instead. The founder was now back in charge. By the end of 1979, Wal-Mart had 278 stores, over a billion dollars in sales, and operated in 11 states. The magic circle was growing.

The photos above are from 1976, 1978 and 1979 respectively. These pictures remind me of the very first Wal-Mart store I ever laid eyes upon, around 1976, years before I (and much of America) learned of the company’s famous founder. In the early 70’s, my stepfather bought a small farm in rural west Tennessee. It was a rustic place, with a creaky old farmhouse without air conditioning. We’d spend about three weeks there every summer, and many years we would drive down the day after Christmas and spend the rest of our Christmas break there, trying to keep the pipes from freezing. The summers were definitely a shock to the system of this 12-year old Chicagoan, used to spending my vacations lying around the house, watching reruns of Petticoat Junction and Green Acres. Now I was digging postholes and sweating like I never had in my life. (Fresh Air! Bah. Of course now I look back at it as great experience, naturally.) The Wal-Mart location was in Martin, Tennessee, a college town, and was Wal-Mart’s third or fourth store in the state. I clearly remember thinking that it had to be the single store of a family-owned business. Regrettably, we never set foot in the place, and it would be years before I would experience the wonder of Wal-Mart.

What's the Frequency, Kmart?

The transformation that the Kresge company underwent with the introduction of Kmart was dramatic, to put it very mildly. Among the most impressive aspects were the sheer speed and scale of the rollout. Once the final decision was made to push forward with Kmart, Kresge president Harry Cunningham gave a mandate to Kresge’s real estate department that at least 60 leases be secured for new Kmart sites to accommodate the planned rapid-fire growth. As mentioned, there were 18 Kmarts in operation at the end of 1962. 35 would be added in 1963, 35 more in 1964, and 34 more in 1965. By the end of the decade, there would be over 270 Kmarts in all regions of the United States, as well as Canada and Puerto Rico.

Aside from four small-footprint stores that were used in part for development purposes (Kresge called them “bantam” K-marts), the average square footage of the earliest Kmarts was 60,000, growing to 75,000 within a couple of years and to over 90,000 square feet by the end of the 60’s. In the following decade, they would consistently exceed 120,000 square feet.

The simple, rectangular, box-like design of the Kmart stores was a definite aid in the speed at which the stores opened, with average construction time at a brief six months per store. Another key factor was Kresge’s insistence on building free-standing stores in most cases, thereby avoiding frustrating (and costly) delays at the hands of shopping center developers. Kmarts were often located near other stores, but were rarely connected to them.

Kresge sought to open at least two (often more) stores in quick succession within a given market in order to maximize advertising dollars. The first major market, for obvious reasons, was the Detroit metro area, Kresge’s hometown, where seven Kmarts were operating within the first two years. Atlanta, Denver, Knoxville, Fresno and Charlotte were among the other early multiple-store markets.

The store carried a full line of merchandise, including clothes, kitchen items, home improvement and auto accessories , sporting goods, a camera department (remember the “Focal” brand?), electronics (or “Television and Hi-Fi” as such departments were then commonly called), jewelry, and in many cases, a full-line supermarket. A number of the departments were leased, among them sporting goods, cameras and jewelry.

Most notably the supermarkets were leased, from a number of different operators. The early Kmart supermarket lessees were moderate-sized grocery firms, including Borman Food Stores, Inc., the first operator of the some of the K-mart supermarkets in Michigan, Illinois and Indiana. Even small family-owned grocers got in on some of the action. When the Benton Harbor, Michigan Kmart opened in 1963, for example, the supermarket portion was operated by John Sassano, an independent grocer based in Hobart, Indiana. The largest operator of Kmart supermarkets would be Detroit-based Allied Supermarkets, who signed on with the company in June 1964. Allied up to that point had operated food stores in the Midwest, Texas and Oklahoma under the names Wrigley and Humpty Dumpty, among others. They would eventually operate grocery units in a great many Kmart stores all over the country well into the 1970’s. The supermarket areas averaged 20-24,000 square feet and were all thoroughly branded “Kmart”, regardless of the operator. There even was a line of private label items, including Kmart potato chips!

The stores were big, fairly colorful, and most importantly featured discount prices across the board. And then there were the “special buys” (later called “bluelight” specials) to drive high-volume sales on select items. Kmart’s selling prices were set at Kresge headquarters in Detroit, and interestingly, the individual Kmart store managers were given the authority to lower prices to beat local competition, but they were forbidden to raise them. “Charge It!” banners abounded.
Customers showed up en masse, and most of them instantly became regulars. A retailing legend was born.

The photos, dating from late 1962/early 1963, show some of the earliest Detroit area Kmarts, including an exterior view (the Kmart logo would be tweaked slightly on future stores), and views of various departments. The woman shopping in the supermarket area resembles Barbara Billingsley, TV’s Mrs. Cleaver. She’s shopping the detergent aisle, and if you look carefully you can see some boxes of Tide, that most photogenic of consumer products, to her lower right. There's a mezzanined furniture area visible behind the camera department, a feature of a number of early stores. I find the last photo very touching, because it seems to feature a real-life mother and daughter, not professional models. The mom looks like the kind who would have had fresh cookies baking in the oven when you showed up home from school.

A Mid-50's Inside Look at Sears

A set of interior views typical of larger Sears stores from the mid-1950's. From the end of World War II up to that time, the company opened over 100 stores in new locations and had relocated more than twice that number of existing stores to larger, suburban facilities.

Sears’ sales by this time were more than double that of their arch competitor, Montgomery Ward. Their approach to expansion under the leadership of General Wood was diametrically opposed to the extremely conservative stance of Ward under their nearly 80-year old president Sewell Avery. Avery predicated Ward’s go-slow approach on his firm belief that America faced the strong possibility of another depression in the years following WWII. Obviously, this did not materialize, and Avery’s caution, which had served Ward so well during the 1930’s now held the company back. Avery was finally forced into retirement in 1955, and Ward would impressively ramp up their growth in the very late 50’s and early 60’s, but would continue to be dominated by Sears (in 1958, J.C. Penney would pass Ward as number two, but that’s another story).

Another key edge for Sears in competing with Montgomery Ward was their much broader offering of hard lines – tools, sporting goods, lawn and garden equipment and so on. A major tenet of Sears’ merchandising approach was the belief that they needed to provide items of interest to male shoppers to peruse while their wives shopped. This philosophy would eventually lead to the development of the Ted Williams line of sports and fishing equipment and later the (Sir Edmund) Hillary line of camping gear. Sears also placed a much heavier emphasis on large appliance sales with their Kenmore and Coldspot lines. Sears' Coldspot line, for example, was manufactured by Whirlpool and was America’s largest selling freezer line for many years. Ward was much slower to diversify beyond their traditional soft lines.

Most of the photos are circa 1956, including the great shot of the towel display, showing an array of diamond-pattern towels that would be welcome in many a retro fan’s home, the Silvertone radio and TV display, the quinessential Craftsman tool department and the great boating line-up. Sears’ Elgin brand outboards were made during this time by West Bend manufacturing. The escalator shot, from the Nashville, Tennessee store is from a couple of years earlier. The catalog order counter (a fixture of Sears stores large and small) and the paint department views are slightly more recent.