Monday, September 29, 2008

The Game's Afoot

Spent last week on my annual Department Store Hunting trip. Once a year I take a week and drive from city to city to find out who was in business where when. This year I did Delaware and the Eastern Shore of Maryland. This may not seem like a prime department store area, but you never know. It was in Warren, Pa., an out-of-the-way oil town east of Erie that I thought would be utterly without interest, that I found the connection that finally tied together a chain of stores that once existed throughout western Pennsylvania. On the other hand, Bradford, the next city east, offered no connection to anything other than itself, and in retailing-history terms not much had ever happened in Bradford. So I try to approach each city on my list (taken from the historic size of the retail market, the newspaper circulation, and the city's population, all with various factors to adjust) as a blank slate and see what I will find there.

I had never done any work on the department stores of Wilmington even though it's a half-hour from Philadelphia; it wasn't in Pennsylvania or New Jersey. Wilmington is a quite substantial city and until the development of the Bay Bridge in the 1950s was the entrepot for the entire Eastern Shore. And the many chemical companies endowed the city with a high degree of prosperity. Yet Wilmington never had a first-class department store until John Wanamaker of Philadelphia (and at that point, New York as well) opened a store there around 1950. In this it was different from similarly sized cities such as Allentown and Reading, or even smaller ones like Lancaster. Hess's in Allentown, Pomeroy's in Reading and Watt & Shand in Lancaster were far larger and more complete stores than Kennard's or Crosby & Hill in Wilmington.

In part this is the complexity of markets -- Wilmington's eastern suburbs become Philadelphia's western suburbs without a break, and have for decades. But Crosby & Hill, around the turn of the 20th century, had aspirations of becoming a major operation, with branches in New Jersey and Pennsylvania. There had been ambition, and then there was none.

My friend Susanne Shaw at the University of Kansas, a longtime student of newspapers and a leader in journalism education, speaks of the key role of leadership. In fits and starts, with foot-dragging and incomprehension, organizations move in the direction their leaders -- particularly the one at the top -- move them in, whether the people working there want them to or not, whether it's a good plan or not, even whether it's ruinous or not. Thus the leader is the key hire in the organization. A bad match, a narcissist, a time-server -- in good times you can cope with problems, in bad times you can't.

By the 1920s, large-city department stores had made massive infrastructure investments and, particularly for those in the Northeast and Midwest, it was just a matter of riding out the tides. Some fell in the Depression, others in 1950s suburbanization, but the path was pretty well set for Higbee's or Hochschild Kohn or Hudson's into the 1980s. Small-city stores pretty much kept going as they were. The mid-size cities -- still small enough that one company's could make a capital investment that would completely change the retail environment -- offer many interesting tales of chances taken or not taken and how they played out.

In Evansville, Ind., the locally owned department stores -- Bacon's, Lahr's, Andres' -- all went under in the Depression, leaving a market that Interstate Stores -- known primarily for low-end stores such as Stillman's -- filled by creating a first-class, full-line department store out of nothing and naming it, prosaically, the Evansville Store. In Fort Wayne, Wolf & Dessauer, the city's dominant store, invested millions in a new downtown store in the late 1950s, a block off the main street and surrounded by parking, a store so large and off to itself that it rendered much of the rest of downtown Fort Wayne irrelevant -- which then took its toll on Wolf & Dessauer. The Latz family made a bet that had unexpected consequences.

And in Wilmington, a city with a blocks-long downtown of narrow streets, the city's two major department stores stayed in first gear, opening the door wide for Philadelphia's Wanamakers and then Strawbridge & Clothier to open branches there in the early 1950s -- the first city-level department stores in what was a reasonably sized city. Meanwhile, in a similarly sized market not that much farther from Philadelphia, Max Hess Jr. was making his family's Allentown store into a major retail institution, one known nationally for its ambition and gumption.

In the end, of course, none of the downtown stores could complete with the combination of free parking, nighttime and Sunday hours, air-conditioned malls and perceived freedom from crime. There is no more Hess's, which was sold to a mall developer in Johnstown and eventually became part of Bon-Ton stores; there is no more Kennard's, even though it opened stores in Wilmington's malls. So the lesson could be, why should anyone have botherered? They should have just put "going out of business" signs up in the 1950s and accepted their irrelevancy.

But the outcome of decisions made today often is not fully seen for 10 or 20 years. The people making decisions in the 1930s through 1960s didn't see an inevitable future. They did what they thought was right for themselves, their families, and their businesses. The future only looks inevitable looking backward.

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