Monday, November 15, 2010

More About Strawbridge

As noted two posts ago, Philadelphia's Strawbridge & Clothier was one of America's most successful, innovative, and responsive department stores, and remained so under family ownership for more than 130 years. But eventually the cost of staying competitive in the field -- and in the discount field as well with its Clover division -- got too big, and the family sold out. (Beyond my expertise is how the cost of keeping up with vast national chains like Federated and May requires more capital than smaller companies could access based on their lesser cash flow.)

Like any mature business, Strawbridge faced challenges to its continuance every year. A couple are similar to the challenges newspapers have faced and are facing. Strawbridge's responses worked for a while, and while the company disappeared, many of its locations still are successful department stores under the Macy's name, so it's not that the business model of the store was bad, just the business model of the company.

As Alfred Lief notes in "Family Business," after World War II price competition increased, "resulting from improved production in many lines. Theoretically, lower levels were good for business because they were good for the public, ushering in better values; and from a financial standpoint it could mean lower capital requirements." This isn't quite the disruptive change of the Internet, but it touches on the same issue. Cheaper costs should be good for business because they allow you to lower your price and spend less on capital, so for a newspaper the need to not buy presses or paper should be good for it and its customers. "But too much of a good thing was always unhealthy." Get to a point where there's too much competition with too little capital investment needed, and established business founders. It can do nothing else. It can't make the past go away.

More important was that sales volume at the giant downtown store -- which had been expanded in the 1930s to handle its tremendous and growing business -- was now falling off. (Read: The massive pressrooms built during the height of classified and insert growth in the 1990s.) Disruptive change -- the postwar suburban push -- had made people less inclined to take a longer drive or train trip to go shopping. Yes, Strawbridge and Wanamakers might have better merchandise than was found at E.J. Korvette or Shoppers Fair -- but was it that much better to make the trip worthwhile, except for special occasions such as Christmas shopping or buying a party dress? Sort of like only buying a newspaper when your team wins the World Series. But while you can run a bridal shop on special occasions, you can't run a department store.

So Strawbridge went to the suburbs, opening stores throughout the Philadelphia area. This is somewhat the same as metro newspapers' response to suburbanization -- creating Neighbors sections. It was different in that Neighbors was more of a boutique than a branch. But the point was usually the same -- to try to follow one's customers' out to the suburbs and keep them from going to suburban rivals there.

Because department stores were department stores, those rivals were seen as -- other department stores. While department stores recognized that their customers increasingly were going to Kmart, they apparently thought it was only because a major department store wasn't close enough. Thus, when Strawbridge's was the motive force behind opening Cherry Hill Mall in 1962 as the prototype (Correction: Off by one -- see comments) for all of today's enclosed malls, the aim was to not re-create downtown Philadelphia with its (now down to) four department stores. As Lied writes, Strawbridge "proposed Bambergers of Newark as an acceptable neighbor... This development prompted Wanamakers and Gimbels to make a defensive move. They paired off the next year in a shopping center at Moorestown, New Jersey, about five miles east."

In the short run, this was fine, and Cherry Hill -- which eventually grew to include a Penney's as well -- was one of the marvels of the age and remains one of the East Coast's most important shopping destinations, with a Crate & Barrel, a Nordstrom, and a Container Store joining Macy's and Penney's. While it and similar stores in Springfield, King of Prussia, and elsewhere kept Strawbridge's going, they didn't address the discounter problem. This Strawbridge did, of course, with the Clover division, just as the Dayton Co. of Minneapolis did with Target. Eventually, of course, Dayton Hudson sold off its department stores and just kept Target. Would Strawbridge's have eventually just become Clover? Probably not, because it didn't have the resources to compete with national companies in either venue.

Strawbridge's recognized what was happening, as noted by these sentences bringing to mind the multiplatform moves (internal and external) of newspapers: "The future business of Strawbridge & Clothier would be carried on and directed in mutiple locations. In order to be able to run a multi-store operation, the organization would have to be restructured." In the short run, Strawbridge's did well. In the long run, though, its days were numbered.

What did Strawbridge's in was that it was competing with national chains (May Co., Federated, and Macy's at the end in department stores, Walmart and Target in discounters) that could outdo it when size and breadth were the issue, and competing with an incredible multiplicity of small stores that could outdo it in the personal service it once offered but could no longer afford because it was having to cut costs to compete with the national chains.

But could it have transformed itself into a surviving boutique organization? Doubtful. The "Strawbridge" name stood for a classy department store, just as the same of, say, the Omaha World-Herald stands for a newspaper. To make it stand for a small jewelry boutique -- doubtful. Loyalists would be miffed, and jewelry buyers would not care. They might still totally go to Jared.

So the problem for newspapers may be that in the end, there's not much you can do if your world falls apart. That's less hopeful than I usually try to be, but it wasn't bad management or resisting the customers that put an end to Strawbridge & Clothier. Strawbridge just didn't fit into the world anymore. That doesn't mean that there still aren't department stores, just as changes in communication don't mean that there won't be newspapers. But perhaps they will be print editions of the New York Times and Wall Street Journal for those who are willing to pay for them -- produced in ways that spread the overhead around nationally -- and a bunch of weeklies or local replacements as news boutiques, with the Internet as Walmart. The thing is that in the end, that doesn't matter that much for the consumer, who may even be happier with the arrangement. Whom it matters for, other than the people who lose their jobs, is those who remember how great it was to shop at a store like Strawbridge & Clothier, and feel a loss in their lives.


gottacook said...

"Strawbridge just didn't fit into the world anymore" is an elegant summation of your story. I lived in Center City when all four (Wanamaker, Gimbels, Lit's, and S&C) were still in business on Market Street.

One small nitpick, if I may: Cherry Hill Mall wasn't exactly the sole pioneer of the enclosed mall; it was preceded by Southdale, in a southern suburb of Minneapolis, in 1956.

Davisull said...

Ah, I had always assumed that the difference between Cherry Hill and all that went before it was the two-anchor format being enclosed. But it turns out Southdale had not only Dayton's, which I knew of, but Donaldson's as well, and that Cherry Hill was simply the first of its kind in the East -- both being projects of Victor Gruen. Thanks for the correction. East Coast hubris.

Anonymous said...

Is English your native language. If it is, I recommend you take a writing class. This article was difficult to read and understand due to your writing style.