Business
2:27 am
Mon November 19, 2012

The Past And Future Of America's Biggest Retailers

Originally published on Tue November 20, 2012 9:38 am

It's an anniversary that most Americans can celebrate — the birthday of the big-box store. Discount shopping as we know it began 50 years ago. In 1962, enterprising retailers invented Wal-Mart, Target and Kmart.

These stores changed the way we shop and the way we think about price. Historian Marc Levinson, author of The Great A&P and the Struggle for Small Business in America, talked to NPR's Linda Wertheimer about what happened all those years ago, and how the stores will continue to evolve in the Internet age.


Interview Highlights

On why 1962 was the year of the big-box store

"In 1962, a number of different companies decided to try and create brand new store formats. The leader in that in 1962 is forgotten today. It was a company called Woolworths and it opened a store called Woolco. Woolco was expected to be the giant because Woolworths was gigantic. And everyone thought Woolco was going to conquer the world. Woolco, as your listeners will know, didn't make it."

On how big-box stores popularized the idea of discounting after World War II

"There were laws meant to prohibit big retailers from getting volume discounts, so they couldn't buy merchandise more cheaply than mom-and-pop stores and mark it down. The other thing was that the manufacturer could make a product, could tell the retailer, 'You may sell our good, but only at the price we set.' And so if a retailer wanted to sell a certain brand of camera or a certain phonograph record or whatever, it had to sell it at the set price. That started breaking down in the 1950s, and that really opened the way to discount retailing."

On how big-box stores cornered the suburban market

"One of the prerequisites for the big-box was the car. Everybody had to have a car because the big-box was sitting out in a parking lot somewhere. The big-box made shopping into a family experience. Mom and dad and the kids all piled into the car, they went out to this big store, and they could spend several hours there because there was, by the standards of the day, an enormous amount of merchandise. Now, you've got to give people a little sense of scale. We're talking about stores that were gigantic for their time, and that meant they might have about 50,000 square feet of space. If you go into a typical Wal-Mart Supercenter today, it's perhaps four times that size. So 'big' is relative, but for its day, 1962, these stores were quite large."

On how the big boxes evolved from traditional variety stores

"Stores had to figure out how to distinguish themselves. You couldn't all have the same merchandise and be just like the other one. And we went through a period of experimentation. ... Some [companies are] no longer with us. Some of them tried strategies and they just didn't work out. It was not clear in 1962 that running a discount store like this was going to be a winning strategy."

On whether big-box stores will still be around in 50 years

"There are very few retailers that have that kind of lifespan. There aren't too many that have been around for a hundred [years]. But even if they still exist, they may be quite different. For example, you see now retailers trying very much to integrate their physical store with their Internet store. So maybe the physical store becomes mostly a showroom — you don't actually go there to buy things and walk out with them. You go there to look at things, and then you order them online and then they're delivered to your house. Or maybe you order them online and you go to the store to pick them up, but the store may not be filled with quite so much merchandise. There are quite a few possibilities, and I think it's really foolhardy to guess what this is going to look like frankly in 10 years, much less 50."

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

Transcript

LINDA WERTHEIMER, HOST:

Here's an anniversary most Americans can celebrate - the birthday of the big-box. Discount shopping, as we now know it, began 50 years ago. In 1962, enterprising retailers invented Wal-Mart, Target and Kmart.

Remember this?

(SOUNDBITE OF KMART COMMERCIAL)

UNIDENTIFIED PEOPLE: (Singing) Stop and shop at Kmart. Get the best big name brand merchandise. The guarantee that's quality and discounts, good price.

WERTHEIMER: Those stores change the way we shop.

Here to help us understand what happened to us all those years ago is Marc Levinson, historian, author of "The Great A&P and the Struggle for Small Business in America."

Mr. Levinson, welcome to the program.

MARC LEVINSON: Thank you for having me.

WERTHEIMER: Now, why was 1962 the year of the big box - or perhaps, the beginning of it?

LEVINSON: In 1962, a number of different companies decided to try and create brand-new store formats. The leader in that in 1962 is forgotten today. It was a company called Woolworths and it opened a store called Woolco. Woolco was expected to be the giant because Woolworths was gigantic. And everyone thought that Woolco was going to conquer the world. Woolco, as your listeners will know, didn't make it.

WERTHEIMER: Now discounting - hard to believe - was sort of a new idea. It was a postwar idea. There were actually laws against discounting in this country, and in many places in Europe, for example.

LEVINSON: That's correct. There were laws meant to prohibit big retailers from getting volume discounts, so they couldn't buy merchandise more cheaply than mom-and-pop stores and mark it down. The other thing was that the manufacturer could make a product, could tell the retailer, you may sell our good, but only at the price we set. And so if a retailer wanted to sell a certain brand of camera or a certain phonograph record or whatever, it had to sell it at the set price. That started breaking down in the 1950s, and that really opened the way to discount retailing.

WERTHEIMER: Besides price - which was, of course, a very big deal - big-boxes did quite a few things differently. They were not trying to compete with big downtown shopping in cities. They went out, out to the suburbs - out even to rural areas.

LEVINSON: Sure. One of the prerequisites for the big-box was the car. Everybody had to have a car because the big-box was sitting out in a parking lot somewhere. The big-box made shopping into a family experience. Mom and dad and the kids all piled into the car, they went out to this big store, and they could spend several hours there because there was, by the standards of the day, an enormous amount of merchandise.

WERTHEIMER: Now, selling groceries and selling case goods, that was something that even these businesses that originated as dime stores were able to grasp. They could figure out how to do that. But one of the things I felt was so interesting is that when they headed off in new directions they found themselves kind of flummoxed by how to do it. One of the new directions that was difficult, apparently, was fashion.

Now, Target, which was a spinoff of the Dayton Department Store chain went for that relatively early. This is an ad from 1970.

(SOUNDBITE OF TARGET AD)

UNIDENTIFIED MAN: The target label is your Best Buy. Miss Target.

WERTHEIMER: You know, I always thought that was a joke, Target - that, you know, people would refer to Target, which is not a fancy store as something fancy, Miss Target. But they did that ad too.

LEVINSON: Stores had to figure out how to distinguish themselves, and we went through a period experimentation. Actually, you mentioned several companies that got their start in 1962. There were a number of others, some of them are no longer with us. Some of them tried strategies and they just didn't work out. And it was not clear in 1962 that running a discount store like this was going to be a winning strategy.

WERTHEIMER: So do you think that you and I can sit down together 20 years from now, or 50 years from now, when we are both dead and talk about the stores and find that they still exist?

LEVINSON: That would be extraordinary. There are very few retailers that have that kind of lifespan.

WERTHEIMER: Well, these guys lived for 50 years already.

LEVINSON: Already. There aren't too many that have been around for a hundred. But even if they still exist, they may be quite different. For example, you see now retailers trying very much to integrate their physical store with their Internet store. So maybe the physical store becomes mostly a showroom. You don't actually go there to buy things and walk out with them. You go there to look at things, and then you order them online and then they're delivered to your house. Or maybe you order them online and you go to the store to pick them up. But the store may not be filled with quite so much merchandise. There are quite a few possibilities, and I think it's really foolhardy to guess what this is going to look like frankly in 10 years, much less 50.

WERTHEIMER: Marc Levinson, thank you very much.

LEVINSON: Thank you.

WERTHEIMER: Marc Levinson is an historian. He is the author of "The Great A&P and the Struggle for Small Business in America." Transcript provided by NPR, Copyright National Public Radio.

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