Retail masters #1: The men that shaped retailing as we know it today
There has been a lot of discussion (again) around the difficult times of the department stores. In order to understand what might help the industry, it helps to go back and understand what eventually made department stores great.
The golden era of the great department stores (from mid 20th century to early or mid 21st century) has many corollaries to present day changes in retailing. The great retail entrepreneurs that were active during the formative years of modern retailing could teach a lot to the smart and attentive retail leaders.
The two pioneers
The earliest department stores can be traced back to the 18th century. However, the emergence of the great department stores that have become part of the lore of the retail legends emerged around the mid- and late 19th century and early 20th century.
Two of the most important centers of innovation in retailing during the 19th century were New York and Paris. This was initiated by two great retail innovators who never got similar credit than their more well-known successors.
Alexander Turney Stewart in New York and Aristide Boucicaut in Paris initiated a great era of innovative retailing, which created many of the customs we take today as granted in the retailing industry.
Department stores became cultural icons that defined consumption and became important monuments and tourist attractions within the centres of the big cities.
Stewart as one of the first, Boucicaut showing the way in Paris
Alexander Turney Stewart (Source: Wikipedia)
Alexander Turney Stewart was an Irish immigrant who opened his first store in New York in 1823. With the money accumulated from that store, in 1846 Stewart was able to build the first multi-storey building designed specifically to sell large volumes of products. The store became known as the ”Marble Palace” and has also been regarded as ”the cradle of the department store”.
In 1862 the Marble Palace was superceded by a six storey ”Cast Iron Palace” employing over 2 000 people. The store included a grand emporium with a high open space in the middle of the store (like in big cathedrals) creating a sense of height that became a trademark for the department stores.
Aristide Boucicaut (Source: Wikipedia)
About five years after the Marble Palace (in 1852) Aristide Boucicaut joined a small retail company on the left bank of the Seine in Paris. Boucicaut turned out to be a similarly great retail innovator as his counterpart across the Atlantic, maybe even more important.
When Boucicaut joined Bon Marche it had twelve employees and four departments with a sales volume of 450 000 francs. During the first eight years, mr Boucicaut increased the sales tenfold to 5 million francs in 1860. 25 years later in 1877 when mr Boucicaut died the Bon Marche was probably the largest retailer in France with the revenues of 73 million francs (16 000 % growth, annual growth rate of 22,6 %!).
Boucicaut succeeded in what Stewart failed
Despite the great success that Alexander Stewart's businesses enjoyed (he became one of the wealthiest people in America), he wasn't able to build a company that would flourish after his passing. In the decades following his death in 1876, the business faded into bankcruptcy.
Aristide Boucicaut was able to create a more lasting organisation. He invested in his people who went on to create even bigger success that was achieved during mr Boucicaut’s time.
In 1910 (33 years after mr. Boucicaut’s death) the sales of Bon Marche exceeded 227 million francs. The competitors of Bon Marche were trading on a level, which Bon Marche had been selling almost three decades before.
Aristide Boucicaut succeeded in what is probably the most difficult and important task of an entrepreneur, building a company that lasts for decades, even centuries.
Great retail innovators
These two department store pioneers were also great innovators of retail practices.
During Aristide Boucicaut’s time the Bon Marche instituted major innovations that are taken for granted today. This include
fixed pricing (prices set before -> no haggling with the sales person)
annual sales
a ‘money back’ guarantee
entre libre (customers could browse the store without the need to buy)
Instituting entre libre was one of the monumental retailing changes that has been attributed to Harry Selfridge when he opened his store in London in 1909. However, that happened more than 30 years after Aristide Boucicaut's death.
Bon Marche was also the first French retailer to sell a huge variety of products from homewares, toys and perfume to sports equipment and children’s clothes.
Alexander Stewart on the other hand introduced the first in-store fashion shows in retail settings and created buildings for selling products that the society had not seen before.
Both Boucaicaut and Stewart understood the importance of courteous service and quality in building the trust of the public. For them service was one of the great differentiators from the poor service of the small retail stalls of the 19th century. Fixed prices on the other hand reduced customers’ suspicion towards retailers, something that is taken for granted today, but was not normal in the retail scene of the mid 19th century.
Mail order: an innovative new channel
© ModeMuseum Provincie Antwerpen
Another innovative aspect of the two pioneering department stores was their use of the new medium of mail order catalogues. Alexander Stewart saw early on the potential for the mail order business.
By 1876 he had hired twenty clerks to read, respond and mail out orders. That year he profited by over $500,000 from the mail order business alone.
Stewart's mail order business' efficiency, convenience and profits gained much attention and other entrepreneurs followed in his footsteps.
Even though Sears & Roebuck has been seen as a pioneer of mail order retailing, the company was founded 15 years after Alexander Stewart began his mail order business.
Bon Marche was also active early on in selling via mail order. In 1903 the mail order totalled 188,5 million francs. Significant part of the business was done internationally. Even far-flung places like Scandinavia were ordering from Bon Marche. Customers living in countries bordering France were eligible for free deliveries with orders over 25 francs (except bulky items, such as furniture).
The great entrepreneurs of the department store industry were eager in testing out the new channels.
Delivering the products to customer’s home was a natural extension of the service in the store. Additionally the big department stores were famous around the world. Mail order provided a possibility for the customers who were living outside of Paris or New York to buy from these retailers.
Riding the waves of change
The Bon Marche experienced its peak years from 1869 to the First World War. This can also be identified as the Golden Age of the department stores in general. During that time the concept grew from a small retail innovation to dominate the city centres and also the cultural landscape of the western societies.
This coincided with the Gilded Age in the United States and Belle Epoque in France both of which were periods characterised by rapid optimism, economic development as well as cultural, scientific and technological innovations.
Like most great innovations, the department stores emerged and flourished at the intersection of two revolutions, one in retailing and one in society.
In retailing the department stores transformed the industry in two ways. Firstly, with their vast stores, the department stores were able to constantly increase the amount of products sold. This was totally different compared to what the traditional retailers of the time were able to offer.
Another way department stores changed retailing was it's ability to have high stock turns and thus buy in big amounts from the manufacturers. This enabled them to sell products in lower prices than their competitors.
The big cultural shift which the department stores were actively shaping and riding was the ”democratization of luxury”. The department stores of the past were not places of luxury shopping, like they nowadays are, quite the contrary.
Bon Marche (like Marshall Fields or Selfridges later) was not a store only for the rich, it was a middle-class institution. For example Harry Selfridge introduced a bargain basement while managing the great Chicago based department store Marshall Field's.
After all, retailers who want to sell merchandise in big quantities cannot rely only on a small part of the population.
Cultural institutions that created show and wonder
Department stores also became places of wonder and sensation. People came less to purchase and more to visit and bought during the visit. The stores themselves were built to create powerful expressions of vast and open displays that lured people into buying. The stores were, like Emile Zola famously portrayed them in his famous book ”Au Bonnheur Des Dames” as ”cathedrals of modern consumption”.
Showmanship and showcasing technological advancements were a big part of the great department stores, especially of Bon Marche and later Selfridges.
Like Harry Selfridge later in London, Aristide Boucicaut wanted to make the Bon Marche to be ”one of the sights of Paris”. This was also a great way to keep people of all ages and backgrounds coming in. That in turn enabled the store sell in higher volumes and thus get lower prices.
“So ready to portray his emporium as a theatre, or the opera, or a land of enchantment, Boucicaut had found the supreme effect. Spactcle and entertainment, on the one hand, the world of consumption on the other, were now truly indistinguishable.”
Innovators that inspired the new breed of entrepreneurs
In 1876 at the same year as Alexander Stewart passed away and a year before Aristide Boucicaut’s death, a young man in Chicago went to work for the department store Marshall Field. He went on to advance in the management of the Field’s and later on to take the courage leap over the Atlantic. That would forever transform the stale retail industry in London.
This young man was Harry Selfridge.
Harry Selfridge was one of the most prominent figures of the Golden Age of the department stores. He became a symbol for the excitement and experience of the great department stores. Despite the less than glamorous ending of his career (and life), he left a lasting legacy.
However, his legacy was very much built on the things developed by Stewart and Boucicaut. Harry Selfridge was a big fan of both men, especially of Boucicaut. Mr Selfridge considered Bon Marche as a masterpiece that became a great inspiration for his store, which was to change the retailing landscape of London.
“The time Selfridge spent time studying Au Bon Marché in Paris was crucial to his development as a retailing reviolutionary.”
More on that and Harry Selfridge’s masterstrokes in the next Retail masters article in February…
Timeline of the opening of the great department stores in Paris and in New York
Alexander Turney Stewart 1823, Marble Palace 1848
Lord & Taylor 1824
Aristide Boucicaut arriving to Bon Marche 1851
Grand Magasins de Louvre 1855
Macy's 1858
Bloomingdales 1862
Printemps 1865
Saks 1867
Marshall Field’s 1867
Galleries Lafayette 1895
Selfridge’s 1909
La Samaritaine 1910