BRIEF HISTORY
Department Stores have their roots in the New York City business arena of the industrial era. Their success in the mid-nineteenth century created such retailing giants as Macy S, Gimbels, Marshall Field's in Chicago, and Neiman-Marcus in Dallas. Department stores indirectly paved the way for department/mail-order stores, smaller department,chain stores, and late-twentieth-century mass merchandising department/discount stores like Wal Mart .
The story of department store shopping is one that seemingly forever will be bound up in the transportation and travel patterns of Americans. At the beginning of the nineteenth century, subsistence growing and local handwork were the anchors of American buying. The limitations of foot travel or horse-drawn travel necessitated such an economy. Farmers grew what their families needed as well as what they could sell from the back of a wagon to people in nearby towns. In addition, Artisans handcrafts sold items such as furniture, candles, or tack to locals. Transportation advances began to change that economy. River travel by steamboat became practical after 1810; canal travel after 1825; rail travel after about 1832 in the East and from coast to coast after 1869 when work crews completed the Transcontinental railway.
Until the Industrial Revolution, however, production could not effectively utilize the potential of new transportation. Interchangeable parts, assembly line techniques, vertical integration of businesses, and urban industrialized centers made production of virtually all goods quicker and more cost efficient, allowing manufacturers to capitalize on transportation.
Yet merchandising outlets for mass-produced goods lagged behind the capabilities of industrialized production and transportation. Producers discovered that, without sufficient retail outlets, a large percentage of their goods could quickly become surplus, eating away at their bottom line. Industrialization also enabled companies to produce new goods that the buying public had never encountered and for which it had no need or desire. Wholesalers and brokers had already worked the agricultural produce system, taking grain and vegetables from farms to markets and profiting in the process. They were prepared to do the same for manufactured goods, but the cycle begged for some type of marketing or retail system to marry goods to consumers.
A new type of store filled the bill. City stores and shops specialized in specific goods, such as clothing or cookware. General stores had small offerings of a variety of goods, but neither could exploit what industrialized production and transportation could supply. Department stores could. From the beginning, department stores were large. Inside, owners divided them into "departments" which contained similar types of goods.
Although not the most famous of store owners, Alexander Turney Stewart is the father of the American department store. An immigrant Irish schoolteacher, Stewart opened a small dry-goods store in New York in 1823. He prospered well enough to open a second store, Marble Dry Goods in 1848. In 1862 he built the huge Cast Iron Palace that claimed an entire city block and was the largest retail store in the world at the time.
Aside from creating the department store, Stewart started the practice of "no haggle" shopping. Haggling, the practice of buyers and sellers negotiating a price acceptable to both, was a tradition in American shopping.
But Stewart saw that salesmen could conduct more business without the obstacle of haggling, and he also perceived that many shoppers did not like the haggling ritual. Instead, he settled on a price he could accept for every product he sold, then he marked the product with that price. His customers were free to pay the price or shop elsewhere. With little exception, they liked the policy and Stewart made millions of dollars.
The Philadelphia merchant John Wanamaker, as did all other department store pioneers, adopted Stewart's "one-price" policy, but he took it a step farther. Wanamaker, who first partnered with Nathan Brown in 1861, then worked alone after Brown's death in 1868, offered customers a satisfaction guaranteed" policy that he backed with the promise of exchanges or refunds. While other merchants followed suit, Wanamaker was one of the first merchants to run a full-page ad in newspapers, and his endless advertising associated him most with the satisfaction pledge, something he called "the Golden Rule of business." Wanamaker branched out with stores in Pittsburgh, Memphis, St. Louis, Baltimore, Richmond, and Louisville. Ultimately he expanded into New York City, setting up business in one of Alexander Stewart's old stores.
Today, neither Stewart nor Wanamaker is a household name. R. H. Macy is. Rowland H. Macy founded the famous New York City department store that is known to most Americans as the annual sponsor of the Macy's Thanksgiving Day Parade and also because it is the scene of much of the story in the classic Christmas movie Miracle on 34th Street. The Macy's name is synonymous with American department stores.
Departmental store
