E. J. Korvette

Infobox Company
name = E. J. Korvette

type = discount department store
genre = retail
foundation = 1948
founder =
location_city = New York City
location_country = United States
location =
locations =
area_served = eastern United States
key_people =
industry = retail
products =
owner =
slogan =

E.J. Korvette was an American chain of discount department stores, founded in 1948 in New York City. It is notable as one of the first department stores to challenge the suggested retail price provisions of anti-discounting statutes [http://www.buyandhold.com/bh/en/education/history/2001/discount_retailers.html Buy and Hold: Discount Retailers] , accessed October 31, 2006] . It is also notable for its failure to manage its business success which led to decline and its 1980 bankruptcy and closure. [http://www.hbsworkingknowledge.hbs.edu/archive/1096.html Harvard Business School: When Giants Stumble] , October 12, 1999] Founded by World War II veteran Eugene Ferkauf and his friend, Joe Zwillenberg, E.J. Korvette did much to define the idea of a discount department store. It displaced earlier five and dime retailers and preceded later discount stores, like Wal-Mart, and warehouse clubs such as Costco Wholesale.

Notable Retailing Innovations

E. J. Korvette's founder, Eugene Ferkauf, began his discounting career in a convert|400|sqft|m2|sing=on loft in mid-Manhattan, New York City. Inventory consisted of well known brands of luggage, household appliances and some jewelry. Discounts were one-third off regular price. Sales were over $2,500 per square foot. Ferkauf retired in 1968. (Discount Merchandiser July 1988)

E.J. Korvette's used several retailing innovations to propel its rapid growth. It used discounting even though most discounting was outlawed (or "thought" outlawed) at the time. Korvette's instituted a membership program, a technique from consumers' cooperatives that never been applied to a department store before. It also expanded into suburban locations at a time when most department stores were in a central business district.

Discounting and Membership Program

Korvette's low-price, low-service model was in some ways similar to that of earlier five and dime retailers such as Woolworth's, McCrory's, and S.S. Kresge. But Korvette's was innovative in avoiding the anti-discounting provisions of the Robinson-Patman Act, and undercutting the suggested retail price on such expensive items as appliances and luxury pens.

Korvette used "membership cards" (which it distributed in front of its stores, and to surrounding offices) to style itself a retail cooperative. In so doing, Korvette's was able to accept deep discounts from suppliers— something that competing department stores, such as Macy's and Gimbel's, could not do. In fact, Macy's and others filed numerous "fair trade" lawsuits against Korvette's to stop it from undercutting their prices. None succeeded. Arguably the lawsuits helped Korvette's by calling attention to prices so low that competitors thought them illegal.

Founder Eugene Ferkauf attributed his idea for membership cards and deep discounts to luggage wholesaler "Charles Wolf". But where Charles Wolf made limited or even surreptitious use of it, Korvette's popularized it by instructing employees to distribute membership cards to any person entering any Korvette's.

trip Malls and the Suburbs

While the first E.J. Korvette store was located on 46th street in Manhattan, its rapid growth in the 1950s was helped by its many stores in strip malls along arterial roads leading out of urban centers. This made E.J. Korvette ideally situated to meet the demands of the suburbs which grew in the United States during the that era.

First of modern type store was opened in 1954, a convert|90000|sqft|m2|sing=on store in Carle Place, Long Island, which for the first time carried apparel. (Discount Merchandiser July 1988) In 1956 Korvette's had 6 stores, including stores in Philadelphia and Harrisburg, PA. By 1958 it had 12 stores. At its peak, it had 58 stores.

A Korvette retail floor had cashiers located in individual departments, with no checkout line area. Large stores included a full supermarket, pharmacy, pets, and tire centers.

Korvette's expanded into the Chicago area in the 1960s. It successfully disputed the state and local Sunday closing ordinances and laws. Once those barriers were broken, many other retailers opened on Sunday.

Decline and Closure

Korvette's decline and closure are variously attributed to inconsistent management [http://www.anbhf.org/retailing.html] , failure to focus on merchandise it knew (such as appliances), and ultimately attempting to compete directly with the department stores in areas such as fashion (when it had neither the expertise nor the right store atmosphere).

Of note was E. J. Korvette's venture into the home entertainment business. The retailer established a rather out of context series of high-end audio salons within selected stores. Korvettes went so far as to market its own "XAM" brand of stereo receivers, amplifiers (some manufactured by Roland Electronics of Japan) and speakers. At a number of the retail locations the audio department was, on dollar per square foot basis, one of the more profitable departments in the store.Fact|date=April 2008

In late 1965, Korvette's formed its own Home Furnishings Division and ceased subcontracting furniture and carpet sales. A complex warehousing and distributing network was established. A central distribution warehouse was established in Danville, VA. This location received furniture, purchased by its buyers located in East Paterson, NJ. and in turn reshipped individual customer orders based on promised delivery dates. The sold merchandise was then shipped to delivery warehouses in East Paterson, NJ, Pensauken, NJ and Jessup, MD for final prep and delivery. This well-managed furniture distribution group was active until it closed at the end of 1977.

By 1966, Korvette's had begun to decline and chose to merge with Spartan Industries, a soft goods retailer. Eugene Ferkauf was eased out of the company leadership, and Spartan managers attempted to revive the company.

From 1971 to 1979, Korvette's was owned by Arlen Realty, a land development company that used Korvettes 50 stores as a source of cash flow. Under Arlen's ownership, Korvette's stores deteriorated and lost market share relative to other retailers. Soon the company soon became worth more for its real estate assets (such as its ownership or leasehold interests in valuable locations) than its retail sales.Fact|date=April 2008

In 1979, Korvette's was purchased by the Agache-Willot Group of France [http://query.nytimes.com/gst/fullpage.html?res=950DE7D81739F936A25754C0A964948260 Herald Sq. Korvettes Store to be a Mall] New York Times, July 15, 1982, by Isadore Barmash] which initially closed Korvette's least profitable stores, and began selling off merchandise, fixtures, equipment, and real estate. In 1980, they declared bankruptcy and on December 24, 1980 they closed all of their remaining 15 stores.

The Origin of the E.J. Korvette Name

According to Korvette's founder, Eugene Ferkauf, the name E.J. Korvette was coined as a combination of the initials of its founders ("Eugene" and "Joe") and a re-spelling of the naval term, "Corvette." [ [http://www.snopes.com/business/names/korvette.asp Claim: The discount chain E.J. Korvette took its name from a shortening of 'eight Jewish Korean War veterans,' the founding partners. Status: False.] at Snopes.com] . This claim, and the fact that the name pre-dates the Korean War by three years, directly contradict an urban legend that the name stood for "Eight (or Eleven) Jewish Korean War Veterans".

Former locations

At its height, E. J. Korvette had 58 stores. Below are listed more than 60 locations which have served as E. J. Korvette stores at some point in the company's history.

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Connecticut

*Hartford - 901 Main Street
*Trumbull - Trumbull Shopping Park (now Westfield Trumbull) - later G. Fox, then Filene's, now Macy's

Illinois

*Arlington Heights - Arlington Heights Road & Rand Road
*Elmhurst - Highway 83 & St. Charles Road (later Builders Square, now Sears and Kohl's)
*Matteson - Crawford Avenue & Lincoln Highway
*Morton Grove - Waukegan Road & Dempster Street - now Bally's Fitness
*North Riverside - Harlem Avenue & Cermak Road (divided in to Kohl's, Petco, and Best Buy)
*Oak Lawn - 87th Street & Cicero Avenue

Maryland

*Baltimore - Northern Pkwy. @ Loch Raven Blvd.
*Bel Air - Harford Mall - later Hecht's, now Macy's
*Catonsville - Catonsville Shopping Center, Baltimore National Pike (US 40) later Caldor; then Kmart; now Forman Mills
*Glen Burnie - Governor Plaza, MD Route 3 (Gov. Ritchie Highway) later Ames, later became Syms, CompUSA, and Bally Total Fitness
*Langley Park - originally Lansburgh's, then Korvette's, then Kmart, now other stores, including a Toys "R" Us which closed in 2007
*Parkville - Perring Plaza Shopping Center, Perring Parkway and Joppa Road - became Ames, later became Burlington Coat Factory, Metro Food Market/Shoppers Food Warehouse, and Office Depot
*Rockville - Mid-Pike Plaza, Rockville Pike at Montrose Rd. - now G Street Fabrics, Bally's Total Fitness, Syms, Toys "R" Us, and other shops

Michigan

*Grand Rapids - Plainfield Ave. NE - later converted to Meijer corporate offices, building and property now for sale
*Madison Heights - 29101 John R. Rd. - now Kmart
*Redford - Telegraph Road - now Burlington Coat Factory and smaller stores
*Roseville - Gratiot Ave. @ 12 Mile Rd. - later became Roseville Town Center, a small mall featuring Service Merchandise; building now occupied by Office Depot and Marshalls Megastore
*Southfield - 29720 Southfield Road - later Service Merchandise and other stores, building now occupied by Burlington Coat Factory, Marshalls, and Staples
*Southgate - 16705 Fort Street - torn down, Super Kmart on site

Missouri

*St. Louis
**201 Evans Lane @ S. Florissant Road in Cool Valley - built 1964; now DRS Technologies, Sustainment Systems Division
**Watson Rd. @ Lindbergh - later Marshalls, demolished 1995 for new Marshalls and Home Depot

New Jersey

*Audubon - Black Horse Pike Shopping Center, Black Horse Pike @ Nicholson Rd. - became Woolco, then Bradlees; demolished for new shopping center featuring Wal-Mart
*Ewing Twp. - North Olden Ave. at Princeton Ave. - later Laneco, now Save-a-Lot supermarket and office space [ [http://retailtrafficmag.com/mag/retail_spruced_office_space/ Spruced Up by Office Space ] ]
*Moorestown - N.J. Rt. 38 at Lenola Road - now Kmart
*North Brunswick - Brunswick Shopping Center - later Caldor, then Ames, now LA Fitness
*Paramus - Route 4, across from Bergen Mall - now Kohl's and Daffy's
*Watchung - Blue Star Shopping Center - became Caldor, now Kohl's
*Wayne - Wayne Towne Center - originally S. Klein, now Fortunoff
*West Orange - Korvette Shopping Plaza, Prospect and Eagle Rock Avenues - later Caldor, now Kmart
*Woodbridge - US-1&9 at Route 35 - became Caldor, now ShopRite Supermarket

New York

*Albany - Northway Mall - later Montgomery Ward, closed late 1990s, mall torn down
*Bay Shore
*The Bronx - White Plains Road at Story Avenue - became (TSS/Times Square Store), then (Alexanders, Caldor, and now Kmart)
*Brooklyn
**Bay Parkway near Belt Parkway - became Caesar's Bay Bazaar in 1982, later Kmart, now Kohl's and Toys "R" Us
**Fulton St - now a row of many different stores.
*Carmel - now a Hannaford supermarket
*Carle Place - Westbury Ave. - site being cleared for development
*Cedarhurst - Five Towns Shopping Center - store converted to Bay Harbour Mall, a small enclosed mall with 20 stores, plus Service Merchandise and Burlington Coat Factory as anchor stores. Mall space was gutted in early 2000s; building now occupied by Burlington Coat Factory, Bed Bath & Beyond, Best Buy, and Marshalls
*Commack - Veterans Memorial Hwy. - originally S. Klein; later Gertz, then Stern's, now Macy's
*Douglaston - later became a Stern's and then a Macy's
*Flushing - now New York Health Insurance Plan - HIP Center
*Hicksville Mid-Island Plaza (now Broadway Mall) - originally S. Klein; store converted to food court and smaller stores
*Huntington - now Buy Buy Baby and Michaels (previously Service Merchandise/Filene's Basement)
*Lake Grove - later Gertz, then Stern's; store demolished in early 2000s to make way for outdoor shopping area
*Lawrence - on site of former Bargain Town; later Times Square Store, now Costcocite web|url=http://www.wtv-zone.com/dpjohnson/60sdiscountstores/page2.html|title=Discount Stores of the 60's|publisher=D.P. Johnson|author=D.P. Johnson|accessdate=2007-05-22]
*Manhattan
** Fifth Avenue (flagship store) - became Eastern Airlines building for a short time after
** Herald Square - Opened as Saks & Co., later, Saks 34th Street, now Herald Center
** 45th Street - Original founding location, now subdivided office space
*Massapequa - Sunrise Mall (now Westfield Sunrise) - later Abraham & Straus, then Stern's, then Macy's Clearance Center, now Wal-Mart
*Nanuet - occupied entire Rockland Center strip mall entirely to right of Path-Mark store, subsequently divided into smaller units.
*Pelham Manor - Boston Post Road at Pelham Parkway - later Caldor, then Kmart, now vacant
*Port Chester - Boston Post Road - later Caldor, now Kohl's
*Scarsdale - 969 Central Park Ave - became Mays Department Store; later Burlington Coat Factory; now various stores
*Smithtown
*Staten Island - 2795 Richmond Avenue in New Springville - later Pergament, now Best Buy
*Valley Stream - Green Acres Mall - former S. Klein; later Gertz, then Stern's, now Macy's Furniture Store
*West Hempstead - later an indoor flea market called Shopper's Village, now National Wholesale Liquidators
*West Islip - Sunrise Highway - now Bob's Store

Pennsylvania

*Audubon
*Camp Hill - Camp Hill Shopping Center - demolished when strip mall was rebuilt as Camp Hill Mall
*King of Prussia - Plaza at King of Prussia - later Woolworth; store space razed and redeveloped in 1993 for mall expansion
*Philadelphia - Roosevelt Boulevard and Welsh Road - now Marshalls and a closed Tower Records
*Wyncote - Cedarbrook Mall (now Cedarbrook Plaza) - later Jamesway, then Caldor, then Kmart Supercenter] ; demolished for Wal-Mart Supercenter
*Springfield - Marple Crossroads Shopping Center - now Value City

Virginia

*Bailey's Crossroads - now TJ Maxx and Burlington Coat Factory
*Hampton - Coliseum Mall - later Montgomery Ward, now partially Burlington Coat Factory, to be torn down
*Springfield - Springfield Mall - former Lansburgh's; now Macy's

References

External links

* [http://www.buyandhold.com/bh/en/education/history/2001/discount_retailers.html Discount Retailers]
* [http://www.hbsworkingknowledge.hbs.edu/book-review.jhtml?id=1096&t=bizhistory When Giants Stumble]
* [http://www.anbhf.org/retailing.html American National Business Hall of Fame: Retailers]
* [http://www.flickr.com/photos/tppllc/492855704/ Family in front of E.J. Korvette Store, Long Island, 1967]
* [http://youtube.com/watch?v=u7i5KdtfJM8 1970s commercial on YouTube]